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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 333-148153

 

 

REALOGY CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   20-4381990

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification Number)

One Campus Drive

Parsippany, NJ

  07054
(Address of principal executive offices)   (Zip Code)

(973) 407-2000

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ¨     No   x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ¨     No   ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨

   Accelerated filer   ¨

Non-accelerated filer   x

(Do not check if a smaller reporting company)

   Smaller reporting company   ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

The number of shares outstanding of the registrant’s common stock, $0.01 par value, as of August 11, 2009 was 100.

 

 

 


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Table of Contents

 

         Page

Forward Looking Statements

   1

PART I

  FINANCIAL INFORMATION   

Item 1.

 

Financial Statements

   4
 

Report of Independent Registered Public Accounting Firm

   4
 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008

   5
 

Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008

   6
 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008

   7
 

Notes to Condensed Consolidated Financial Statements

   8

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   39

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

   66

Item 4T.

 

Controls and Procedures

   66

PART II

 

OTHER INFORMATION

   67

Item 1.

 

Legal Proceedings

   67

Item 6.

 

Exhibits

   69
 

Signatures

   70


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FORWARD-LOOKING STATEMENTS

Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other public statements. These forward-looking statements were based on various facts and were derived utilizing numerous important assumptions and other important factors, and changes in such facts, assumptions or factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives, as well as projections of macroeconomic trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward looking in nature and not historical facts. You should understand that the following important factors could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements:

 

   

our substantial leverage as a result of our acquisition by affiliates of Apollo Management, L.P. and the related financings (the “Transactions”). As of June 30, 2009, our total debt (including the current portion) was $6,875 million (which does not include $515 million of letters of credit issued under our synthetic letter of credit facility and an additional $136 million of outstanding letters of credit). In addition, as of June 30, 2009, our current liabilities included $442 million of securitization obligations which were collateralized by $519 million of securitization assets that are not available to pay our general obligations;

 

   

we have constraints on our sources of liquidity. At June 30, 2009, we had borrowings under our revolving credit facility of $610 million (or $254 million, net of $356 million of available cash) and $136 million of outstanding letters of credit drawn against the facility, leaving $4 million of available capacity under the revolving credit facility.

 

   

an event of default under our senior secured credit facility, including but not limited to a failure to maintain, or a failure to cure a default of, the applicable senior secured leverage ratio, or under our indentures or relocation securitization facilities or a failure to meet our cash interest obligations under these instruments or other lack of liquidity caused by substantial leverage and the continuing adverse housing market, would materially and adversely affect our financial condition, results of operations and business. The ratio limit under our senior secured leverage ratio as of June 30, 2009 was 5.35 to 1; as of September 30, 2009 the ratio limit becomes 5.0 to 1. As of June 30, 2009 the ratio was 5.1 to 1;

 

   

continuing adverse developments or the absence of improvement in the residential real estate markets, either regionally or nationally, due to lower sales, price declines, excessive home inventory levels, and reduced availability of mortgage financing or availability only at higher rates, including but not limited to:

 

   

a continuing decline in the number of homesales and/or further declines in prices and a deterioration in other economic factors that particularly impact the residential real estate market and the business segments in which we participate;

 

   

continuing negative trends and/or a negative perception of the market trends in value for residential real estate;

 

   

continuing high levels of foreclosure activity;

 

   

reduced availability of mortgage financing or financing on terms not sufficiently attractive to homebuyers;

 

   

competition in our existing and future lines of business and the financial resources of competitors;

 

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our failure to comply with laws and regulations and any changes in laws and regulations; and

 

   

local and regional conditions in the areas where our franchisees and brokerage operations are located.

 

   

the final resolutions or outcomes with respect to Cendant’s contingent liabilities, including contingent tax liabilities, under the Separation and Distribution Agreement and the Tax Sharing Agreement, including any adverse impact on our future cash flows or future results of operations;

 

   

continuing adverse developments or the absence of improvement in general business, economic and political conditions, including reduced availability of credit and the instability of financial institutions in the U.S. and abroad, changes in short-term or long-term interest rates;

 

   

a continuing drop in consumer confidence and/or the impact of the current recession and the related high levels of unemployment in the U.S. and abroad;

 

   

concerns about the Company’s continued viability, which may impact, among other things, retention of sales associates, franchisees and corporate clients;

 

   

our inability to achieve future cost savings, cash conservation and other benefits anticipated as a result of our restructuring and capital reduction initiatives or such initiatives cost more or take longer to implement than we project;

 

   

limitations on flexibility in operating our business due to restrictions contained in our debt agreements;

 

   

our inability to access capital and/or to securitize certain assets of our relocation business, either of which would require us to find alternative sources of liquidity, which may not be available, or if available, may not be on favorable terms or we may be required to reduce our operations;

 

   

our failure to maintain or acquire franchisees and brands or the inability of franchisees to survive the current real estate downturn;

 

   

disputes or issues with entities that license us their brands for use in our business that could impede our franchising of those brands;

 

   

our geographic and high-end market concentration relating in particular to our company-owned brokerage operations;

 

   

actions by our franchisees that could harm our business;

 

   

reduced ability to complete future strategic acquisitions or to realize anticipated benefits from completed acquisitions;

 

   

the loss of any of our senior management or key managers or employees in specific business units;

 

   

an increase in the funding obligation under the pension plans assigned to us in connection with our separation from Cendant;

 

   

the possibility that the distribution of our stock to holders of Cendant’s common stock in connection with our separation from Cendant into four independent companies, together with certain related transactions and our sale to affiliates of Apollo Management, L.P., were to fail to qualify as a reorganization for U.S. federal income tax purposes; and

 

   

the cumulative effect of adverse litigation or arbitration awards against us and the adverse effect of new regulatory interpretations, rules and laws.

Other factors not identified above, including the risk factors described under the headings “Forward-Looking Statements” and “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2008 (the “2008 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”), may

 

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also cause actual results to differ materially from those projected by our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control.

You should consider the areas of risk described above, as well as those set forth under the heading “Risk Factors” in the 2008 Form 10-K, in connection with considering any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law. For any forward-looking statement contained in our public filings or other public statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

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PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of Realogy Corporation

Parsippany, New Jersey

We have reviewed the accompanying condensed consolidated balance sheet of Realogy Corporation and its subsidiaries as of June 30, 2009, and the related condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2009 and the condensed consolidated statement of cash flows for the six-month period ended June 30, 2009. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

/s/ PricewaterhouseCoopers LLP

Florham Park, New Jersey

August 11, 2009

 

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REALOGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
         2009             2008             2009             2008      

Revenues

        

Gross commission income

   $ 746      $ 1,040      $ 1,218      $ 1,788   

Service revenue

     161        208        295        392   

Franchise fees

     72        91        122        164   

Other

     39        50        80        96   
                                

Net revenues

     1,018        1,389        1,715        2,440   
                                

Expenses

        

Commission and other agent-related costs

     477        685        769        1,171   

Operating

     313        422        641        851   

Marketing

     45        60        86        115   

General and administrative

     53        55        116        118   

Former parent legacy costs (benefit), net

     (46     (7     (42     (1

Restructuring costs

     10        14        44        23   

Merger costs

     —          —          —          2   

Depreciation and amortization

     48        55        99        111   

Interest expense/(income), net

     147        152        291        316   

Other (income)/expense, net

     (11     —          (10     —     
                                

Total expenses

     1,036        1,436        1,994        2,706   
                                

Loss before income taxes, equity in earnings and noncontrolling interest

     (18     (47     (279     (266

Income tax expense (benefit)

     5        (19     7        (102

Equity in earnings of unconsolidated entities

     (8     (1     (12     (4
                                

Net loss

   $ (15   $ (27   $ (274   $ (160
                                

See Notes to Condensed Consolidated Financial Statements.

 

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REALOGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

 

     June 30,
2009
    December 31,
2008
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 388      $ 437   

Trade receivables (net of allowance for doubtful accounts of $72 and $46)

     151        140   

Relocation receivables

     499        765   

Relocation properties held for sale

     3        22   

Deferred income taxes

     27        92   

Due from former parent

     3        3   

Other current assets

     106        112   
                

Total current assets

     1,177        1,571   

Property and equipment, net

     232        276   

Goodwill

     2,575        2,572   

Trademarks

     732        732   

Franchise agreements, net

     3,009        3,043   

Other intangibles, net

     467        480   

Other non-current assets

     233        238   
                

Total assets

   $ 8,425      $ 8,912   
                

LIABILITIES AND STOCKHOLDER’S DEFICIT

    

Current liabilities:

    

Accounts payable

   $ 142      $ 133   

Securitization obligations

     442        703   

Due to former parent

     560        554   

Revolving credit facility and current portion of long-term debt

     642        547   

Accrued expenses and other current liabilities

     492        513   
                

Total current liabilities

     2,278        2,450   

Long-term debt

     6,233        6,213   

Deferred income taxes

     767        826   

Other non-current liabilities

     152        163   
                

Total liabilities

     9,430        9,652   
                

Commitments and contingencies (Notes 8 and 9)

    

Stockholder’s deficit:

    

Common stock

     —          —     

Additional paid-in capital

     2,016        2,013   

Accumulated deficit

     (2,983     (2,709

Accumulated other comprehensive loss

     (39     (46
                

Total Realogy stockholder’s deficit

     (1,006     (742
                

Noncontrolling interest

     1        2   
                

Total stockholder’s deficit

     (1,005     (740
                

Total liabilities and stockholder’s deficit

   $ 8,425      $ 8,912   
                

See Notes to Condensed Consolidated Financial Statements.

 

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REALOGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

     Six Months Ended
June 30,
 
         2009             2008      

Operating Activities

    

Net loss

   $ (274   $ (160

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     99        111   

Deferred income taxes

     3        (106

Amortization of deferred financing costs and discount on unsecured notes

     15        15   

Equity in earnings of unconsolidated entities

     (12     (4

Other adjustments to net loss

     14        11   

Net change in assets and liabilities, excluding the impact of acquisitions and dispositions:

    

Trade receivables

     (10     (38

Relocation receivables and advances

     277        7   

Relocation properties held for sale

     19        58   

Other assets

     9        19   

Accounts payable, accrued expenses and other liabilities

     26        9   

Due (to) from former parent

     8        3   

Other, net

     (2     1   
                

Net cash provided by (used in) operating activities

     172        (74
                

Investing Activities

    

Property and equipment additions

     (15     (24

Net assets acquired (net of cash acquired) and acquisition-related payments

     (4     (9

Proceeds from the sale of property and equipment

     —          7   

Proceeds related to corporate aircraft sale leaseback and termination

     —          12   

Investment in unconsolidated entities

     —          (4

Change in restricted cash

     (3     3   

Other, net

     —          5   
                

Net cash used in investing activities

     (22     (10
                

Financing Activities

    

Net change in revolving credit facility

     95        205   

Repayments made for term loan credit facility

     (16     (16

Note payment for 2006 acquisition of Texas American Title Company

     —          (10

Net change in securitization obligations

     (274     (116

Other, net

     (7     (8
                

Net cash (used in) provided by financing activities

     (202     55   
                

Effect of changes in exchange rates on cash and cash equivalents

     3        —     

Net decrease in cash and cash equivalents

     (49     (29

Cash and cash equivalents, beginning of period

     437        153   
                

Cash and cash equivalents, end of period

   $ 388      $ 124   
                

Supplemental Disclosure of Cash Flow Information

    

Interest payments (including securitization interest expense)

   $ 249      $ 369   

Income tax payments (refunds), net

   $ 4      $ 1   

See Notes to Condensed Consolidated Financial Statements.

 

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REALOGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise noted, all amounts are in millions)

(Unaudited)

 

1. BASIS OF PRESENTATION

Realogy Corporation (“Realogy” or “the Company”), a Delaware corporation, was incorporated on January 27, 2006 to facilitate a plan by Cendant Corporation (“Cendant”) to separate Cendant into four independent companies—one for each of Cendant’s real estate services, travel distribution services (“Travelport”), hospitality services (including timeshare resorts) (“Wyndham Worldwide”), and vehicle rental businesses (“Avis Budget Group”). On July 31, 2006, the separation (“Separation”) became effective.

In December 2006, the Company entered into an agreement and plan of merger (the “Merger”) with Domus Holdings Corp. (“Holdings”) and Domus Acquisition Corp., which are affiliates of Apollo Management VI, L.P., an entity affiliated with Apollo Management, L.P. (“Apollo”). All of Realogy’s issued and outstanding common stock is currently owned by a direct wholly owned subsidiary of Holdings, Domus Intermediate Holdings Corp. (“Intermediate”). The Merger was consummated on April 10, 2007.

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and with Article 10 of Regulation S-X. In management’s opinion, the accompanying Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of June 30, 2009 and the results of our operations and cash flows for the three and six months ended June 30, 2009 and 2008. Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations. We have eliminated all intercompany transactions and balances between entities consolidated in these financial statements.

As the interim Condensed Consolidated Financial Statements of the Company are prepared using the same accounting principles and policies used to prepare the annual financial statements, they should be read in conjunction with the Consolidated and Combined Financial Statements of the Company for the year ended December 31, 2008 included in the 2008 Form 10-K.

In presenting the Condensed Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ materially from those estimates.

Business Description

The Company reports its operations in the following business segments:

 

   

Real Estate Franchise Services (known as Realogy Franchise Group or RFG)—franchises the Century 21 ® , Coldwell Banker ® , ERA ® , Sotheby’s International Realty ® , Coldwell Banker Commercial ® and Better Homes and Gardens ® Real Estate brand names. We launched the Better Homes and Gardens ® Real Estate brand in July 2008. As of June 30, 2009, we had approximately 14,400 franchised and company owned offices and 270,000 sales associates operating under our brands in the U.S. and 92 other countries and territories around the world, which included approximately 790 of our company owned and operated brokerage offices with approximately 48,000 sales associates.

 

   

Company Owned Real Estate Brokerage Services (known as NRT)—operates a full-service real estate brokerage business principally under the Coldwell Banker ® , ERA ® , Corcoran Group ® and Sotheby’s International Realty ® brand names. In addition, we operate a large independent real estate owned (“REO”) residential asset manager, which focuses on bank-owned properties.

 

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Relocation Services (known as Cartus)—primarily offers clients employee relocation services such as home sale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household goods moving services, visa and immigration support, intercultural and language training and group move management services.

 

   

Title and Settlement Services (known as Title Resource Group or TRG)—provides full-service title, settlement and vendor management services to real estate companies, affinity groups, corporations and financial institutions with many of these services provided in connection with the Company’s real estate brokerage and relocation services business.

Compliance with Financial Covenant

The Company’s senior secured credit facility contains a financial covenant which requires the Company to maintain on the last day of each quarter a senior secured leverage ratio not to exceed a maximum amount. At September 30, 2009 the ratio becomes 5.0 to 1.

In order to comply with the senior secured leverage ratio for the twelve month periods ending September 30, 2009, December 31, 2009, March 31, 2010 and June 30, 2010 (or to avoid an event of default thereof), the Company will need to achieve a certain amount of Adjusted EBITDA and/or reduce levels of senior secured indebtedness. The factors that will impact the foregoing include: (a) slowing decreases, stabilization or increases in sales volume and the price of existing homesales, (b) continuing to effect cost savings and business productivity enhancement initiatives, (c) increasing new franchise sales, sales associate recruitment and/or brokerage acquisitions, (d) obtaining additional equity financing from our parent company, (e) issuing debt or equity financing, or (f) a combination thereof. Factors (b) through (e) may not be sufficient to overcome macroeconomic conditions affecting the Company.

Based upon the Company’s current financial forecast and additional equity available through December 31, 2009, as set forth in the 2008 Form 10-K, the Company believes that it will continue to be in compliance with, or be able to avoid an event of default under, the senior secured leverage ratio and meet its cash flow needs during the next twelve months. The Company has the right to avoid an event of default of the senior secured leverage ratio in three of any of the four consecutive quarters through the issuance of additional Holdings equity for cash, which would be infused as capital into the Company. The effect of such infusion would be to increase Adjusted EBITDA and reduce net senior secured indebtedness.

If the Company was unable to maintain compliance with the senior secured leverage ratio and the Company fails to remedy a default through an equity cure from our parent permitted thereunder, there would be an “event of default” under the senior secured credit agreement. See Note 5, “Short and Long Term Debt” for a description of the consequences of an event of default.

Impairment of Goodwill and Other Indefinite-lived Intangibles

In connection with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” the Company is required to assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs its required annual impairment testing in the fourth quarter of each year subsequent to completing its annual forecasting process. Each of the Company’s operating segments represents a reporting unit.

During the fourth quarter of 2008, the Company performed its annual impairment review of goodwill and unamortized intangible assets. This analysis resulted in an impairment charge of $1,739 million ($1,523 million net of income tax benefit). The impairment charge reduced intangible assets by $384 million and goodwill by $1,355 million.

The Company continues to assess events and circumstances that would indicate an impairment has occurred given the current state of, and long term forecast for, the housing market. The Company believes that no events or circumstances occurred during the six months ended June 30, 2009 that would require the Company to reassess goodwill and intangible assets for impairment.

 

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Derivative Instruments

The Company accounts for derivatives and hedging activities in accordance with SFAS No. 133, “Accounting for Derivative Investments and Hedging Activities,” as amended (“SFAS No. 133”), which requires that all derivative instruments be recorded on the balance sheet at their respective fair values. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument is dependent upon whether the derivative has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.

The Company uses foreign currency forward contracts largely to manage its exposure to changes in foreign currency exchange rates associated with its foreign currency denominated receivables and payables. The Company primarily manages its foreign currency exposure to the British Pound, Euro, Swiss Franc and Canadian Dollar. The Company has chosen not to elect hedge accounting for these forward contracts; therefore, any change in fair value is recorded in the Condensed Consolidated Statements of Operations. However, the fluctuations in the value of these forward contracts generally offset the impact of changes in the value of the underlying risk that they are intended to economically hedge. As of June 30, 2009, the Company has outstanding foreign currency forward contracts with a notional value of $18 million.

The Company enters into interest rate swaps to manage its exposure to changes in interest rates associated with its variable rate borrowings. The Company has two interest rate swaps with an aggregate notional value of $575 million to hedge the variability in cash flows resulting from the term loan facility entered into on April 10, 2007. The Company is utilizing pay-fixed interest rate (and receives 3-month LIBOR) swaps to perform this hedging strategy. The derivatives are being accounted for as cash flow hedges in accordance with SFAS No. 133 and the unfavorable fair market value of the swaps of $18 million, net of income taxes, is recorded in Accumulated Other Comprehensive Loss at June 30, 2009.

The fair value of derivative instruments as of June 30, 2009 was as follows:

 

     Asset Derivatives    Liability Derivatives
     Balance Sheet Location    Fair
Value
   Balance Sheet Location    Fair
Value

Derivatives designated as hedging instruments under FAS 133

           

Interest rate swap contracts

         Other non-current liabilities    $ 31
               

Derivatives not designated as hedging instruments under FAS 133

           

Foreign exchange contracts

   Other current assets    $ —      Other current liabilities    $ —  
                   

The effect of derivative instruments on earnings for the three months ended June 30, 2009:

 

     Amount of gain (loss)
recognized in OCI on
derivative June 30,
2009
   Location of gain (loss)
reclassified from AOCI
into income

June 30, 2009
   Amount of gain (loss)
reclassified from
AOCI into income
June 30, 2009
 

Derivatives designated as hedging instruments under FAS 133

        

Interest rate swap contracts

   $                             2    Interest expense    $                         (5
                  

The effect of derivative instruments on earnings for the six months ended June 30, 2009:

 

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     Amount of gain (loss)
recognized in OCI on
derivative June 30,
2009
   Location of gain (loss)
reclassified from AOCI
into income

June 30, 2009
    Amount of gain (loss)
reclassified from
AOCI into income
June 30, 2009
 

Derivatives designated as hedging instruments under FAS 133

       

Interest rate swap contracts

   $                             7      Interest expense      $ (9
                 
     Location of gain (loss)
recognized in income
   Amount of
gain (loss)
three months
ended June 30,
2009
    Amount of
gain (loss)
six months
ended June 30,
2009
 

Derivatives not designated as hedging instruments under FAS 133

       

Foreign exchange contracts

     Operating expense    $                         (2   $                         (1
                   

Financial Instruments

SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”) clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

 

Level Input:

  

Input Definitions:

Level I

   Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Level II

   Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.

Level III

   Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The availability of observable inputs can vary from asset to asset and is affected by a wide variety of factors, including, for example, the type of asset, whether the asset is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level III. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The fair value of financial instruments is generally determined by reference to quoted market values. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The fair value of interest rate swaps is determined based upon a discounted cash flow approach that incorporates counterparty and performance risk.

 

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The following table summarizes fair value measurements by level at June 30, 2009 for assets/liabilities measured at fair value on a recurring basis:

 

     Level I    Level II    Level III    Total

Derivatives

           

Interest rate swaps (included in other non-current liabilities)

   $ —      $ —      $ 31    $ 31

Deferred compensation plan assets (included in other non-current assets)

     1      —        —        1

The following table presents changes in Level III financial liabilities measured at fair value on a recurring basis:

 

Fair value, January 1, 2009

   $ 38   

Included in other comprehensive loss

     (5
        

Fair value, March 31, 2009

     33   

Included in other comprehensive loss

     (2
        

Fair value, June 30, 2009

   $ 31   
        

The following table summarizes the carrying amount of the Company’s indebtedness compared to the estimated fair value at June 30, 2009:

 

     Carrying
Amount
   Estimated
Fair Value

Debt

     

Securitization obligations

   $ 442    $ 442

Revolving credit facility

     610      610

Term loan facility

     3,107      2,268

Fixed Rate Senior Notes

     1,684      733

Senior Toggle Notes

     612      190

Senior Subordinated Notes

     862      235

Income Taxes

The Company’s provision for income taxes in interim periods is computed by applying its estimated annual effective tax rate against loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. Our income tax expense for the three and six months ended June 30, 2009 was $5 million and $7 million, respectively. The components of our income tax expense are as follows:

 

   

no U.S. Federal income tax benefit was recognized for the current period losses due to a valuation allowance for domestic operations;

 

   

income tax expense was recognized for foreign and state income taxes for certain jurisdictions; and

 

   

income tax expense was recorded for an increase in deferred tax liabilities associated with indefinite-lived intangible assets.

Supplemental Cash Flow Information

For the periods presented, the Company had the following significant non-cash transactions:

In the second quarter of 2009, pursuant to the terms of the Senior Toggle Notes, the Company elected to satisfy the interest payment obligation by issuing $34 million of Senior Toggle Notes which resulted in a non-cash transfer between accrued interest and long term debt. In the second quarter of 2008, the Company terminated the capital lease for the corporate aircraft, which resulted in a non-cash elimination of the related asset and capital lease for $26 million.

 

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Defined Benefit Pension Plan

The net periodic pension cost for the three months ended June 30, 2009 was $1 million and is comprised of interest cost and amortization of amounts previously recorded as other comprehensive income of approximately $2 million offset by a benefit of $1 million for the expected return on assets. The net periodic pension benefit for the three months ended June 30, 2008 was less than $1 million and was comprised of interest cost of approximately $2 million offset by a benefit of $2 million for the expected return on assets.

Recently Adopted Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”). SFAS No. 141R provides revised guidance on how acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, as well as contingencies, noncontrolling interests, and goodwill acquired in a business combination. In addition, changes in deferred tax asset valuation allowances and uncertain tax positions after the acquisition date will generally impact income tax expense. SFAS No. 141R also expands required disclosures surrounding the nature and financial effects of business combinations. SFAS No. 141R was effective, on a prospective basis, for fiscal years beginning after December 15, 2008; therefore, the Company adopted SFAS No. 141R on January 1, 2009. The Company has not entered into any material business combinations since the adoption of SFAS No. 141R. If the Company does enter into any material business combinations, the transaction may significantly impact the Company’s consolidated financial position and results of operations as compared to the Company’s past acquisitions, accounted for under previous GAAP requirements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS No. 160”). SFAS No. 160 establishes requirements for ownership interests in subsidiaries held by parties other than the Company (“noncontrolling interest”) be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity. All changes in the parent’s ownership interests not involving a change in control are required to be accounted for consistently as equity transactions and any noncontrolling equity investments in unconsolidated subsidiaries must be measured initially at fair value. SFAS No. 160 was effective, on a prospective basis, for fiscal years beginning after December 15, 2008, therefore the Company adopted SFAS No. 160 on January 1, 2009. The presentation and disclosure requirements in SFAS No. 160 are required to be applied retrospectively to comparative financial statements. As a result of the implementation of this standard, the Company reclassified $2 million from Other Non-current Liabilities to a separate Noncontrolling Interest line in the Equity section of the Condensed Consolidated Balance Sheet as of December 31, 2008. Noncontrolling interest amounts were not reflected on a separate line on the Condensed Consolidated Statement of Operations as the amounts were less than $1 million.

In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 expands quarterly disclosure requirements in SFAS No. 133 about an entity’s derivative instruments and hedging activities. SFAS No. 161 was effective for fiscal years beginning after November 15, 2008; therefore, the Company adopted SFAS No. 161 on January 1, 2009. See additional disclosures in Note 1, “Basis of Presentation” under the heading “Derivative Instruments”.

In April 2009, the FASB issued Staff Position (“FSP”) No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”. This FSP expands the fair value disclosures required for all financial instruments under SFAS No. 107 to interim periods for publicly traded entities. It also requires entities to disclose the method and significant assumptions used to estimate the fair value on an interim basis. The FSP is effective prospectively for interim reporting periods ending after June 15, 2009. The Company adopted the expanded disclosure requirements under this FSP for the period ended June 30, 2009. The FSP did not have an impact on the Company’s consolidated financial condition, results of operations or cash flows.

 

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In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS No. 165”). The guidance establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosures in the financial statements. SFAS No. 165 provides largely the same guidance on subsequent events which previously existed only in auditing literature. The guidance is effective for interim or annual financial periods ending after June 15, 2009. The Company adopted SFAS No. 165 during the quarter ended June 30, 2009 and the adoption did not have a material impact on its consolidated financial condition, results of operations or cash flows. Management has evaluated all subsequent events through August 11, 2009, the date the financial statements were issued.

Recently Issued Accounting Pronouncements

In December 2008, the FASB issued Staff Position No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP 132R-1”). This FSP enhances the annual disclosure about plan assets by requiring the nature and amount of concentrations of risk, fair value measurement similar to SFAS No. 157 requirements, significant investment strategies, and increased asset categories. The FSP is effective prospectively for fiscal years ending after December 15, 2009. The Company will adopt the expanded disclosure requirements under this FSP for the year ending December 31, 2009. The FSP will not have an impact on the Company’s consolidated financial condition, results of operations or cash flows.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an amendment of FAS No. 140” (“SFAS No. 166”). The new guidance (1) eliminates the concept of qualifying special purpose entities, which will likely result in many transferors consolidating such entities; (2) provides a new “participating interest” definition that must be met for transfers of portions of financial assets to be eligible for sale accounting; (3) clarifies and amends the derecognition criteria for a transfer to be accounted for as a sale; and (4) requires extensive new disclosures. SFAS No. 166 is effective prospectively for new transfers of financial assets occurring in fiscal years beginning after November 15, 2009. The Company will adopt the new guidance beginning January 1, 2010 and is currently evaluating the impact the adoption will have on its consolidated financial statements.

In June 2009, the FASB also issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS No. 167”). SFAS No. 167 amends FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 “ for determining whether an entity is a variable interest entity (“VIE”) and requires an enterprise to perform a qualitative analysis to determine whether its variable interest or interests give it a controlling financial interest in a VIE. Under SFAS No. 167, an enterprise has a controlling financial interest when it has (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. SFAS No. 167 also requires ongoing assessments of whether the reporting entity is the primary beneficiary of a VIE to consolidate, requires enhanced disclosures and eliminates the scope exclusion for qualifying special purpose entities. The new guidance is effective for the first annual reporting period that begins after November 15, 2009. The Company will adopt SFAS No. 167 beginning January 1, 2010 and is currently evaluating the impact the adoption will have on its consolidated financial statements.

In July 2009, the FASB launched the FASB Accounting Standards Codification (“the Codification”) as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification reorganizes the thousands of U.S. GAAP pronouncements into roughly 90 accounting topics and displays all topics using a consistent structure. It also includes relevant Securities and Exchange Commission (SEC) guidance that follows the same topical structure in separate sections in the Codification. While the Codification does not change GAAP, it introduces a new structure of authoritative accounting guidance. The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting

 

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standards documents are superseded. All other accounting literature not included in the Codification is nonauthoritative. The Company will adopt the Codification in the quarter ending September 30, 2009 and expects that the adoption will only affect how the accounting guidance is referenced and will not impact its consolidated financial condition, results of operations or cash flows.

 

2. OTHER (INCOME)/EXPENSE, NET AND COMPREHENSIVE LOSS

The Company recognized other income of $11 million and $10 million for the three and six months ended June 30, 2009, respectively, which was primarily due to litigation proceeds of $11 million received in April 2009. See Note 9 for additional information.

Comprehensive loss consisted of the following:

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
         2009             2008             2009             2008      

Net loss

   $ (15   $ (27   $ (274   $ (160

Foreign currency translation adjustments

     4        —          3        1   

Unrealized gain (loss) on interest rate hedges, net

     2        12        4        —     
                                

Total comprehensive loss attributable to Realogy

   $ (9   $ (15   $ (267   $ (159
                                

The Company does not provide for income taxes for foreign currency translation adjustments related to investments in foreign subsidiaries where the Company intends to reinvest the undistributed earnings indefinitely in those foreign operations.

 

3. INTANGIBLE ASSETS

Intangible assets consisted of:

 

     As of June 30, 2009    As of December 31, 2008
     Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount
   Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount

Amortized Intangible Assets

                 

Franchise agreements (a)

   $ 2,019    $ 155    $ 1,864    $ 2,019    $ 121    $ 1,898

License agreement (b)

     45      2      43      45      2      43

Pendings and listings (c)

     2      2      —        2      2      —  

Customer relationship (d)

     467      58      409      467      45      422

Other (e)

     7      2      5      7      2      5
                                         
   $ 2,540    $ 219    $ 2,321    $ 2,540    $ 172    $ 2,368
                                         

Unamortized Intangible Assets

                 

Goodwill (f)

   $ 2,575          $ 2,572      
                         

Franchise agreement with NRT (g)

   $ 1,145          $ 1,145      

Trademarks (h)

     732            732      

Title plant shares ( i )

     10            10      
                         
   $ 1,887          $ 1,887      
                         

 

(a) Generally amortized over a period of 30 years.
(b) Relates to the Sotheby’s International Realty and Better Homes and Gardens Real Estate agreements which will be amortized over 50 years (the contractual term of the license agreement).
(c) Amortized over the estimated closing period of the underlying contracts (in most cases approximately 5 months).

 

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(d) Relates to the customer relationships at Title and Settlement Services segment and the Relocation Services segment. These relationships will be amortized over a period of 10 to 20 years.
(e) Generally amortized over periods ranging from 5 to 10 years.
(f) Goodwill increased $3 million due to acquisitions made during the six months ended June 30, 2009.
(g) Relates to the Real Estate Franchise Services franchise agreement with NRT, which is expected to generate future cash flows for an indefinite period of time.
(h) Relates to the Century 21, Coldwell Banker, ERA, The Corcoran Group, Coldwell Banker Commercial and Cartus tradenames, which are expected to generate future cash flows for an indefinite period of time.
(i) Primarily related to the Texas American Title Company title plant shares. Ownership in a title plant is required to transact title insurance in certain states. We expect to generate future cash flows for an indefinite period of time.

Amortization expense relating to intangible assets was as follows:

 

     Three Months Ended
June 30,
   Six Months Ended
June 30,
         2009            2008            2009            2008    

Franchise agreements

   $ 17    $ 17    $ 34    $ 33

Pendings and listings

     —        —        —        1

Customer relationships

     7      6      13      12

Other

     —        —        —        1
                           

Total

   $ 24    $ 23    $ 47    $ 47
                           

Based on the Company’s amortizable intangible assets as of June 30, 2009, the Company expects related amortization expense for the remainder of 2009, the four succeeding years and thereafter to approximate $47 million, $94 million, $94 million, $94 million, $94 million and $1,898 million, respectively.

 

4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of:

 

     June 30,
2009
   December 31,
2008

Accrued payroll and related employee costs

   $ 74    $ 94

Accrued volume incentives

     15      22

Deferred income

     71      80

Accrued interest

     119      120

Other

     213      197
             
   $ 492    $ 513
             

 

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5. SHORT AND LONG TERM DEBT

Total indebtedness is as follows:

 

     June 30,
2009
   December 31,
2008

Senior Secured Credit Facility:

     

Revolving credit facility

   $ 610    $ 515

Term loan facility

     3,107      3,123

Fixed Rate Senior Notes

     1,684      1,683

Senior Toggle Notes

     612      577

Senior Subordinated Notes

     862      862

Securitization Obligations:

     

Apple Ridge Funding LLC

     358      537

U.K. Relocation Receivables Funding Limited

     84      146

Kenosia Funding LLC

     —        20
             
   $ 7,317    $ 7,463
             

SENIOR SECURED CREDIT FACILITY

In connection with the closing of the Merger on April 10, 2007, the Company entered into a senior secured credit facility consisting of (i) a $3,170 million term loan facility, (ii) a $750 million revolving credit facility and (iii) a $525 million synthetic letter of credit facility.

Interest rates with respect to term loans under the senior secured credit facility are based on, at the Company’s option, (a) adjusted LIBOR plus 3.0% or (b) the higher of the Federal Funds Effective Rate plus 0.5% and JPMorgan Chase Bank, N.A.’s prime rate (“ABR”) plus 2.0%. The term loan facility provides for quarterly amortization payments totaling 1% per annum of the principal amount with the balance due upon the final maturity date.

The Company’s senior secured credit facility provides for a six-year, $750 million revolving credit facility, which includes a $200 million letter of credit sub-facility and a $50 million swingline loan sub-facility. The Company uses the revolving credit facility for, among other things, working capital and other general corporate purposes, including permitted acquisitions and investments. Interest rates with respect to revolving loans under the senior secured credit facility are based on, at the Company’s option, adjusted LIBOR plus 2.25% or ABR plus 1.25% in each case subject to adjustment based on the attainment of certain leverage ratios.

The Company’s senior secured credit facility provides for a six-and-a-half-year $525 million synthetic letter of credit facility for which the Company pays 300 basis points in interest on amounts utilized. The capacity of the synthetic letter of credit is reduced by 1% each year and as a result the amount available was reduced to $518 million on December 31, 2008 and to $515 million at June 30, 2009. On April 26, 2007, the synthetic letter of credit facility was used to post a $500 million letter of credit to secure the fair value of the Company’s obligations in respect of Cendant’s contingent and other liabilities that were assumed under the Separation and Distribution Agreement and the remaining capacity was utilized for general corporate purposes. The stated amount of the standby irrevocable letter of credit is subject to periodic adjustment to reflect the then current estimate of Cendant contingent and other liabilities.

The Company’s senior secured credit facility is secured to the extent legally permissible by substantially all of the assets of the Company’s parent company, the Company and the subsidiary guarantors, including but not limited to (a) a first-priority pledge of substantially all capital stock held by the Company or any subsidiary guarantor (which pledge, with respect to obligations in respect of the borrowings secured by a pledge of the stock of any first-tier foreign subsidiary, is limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such foreign subsidiary), and (b) perfected first-priority security interests in substantially all tangible and intangible assets of the Company and each subsidiary guarantor, subject to certain exceptions.

 

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The Company’s senior secured credit facility contains financial, affirmative and negative covenants and requires the Company to maintain on the last day of each quarter a senior secured leverage ratio not to exceed a maximum amount. Specifically our senior secured debt (net of unsecured cash and permitted investments) to trailing twelve month EBITDA (as such terms are defined in the senior secured credit facility), calculated on a “pro forma” basis pursuant to the senior secured credit facility, may not exceed 5.35 to 1 at June 30, 2009. The ratio steps down to 5.0 to 1 at September 30, 2009 and to 4.75 to 1 at March 31, 2011 and thereafter. EBITDA, as defined in the senior secured credit facility, includes certain adjustments and also is calculated on a pro forma basis for purposes of the senior secured leverage ratio. In this report, the Company refers to the term “Adjusted EBITDA” to mean EBITDA as so defined and calculated for purposes of determining compliance with the senior secured leverage ratio. At June 30, 2009, the Company was in compliance with the senior secured leverage ratio. See “Financial Conditions, Liquidity and Capital Resources – EBITDA and Adjusted EBITDA” for the detailed covenant calculation.

The Company’s current financial forecast of Adjusted EBITDA includes additional cost saving and business optimization initiatives. As such initiatives are implemented, management will give pro forma effect to such measures and add back the savings or enhanced revenue from those initiatives as if they had been implemented at the beginning of the trailing twelve month period for calculating compliance with the senior secured leverage ratio.

In order to comply with the senior secured leverage ratio for the twelve month periods ending September 30, 2009, December 31, 2009, March 31, 2010, and June 30, 2010 (or to avoid an event of default thereof), the Company will need to achieve a certain amount of Adjusted EBITDA and/or reduce levels of senior secured indebtedness. The factors that will impact the foregoing include: (a) slowing decreases, stabilization or increases in sales volume and the price of existing homesales, (b) continuing to effect cost savings and business productivity enhancement initiatives, (c) increasing new franchise sales, sales associate recruitment and/or brokerage acquisitions, (d) obtaining additional equity financing from our parent company, (e) issuing debt or equity financing, or (f) a combination thereof. Factors (b) through (e) may not be sufficient to overcome macroeconomic conditions affecting the Company.

Based upon the Company’s current financial forecast and additional equity available through December 31, 2009, as set forth in the 2008 Form 10-K, the Company believes that it will continue to be in compliance with, or be able to avoid an event of default under, the senior secured leverage ratio and meet its cash flow needs during the next twelve months. The Company has the right to avoid an event of default of the senior secured leverage ratio in three of any of the four consecutive quarters through the issuance of additional Holdings equity for cash, which would be infused as capital into the Company. The effect of such infusion would be to increase Adjusted EBITDA and reduce net senior secured indebtedness.

If the Company was unable to maintain compliance with the senior secured leverage ratio and the Company fails to remedy a default through an equity cure from our parent permitted thereunder, there would be an “event of default” under the senior secured credit agreement. Other events of default under the senior secured credit facility include, without limitation, nonpayment, material misrepresentations, insolvency, bankruptcy, certain judgments, change of control and cross-events of default on material indebtedness.

If an event of default occurs under the senior secured credit facility and the Company fails to obtain a waiver from our lenders, our financial condition, results of operations and business would be materially adversely affected. Upon the occurrence of an event of default under our senior secured credit facility, the lenders:

 

   

would not be required to lend any additional amounts to the Company;

 

   

could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable;

 

   

could require us to apply all of our available cash to repay these borrowings; or

 

   

could prevent the Company from making payments on the Unsecured Notes (as defined below),

any of which could result in an event of default under the Unsecured Notes and our Securitization Facilities.

 

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If the Company were unable to repay those amounts, the lenders under our senior secured credit facility could proceed against the collateral granted to them to secure that indebtedness. We have pledged the majority of our assets as collateral under our senior secured credit facility. If the lenders under the senior secured credit facility were to accelerate the repayment of borrowings, the Company may not have sufficient assets to repay our senior secured credit facility and our other indebtedness, including the Unsecured Notes, or be able to borrow sufficient funds to refinance such indebtedness. Even if the Company is able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to the Company.

FIXED RATE SENIOR NOTES DUE 2014, SENIOR TOGGLE NOTES DUE 2014 AND SENIOR SUBORDINATED NOTES DUE 2015

On April 10, 2007, the Company issued in a private placement $1,700 million aggregate principal amount of 10.50% Senior Notes (the “Fixed Rate Senior Notes”), $550 million aggregate principal amount of 11.00%/11.75% Senior Toggle Notes (the “Senior Toggle Notes”) and $875 million aggregate principal amount of 12.375% Senior Subordinated Notes (the “Senior Subordinated Notes”). On February 15, 2008, the Company completed an exchange offer registering these notes under the Securities Act of 1933, as amended, pursuant to a Registration Statement filed on Form S-4. The Company refers to these notes collectively using the term “Unsecured Notes”.

The Fixed Rate Senior Notes are unsecured senior obligations of the Company and will mature on April 15, 2014. Each Fixed Rate Senior Note bears interest at a rate per annum of 10.50% payable semiannually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year.

The Senior Toggle Notes are unsecured senior obligations of the Company and will mature on April 15, 2014. Interest on the Senior Toggle Notes is payable semiannually to holders of record at the close of business on April 1 or October 1 immediately preceding the interest payment date on April 15 and October 15 of each year.

For any interest payment period after the initial interest payment period and through October 15, 2011, the Company may, at its option, elect to pay interest on the Senior Toggle Notes (1) entirely in cash (“Cash Interest”), (2) entirely by increasing the principal amount of the outstanding Senior Toggle Notes or by issuing Senior Toggle Notes (“PIK Interest”) or (3) 50% as Cash Interest and 50% as PIK Interest. After October 15, 2011, the Company is required to make all interest payments on the Senior Toggle Notes entirely in cash. Cash interest on the Senior Toggle Notes will accrue at a rate of 11.00% per annum. PIK Interest on the Senior Toggle Notes will accrue at the Cash Interest rate per annum plus 0.75%. The Company must elect the form of interest payment with respect to each interest period by delivery of a notice to the trustee prior to the beginning of each interest period. In the absence of an election for any interest period, interest on the Senior Toggle Notes shall be payable according to the method of payment for the previous interest period.

Beginning with the interest period which ended October 2008, the Company elected to satisfy the interest payment obligation by issuing additional Senior Toggle Notes. This PIK Interest election is now the default election for future interest periods through October 15, 2011 unless the Company notifies otherwise prior to the commencement date of a future interest period.

The Company would be subject to certain interest deduction limitations if the Senior Toggle Notes were treated as “applicable high yield discount obligations” (“AHYDO”) within the meaning of Section 163(i)(1) of the Internal Revenue Code. In order to avoid such treatment, the Company is required to redeem for cash a portion of each Senior Toggle Note then outstanding. The portion of a Senior Toggle Note required to be redeemed is an amount equal to the excess of the accrued original issue discount as of the end of such accrual period, less the amount of interest paid in cash on or before such date, less the first-year yield (the issue price of the debt instrument multiplied by its yield to maturity). The redemption price for the portion of each Senior Toggle Note so redeemed would be 100% of the principal amount of such portion plus any accrued interest on the date of redemption. Assuming that the Company continues to utilize the PIK Interest option election through October 2011, the Company would be required to repay approximately $204 million in April 2012 in accordance with the Senior Toggle Note Indenture Agreement.

 

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The Senior Subordinated Notes are unsecured senior subordinated obligations of the Company and will mature on April 15, 2015. Each Senior Subordinated Note bears interest at a rate per annum of 12.375% payable semiannually to holders of record at the close of business on April 1 or October 1 immediately preceding the interest payment date on April 15 and October 15 of each year.

The Company’s Unsecured Notes contain various covenants that limit the Company’s ability to, among other things:

 

   

incur or guarantee additional debt;

 

   

incur debt that is junior to senior indebtedness and senior to the senior subordinated notes;

 

   

pay dividends or make distributions to our stockholders;

 

   

repurchase or redeem capital stock or subordinated indebtedness;

 

   

make loans, capital expenditures or investments or acquisitions;

 

   

incur restrictions on the ability of certain of the Company’s subsidiaries to pay dividends or to make other payments to the Company;

 

   

enter into transactions with affiliates;

 

   

create liens;

 

   

merge or consolidate with other companies or transfer all or substantially all of the Company’s assets;

 

   

transfer or sell assets, including capital stock of subsidiaries; and

 

   

prepay, redeem or repurchase debt that is junior in right of payment to the Unsecured Notes.

The Fixed Rate Senior Notes and Senior Toggle Notes are guaranteed on an unsecured senior basis, and the Senior Subordinated Notes are guaranteed on an unsecured senior subordinated basis, in each case, by each of the Company’s existing and future U.S. subsidiaries that is a guarantor under the senior secured credit facility or that guarantees certain other indebtedness in the future, subject to certain exceptions. See Note 11 for financial information on the guarantors and non-guarantors.

SECURITIZATION OBLIGATIONS

Securitization obligations consisted of:

 

     June 30,
2009
   December 31,
2008

Apple Ridge Funding LLC

   $ 358    $ 537

U.K. Relocation Receivables Funding Limited

     84      146

Kenosia Funding LLC

     —        20
             
   $ 442    $ 703
             

The Company issues secured obligations through Apple Ridge Funding LLC and U.K. Relocation Receivables Funding Limited. These entities are consolidated, bankruptcy remote special purpose entities that are utilized to securitize relocation receivables and related assets. These assets are generated from advancing funds on behalf of clients of the Company’s relocation business in order to facilitate the relocation of their employees. Assets of these special purpose entities are not available to pay the Company’s general obligations. Provided no termination or amortization event has occurred, any new receivables generated under the designated relocation management agreements are sold into the securitization program, and as new relocation management agreements are entered into, the new agreements may also be designated to a specific program.

 

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Certain of the funds that the Company receives from relocation receivables and related assets must be utilized to repay securitization obligations. Such securitization obligations are collateralized by $519 million of underlying relocation receivables and other related relocation assets at June 30, 2009 and $845 million of underlying relocation receivables, relocation properties held for sale and other related relocation assets at December 31, 2008. Substantially all relocation related assets are realized in less than twelve months from the transaction date. Accordingly, all of the Company’s securitization obligations are classified as current in the accompanying Condensed Consolidated Balance Sheets.

Interest incurred in connection with borrowings under these facilities amounted to $3 million and $8 million for the three and six months ended June 30, 2009, respectively, and $11 million and $25 million for the three and six months ended June 30, 2008, respectively. This interest is recorded within net revenues in the accompanying Condensed Consolidated Statements of Operations as related borrowings are utilized to fund the Company’s relocation business where interest is generally earned on such assets. These securitization obligations represent floating rate debt for which the average weighted interest rate was 2.5% and 5.0% for the six months ended June 30, 2009 and 2008, respectively.

Apple Ridge Funding LLC

The Apple Ridge Funding LLC securitization program is a revolving program with a five year term which expires in April 2012. This bankruptcy remote vehicle borrows from one or more commercial paper conduits and uses the proceeds to purchase the relocation assets. This asset backed commercial paper program is guaranteed by the sponsoring financial institution. This program is subject to termination at the end of the five year agreement and, if not renewed, would amortize. The program has restrictive covenants and trigger events, including performance triggers linked to the age and quality of the underlying assets, limits on net credit losses incurred, financial reporting requirements, restrictions on mergers and change of control, and cross defaults under the senior secured credit facility, Unsecured Notes and other material indebtedness. Given the current recession and an increasing number of companies having difficulties meeting their financial obligations, there is a heightened risk relating to compliance with the Apple Ridge securitization performance trigger relating to limits on “net credit losses” (the estimated losses incurred on securitization receivables that have been written off, net of recoveries of such receivables) as net credit losses may not exceed $750 thousand in any one month or $1.5 million in any trailing twelve month period. The Company has not incurred any net credit losses in excess of these thresholds. These trigger events could result in an early amortization of this securitization obligation and termination of any further advances under the program. On June 18, 2009, the Company elected to reduce the available capacity of the Apple Ridge securitization facility by $200 million to $650 million.

U.K. Relocation Funding Limited

The U.K. Relocation Funding Limited securitization program is a revolving program with a five year term which expires in April 2012. This program is subject to termination at the end of the five year agreement and would amortize if not renewed. This program has restrictive covenants, including those relating to financial reporting, mergers and change of control, and events of default. The events of default include non-payment of the indebtedness and cross defaults under the senior secured credit facility, Unsecured Notes and other material indebtedness. Upon an event of default, the lending institution may amortize the indebtedness under the facility and terminate the program.

Kenosia Funding LLC

On January 15, 2009, the Company terminated the Kenosia securitization program in its entirety, repaying the $20 million principal balance then outstanding under the facility. Prior to the termination of this program due to the Company’s decision to reduce the exposure to the purchase of at-risk homes, the Kenosia Funding LLC securitization program was utilized to finance the purchase of at-risk homes and other assets related to those relocations under its fixed fee relocation contracts with certain U.S. Government and corporate clients.

 

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AVAILABLE CAPACITY

As of June 30, 2009, the total capacity, outstanding borrowings and available capacity under the Company’s borrowing arrangements are as follows:

 

     Expiration
Date
   Total
Capacity
   Outstanding
Borrowings
   Available
Capacity

Senior Secured Credit Facility:

           

Revolving credit facility (1)

   April 2013    $ 750    $ 610    $ 4

Term loan facility (2)

   October 2013      3,107      3,107      —  

Fixed Rate Senior Notes (3)

   April 2014      1,700      1,684      —  

Senior Toggle Notes (4)

   April 2014      617      612      —  

Senior Subordinated Notes (5)

   April 2015      875      862      —  

Securitization obligations:

           

Apple Ridge Funding LLC (6)

   April 2012      650      358      292

U.K. Relocation Receivables

           

Funding Limited (6)

   April 2012      165      84      81
                       
      $ 7,864    $ 7,317    $ 377
                       

 

(1) The available capacity under the revolving credit facility is reduced by $136 million of outstanding letters of credit at June 30, 2009. On July 23, 2009, the Company paid the summary judgment for the former parent Credentials litigation which resulted in a reduction of the outstanding letters of credit of $62 million.
(2) Total capacity has been reduced by the quarterly principal payments of 0.25% of the loan balance as required under the term loan facility agreement. The interest rate on the term loan facility was 4.21% at June 30, 2009.
(3) Consists of $1,700 million of 10.50% Senior Notes due 2014, less a discount of $16 million.
(4) Consists of $617 million of 11.00%/11.75% Senior Toggle Notes due 2014, less a discount of $5 million.
(5) Consists of $875 million of 12.375% Senior Subordinated Notes due 2015, less a discount of $13 million.
(6) Available capacity is subject to maintaining sufficient relocation related assets to collateralize these securitization obligations.

 

6. RESTRUCTURING COSTS

2009 Restructuring Program

During the first half of 2009, the Company committed to various initiatives targeted principally at reducing costs and enhancing organizational efficiencies while consolidating existing processes and facilities. The Company currently expects to incur restructuring charges of $62 million in 2009. As of June 30, 2009, the Company has recognized $46 million of this expense.

Restructuring charges by segment for the six months ended June 30, 2009 are as follows:

 

     Opening
Balance
   Expense
Recognized
   Cash
Payments/
Other
Reductions
    Liability
as of
June 30,
2009

Company Owned Real Estate Brokerage Services

   $ —      $ 32    $ (13   $ 19

Real Estate Franchise Services

     —        2      (1     1

Relocation Services

     —        8      (5     3

Title and Settlement Services

     —        2      (1     1

Corporate and Other

     —        2      —          2
                            
   $ —      $ 46    $ (20   $ 26
                            

 

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The table below shows restructuring charges and the corresponding payments and other reductions for the six months ended June 30, 2009 by category:

 

     Personnel
Related
    Facility
Related
    Asset
Impairments
    Total  

Restructuring expense

   $ 15      $ 27      $ 4      $ 46   

Cash payments and other reductions

     (11     (5     (4     (20
                                

Balance at June 30, 2009

   $ 4      $ 22      $ —        $ 26   
                                

2008 Restructuring Program

During 2008, the Company committed to various initiatives targeted principally at reducing costs, enhancing organizational efficiencies and consolidating facilities. The Company recognized $58 million of restructuring expense in 2008 and the remaining liability at December 31, 2008 was $26 million.

The recognition of the 2008 restructuring charge and the corresponding utilization from inception to June 30, 2009 are summarized by category as follows:

 

     Personnel
Related
    Facility
Related
    Asset
Impairments
    Total  

Restructuring expense

   $ 21      $ 30      $ 7      $ 58   

Cash payments and other reductions

     (12     (13     (7     (32
                                

Balance at December 31, 2008

     9        17        —          26   

Cash payments and other reductions (1)

     (8     (6     —          (14
                                

Balance at June 30, 2009

   $ 1      $ 11      $ —        $ 12   
                                

 

(1) During the six months ended June 30, 2009, the Company utilized $13 million of the accrual and reversed $1 million in the Statement of Operations.

2007 Restructuring Program

During 2007, the Company committed to restructuring activities targeted principally at reducing personnel related costs and consolidating facilities. At December 31, 2008, the remaining liability was $8 million. During the six months ended June 30, 2009, the Company utilized $2 million of the accrual and reversed $1 million in the Statement of Operations resulting in a remaining accrual of $5 million.

 

7. STOCK-BASED COMPENSATION

Incentive Equity Awards Granted by Holdings

In connection with the closing of the Transactions on April 10, 2007, Holdings adopted the Domus Holdings Corp. 2007 Stock Incentive Plan (the “Plan”) under which non-qualified stock options, rights to purchase shares of common stock, restricted stock units (“RSUs”) and other awards settleable in, or based upon, common stock may be issued to employees, consultants or directors of the Company or any of its subsidiaries. On November 13, 2007, the Holdings Board authorized an increase in the number of shares of Holdings common stock reserved for issuance under the Plan from 15 million shares to 20 million shares. In conjunction with the closing of the Transactions on April 10, 2007, Holdings granted approximately 11.2 million of stock options in three separate tranches to officers and key employees and approximately 0.4 million of RSUs to senior officers. On November 13, 2007, in connection with the appointment of Henry R. Silverman to non-executive Chairman of the Company, the Holdings Board granted Mr. Silverman an option to purchase 5 million shares of Holdings common stock at $10 per share with a per share fair value of $8.09 which is based upon the fair value of the Company on the date of grant. In general, one half of the grant (the tranche A options) is subject to ratable

 

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vesting over five years, one quarter of the grant (tranche B options) is “cliff” vested upon the achievement of a 20% internal rate of return (“IRR”) target and the remaining 25% of the options (the tranche C options) are “cliff” vested upon the achievement of a 25% IRR target. The realized IRR targets are measured based upon distributions made to the stockholder of Realogy. In addition, at April 10, 2007, 2.3 million shares were purchased under the Plan at fair value by senior management of the Company. During 2008, the Holdings Board granted an aggregate 291,000 stock options and 9,000 RSUs to senior management employees and an independent director of the Company. No stock options were granted in the first half of 2009. As of June 30, 2009, the total number of shares available for future grant under the Plan is approximately 1.5 million shares.

Three tranches of options (“A”, “B” and “C”) were granted to employees and the non-executive Chairman at the estimated fair value at the date of issuance, with the following terms:

 

     Option Tranche
     A    B   C

Weighted average exercise price

   $10.00    $10.00   $10.00

Vesting

   5 years ratable    (1)   (1)

Term of option

   10 years    10 years   10 years

 

(1) Tranche B and C vesting is based upon affiliates of Apollo and co-investors achieving specific IRR targets on their investment in the Company.

The fair value of the Tranche A options is estimated on the date of grant using the Black-Scholes option-pricing model utilizing the following assumptions. Expected volatility is based on historical volatilities of comparable companies. The expected term of the options represents the period of time the options are expected to be outstanding, which is estimated using the simplified method. The risk free interest rate is based on the U.S. Treasury yield curve at the time of the grant.

The fair value of Tranche B and C options is estimated on the date of grant using a lattice based option valuation model. Expected volatility is based on historical volatilities of the same comparable companies. The expected term is estimated based on when certain IRR targets are projected to be met and when the options are expected to be exercised. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant, which corresponds to the expected term of the options.

Restricted Stock Units Granted by Holdings

One-half of the RSUs granted to employees “cliff” vested in October 2008 and the remaining RSUs “cliff” vest in April 2010. One-half of the director RSUs “cliff” vest in August 2009 and the remaining RSUs “cliff” vest in February 2011. Shares were granted at the fair market price of $10 which is the price paid by affiliates of Apollo and co-investors in connection with the purchase of Domus shares on the date the merger was consummated.

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense of $2 million and $4 million related to the incentive equity awards granted by Holdings for the three and six months ended June 30, 2009, respectively, and expense of $2 million and $4 million for the three and six months ended June 30, 2008, respectively.

 

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Equity Award Activity

A summary of option and restricted share activity is presented below (number of shares in millions):

 

     Option Tranche     Restricted
Stock Units
     A     B     C    

Outstanding at December 31, 2008

     7.96        3.96        3.96        0.23

Granted

     —          —          —          —  

Exercised

     —          —          —          —  

Forfeited

     (0.08     (0.04     (0.04     —  
                              

Outstanding at June 30, 2009

     7.88        3.92        3.92        0.23
                              

Exercisable at June 30, 2009

     2.61        —          —          —  
                              

Weighted average remaining contractual term (years)

     8.00        8.00        8.00     

Weighted average grant date fair value per share

   $ 3.67      $ 3.00      $ 2.46      $ 10.00
     Options
Vested
    Weighted
Average
Exercise Price
    Weighted
Average
Remaining
Contractual Term
    Aggregate
Intrinsic
Value

Exercisable at June 30, 2009

     2.61      $ 10.00        7.97 years      $ —  

As of June 30, 2009, there was $20 million of unrecognized compensation cost related to the remaining vesting period of tranche A options and restricted shares under the Plan, and $22 million of unrecognized compensation cost related to tranches B and C options. Unrecognized cost for tranche A and the restricted shares will be recorded in future periods as compensation expense over a weighted average period of approximately 2.9 years, and the unrecognized cost for tranches B and C options will be recorded as compensation expense when an IPO or significant capital transaction is probable of occurring.

 

8. SEPARATION ADJUSTMENTS AND TRANSACTIONS WITH FORMER PARENT AND SUBSIDIARIES

Transfer of Cendant Corporate Liabilities and Issuance of Guarantees to Cendant and Affiliates

Pursuant to the Separation and Distribution Agreement, upon the distribution of the Company’s common stock to Cendant stockholders, the Company entered into certain guarantee commitments with Cendant (pursuant to the assumption of certain liabilities and the obligation to indemnify Cendant, Wyndham Worldwide and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with Cendant and Wyndham Worldwide. These guarantee arrangements primarily relate to certain contingent litigation liabilities, contingent tax liabilities, and other corporate liabilities, of which the Company assumed and is responsible for 62.5% of the contingent liabilities. Regarding the guarantees, if any of the companies responsible for all or a portion of such liabilities were to default in its payment of costs or expenses related to any such liability, the Company would be responsible for a portion of the defaulting party or parties’ obligation. To the extent such recorded liabilities are in excess or are not adequate to cover the ultimate payment amounts, such deficiency or excess will be reflected in the results of operations in future periods.

The majority of the liabilities allocated in 2006 have been classified as due to former parent in the Condensed Consolidated Balance Sheet as the Company is obligated to indemnify Cendant for these contingent liabilities and therefore any payments are typically made to the third party through the former parent. At December 31, 2008, the due to former parent balance was $554 million and the balance was $560 million at June 30, 2009.

The two most significant categories of contingent liabilities included in due to former parent are contingent litigation liabilities and contingent tax liabilities. The amount of contingent litigation liabilities was $68 million

 

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at June 30, 2009 and December 31, 2008. The reserve for the Credentials litigation matter is $66 million of the $68 million of contingent litigation liabilities at June 30, 2009. See Note 9 “Commitments and Contingencies” for the resolution of this matter. The amount of contingent tax liabilities was $365 million and $366 million at June 30, 2009 and December 31, 2008, respectively. The remaining portion of the contingent liabilities include liabilities relating to (i) accrued interest on the contingent tax liabilities, (ii) Cendant’s terminated or divested businesses, and (iii) the residual portion of accruals for Cendant operations.

Tax Receivable Agreement with Wright Express Corporation

As previously disclosed, Cendant and Wright Express Corporation (“WEX”) had entered into a Tax Receivable Agreement (the “TRA”), dated February 22, 2005, among WEX, Cendant and Cendant Mobility Services Corporation (n/k/a Cartus) in connection with Cendant’s disposition of the WEX business in an initial public offering in February 2005. As a result of the initial public offering, the tax basis of WEX’s tangible and intangible assets increased to their fair market value. Pursuant to the TRA, WEX had agreed to pay Cendant 85% of tax savings related to the increased tax basis of the assets and their related amortization over a 15-year period. The actual amount of payments, if any, and the timing of receipt of any payments were variable, depending upon a number of factors, including whether WEX earned sufficient taxable income to realize the full tax benefit of the amortization of its assets. Pursuant to the Separation and Distribution Agreement, dated as of July 27, 2006, by and among Cendant, Realogy, Wyndham Worldwide Corporation and Travelport Inc., the Company acquired from Cendant the right to receive 62.5% of the payments by WEX to Cendant under the TRA.

On June 26, 2009, the Company entered into a Tax Receivable Prepayment Agreement (the “Prepayment Agreement”) with WEX, pursuant to which WEX simultaneously paid the Company the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to the Company under Article III of the TRA. In connection with the Prepayment Agreement, Apollo Investment Fund VI, L.P. and certain affiliated funds executed a guarantee, in favor of WEX, to backstop certain of Realogy’s indemnification obligations under the Prepayment Agreement under certain circumstances.

Transactions with PHH Corporation

In January 2005, Cendant completed the spin-off of its former mortgage, fleet leasing and appraisal businesses in a tax-free distribution of 100% of the common stock of PHH to its stockholders. In connection with the spin-off, the Company entered a venture, PHH Home Loans with PHH for the purpose of originating and selling mortgage loans primarily sourced through the Company’s real estate brokerage and relocation businesses. The Company owns 49.9% of the venture. The Company entered into an agreement with PHH and PHH Home Loans regarding the operation of the venture. The Company also entered into a marketing agreement with PHH whereby PHH is the recommended provider of mortgage products and services promoted by the Company to its independently owned and operated franchisees and a license agreement with PHH whereby PHH Home Loans was granted a license to use certain of the Company’s real estate brand names. The Company also maintains a relocation agreement with PHH whereby PHH outsourced its employee relocation function to the Company and the Company subleases office space to PHH Home Loans.

In connection with these agreements, the Company recorded net revenues of $1 million and $3 million for the three and six months ended June 30, 2009, respectively, and net revenues of $1 million and $3 million for the three and six months ended June 30, 2008, respectively. The Company recorded equity earnings of $8 million and $12 million for the three and six months ended June 30, 2009, respectively, and equity earnings of $1 million and $4 million for the three and six months ended June 30, 2008, respectively. In June 2009, the Company received a $3 million dividend distribution from PHH Home Loans.

Transactions with Affinion Group Holdings, Inc. (an Affiliate of Apollo)

On June 30, 2008, Affinion Group, Inc., a wholly owned subsidiary of Affinion, entered into an Assignment and Assumption Agreement (“AAA”) with Avis Budget Group, Wyndham Worldwide and Realogy. Prior to this

 

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transaction, Avis Budget Group, Wyndham Worldwide and Realogy had provided certain loyalty program-related benefits and services to credit card holders of a major financial institution and received a fee from this financial institution based on spending by the credit card holders. In connection with the transaction, on June 30, 2008, Realogy agreed to pay approximately $8 million in the aggregate (a portion payable at closing and the balance over a three year period) as consideration for Affinion Group, Inc.’s assignment and assumption of Realogy’s proportionate share of the fulfillment obligation relating to the loyalty program points outstanding as of the closing date. The second payment of $2 million was paid in July 2009 leaving a remaining liability of $3 million.

Transactions with Related Parties

The Company has entered into certain transactions in the normal course of business with entities that are owned by affiliates of Apollo. For the six months ended June 30, 2009 and 2008, the Company has recognized revenue related to these transactions of less than $1 million in the aggregate in each period.

 

9. COMMITMENTS AND CONTINGENCIES

Litigation

The Company is involved in claims, legal proceedings and governmental inquiries related to alleged contract disputes, business practices, intellectual property and other commercial, employment and tax matters. Examples of such matters include but are not limited to allegations: (i) concerning a dilution in the value of the Century 21 ® name and goodwill based upon purported changes made to the Century 21 ® system after the Company acquired it in 1995; (ii) contending that the affiliated business relationship between NRT and Title Resource Group is an inherent breach of an agent’s fiduciary duty to the customer; (iii) contending that residential real estate agents engaged by NRT are potentially common law employees instead of independent contractors, and therefore may bring claims against NRT for breach of contract, wrongful discharge and negligent supervision and obtain benefits available to employees under various state statutes; (iv) contending that NRT’s legal assistance program constitutes the illegal sale of insurance; and (v) concerning claims generally against the company owned brokerage operations for negligence or breach of fiduciary duty in connection with the performance of real estate brokerage or other professional services.

In Homestore.com Securities Litigation , this action was settled in July 2008, subject to notice to class members and Court approval. The court granted preliminary approval of the settlement in December 2008 and final approval of the settlement in March 2009. Under the terms of the settlement, Cendant agreed to receive approximately $11.5 million, plus interest but waived its right to the remaining $4 million cash escrow balance. Cendant also waived any right it may have to any settlement proceeds that may be distributed from a future settlement with defendant Stuart Wolf. Under the terms of the Separation Agreement, Realogy is entitled to 100% of the proceeds payable to Cendant under the settlement agreement. On April 27, 2009, Realogy received $11 million of settlement proceeds and will be entitled to an additional $0.8 million when the individual settlements of this action are distributed to all defendants by the plaintiffs.

The foregoing cases are in addition to the former parent contingent liability matters disclosed in Note 8 “Separation Adjustments and Transactions with Former Parent and Subsidiaries,” under which Realogy and Wyndham are responsible for 62.5% and 37.5%, respectively, of any former parent liability. The former parent contingent liabilities include a nine-year old legacy Cendant litigation matter not related to real estate, CSI   Investment et. al. vs. Cendant et. al. (“Credentials Litigation”), in which the district court in September 2007 granted summary judgment on the breach of contract claims asserted by the plaintiffs. The summary judgment award plus interest through June 30, 2009 for Cendant is approximately $98 million and also provides for the

 

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award of attorneys’ fees to the plaintiff. The Company has reserved $66 million for this matter as of June 30, 2009. In 2008, Cendant appealed the summary judgment decision to the Second Circuit Court of Appeals and appellate bonds were posted by Realogy and Wyndham for their respective portions. Plaintiffs also cross appealed the portion of the summary judgment decision in favor of the defendants. On July 1, 2009, following oral argument held on June 26, 2009, the appellate court affirmed the trial court’s decisions, denying the appeals filed by both parties and on July 23, 2009 the summary judgment award was paid in full (including $62 million to satisfy Realogy’s 62.5% of the liability). Promptly thereafter, the court entered a satisfaction of judgment (subject to plaintiffs’ right to petition the lower court for reasonable attorneys’ fees) and cancelled the surety bonds.

The Company believes that it has adequately accrued for such matters as appropriate or, for matters not requiring accrual, believes that it will not have a material adverse effect on its results of operations, financial position or cash flows based on information currently available. However, litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable resolutions could occur. As such, an adverse outcome from such unresolved proceedings for which claims are awarded in excess of the amounts accrued for could be material to the Company with respect to earnings or cash flows in any given reporting period. However, the Company does not believe that the impact of such unresolved litigation should result in a material liability to the Company in relation to its consolidated financial position or liquidity.

Tax Matters

The Company is subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and in recording the related assets and liabilities. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. The Company is regularly under audit by tax authorities whereby the outcome of the audits is uncertain. Accruals for tax contingencies are provided for in accordance with the requirements of FIN 48 and are currently maintained on the Company’s Balance Sheet.

Under the Tax Sharing Agreement with Cendant, Wyndham Worldwide and Travelport, we are responsible for 62.5% of any payments made to the Internal Revenue Service (“IRS”) to settle claims with respect to tax periods ending on or prior to December 31, 2006 that relate to income taxes imposed on Cendant and certain of its subsidiaries; the operations (or former operations) which were determined by Cendant not to relate specifically to the respective businesses of Realogy, Wyndham Worldwide, Avis Budget or Travelport. The IRS is currently examining Cendant’s taxable years 2003 through 2006, during which the Company was included in Cendant’s tax returns. Although the Company and Cendant believe there is appropriate support for the positions taken on its tax returns, the Company and Cendant have recorded liabilities representing the best estimates of the probable loss on certain positions. The Company and Cendant believe that the accruals for tax liabilities are adequate for all open years, based on assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. The Company currently expects that the IRS examination of Cendant’s taxable years 2003 through 2006 may be completed in the first half of 2010. The tax indemnification accruals for Cendant’s tax matters of $365 million at June 30, 2009 are provided for in accordance with SFAS No. 5, “Accounting for Contingencies.”

$500 Million Letter of Credit

On April 26, 2007, the Company established a $500 million standby irrevocable letter of credit for the benefit of Avis Budget Group in accordance with the Separation and Distribution Agreement and a letter agreement among the Company, Wyndham Worldwide and Avis Budget Group relating thereto. The Company

 

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utilized its synthetic letter of credit to satisfy the obligations to post the standby irrevocable letter of credit. The standby irrevocable letter of credit back-stops the Company’s payment obligations with respect to its share of Cendant contingent and other corporate liabilities under the Separation and Distribution Agreement. The stated amount of the standby irrevocable letter of credit is subject to periodic adjustment to increase or decrease to reflect the then current estimate of Cendant contingent and other liabilities.

Apollo Management Fee Agreement

In connection with the Transactions, Apollo entered into a management fee agreement with the Company which allows Apollo and its affiliates to provide certain management consulting services to us through the end of 2016 (subject to possible extension). The agreement may be terminated at any time upon written notice to the Company from Apollo. The Company will pay Apollo an annual management fee for this service up to the sum of (1) the greater of $15 million or 2.0% of the Company’s annual Adjusted EBITDA for the immediately preceding year, plus out of pocket costs and expenses in connection therewith. If Apollo elects to terminate the management fee agreement, as consideration for the termination of Apollo’s services under the agreement and any additional compensation to be received, the Company will agree to pay to Apollo the net present value of the sum of the remaining payments due to Apollo and any payments deferred by Apollo.

In addition, in the absence of an express agreement to the contrary, at the closing of any merger, acquisition, financing and similar transaction with a related transaction or enterprise value equal to or greater than $200 million, Apollo will receive a fee equal to 1% of the aggregate transaction or enterprise value paid to or provided by such entity or its stockholders (including the aggregate value of (x) equity securities, warrants, rights and options acquired or retained, (y) indebtedness acquired, assumed or refinanced and (z) any other consideration or compensation paid in connection with such transaction). The Company will agree to indemnify Apollo and its affiliates and their directors, officers and representatives for potential losses relating to the services to be provided under the management fee agreement.

Escrow and Trust Deposits

As a service to our customers, we administer escrow and trust deposits which represent undisbursed amounts received for settlements of real estate transactions. These escrow and trust deposits totaled approximately $496 million and $240 million at June 30, 2009 and December 31, 2008, respectively. These escrow and trust deposits are not assets of the Company and, therefore, are excluded from the accompanying Condensed Consolidated Balance Sheets. However, we remain contingently liable for the disposition of these deposits.

 

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10. SEGMENT INFORMATION

Presented below are the Company’s operating segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources. Management evaluates the operating results of each of its segments based upon revenue and EBITDA, which is defined as net income (loss) before depreciation and amortization, interest (income) expense, net (other than Relocation Services interest for securitization assets and securitization obligations) and income taxes, each of which is presented in the Company’s Condensed Consolidated Statements of Operations. The Company’s presentation of EBITDA may not be comparable to similar measures used by other companies.

 

     Revenues (a)  
     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
         2009             2008             2009             2008      

Real Estate Franchise Services

   $ 143      $ 185      $ 248      $ 336   

Company Owned Real Estate Brokerage Services

     764        1,061        1,255        1,827   

Relocation Services

     80        124        151        233   

Title and Settlement Services

     88        94        156        175   

Corporate and Other (b)

     (57     (75     (95     (131
                                

Total Company

   $ 1,018      $ 1,389      $ 1,715      $ 2,440   
                                

 

(a) Transactions between segments are eliminated in consolidation. Revenues for the Real Estate Franchise Services segment include intercompany royalties and marketing fees paid by the Company Owned Real Estate Brokerage Services segment of $57 million and $95 million for the three and six months ended June 30, 2009, respectively, and $75 million and $131 million for the three and six months ended June 30, 2008, respectively. Such amounts are eliminated through the Corporate and Other line. Revenues for the Relocation Services segment include $9 million and $15 million of intercompany referral and relocation fees paid by the Company Owned Real Estate Brokerage Services segment during the three and six months ended June 30, 2009, respectively, and $12 million and $20 million during the three and six months ended June 30, 2008, respectively. Such amounts are recorded as contra-revenues by the Company Owned Real Estate Brokerage Services segment. There are no other material inter-segment transactions.
(b) Includes the elimination of transactions between segments.

 

     EBITDA  
     Three Months Ended
June 30, (a)
    Six Months Ended
June 30, (b)
 
         2009             2008             2009             2008      

Real Estate Franchise Services

   $ 85      $ 109      $ 129      $ 188   

Company Owned Real Estate Brokerage Services

     24        26        (60     (33

Relocation Services

     72        23        72        23   

Title and Settlement Services

     12        5        7        3   

Corporate and Other

     (8     (2     (25     (16
                                

Total Company

     185        161        123        165   

Less:

        

Depreciation and amortization

     48        55        99        111   

Interest expense, net

     147        152        291        316   

Income tax expense (benefit)

     5        (19     7        (102
                                

Net loss

   $ (15   $ (27   $ (274   $ (160
                                

 

(a) Includes $10 million of restructuring costs offset by a benefit of $46 million of former parent legacy items (comprised of a benefit of $55 million recorded at Cartus related to Wright Express Corporation partially offset by $9 million of expenses recorded at Corporate) for the three months ended June 30, 2009, compared to $14 million of restructuring costs offset by a benefit of $7 million of former parent legacy items for the three months ended June 30, 2008.
(b) Includes $44 million of restructuring costs offset by a benefit of $42 million of former parent legacy items (comprised of a benefit of $55 million recorded at Cartus related to Wright Express Corporation partially offset by $13 million of expenses recorded at Corporate) for the six months ended June 30, 2009, compared to $23 million and $2 million of restructuring costs and merger costs, respectively, offset by a benefit of $1 million of former parent legacy items for the six months ended June 30, 2008.

 

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11. GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION

The following consolidating financial information presents the Condensed Consolidating Balance Sheets and Condensed Consolidating Statements of Operations and Cash Flows for: (i) Realogy Corporation (the “Parent”); (ii) the guarantor subsidiaries; (iii) the non-guarantor subsidiaries; (iv) elimination entries necessary to consolidate the Parent with the guarantor and non-guarantor subsidiaries; and (v) the Company on a consolidated basis. The guarantor subsidiaries are comprised of 100% owned entities, and guarantee on an unsecured senior subordinated basis the Senior Subordinated Notes and on an unsecured senior basis the Fixed Rate Senior Notes and Senior Toggle Notes. Guarantor and non-guarantor subsidiaries are 100% owned by the Parent, either directly or indirectly. All guarantees are full and unconditional and joint and several. Non-Guarantor entities are comprised of securitization entities, foreign subsidiaries, unconsolidated entities, insurance underwriter subsidiaries and qualified foreign holding corporations. The guarantor and non-guarantor financial information is prepared using the same basis of accounting as the condensed consolidated financial statements.

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2009

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenues

          

Gross commission income

   $ —        $ 746      $ —        $ —        $ 746   

Service revenue

     —          117        44        —          161   

Franchise fees

     —          72        —          —          72   

Other

     —          38        1        —          39   
                                        

Net revenues

     —          973        45        —          1,018   

Expenses

          

Commission and other agent-related costs

     —          477        —          —          477   

Operating

     —          283        30        —          313   

Marketing

     —          44        1        —          45   

General and administrative

     10        41        2        —          53   

Former parent legacy costs (benefit), net

     9        (55     —          —          (46

Restructuring costs

     —          10        —          —          10   

Depreciation and amortization

     2        46        —          —          48   

Interest expense/(income), net

     147        —          —          —          147   

Other (income)/expense, net

     (11     —          —          —          (11

Intercompany transactions

     1        (1     —          —          —     
                                        

Total expenses

     158        845        33        —          1,036   

Income (loss) before income taxes, equity in earnings and noncontrolling interest

     (158     128        12        —          (18

Income tax expense (benefit)

     (66     63        8        —          5   

Equity in earnings of unconsolidated entities

     —          —          (8     —          (8

Equity in (earnings) losses of subsidiaries

     (77     (12     —          89        —     
                                        

Net income (loss)

   $ (15   $ 77      $ 12      $ (89   $ (15
                                        

 

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Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2009

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenues

          

Gross commission income

   $ —        $ 1,217      $ 1      $ —        $ 1,218   

Service revenue

     —          210        85        —          295   

Franchise fees

     —          122        —          —          122   

Other

     —          78        2        —          80   
                                        

Net revenues

     —          1,627        88        —          1,715   

Expenses

          

Commission and other agent-related costs

     —          769        —          —          769   

Operating

     1        581        59        —          641   

Marketing

     —          84        2        —          86   

General and administrative

     20        92        4        —          116   

Former parent legacy costs (benefit), net

     13        (55     —          —          (42

Restructuring costs

     3        41        —          —          44   

Depreciation and amortization

     4        94        1        —          99   

Interest expense/(income), net

     290        1        —          —          291   

Other (income)/expense, net

     (11     —          1        —          (10

Intercompany transactions

     3        (3     —          —          —     
                                        

Total expenses

     323        1,604        67        —          1,994   

Income (loss) before income taxes, equity in earnings and noncontrolling interest

     (323     23        21        —          (279

Income tax expense (benefit)

     (25     20        12        —          7   

Equity in earnings of unconsolidated entities

     —          —          (12     —          (12

Equity in (earnings) losses of subsidiaries

     (24     (21     —          45        —     
                                        

Net income (loss)

   $ (274   $ 24      $ 21      $ (45   $ (274
                                        

 

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Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2008

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenues

          

Gross commission income

   $ —        $ 1,039      $ 1      $ —        $ 1,040   

Service revenue

     —          161        47        —          208   

Franchise fees

     —          91        —          —          91   

Other

     —          50        —          —          50   
                                        

Net revenues

     —          1,341        48        —          1,389   

Expenses

          

Commission and other agent-related costs

     —          685        —          —          685   

Operating

     —          392        30        —          422   

Marketing

     —          59        1        —          60   

General and administrative

     9        43        3        —          55   

Former parent legacy costs (benefit), net

     (7     —          —          —          (7

Restructuring costs

     —          14        —          —          14   

Depreciation and amortization

     2        53        —          —          55   

Interest expense/(income), net

     152        —          —          —          152   

Intercompany transactions

     5        (5     —          —          —     
                                        

Total expenses

     161        1,241        34        —          1,436   

Income (loss) before income taxes, equity in earnings and noncontrolling interest

     (161     100        14        —          (47

Income tax expense (benefit)

     (65     41        5        —          (19

Equity in earnings of unconsolidated entities

     —          —          (1     —          (1

Equity in (earnings) losses of subsidiaries

     (69     (10     —          79        —     
                                        

Net income (loss)

   $ (27   $ 69      $ 10      $ (79   $ (27
                                        

 

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Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2008

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Revenues

          

Gross commission income

   $ —        $ 1,786      $ 2      $ —        $ 1,788   

Service revenue

     —          301        91        —          392   

Franchise fees

     —          164        —          —          164   

Other

     —          100        (4     —          96   
                                        

Net revenues

     —          2,351        89        —          2,440   

Expenses

          

Commission and other agent-related costs

     —          1,171        —          —          1,171   

Operating

     1        789        61        —          851   

Marketing

     —          113        2        —          115   

General and administrative

     16        96        6        —          118   

Former parent legacy costs (benefit), net

     (1     —          —          —          (1

Restructuring costs

     —          23        —          —          23   

Merger costs

     1        1        —          —          2   

Depreciation and amortization

     5        105        1        —          111   

Interest expense/(income), net

     315        1        —          —          316   

Intercompany transactions

     11        (11     —          —          —     
                                        

Total expenses

     348        2,288        70        —          2,706   

Income (loss) before income taxes, equity in earnings and noncontrolling interest

     (348     63        19        —          (266

Income tax expense (benefit)

     (137     27        8        —          (102

Equity in earnings of unconsolidated entities

     —          —          (4     —          (4

Equity in (earnings) losses of subsidiaries

     (51     (15     —          66        —     
                                        

Net income (loss)

   $ (160   $ 51      $ 15      $ (66   $ (160
                                        

 

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Condensed Consolidating Balance Sheet

As of June 30, 2009

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
   Eliminations     Consolidated  

Assets

           

Current assets:

           

Cash and cash equivalents

   $ 312      $ 28      $ 50    $ (2   $ 388   

Trade receivables, net

     —          125        28      (2     151   

Relocation receivables

     —          (9     508      —          499   

Relocation properties held for sale

     —          3        —        —          3   

Deferred income taxes

     (29     56        —        —          27   

Intercompany note receivable

     —          8        18      (26     —     

Due from former parent

     3        —          —        —          3   

Other current assets

     11        74        22      (1     106   
                                       

Total current assets

     297        285        626      (31     1,177   

Property and equipment, net

     26        205        1      —          232   

Goodwill

     —          2,575        —        —          2,575   

Trademarks

     —          732        —        —          732   

Franchise agreements, net

     —          3,009        —        —          3,009   

Other intangibles, net

     —          467        —        —          467   

Other non-current assets

     114        75        44      —          233   

Investment in subsidiaries

     7,875        118        —        (7,993     —     
                                       

Total assets

   $ 8,312      $ 7,466      $ 671    $ (8,024   $ 8,425   
                                       

Liabilities and Stockholder’s Equity (Deficit)

           

Current liabilities:

           

Accounts payable

   $ 15      $ 121      $ 9    $ (3   $ 142   

Securitization obligations

     —          —          442      —          442   

Intercompany note payable

     —          18        8      (26     —     

Due to former parent

     560        —          —        —          560   

Revolving credit facility and current portion of long term debt

     642        —          —        —          642   

Accrued expenses and other current liabilities

     171        297        26      (2     492   

Intercompany payables

     1,451        (1,507     56      —          —     
                                       

Total current liabilities

     2,839        (1,071     541      (31     2,278   

Long-term debt

     6,233        —          —        —          6,233   

Deferred income taxes

     (563     1,330        —        —          767   

Other non-current liabilities

     93        47        12      —          152   

Intercompany liabilities

     715        (715     —        —          —     
                                       

Total liabilities

     9,317        (409     553      (31     9,430   
                                       

Total stockholder’s equity (deficit)

     (1,005     7,875        118      (7,993     (1,005
                                       

Total liabilities and stockholder’s equity (deficit)

   $ 8,312      $ 7,466      $ 671    $ (8,024   $ 8,425   
                                       

 

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Condensed Consolidating Balance Sheet

As of December 31, 2008

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
   Eliminations     Consolidated  

Assets

           

Current assets:

           

Cash and cash equivalents

   $ 378      $ 26      $ 36    $ (3   $ 437   

Trade receivables, net

     —          110        30      —          140   

Relocation receivables

     —          (36     801      —          765   

Relocation properties held for sale

     —          (13     35      —          22   

Deferred income taxes

     36        56        —        —          92   

Intercompany note receivable

     —          50        18      (68     —     

Due from former parent

     3        —          —        —          3   

Other current assets

     12        83        114      (97     112   
                                       

Total current assets

     429        276        1,034      (168     1,571   

Property and equipment, net

     29        245        2      —          276   

Goodwill

     —          2,572        —        —          2,572   

Trademarks

     —          732        —        —          732   

Franchise agreements, net

     —          3,043        —        —          3,043   

Other intangibles, net

     —          480        —        —          480   

Other non-current assets

     126        78        34      —          238   

Investment in subsidiaries

     7,850        151        —        (8,001     —     
                                       

Total assets

   $ 8,434      $ 7,577      $ 1,070    $ (8,169   $ 8,912   
                                       

Liabilities and Stockholder’s Equity (Deficit)

           

Current liabilities:

           

Accounts payable

   $ 14      $ 209      $ 10    $ (100   $ 133   

Securitization obligations

     —          —          703      —          703   

Intercompany note payable

     —          18        50      (68     —     

Due to former parent

     554        —          —        —          554   

Revolving credit facility and current portion of long term debt

     547        —          —        —          547   

Accrued expenses and other current liabilities

     164        320        29      —          513   

Intercompany payables

     1,300        (1,416     116      —          —     
                                       

Total current liabilities

     2,579        (869     908      (168     2,450   

Long-term debt

     6,213        —          —        —          6,213   

Deferred income taxes

     (428     1,254        —        —          826   

Other non-current liabilities

     98        54        11      —          163   

Intercompany liabilities

     712        (712     —        —          —     
                                       

Total liabilities

     9,174        (273     919      (168     9,652   
                                       

Total stockholder’s equity (deficit)

     (740     7,850        151      (8,001     (740
                                       

Total liabilities and stockholder’s equity (deficit)

   $ 8,434      $ 7,577      $ 1,070    $ (8,169   $ 8,912   
                                       

 

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Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2009

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Net cash provided by (used in) operating activities

   $ (249   $ (19   $ 459      $ (19   $ 172   

Investing activities

          

Property and equipment additions

     (1     (14     —          —          (15

Net assets acquired (net of cash acquired) and acquisition-related payments

     —          (4     —          —          (4

Change in restricted cash

     —          —          (3     —          (3

Intercompany dividend

     —          47        —          (47     —     

Intercompany note receivable

     —          42        —          (42     —     

Other, net

     —          —          —          —          —     
                                        

Net cash provided by (used in) investing activities

     (1     71        (3     (89     (22

Financing activities

          

Net change in revolving credit facility

     95        —          —          —          95   

Payments made for term loan facility

     (16     —          —          —          (16

Net change in securitization obligations

     —          —          (274     —          (274

Intercompany dividend

     —          —          (67     67        —     

Intercompany note payable

     —          —          (42     42        —     

Intercompany transactions

     106        (46     (60     —          —     

Other, net

     (1     (4     (2     —          (7
                                        

Net cash provided by (used in) financing activities

     184        (50     (445     109        (202
                                        

Effect of changes in exchange rates on cash and cash equivalents

     —          —          3        —          3   
                                        

Net (decrease) increase in cash and cash equivalents

     (66     2        14        1        (49

Cash and cash equivalents, beginning of period

     378        26        36        (3     437   
                                        

Cash and cash equivalents, end of period

   $ 312      $ 28      $ 50      $ (2   $ 388   
                                        

 

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Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2008

(in millions)

 

     Parent
Company
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Consolidated  

Net cash provided by (used in) operating activities

   $ (362   $ 158      $ 110      $ 20      $ (74

Investing activities

          

Property and equipment additions

     (1     (22     (1     —          (24

Proceeds from the sale of property and equipment

     —          7        —          —          7   

Proceeds related to corporate aircraft sale leaseback and termination

     12        —          —          —          12   

Net assets acquired (net of cash acquired) and acquisition-related payments

     —          (9     —          —          (9

Investment in unconsolidated entities

     —          (2     (2     —          (4

Change in restricted cash

     —          —          3        —          3   

Intercompany note receivable

     —          (11     (17     28        —     

Other, net

     —          —          5        —          5   
                                        

Net cash provided by (used in) investing activities

     11        (37     (12     28        (10

Financing activities

          

Net change in revolving credit facility

     205        —          —          —          205   

Payments made for term loan facility

     (16     —          —          —          (16

Note payment for 2006 acquisition of Texas American Title Company

     —          (10     —          —          (10

Net change in securitization obligations

     —          —          (116     —          (116

Intercompany dividend

     —          —          (12     12        —     

Intercompany note payable

     —          17        11        (28     —     

Intercompany transactions

     48        (72     24        —          —     

Other, net

     (2     (6     —          —          (8
                                        

Net cash provided by (used in) financing activities

     235        (71     (93     (16     55   
                                        

Effect of changes in exchange rates on cash and cash equivalents

     —          —          —          —          —     
                                        

Net (decrease) increase in cash and cash equivalents

     (116     50        5        32        (29

Cash and cash equivalents, beginning of period

     120        56        36        (59     153   
                                        

Cash and cash equivalents, end of period

   $ 4      $ 106      $ 41      $ (27   $ 124   
                                        

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with our Consolidated and Combined Financial Statements and accompanying Notes included in the 2008 Form 10-K. Unless otherwise noted, all dollar amounts are in millions and those relating to our results of operations are presented before income taxes. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Forward-Looking Statements” in this report and “Forward-Looking Statements” and “Risk Factors” in our 2008 Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking statements.

Except as otherwise indicated or unless the context otherwise requires, the terms “Realogy Corporation,” “Realogy,” “we,” “us,” “our,” “our company” and the “Company” refer to Realogy Corporation and its consolidated subsidiaries. “Cendant Corporation” and “Cendant” refer to Cendant Corporation, which changed its name to Avis Budget Group, Inc. in August 2006.

OVERVIEW

We are a global provider of real estate and relocation services and report our operations in the following four segments:

 

   

Real Estate Franchise Services (known as Realogy Franchise Group or RFG)—franchises the Century 21 ® , Coldwell Banker ® , ERA ® , Sotheby’s International Realty ® , Coldwell Banker Commercial ® and Better Homes and Gardens ® Real Estate brand names. We launched the Better Homes and Gardens ® Real Estate brand in July 2008. As of June 30, 2009, we had approximately 14,400 franchised and company owned offices and 270,000 sales associates operating under our brands in the U.S. and 92 other countries and territories around the world, which included approximately 790 of our company owned and operated brokerage offices with approximately 48,000 sales associates.

 

   

Company Owned Real Estate Brokerage Services (known as NRT)—operates a full-service real estate brokerage business principally under the Coldwell Banker ® , ERA ® , Corcoran Group ® and Sotheby’s International Realty ® brand names. In addition, we operate a large independent real estate owned (“REO”) residential asset manager, which focuses on bank-owned properties.

 

   

Relocation Services (known as Cartus)—primarily offers clients employee relocation services such as home sale assistance, home finding and other destination services, expense processing, relocation policy counseling and other consulting services, arranging household goods moving services, visa and immigration support, intercultural and language training and group move management services.

 

   

Title and Settlement Services (known as Title Resource Group or TRG)—provides full-service title, settlement and vendor management services to real estate companies, affinity groups, corporations and financial institutions with many of these services provided in connection with the Company’s real estate brokerage and relocation services business.

As discussed under the heading “Industry Trends,” the domestic residential real estate market is in a significant and lengthy downturn. As a result, our results of operations during the past three years have been materially adversely affected. Although cyclical patterns are typical in the housing industry, the depth and length of the current downturn has proved exceedingly difficult to predict. Despite the current downturn, we believe that the housing market will benefit over the long term from expected positive long-term demographic trends, such as population growth and increases in the number of U.S. households, as well as economic fundamentals, such as rising gross domestic product, among others.

 

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Merger Agreement with Affiliates of Apollo Management VI, L.P.

In December 2006, the Company entered into an agreement and plan of merger (the “Merger”) with Domus Holdings Corp. (“Holdings”) and Domus Acquisition Corp., which are affiliates of Apollo Management VI, L.P., an entity affiliated with Apollo Management, L.P. (“Apollo”). The Merger was consummated on April 10, 2007. As a result of the Merger, Realogy became an indirect wholly owned subsidiary of Holdings.

The Company incurred substantial indebtedness in connection with the Merger and related transactions. See Note 5 “Short and Long Term Debt” for additional information on the indebtedness incurred related to the Merger. Our high level of debt limits our investment and acquisition opportunities and forces us to manage our business very cautiously to meet our debt service obligations while maintaining adequate cash for operational purposes. A continuing industry or economic downturn will put even greater pressure on the Company and increase the difficulties we face in managing our substantial debt as discussed more fully under “Risk Factors” in our 2008 Form 10-K.

Industry Trends

Our businesses compete primarily in the domestic residential real estate market, which currently is in a significant and prolonged downturn that initially began in the second half of 2005. Leading up to 2005, home prices and the number of homesale transactions rose rapidly in the first half of the decade due to a combination of factors, including (1) increased owner-occupant demand for larger and more expensive homes made possible by unusually favorable financing terms for both prime and sub-prime borrowers, (2) low interest rates, (3) record appreciation in housing prices driven partially by investment speculation, (4) the growth of the mortgage-backed securities market as an alternative source of capital to the mortgage market, and (5) high credit ratings for mortgage backed securities despite increasing inclusion of subprime loans made to buyers relying upon continuing home price appreciation rather than more traditional underwriting standards.

As housing prices rose even higher, the number of U.S. homesale transactions first slowed, then began decreasing in 2006. This declining trend has continued from 2006 through the present period. In certain locations, the number of homesale transactions has fallen far more dramatically than for the country as a whole — the hardest hit areas have been those areas that had experienced the greatest speculation and year over year price appreciation. The overall slowdown in transaction activity has caused a buildup of large inventories of housing and an increase in short sale and foreclosure activity. These factors combined with the contraction in the mortgage financing market have contributed to heightened buyer caution regarding timing and pricing. The result has been downward pressure on home prices from 2007 through the present period.

The housing market is also being significantly impacted by consumer sentiment about the overall state of the economy, particularly mounting consumer anxiety over negative economic growth and rising unemployment. The deteriorating conditions in the job market and consumer confidence have caused a further decrease in homesale transactions and more downward pressure on homesale prices. According to the Conference Board, a New York based industry research group, consumer confidence index decreased from 90.6 in December 2007 to 50.4 in June 2008 and then fell further to an all time low of 25.0 in February 2009. The consumer confidence index rose to 54.9 in May 2009 and since then has decreased slightly to 46.6 as of July 2009.

A continued decline in homesale transactions or prices due to some or all of the factors discussed above will adversely affect our revenue and profitability. Leading into and during the first half of 2009, we believe there was a significant shift in homesale transaction activity to the low and mid-price points of the housing market relative to the high end. This is in contrast to the first half of 2008 when the low and mid-price point homesale activity was declining more significantly than the high end. The net effect of this shift caused a more significant reduction in the year over year average homesale price, particularly in our Company Owned Real Estate Brokerage Services business. Although cyclical patterns are typical in the housing industry, the depth and length of the current downturn has proven exceedingly difficult to predict.

 

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Many of the same negative trends impacting our businesses that derive revenue from homesales also impact our relocation services business which is a global provider of outsourced employee relocation services. In addition to general residential housing trends, key drivers of our relocation services business are corporate spending and employment trends which have been negatively impacted by the negative economic growth and rising unemployment.

Homesales

Existing homesale volume has continued to decline from 2006 through 2008 and is expected to continue to decline through 2009 as reflected in the table below. Our recent financial results confirm that this negative trend continued into the first half of 2009 as evidenced by homesale side declines in our Real Estate Franchise Services and Company Owned Real Estate Brokerage Services businesses. As it relates to our Real Estate Franchise Services business in particular, excluding the adverse impact of the loss of sides from terminated franchisees partially offset by the addition of sides from new franchisees, our sides declined approximately 8% and 11% during the three months ended June 30, 2009 and March 31, 2009, respectively.

 

     2009 vs. 2008              
     Full Year
Forecasted
    Second
Quarter
    First
Quarter
    2008 vs. 2007
Full Year
    2007 vs. 2006
Full Year
 

Number of Homesales

          

Industry

          

NAR (a)

   (— %)    (3 %)    (7 %)    (13 %)    (13 %) 

FNMA (a)

   (2 %)    (5 %)    (7 %)    (13 %)    (13 %) 

Realogy

          

Real Estate Franchise Services

     (8 %)    (15 %)    (18 %)    (19 %) 

Company Owned Real Estate Brokerage Services

     (9 %)    (12 %)    (16 %)    (17 %) 

 

(a) Existing homesale data is as of August 2009 for NAR and July 2009 for FNMA.

For 2010 compared to 2009, NAR as of August 2009 and FNMA as of July 2009 forecast an increase in existing homesale transactions of 5% and 11%, respectively.

Existing homesale volume was reported by NAR to be approximately 4.9 million homes for 2008 compared to 5.7 million homes in 2007 and the high of 7.1 million homes in 2005. NAR, as of August 2009, is forecasting that 2009 existing homesales will remain at approximately 4.9 million homes, while FNMA, as of July 2009, is forecasting that 2009 existing homesales will decline to 4.8 million homes.

 

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Homesale Price

Based upon information published by NAR, the national median price of existing homes sold increased from 2001 to 2005 at a compound annual growth rate, or CAGR, of 7.3% compared to a CAGR of 3.0% from 1972 to 2000. According to NAR, the rate of increase slowed significantly in 2006 and declined for the first time since 1972 in 2007 and 2008 as reflected in the table below. NAR and FNMA expect that these declines will continue in 2009 and our recent financial results confirm that this declining pricing trend continued in the first half of 2009 as evidenced by homesale price declines in our Real Estate Franchise Services and Company Owned Real Estate Brokerage Services businesses. The decrease in average homesale price for the Company Owned Real Estate Brokerage Services segment is being impacted by a significant increase in REO activities as well as a meaningful shift in the mix and volume of its overall homesale activity from higher price point areas to lower price point areas.

 

     2009 vs. 2008              
     Full Year
Forecasted
    Second
Quarter
    First
Quarter
    2008 vs. 2007
Full Year
    2007 vs. 2006
Full Year
 

Price of Homes

          

Industry

          

NAR (a)

   (12 %)    (16 %)    (16 %)    (10 %)    (1 %) 

FNMA (a)

   (13 %)    (16 %)    (16 %)    (10 %)    (1 %) 

Realogy

          

Real Estate Franchise Services

     (15 %)    (15 %)    (7 %)    (1 %) 

Company Owned Real Estate Brokerage Services

     (24 %)    (32 %)    (10 %)    8

 

(a) Existing homesale price data is for median price and is as of August 2009 for NAR and July 2009 for FNMA.

For 2010 compared to 2009, NAR, as of August 2009, forecasts an increase in median homesale price of 3% while FNMA, as of July 2009, forecasts a 7% decrease.

***

While NAR and FNMA are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and FNMA because they use survey data in their historical reports and forecasting models whereas we report based on actual results. In addition to the differences in calculation methodologies, there are geographical differences and concentrations in the markets in which we operate versus the national market. For instance, comparability is impaired due to NAR’s utilization of seasonally adjusted annualized rates whereas we report actual period over period changes and their use of median price for their forecasts compared to our average price. Further, differences in weighting by state may contribute to significant statistical variations.

Home Inventory

According to NAR, the number of existing homes for sale decreased from 4.0 million homes at December 2007 to 3.7 million homes at December 2008. The number of existing homes for sale in June 2009 was 3.8 million homes which represents a seasonally adjusted 9.4 months of supply. This high level of supply could continue to add downward pressure on the price of existing homesales.

Housing Affordability Index

According to NAR, the housing affordability index had continued to improve as a result of the homesale price declines in 2007, 2008 and the first half of 2009. An index above 100 signifies that a family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming

 

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a 20 percent down payment. The monthly housing affordability index improved to 159 for the month of June 2009 from 123 for the month of June 2008. This housing affordability improvement could favorably impact a housing recovery.

Other Factors

Interest rates continue to be at historically low levels. According to Freddie Mac, interest rates on commitments for fixed-rate first mortgages have decreased from 6.0% in 2008 to 5.4% for the month of June 2009. However, mortgage underwriting standards remain conservative, thereby mitigating some of the favorable impact of lower interest rates.

During the current downturn in the residential real estate market, certain of our franchisees have experienced operating difficulties. As a result, we have had to record additional bad debt expense and development advance note reserve expense in the first half of 2009. In addition, we have had to terminate franchisees more frequently due to non-reporting and non-payment. We continue to actively monitor the collectability of receivables and notes from our franchisees due to the current state of the housing market and this assessment could result in an increase in our allowance for doubtful accounts and reserve for development advance notes in the future.

The real estate industry generally benefits from rising home prices and increased volume of homesales and conversely is harmed by falling prices and falling volume of homesales. The business also is affected by interest rate volatility. Also, tightened mortgage underwriting criteria limits many customers’ ability to qualify for a mortgage. If mortgage rates fall or remain low, the number of homesale transactions may increase as homeowners choose to move because financing appears affordable or renters decide to purchase a home for the first time. If inflation concerns become more prevalent and interest rates rise, the number of homesale transactions may decrease as potential home sellers choose to stay with their current mortgage and potential home buyers choose to rent rather than pay higher mortgage rates.

We believe that long-term demand for housing and the growth of our industry is primarily driven by affordability, the economic health of the domestic economy, positive demographic trends such as population growth, interest rate trends and locally based dynamics such as housing demand relative to housing supply. Although we see improvement in affordability and a slight lessening in the overhang of housing inventory, we are not certain when credit markets and the job market will return to a more normal state or the general economy will improve. Consequently, we cannot predict when the markets and related economic forces will return the residential real estate industry to a growth period.

Key Drivers of Our Businesses

Within our Real Estate Franchise Services segment and our Company Owned Real Estate Brokerage Services segment, we measure operating performance using the following key operating statistics: (i) closed homesale sides, which represents either the “buy” side or the “sell” side of a homesale transaction, (ii) average homesale price, which represents the average selling price of closed homesale transactions, (iii) average homesale broker commission rate, which represents the average commission rate earned on either the “buy” side or “sell” side of a homesale transaction, and (iv) in our Company Owned Real Estate Brokerage Services segment, gross commission per side which represents the average commission we earn before expenses. Of these measures, closed homesale sides, average homesale price and average homesale broker commission rate are the most critical to our business and therefore have the greatest impact on our operating results.

Prior to 2006, the average homesale broker commission rate had been declining several basis points per year, the effect of which was, prior to 2006, more than offset by increases in homesale prices. From 2006 through the first half of 2009, the average homesale broker commission rate our franchisees receive from their customers and we receive from our customers has increased; however, we expect that, over the long term, the modestly declining trend in average brokerage commission rates will resume.

 

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Our Real Estate Franchise Services segment is impacted by the net effective royalty rate, which represents the average percentage of our franchisees’ commission revenues paid to our Real Estate Franchise Services segment as a royalty per side. Our Company Owned Real Estate Brokerage Services segment has a significant concentration of real estate brokerage offices and transactions in geographic areas where home prices tend to be at the higher end of the U.S. real estate market, particularly the east and west coasts, while our Real Estate Franchise Services segment has franchised offices that are more widely dispersed across the United States. Accordingly, operating results and homesale statistics may differ between our Company Owned Real Estate Brokerage Services segment and our Real Estate Franchise Services segment.

Within our Relocation Services segment, we measure operating performance using the following key operating statistics: (i) initiations, which represent the total number of transferees we serve, and (ii) referrals, which represent the number of referrals from which we earned revenue from real estate brokers. In our Title and Settlement Services segment, operating performance is evaluated using the following key metrics: (i) purchase title and closing units, which represents the number of title and closing units processed as a result of home purchases, (ii) refinance title and closing units, which represents the number of title and closing units processed as a result of homeowners refinancing their home loans, and (iii) average price per closing unit, which represents the average fee we earn on purchase title and refinancing title sides.

The sustained decline in existing homesales and sustained decline in home prices has and could continue to adversely affect our results of operations by reducing the royalties we receive from our franchisees and company owned brokerages, reducing the commissions our company owned brokerage operations earn, reducing the demand for our title and settlement services and reducing the referral fees earned by our relocation services business. Our results could also be negatively affected by a decline in commission rates charged by brokers.

The following table presents our drivers for the three and six months ended June 30, 2009 and 2008. See “Results of Operations” for a discussion as to how the key drivers affected our business for the periods presented.

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2009     2008     % Change     2009     2008     % Change  

Real Estate Franchise Services (a)

            

Closed homesale sides

     259,476        282,333      (8 %)      437,708        491,646      (11 %) 

Average homesale price

   $ 188,489      $ 221,351      (15 %)    $ 186,199      $ 218,351      (15 %) 

Average homesale broker commission rate

     2.57     2.52   bps      2.57     2.51   bps 

Net effective royalty rate

     5.10     5.10   bps      5.12     5.08   bps 

Royalty per side

   $ 256      $ 294      (13 %)    $ 255      $ 289      (12 %) 

Company Owned Real Estate Brokerage Services

  

         

Closed homesale sides

     72,362        79,823      (9 %)      119,861        133,871      (10 %) 

Average homesale price

   $ 378,870      $ 497,203      (24 %)    $ 369,743      $ 509,059      (27 %) 

Average homesale broker commission rate

     2.52     2.48   bps      2.53     2.47   bps 

Gross commission income per side

   $ 10,292      $ 12,981      (21 %)    $ 10,140      $ 13,322      (24 %) 

Relocation Services

            

Initiations

     33,074        42,439      (22 %)      60,751        75,194      (19 %) 

Referrals

     17,349        20,943      (17 %)      28,068        34,875      (20 %) 

Title and Settlement Services

            

Purchase title and closing units

     28,148        32,938      (15 %)      46,959        56,947      (18 %) 

Refinance title and closing units

     22,693        10,504      116     42,625        21,775      96

Average price per closing unit

   $ 1,255      $ 1,535      (18 %)    $ 1,236      $ 1,485      (17 %) 

 

(a) Includes all franchisees except for our Company Owned Real Estate Brokerage Services segment.

 

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RESULTS OF OPERATIONS

Discussed below are our condensed consolidated results of operations and the results of operations for each of our reportable segments. The reportable segments presented below represent our operating segments for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon revenue and EBITDA. Our presentation of EBITDA may not be comparable to similarly-titled measures used by other companies. As discussed above, under “Industry Trends,” our results of operations are significantly impacted by industry and economic factors that are beyond our control.

Three Months Ended June 30, 2009 vs. Three Months Ended June 30, 2008

Our consolidated results comprised the following:

 

     Three Months Ended
June 30,
 
     2009     2008     Change  

Net revenues

   $ 1,018      $ 1,389      $ (371

Total expenses (1)

     1,036        1,436        (400
                        

Loss before income taxes, equity in earnings and noncontrolling interest

     (18     (47     29   

Income tax expense (benefit)

     5        (19     24   

Equity in earnings of unconsolidated entities

     (8     (1     (7
                        

Net loss

   $ (15   $ (27   $ 12   
                        

 

(1) Total expenses for the three months ended June 30, 2009 include $10 million of restructuring costs offset by a benefit of $46 million of former parent legacy items (comprised of a benefit of $55 million recorded at Cartus related to Wright Express Corporation partially offset by $9 million of expenses recorded at Corporate). Total expenses for the three months ended June 30, 2008 include $14 million of restructuring costs offset by a benefit of $7 million of former parent legacy items.

Net revenues decreased $371 million (27%) for the second quarter of 2009 compared with the second quarter of 2008 principally due to a decrease in revenues across all of our operating segments, primarily due to decreases in transaction sides volume and the average price of homes sold.

Total expenses decreased $400 million (28%) primarily due to the following:

 

   

a decrease of $208 million of commission expenses paid to real estate agents due to lower gross commission income and changes in the average homesale broker commission rates;

 

   

a decrease of $124 million in operating and marketing expenses primarily due to restructuring activities implemented in 2008 and the first half of 2009 and the exit of the at-risk government business;

 

   

a decrease in interest expense of $5 million as a result of decreasing interest rates; and

 

   

an incremental increase of $39 million in former parent legacy benefit items primarily as a result of a $49 million tax prepayment with Wright Express Corporation.

Our income tax expense for the three months ended June 30, 2009 was $5 million. The components of our income tax expense are as follows:

 

   

no U.S. Federal income tax benefit was recognized for the current period losses due to a valuation allowance for domestic operations;

 

   

income tax expense was recognized for foreign and state income taxes for certain jurisdictions; and

 

   

income tax expense was recorded for an increase in deferred tax liabilities associated with indefinite-lived intangible assets.

We currently forecast that the 2009 income tax expense will be approximately $17 million.

 

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Following is a more detailed discussion of the results of each of our reportable segments during the three months ended June 30:

 

     Revenues     EBITDA (b)     Margin
     2009     2008     %
Change
    2009     2008     %
Change
    2009     2008     Change

Real Estate Franchise Services

   $ 143      $ 185      (23 %)    $ 85      $ 109      (22 %)    59   59   —  

Company Owned Real Estate Brokerage Services

     764        1,061      (28     24        26      (8   3      2      1

Relocation Services

     80        124      (35     72        23      213      90      19      71

Title and Settlement Services

     88        94      (6     12        5      140      14      5      9

Corporate and Other (a)

     (57     (75   *        (8     (2   *         
                                                  

Total Company

   $ 1,018      $ 1,389      (27 %)    $ 185      $ 161      15   18   12   6
                                      

Less: Depreciation and amortization

           48        55           

  Interest expense, net

           147        152           

  Income tax expense (benefit)

           5        (19        
                              

Net loss

         $ (15   $ (27        
                              

 

(*) not meaningful
(a) Includes unallocated corporate overhead and the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by our Company Owned Real Estate Brokerage Services segment of $57 million and $75 million during the three months ended June 30, 2009 and 2008, respectively.
(b) Includes $10 million of restructuring costs offset by a benefit of $46 million of former parent legacy items (comprised of a benefit of $55 million recorded at Cartus related to Wright Express Corporation partially offset by $9 million of expenses recorded at Corporate) for the three months ended June 30, 2009, compared to $14 million of restructuring costs offset by a benefit of $7 million of former parent legacy items for the three months ended June 30, 2008.

As described in the aforementioned table, EBITDA margin for “Total Company” expressed as a percentage of revenues increased six percentage points for the three months ended June 30, 2009 compared to the same period in 2008 primarily due to an increase in EBITDA at the Relocation Services segment as discussed below.

On a segment basis, the Real Estate Franchise Services segment margin remained consistent at 59% compared to the prior period. The three months ended June 30, 2009 reflected a decrease in the number of homesale transactions and a decrease in average homesale price offset by an increase in the average homesale broker commission rate and the impact of cost saving initiatives. The Company Owned Real Estate Brokerage Services segment margin increased one percentage point to 3% from 2% in the comparable prior period. The three months ended June 30, 2009 reflected a decrease in the number of homesale transactions and a decrease in the average homesale price offset by lower operating expenses primarily as a result of restructuring and cost saving activities. The Relocation Services segment margin increased 71 percentage points to 90% from 19% in the comparable prior period primarily due to a $49 million net tax receivable prepayment from Wright Express Corporation. The Title and Settlement Services segment margin increased nine percentage points to 14% from 5% in the comparable prior period. The increase in margin profitability was mainly attributable to lower volume related expenses as well as lower cost of sales as a result of cost savings initiatives.

The Corporate and Other EBITDA for the three months ended June 30, 2009 was a negative $8 million compared to a negative $2 million in the same period in 2008. The decrease in EBITDA was primarily due to $11 million of litigation proceeds offset by a $17 million reduction in legacy benefits which occurred in the prior period primarily comprised of proceeds of $13 million related to the Shelton legal matter and a benefit of $2 million related to adjustments to legacy accruals.

 

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Real Estate Franchise Services

Revenues decreased $42 million to $143 million and EBITDA decreased $24 million to $85 million for the three months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenue was primarily driven by an $18 million or 21% decrease in third-party domestic franchisees royalty revenue due to an 8% decrease in the number of homesale transactions from our third-party franchisees and a 15% decrease in the average homesale price partially offset by a higher average homesale broker commission rate. Revenue from foreign franchisees decreased $2 million. In addition, marketing revenue and related marketing expenses decreased $2 million and $5 million, respectively, due to lower royalty volume and cost cutting initiatives in the second quarter of 2009.

The decrease in revenue was also attributable to a $17 million decrease in royalties received from our Company Owned Real Estate Brokerage Services segment which pays royalties to our Real Estate Franchise Services segment. These intercompany royalties of $52 million and $69 million during the second quarter of 2009 and 2008, respectively, are eliminated in consolidation. See “Company Owned Real Estate Brokerage Services” for a discussion as to the drivers related to this period over period revenue decrease for Real Estate Franchise Services.

The decrease in EBITDA was principally due to the reduction in revenues discussed above partially offset by a $4 million reduction in employee related costs and benefits, a decrease of $4 million in other operating expenses, primarily the result of cost saving activities and a $3 million decrease in bad debt expense.

Company Owned Real Estate Brokerage Services

Revenues decreased $297 million to $764 million and EBITDA decreased $2 million to $24 million for the three months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenues, excluding REO revenues, of $288 million was substantially comprised of reduced commission income earned on homesale transactions which was primarily driven by a 9% decline in the number of homesale transactions and a 24% decrease in the average price of homes sold partially offset by an increased average homesale broker commission rate. We believe the 9% decline in homesale transactions is reflective of industry trends in the markets we serve – geographic areas where homesale prices tend to be at the higher end of the U.S. real estate market. The significant decrease in the average homesale price of 24% is the result of a continuation of the shift in the mix and volume of its overall homesale activity from higher price point areas to lower price point areas as well as a significant level of foreclosure and short sale activity in certain markets. Separately, revenues from our REO asset management company decreased by $8 million to $16 million in the three months ended June 30, 2009 when compared to the same period in 2008. Our REO operations facilitate the maintenance and sale of foreclosed homes on behalf of lenders and the profitability of this business tends to be countercyclical to the overall state of the housing market.

EBITDA decreased $2 million for the three months ended June 30, 2009 compared to the three months ended June 30, 2008 due to the decrease in revenues discussed above, mostly offset by:

 

   

a decrease of $208 million in commission expenses paid to real estate agents as a result of the reduction in revenue and an improvement in the commission split rate;

 

   

a decrease of $17 million in royalties paid to our real estate franchise services segment, principally as a result of the reduction in revenues earned on homesale transactions;

 

   

a decrease in marketing costs of $11 million due to a shift to technology media marketing and other cost reduction initiatives;

 

   

an $8 million decrease in restructuring expenses;

 

   

a $6 million reduction in certain estimated business acquisition liabilities;

 

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a decrease of $37 million in other operating expenses, net of inflation primarily due to restructuring, cost saving activities and reduced employee costs; and

 

   

an increase of $7 million in equity in earnings of unconsolidated entities related to our investment in PHH Home Loans.

To counteract the revenue decline, the Company has implemented significant cost saving measures which have substantially reduced fixed costs associated with operating a full service real estate brokerage business. The realization of these cost saving measures has been able to substantially offset the overall decline in revenues for the current period.

Relocation Services

Revenues decreased $44 million to $80 million and EBITDA increased $49 million to $72 million for the three months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenues was primarily driven by:

 

   

a decrease of $27 million in at-risk revenue mainly due to the elimination of the government portion of our at-risk business;

 

   

a $13 million decrease in referral fee revenue primarily due to lower domestic transaction volume as a result of lower homesale authorization volume as well as decreased average home values; and

 

   

a $4 million decrease in relocation service fee revenues primarily due to lower domestic transaction volume;

partially offset by:

 

   

$3 million of incremental international revenue due to increased transaction volume.

EBITDA increased for the three months ended June 30, 2009 compared with the same period in 2008 due to $6 million of recurring tax receivable payments from Wright Express Corporation (“WEX”) as well as a net $49 million tax receivable prepayment from WEX. The $49 million payment represents the payment in full of its remaining contingent obligations to Realogy under the Tax Receivable Agreement, among WEX, Cendant Corporation (n/k/a Avis Budget Group, Inc.) (“Cendant”) and Cendant Mobility Services Corporation (n/k/a Cartus Corporation) which was entered into in February 2005. EBITDA was also impacted by a reduction in costs of $29 million for at-risk homesale transactions as a result of the elimination of the government portion of our at-risk business, a decrease of $15 million of other operating expenses primarily as a result of cost saving activities and reduced employee costs offset by the reduction in revenues discussed above and $3 million of restructuring expenses.

Title and Settlement Services

Revenues decreased $6 million to $88 million and EBITDA increased $7 million to $12 million for the three months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenues is primarily driven by $13 million of reduced resale volume consistent with the decline in overall homesale transactions noted in our Company Owned Real Estate Brokerage Services segment, a $2 million decrease in underwriter revenue, partially offset by an increase of $7 million in volume from refinance transactions. EBITDA increased due to $12 million of lower costs as a result of lower transaction volume and cost savings initiatives, partially offset by the reduction in revenues discussed above.

 

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Six Months Ended June 30, 2009 vs. Six Months Ended June 30, 2008

Our consolidated results comprised the following:

 

     Six Months Ended June 30,  
     2009     2008     Change  

Net revenues

   $ 1,715      $ 2,440      $ (725

Total expenses (1)

     1,994        2,706        (712
                        

Loss before income taxes, equity in earnings and noncontrolling interest

     (279     (266     (13

Income tax expense (benefit)

     7        (102     109   

Equity in earnings of unconsolidated entities

     (12     (4     (8
                        

Net loss

   $ (274   $ (160   $ (114
                        

 

(1) Total expenses for the six months ended June 30, 2009 include $44 million of restructuring costs offset by a benefit of $42 million of former parent legacy items (comprised of a benefit of $55 million recorded at Cartus related to Wright Express Corporation partially offset by $13 million of expenses recorded at Corporate). Total expenses for the six months ended June 30, 2008 include $23 million and $2 million of restructuring costs and merger costs, respectively, offset by a benefit of $1 million of former parent legacy items.

Net revenues decreased $725 million (30%) for the first half of 2009 compared with the first half of 2008 principally due to a decrease in revenues across all of our operating segments, primarily due to decreases in transaction side volume and the average price of homes sold.

Total expenses decreased $712 million (26%) primarily due to the following:

 

   

a decrease of $402 million of commission expenses paid to real estate agents due to lower gross commission income and changes in the average homesale broker commission rates;

 

   

a decrease of $239 million in operating and marketing expenses primarily due to restructuring activities implemented in 2008 and early 2009 and the exit of the at-risk government business;

 

   

a decrease in interest expense of $25 million as a result of decreasing interest rates; and

 

   

an incremental increase of $41 million in former parent legacy benefit items primarily as a result of a net $49 million tax receivable prepayment from Wright Express Corporation;

 

   

offset by an incremental increase in restructuring charges of $21 million.

Our income tax expense for the six months ended June 30, 2009 was $7 million. The components of our income tax expense are as follows:

 

   

no U.S. Federal income tax benefit was recognized for the current period losses due to a valuation allowance for domestic operations;

 

   

income tax expense was recognized for foreign and state income taxes for certain jurisdictions; and

 

   

income tax expense was recorded for an increase in deferred tax liabilities associated with indefinite-lived intangible assets.

We currently forecast that the 2009 income tax expense will be approximately $17 million.

 

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Following is a more detailed discussion of the results of each of our reportable segments during the six months ended June 30:

 

     Revenues     EBITDA (b)     Margin  
     2009     2008     %
Change
    2009     2008     %
Change
    2009     2008     Change  

Real Estate Franchise Services

   $ 248      $ 336      (26 %)    $ 129      $ 188      (31 %)    52   56   (4

Company Owned Real Estate Brokerage Services

     1,255        1,827      (31     (60     (33   (82   (5   (2   (3

Relocation Services

     151        233      (35     72        23      213      48      10      38   

Title and Settlement Services

     156        175      (11     7        3      133      4      2      2   

Corporate and Other (a)

     (95     (131   *        (25     (16   *         
                                                  

Total Company

   $ 1,715      $ 2,440      (30 %)    $ 123      $ 165      (25 %)    7   7   —     
                                                  

Less: Depreciation and amortization

           99        111           

Interest expense, net

           291        316           

Income tax expense (benefit)

           7        (102        
                              

Net loss

         $ (274   $ (160        
                              

 

(*) not meaningful
(a) Includes unallocated corporate overhead and the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by our Company Owned Real Estate Brokerage Services segment of $95 million and $131 million during the six months ended June 30, 2009 and 2008, respectively.
(b) Includes $44 million of restructuring costs offset by a benefit of $42 million of former parent legacy items (comprised of a benefit of $55 million recorded at Cartus related to Wright Express Corporation partially offset by $13 million of expenses recorded at Corporate) for the six months ended June 30, 2009, compared to $23 million and $2 million of restructuring costs and merger costs, respectively, offset by a benefit of $1 million of former parent legacy items for the six months ended June 30, 2008.

As described in the aforementioned table, EBITDA margin for “Total Company” expressed as a percentage of revenues was consistent for the six months ended June 30, 2009 compared to the same period in 2008 primarily due to an increase in EBITDA at the Relocation Services segment as discussed below.

On a segment basis, the Real Estate Franchise Services segment margin decreased four percentage points to 52% versus 56% in the comparable prior period. The six months ended June 30, 2009 reflected a decrease in the number of homesale transactions and a decrease in average homesale price partially offset by an increase in the average homesale broker commission rate and net effective royalty rate and the impact of cost saving initiatives. The Company Owned Real Estate Brokerage Services segment margin decreased three percentage points to a negative 5% from a negative 2% in the comparable prior period. The six months ended June 30, 2009 reflected a decrease in the number of homesale transactions, a decrease in the average homesale price and an increase in restructuring costs partially offset by lower operating expenses primarily as a result of restructuring and cost saving activities. The Relocation Services segment margin increased 38 percentage points to 48% from 10% in the comparable prior period primarily due to the tax receivable prepayment from Wright Express Corporation and the positive impact related to the exit of the at-risk government portion of our business. The Title and Settlement Services segment margin increased two percentage points to 4% from 2% in the comparable prior period. The increase in margin profitability was mainly attributable to lower volume related expenses as well as the result of cost savings initiatives.

The Corporate and Other EBITDA for the six months ended June 30, 2009 was a negative $25 million compared to a negative $16 million in the same period in 2008. The decrease in EBITDA was primarily due to $11 million of litigation proceeds offset by a $2 million increase in restructuring costs and a $15 million reduction in legacy benefits which occurred in the prior period primarily comprised of proceeds of $13 million related to the Shelton legal matter and a benefit of $1 million related to adjustments to legacy accruals.

 

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Real Estate Franchise Services

Revenues decreased $88 million to $248 million and EBITDA decreased $59 million to $129 million for the six months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenue was primarily driven by a $33 million or 23% decrease in third-party domestic franchisees royalty revenue due to an 11% decrease in the number of homesale transactions from our third-party franchisees and a 15% decrease in the average homesale price partially offset by a higher average homesale broker commission rate and net effective royalty rate. Revenue from foreign franchisees decreased $10 million. In addition, marketing revenue and related marketing expenses decreased $8 million and $9 million, respectively, due to lower royalty volume and cost cutting initiatives in the first half of 2009.

The decrease in revenue was also attributable to a $34 million decrease in royalties received from our Company Owned Real Estate Brokerage Services segment which pays royalties to our Real Estate Franchise Services segment. These intercompany royalties, which approximated $88 million and $122 million during the first half of 2009 and 2008, respectively, are eliminated in consolidation. See “Company Owned Real Estate Brokerage Services” for a discussion as to the drivers related to this period over period revenue decrease for Real Estate Franchise Services.

The decrease in EBITDA was principally due to the reduction in revenues discussed above, partially offset by a $9 million reduction in employee related costs and benefits and decrease of $9 million of other operating expenses, primarily the result of cost saving activities.

Company Owned Real Estate Brokerage Services

Revenues decreased $572 million to $1,255 million and EBITDA decreased $27 million to a negative $60 million for the six months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenues, excluding REO revenues, of $566 million was substantially comprised of reduced commission income earned on homesale transactions which was primarily driven by a 10% decline in the number of homesale transactions and a 27% decrease in the average price of homes sold partially offset by an increased average homesale broker commission rate. We believe the 10% decline in homesale transactions is reflective of industry trends in the markets we serve – geographic areas where homesale prices tend to be at the higher end of the U.S. real estate market. The significant decrease in average homesale price of 27% is the result of a continuation of the shift in the mix and volume of its overall homesale activity from higher price point areas to lower price point areas as well as a significant level of foreclosure and short sale activity in certain markets. Separately, revenues from our REO asset management company decreased by $4 million to $36 million in the first half of 2009 when compared to the same period in 2008. Our REO operations facilitate the maintenance and sale of foreclosed homes on behalf of lenders and the profitability of this business is countercyclical to the overall state of the housing market.

EBITDA decreased for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 due to the decrease in revenues discussed above as well as an incremental increase in restructuring expenses of $8 million partially offset by:

 

   

a decrease of $402 million in commission expenses paid to real estate agents as a result of the reduction in revenue and an improvement in the commission split rate;

 

   

a decrease of $34 million in royalties paid to our real estate franchise business, principally as a result of the reduction in revenues earned on homesale transactions;

 

   

a decrease in marketing costs of $23 million due to a shift to technology media marketing and other cost reduction initiatives;

 

   

a $7 million reduction in certain estimated business acquisition liabilities;

 

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a decrease of $81 million of other operating expenses, net of inflation primarily due to restructuring, cost saving activities and reduced employee costs; and

 

   

an increase of $7 million in equity in earnings of unconsolidated entities related to our investment in PHH Home Loans.

To counteract the revenue decline, the Company has implemented significant cost saving measures which have substantially reduced fixed costs associated with operating a full service real estate brokerage business. The realization of these cost saving measures have been unable to fully offset the overall decline in revenues for the six months ended June 30, 2009.

Relocation Services

Revenues decreased $82 million to $151 million and EBITDA increased $49 million to $72 million for the six months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenues was primarily driven by:

 

   

a decrease of $53 million in at-risk revenue mainly due to the elimination of the government portion of our at-risk business;

 

   

a $21 million decrease in referral fee revenue primarily due to lower domestic transaction volume as a result of lower homesale authorization volume as well as decreased average home values; and

 

   

a $10 million decrease in relocation service fee revenues primarily due to lower domestic transaction volume;

partially offset by:

 

   

$5 million of incremental international revenue due to increased transaction volume.

EBITDA increased due to $6 million of recurring tax receivable payments from Wright Express Corporation (“WEX”) as well as a net $49 million tax receivable prepayment from WEX. The $49 million payment represents the payment in full of its remaining contingent obligations to Realogy under the Tax Receivable Agreement among WEX, Cendant Corporation (n/k/a Avis Budget Group, Inc.) (“Cendant”) and Cendant Mobility Services Corporation (n/k/a Cartus Corporation) which was entered into in February 2005. EBITDA was also impacted by a reduction in costs of $64 million for at-risk homesale transactions as a result of the elimination of the government portion of our at-risk business and a decrease of $24 million of other operating expenses primarily as a result of cost saving activities and reduced employee costs offset by the reduction in revenues discussed above and $8 million of restructuring expenses.

Title and Settlement Services

Revenues decreased $19 million to $156 million and EBITDA increased $4 million to $7 million for the six months ended June 30, 2009 compared with the same period in 2008.

The decrease in revenues is primarily driven by $25 million of reduced resale volume consistent with the decline in overall homesale transactions noted in our Company Owned Real Estate Brokerage Services segment, a $5 million decrease in underwriter revenue, a decrease of $3 million from short-term investments returns, partially offset by an increase of $11 million in volume from refinance transactions. EBITDA increased due to $25 million of lower costs as a result of lower transaction volume and cost saving initiatives, partially offset by the reduction in revenues discussed above.

 

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2009 Restructuring Program

During the first half of 2009, the Company committed to various initiatives targeted principally at reducing costs and enhancing organizational efficiencies while consolidating existing processes and facilities. The Company currently expects to incur restructuring charges of $62 million in 2009. As of June 30, 2009, the Company has recognized $46 million of this expense.

Restructuring charges by segment for the six months ended June 30, 2009 are as follows:

 

     Opening
Balance
   Expense
Recognized
   Cash
Payments/
Other
Reductions
    Liability
as of
June 30,
2009

Company Owned Real Estate
Brokerage Services

   $ —      $ 32    $ (13   $ 19

Real Estate Franchise Services

     —        2      (1     1

Relocation Services

     —        8      (5     3

Title and Settlement Services

     —        2      (1     1

Corporate and Other

     —        2      —          2
                            
   $ —      $ 46    $ (20   $ 26
                            

The table below shows restructuring charges and the corresponding payments and other reductions for the six months ended June 30, 2009 by category:

 

     Personnel
Related
    Facility
Related
    Asset
Impairments
    Total  

Restructuring expense

   $ 15      $ 27      $ 4      $ 46   

Cash payments and other reductions

     (11     (5     (4     (20
                                

Balance at June 30, 2009

   $ 4      $ 22      $ —        $ 26   
                                

2008 Restructuring Program

During 2008, the Company committed to various initiatives targeted principally at reducing costs, enhancing organizational efficiencies and consolidating facilities. The Company recognized $58 million of restructuring expense in 2008 and the remaining liability at December 31, 2008 was $26 million.

The recognition of the 2008 restructuring charge and the corresponding utilization from inception to June 30, 2009 are summarized by category as follows:

 

     Personnel
Related
    Facility
Related
    Asset
Impairments
    Total  

Restructuring expense

   $ 21      $ 30      $ 7      $ 58   

Cash payments and other reductions

     (12     (13     (7     (32
                                

Balance at December 31, 2008

     9        17        —          26   

Cash payments and other reductions (1)

     (8     (6     —          (14
                                

Balance at June 30, 2009

   $ 1      $ 11      $ —        $ 12   
                                

 

(1) During the six months ended June 30, 2009, the Company utilized $13 million of the accrual and reversed $1 million in the Statement of Operations.

 

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2007 Restructuring Program

During 2007, the Company committed to restructuring activities targeted principally at reducing personnel related costs and consolidating facilities. At December 31, 2008, the remaining liability was $8 million. During the six months ended June 30, 2009, the Company utilized $2 million of the accrual and reversed $1 million in the Statement of Operations resulting in a remaining accrual of $5 million.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

FINANCIAL CONDITION

 

     June 30,
2009
    December 31,
2008
    Change  

Total assets

   $ 8,425      $ 8,912      $ (487

Total liabilities

     9,430        9,652        (222

Stockholder’s deficit

     (1,005     (740     (265

For the six months ended June 30, 2009, total assets decreased $487 million primarily as a result of a reduction in relocation receivables of $266 million due to lower transaction volume and a decrease in homes in inventory, a decrease in relocation properties held for sale of $19 million due to the wind-down of government at-risk homesale transactions, a decrease of $65 million in deferred tax assets, a decrease in property and equipment, net of $44 million, and a decrease in franchise agreements, net of $34 million. Total liabilities decreased $222 million principally due to decreased securitization obligations of $261 million, a $12 million decrease in accounts payable and accrued expenses and other current liabilities, and a $59 million decrease in deferred income taxes offset by increased net revolver credit facility borrowings of $95 million. Total stockholder’s deficit increased $265 million primarily due to the net loss of $274 million for the six months ended June 30, 2009.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity position has been and may continue to be negatively affected by unfavorable conditions in the real estate or relocation market, including adverse changes in interest rates, access to our relocation securitization programs and access to the capital markets, which may be limited if we were to fail to renew any of the facilities on their renewal dates or if we were to fail to meet certain covenants.

At present, there are numerous general business and economic factors contributing to the residential real estate market downturn and impeding a recovery. These conditions include: (1) systemic weakness in the domestic banking and financial sectors; (2) substantial declines in the stock markets in 2008 and continued stock market volatility; (3) the recession in the U.S. and numerous economies around the globe; (4) high levels of unemployment in various sectors; and (5) other factors that are both separate from, and outgrowths of, the above. If one or more of these conditions continue or worsen, we may experience a further adverse effect on our business, financial condition and liquidity, including our ability to access capital.

At June 30, 2009, our primary sources of liquidity are cash flows from operations and funds available under the revolving credit facility under our senior secured credit facility and our securitization facilities. Our primary liquidity needs will be to finance our working capital, capital expenditures and debt service. Due to the current real estate market downturn and overall uncertainty in the economy, we have taken, and will continue to take, steps to manage our balance sheet and conserve cash.

 

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Cash Flows

At June 30, 2009, we had $388 million of cash and cash equivalents, a decrease of $49 million compared to the balance of $437 million at December 31, 2008. The following table summarizes our cash flows for the six months ended June 30, 2009 and 2008:

 

     Six Months Ended June 30,  
     2009     2008     Change  

Cash provided by (used in):

      

Operating activities

   $ 172      $ (74   $ 246   

Investing activities

     (22     (10     (12

Financing activities

     (202     55        (257

Effects of change in exchange rates on cash and cash equivalents

     3        —          3   
                        

Net change in cash and cash equivalents

   $ (49   $ (29   $ (20
                        

During the six months ended June 30, 2009, we provided $246 million of additional cash from operations as compared to the same period in 2008. Such change is principally due to a reduction in relocation receivables and relocation properties held for sale of $231 million and a reduction in trade receivables of $28 million offset by weaker operating results.

During the six months ended June 30, 2009 versus the same period in 2008, we used $12 million more cash for investing activities. Such change is mainly due to $12 million related to proceeds related to the corporate aircraft sale leaseback and termination in 2008.

During the six months ended June 30, 2009 versus the same period in 2008, we used $257 million more cash in financing activities. The net change in cash flows used in financing activities is the result of the repayment of securitization obligations of $158 million and a decrease in incremental revolver borrowings of $110 million offset by a note payment of $10 million during the six months ended June 30, 2008.

Financial Obligations

SENIOR SECURED CREDIT FACILITY

In connection with the closing of the Merger on April 10, 2007, the Company entered into a senior secured credit facility consisting of (i) a $3,170 million term loan facility, (ii) a $750 million revolving credit facility, and (iii) a $525 million synthetic letter of credit facility.

Interest rates with respect to term loans under the senior secured credit facility are based on, at the Company’s option, (a) adjusted LIBOR plus 3.0% or (b) the higher of the Federal Funds Effective Rate plus 0.5% and JPMorgan Chase Bank, N.A.’s prime rate (“ABR”) plus 2.0%. The term loan facility provides for quarterly amortization payments totaling 1% per annum of the principal amount with the balance due upon the final maturity date.

The Company’s senior secured credit facility provides for a six-year, $750 million revolving credit facility, which includes a $200 million letter of credit sub-facility and a $50 million swingline loan sub-facility. The Company uses the revolving credit facility for, among other things, working capital and other general corporate purposes, including permitted acquisitions and investments. Interest rates with respect to revolving loans under the senior secured credit facility are based on, at the Company’s option, adjusted LIBOR plus 2.25% or ABR plus 1.25% in each case subject to adjustment based on the attainment of certain leverage ratios. At June 30, 2009, the amount available for borrowings under our revolving credit facility was $4 million (after giving effect to $136 million of outstanding letters of credit).

 

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The Company’s senior secured credit facility provides for a six-and-a-half-year $525 million synthetic letter of credit facility for which the Company pays 300 basis points in interest on amounts utilized. The capacity of the synthetic letter of credit is reduced by 1% each year and as a result the amount available was reduced to $518 million on December 31, 2008 and to $515 million at June 30, 2009. On April 26, 2007, the synthetic letter of credit facility was used to post a $500 million letter of credit to secure the fair value of the Company’s obligations with respect to Cendant’s contingent and other liabilities that were assumed under the Separation and Distribution Agreement and the remaining capacity was utilized for general corporate purposes. The stated amount of the standby irrevocable letter of credit is subject to periodic adjustment to reflect the then current estimate of Cendant’s contingent and other liabilities.

The Company’s senior secured credit facility is secured to the extent legally permissible by substantially all of the assets of the Company’s parent company, the Company and the subsidiary guarantors, including but not limited to (a) a first-priority pledge of substantially all capital stock held by the Company or any subsidiary guarantor (which pledge, with respect to obligations in respect of the borrowings secured by a pledge of the stock of any first-tier foreign subsidiary, is limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such foreign subsidiary), and (b) perfected first-priority security interests in substantially all tangible and intangible assets of the Company and each subsidiary guarantor, subject to certain exceptions.

UNSECURED NOTES

On April 10, 2007, the Company issued in a private placement $1,700 million aggregate principal amount of 10.50% Senior Notes (the “Fixed Rate Senior Notes”), $550 million aggregate principal amount of 11.00%/11.75% Senior Toggle Notes (the “Senior Toggle Notes”) and $875 million aggregate principal amount of 12.375% Senior Subordinated Notes (the “Senior Subordinated Notes”). On February 15, 2008, the Company completed an exchange offer registering these notes under the Securities Act of 1933, as amended, pursuant to a Registration Statement filed on Form S-4. The Company refers to these notes using the term “Unsecured Notes”.

The Fixed Rate Senior Notes are unsecured senior obligations of the Company and will mature on April 15, 2014. Each Fixed Rate Senior Note bears interest at a rate per annum of 10.50% payable semiannually to holders of record at the close of business on April 1 and October 1 immediately preceding the interest payment dates of April 15 and October 15 of each year.

The Senior Toggle Notes are unsecured senior obligations of the Company and will mature on April 15, 2014. Interest on the Senior Toggle Notes is payable semiannually to holders of record at the close of business on April 1 or October 1 immediately preceding the interest payment date on April 15 and October 15 of each year. For any interest payment period after the initial interest payment period and through October 15, 2011, the Company may, at its option, elect to pay interest on the Senior Toggle Notes (1) entirely in cash (“Cash Interest”), (2) entirely by increasing the principal amount of the outstanding Senior Toggle Notes or by issuing Senior Toggle Notes (“PIK Interest”), or (3) 50% as Cash Interest and 50% as PIK Interest. After October 15, 2011, the Company is required to make all interest payments on the Senior Toggle Notes entirely in cash. Cash interest on the Senior Toggle Notes will accrue at a rate of 11.00% per annum. PIK Interest on the Senior Toggle Notes will accrue at the Cash Interest rate per annum plus 0.75%. The Company must elect the form of interest payment with respect to each interest period by delivery of a notice to the trustee prior to the beginning of each interest period. In the absence of an election for any interest period, interest on the Senior Toggle Notes shall be payable according to the method of payment for the previous interest period.

Beginning with the interest period which ended October 2008, the Company elected to satisfy the interest payment obligation by issuing additional Senior Toggle Notes. This PIK Interest election is now the default election for future interest periods through October 15, 2011 unless the Company notifies otherwise prior to the commencement date of a future interest period.

The Company would be subject to certain interest deduction limitations if the Senior Toggle Notes were treated as “applicable high yield discount obligations” (“AHYDO”) within the meaning of Section 163(i)(1) of the Internal Revenue Code. In order to avoid such treatment, the Company is required to redeem for cash a

 

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portion of each Senior Toggle Note then outstanding. The portion of a Senior Toggle Note required to be redeemed is an amount equal to the excess of the accrued original issue discount as of the end of such accrual period, less the amount of interest paid in cash on or before such date, less the first-year yield (the issue price of the debt instrument multiplied by its yield to maturity). The redemption price for the portion of each Senior Toggle Note so redeemed would be 100% of the principal amount of such portion plus any accrued interest on the date of redemption. Assuming that the Company continues to utilize the PIK Interest option election through October 2011, the Company would be required to repay approximately $204 million in April 2012.

The Senior Subordinated Notes are unsecured senior subordinated obligations of the Company and will mature on April 15, 2015. Each Senior Subordinated Note bears interest at a rate per annum of 12.375% payable semiannually to holders of record at the close of business on April 1 or October 1 immediately preceding the interest payment date on April 15 and October 15 of each year.

The Fixed Rate Senior Notes and Senior Toggle Notes are guaranteed on an unsecured senior basis, and the Senior Subordinated Notes are guaranteed on an unsecured senior subordinated basis, in each case, by each of the Company’s existing and future U.S. subsidiaries that is a guarantor under the senior secured credit facility or that guarantees certain other indebtedness in the future, subject to certain exceptions.

DEBT RATINGS

As a result of the increased borrowings that were incurred to consummate the Merger, the Company’s future financing activities were materially impacted. Upon consummation of the Merger in April 2007, both Standard and Poor’s and Moody’s downgraded our corporate family debt ratings and rated the newly issued Unsecured Notes as non-investment grade. During 2008, due to the continuing significant and lengthy downturn in the residential real estate market, the rating agencies continued to downgrade our debt ratings. At December 31, 2008, Standard and Poor’s and Moody’s had downgraded our debt ratings so that our Corporate Family Rating was CC and Caa3, respectively, our Senior Secured Debt rating was CCC- and Caa1, respectively, and the Senior Unsecured Notes rating was C and Ca, respectively. The rating outlook at December 31, 2008 was negative and continues to be negative at June 30, 2009. The downgrades reflect the rating agencies’ views that there will be a continuing weakness in the residential homesale market and an increased risk of a default or balance sheet restructuring over the intermediate term. It is possible that the rating agencies may downgrade our ratings further based upon our results of operations and financial condition or as a result of national and/or global economic and political events. There have been no changes in our debt rating during the six months ended June 30, 2009.

SECURITIZATION OBLIGATIONS

Securitization obligations consisted of:

 

     June 30,
2009
   December 31,
2008

Apple Ridge Funding LLC

   $ 358    $ 537

U.K. Relocation Receivables Funding Limited

     84      146

Kenosia Funding LLC (a)

     —        20
             
   $ 442    $ 703
             

 

(a) Program terminated on January 15, 2009.

The Company issues secured obligations through Apple Ridge Funding LLC and U.K. Relocation Receivables Funding Limited. These entities are consolidated, bankruptcy remote special purpose entities that are utilized to securitize relocation receivables and related assets. These assets are generated from advancing funds on behalf of clients of the Company’s relocation business in order to facilitate the relocation of their employees. Assets of these special purpose entities are not available to pay the Company’s general obligations. Provided no termination or amortization event has occurred, any new receivables generated under the designated relocation

 

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management agreements are sold into the securitization program, and as new relocation management agreements are entered into, the new agreements may also be designated to a specific program.

Certain of the funds that the Company receives from relocation receivables and related assets must be utilized to repay securitization obligations. Such securitization obligations are collateralized by $519 million of underlying relocation receivables and other related relocation assets at June 30, 2009 and $845 million of underlying relocation receivables, relocation properties held for sale and other related relocation assets at December 31, 2008. Substantially all relocation related assets are realized in less than twelve months from the transaction date. Accordingly, all of the Company’s securitization obligations are classified as current in the accompanying Condensed Consolidated Balance Sheets.

Interest incurred in connection with borrowings under these facilities amounted to $3 million and $8 million for the three and six months ended June 30, 2009, respectively, and $11 million and $25 million for the three and six months ended June 30, 2008, respectively. This interest is recorded within net revenues in the accompanying Condensed Consolidated Statements of Operations as related borrowings are utilized to fund the Company’s relocation business where interest is generally earned on such assets. These securitization obligations represent floating rate debt for which the average weighted interest rate was 2.5% and 5.0% for the six months ended June 30, 2009 and 2008, respectively.

Apple Ridge Funding LLC

The Apple Ridge Funding LLC securitization program is a revolving program with a five year term. This bankruptcy remote vehicle borrows from one or more commercial paper conduits and uses the proceeds to purchase the relocation assets. This asset backed commercial paper program is guaranteed by the sponsoring financial institution. This program is subject to termination at the end of the five year agreement and, if not renewed, would amortize. The program has restrictive covenants and trigger events, including performance triggers linked to the age and quality of the underlying assets, limits on net credit losses incurred, financial reporting requirements, restrictions on mergers and change of control, and cross defaults under the senior secured credit facility, Unsecured Notes and other material indebtedness. Given the current recession and an increasing number of companies having difficulties meeting their financial obligations, there is a heightened risk relating to compliance with the Apple Ridge securitization performance trigger relating to limits on “net credit losses” (the estimated losses incurred on securitization receivables that have been written off, net of recoveries of such receivables) as net credit losses may not exceed $750 thousand in any one month or $1.5 million in any trailing 12 month period. The Company has not incurred any net credit losses in excess of these thresholds. These trigger events could result in an early amortization of this securitization obligation and termination of any further advances under the program. On June 18, 2009, the Company elected to reduce the available capacity of the Apple Ridge securitization facility by $200 million to $650 million.

U.K. Relocation Funding Limited

The U.K. Relocation Funding Limited securitization program is a revolving program with a five year term. This program is subject to termination at the end of the five year agreement and would amortize if not renewed. This program has restrictive covenants, including those relating to financial reporting, mergers and change of control, and events of default. The events of default include non-payment of the indebtedness and cross defaults under the senior secured credit facility, Unsecured Notes and other material indebtedness. Upon an event of default, the lending institution may amortize the indebtedness under the facility and terminate the program.

Kenosia Funding LLC

On January 15, 2009, the Company terminated the Kenosia securitization program in its entirety, repaying the $20 million principal balance then outstanding under the facility. Prior to the termination of this program due to the Company’s decision to reduce the exposure to the purchase of at-risk homes, the Kenosia Funding LLC securitization program was utilized to finance the purchase of at-risk homes and other assets related to those relocations under its fixed fee relocation contracts with certain U.S. Government and corporate clients.

 

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AVAILABLE CAPACITY

As of June 30, 2009, the total capacity, outstanding borrowings and available capacity under the Company’s borrowing arrangements are as follows:

 

     Expiration
Date
   Total
Capacity
   Outstanding
Borrowings
   Available
Capacity

Senior Secured Credit Facility:

           

Revolving credit facility (1)

   April 2013    $ 750    $ 610    $ 4

Term loan facility (2)

   October 2013      3,107      3,107      —  

Fixed Rate Senior Notes (3)

   April 2014      1,700      1,684      —  

Senior Toggle Notes (4)

   April 2014      617      612      —  

Senior Subordinated Notes (5)

   April 2015      875      862      —  

Securitization obligations:

           

Apple Ridge Funding LLC (6)

   April 2012      650      358      292

U.K. Relocation Receivables Funding Limited (6)

   April 2012      165      84      81
                       
      $ 7,864    $ 7,317    $ 377
                       

 

(1) At June 30, 2009, the available capacity under the revolving credit facility is reduced by $136 million of outstanding letters of credit. On July 23, 2009, the Company paid the summary judgment for the former parent Credentials litigation which resulted in a reduction of the outstanding letters of credit of $62 million.
(2) Total capacity has been reduced by the quarterly principal payments of 0.25% of the loan balance as required under the term loan facility agreement. The interest rate on the term loan facility was 4.21% at June 30, 2009.
(3) Consists of $1,700 million of 10.50% Senior Notes due 2014, less a discount of $16 million.
(4) Consists of $617 million of 11.00%/11.75% Senior Toggle Notes due 2014, less a discount of $5 million.
(5) Consists of $875 million of 12.375% Senior Subordinated Notes due 2015, less a discount of $13 million.
(6) Available capacity is subject to maintaining sufficient relocation related assets to collateralize these securitization obligations.

Covenants under our Senior Secured Credit Facility and the Unsecured Notes

Our senior secured credit facility and the Unsecured Notes contain various covenants that limit our ability to, among other things:

 

   

incur or guarantee additional debt;

 

   

incur debt that is junior to senior indebtedness and senior to the senior subordinated notes;

 

   

pay dividends or make distributions to our stockholders;

 

   

repurchase or redeem capital stock or subordinated indebtedness;

 

   

make loans, capital expenditures or investments or acquisitions;

 

   

incur restrictions on the ability of certain of our subsidiaries to pay dividends or to make other payments to us;

 

   

enter into transactions with affiliates;

 

   

create liens;

 

   

merge or consolidate with other companies or transfer all or substantially all of our assets;

 

   

transfer or sell assets, including capital stock of subsidiaries; and

 

   

prepay, redeem or repurchase debt that is junior in right of payment to the Unsecured Notes.

As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities or finance future operations or capital needs. In addition, on the last day of each fiscal quarter, the financial covenant in our senior secured credit facility requires us to maintain on a quarterly basis a senior secured leverage ratio not to exceed a maximum amount. Specifically our

 

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senior secured debt (net of unsecured cash and permitted investments) to trailing twelve month EBITDA (as such terms are defined in the senior secured credit facility), calculated on a “pro forma” basis pursuant to the senior secured credit facility, may not exceed 5.35 to 1 at June 30, 2009. The ratio steps down to 5.0 to 1 at September 30, 2009 and to 4.75 to 1 at March 31, 2011 and thereafter. EBITDA, as defined in the senior secured credit facility, includes certain adjustments and also is calculated on a pro forma basis for purposes of the senior secured leverage ratio. In this report, we refer to the term “Adjusted EBITDA” to mean EBITDA as so defined and calculated for purposes of determining compliance with the senior secured leverage ratio. At June 30, 2009, the Company was in compliance with the senior secured leverage ratio.

The Company’s current financial forecast of Adjusted EBITDA includes additional cost saving and business optimization initiatives. As such initiatives are implemented, management will give pro forma effect to such measures and add back the savings or enhanced revenue from those initiatives as if they had been implemented at the beginning of the trailing twelve month period for calculating compliance with the senior secured leverage ratio.

In order to comply with the senior secured leverage ratio for the twelve month periods ending September 30, 2009, December 31, 2009, March 31, 2010 and June 30, 2010 (or to avoid an event of default thereof), the Company will need to achieve a certain amount of Adjusted EBITDA and/or reduce levels of senior secured indebtedness. The factors that will impact the foregoing include: (a) slowing decreases, stabilization or increases in sales volume and the price of existing homesales, (b) continuing to effect cost savings and business productivity enhancement initiatives, (c) increasing new franchise sales, sales associate recruitment and/or brokerage acquisitions, (d) obtaining additional equity financing from our parent company, (e) issuing debt or equity financing, or (f) a combination thereof. Factors (b) through (e) may not be sufficient to overcome macroeconomic conditions affecting the Company.

Based upon the Company’s current financial forecast and additional equity available through December 31, 2009, as set forth in the 2008 Form 10-K, the Company believes that it will continue to be in compliance with, or be able to avoid an event of default under, the senior secured leverage ratio and meet its cash flow needs during the next twelve months. The Company has the right to avoid an event of default of the senior secured leverage ratio in three of any of the four consecutive quarters through the issuance of additional Holdings equity for cash, which would be infused as capital into the Company. The effect of such infusion would be to increase Adjusted EBITDA and reduce net senior secured indebtedness.

If we are unable to maintain compliance with the senior secured leverage ratio and we fail to remedy a default through an equity cure from our parent permitted thereunder, there would be an “event of default” under the senior secured credit agreement. Other events of default under the senior secured credit facility include, without limitation, nonpayment, material misrepresentations, insolvency, bankruptcy, certain judgments, change of control and cross-events of default on material indebtedness.

If an event of default occurs under our senior secured credit facility and we fail to obtain a waiver from our lenders, our financial condition, results of operations and business would be materially adversely affected. Upon the occurrence of an event of default under our senior secured credit facility, the lenders:

 

   

would not be required to lend any additional amounts to us;

 

   

could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable;

 

   

could require us to apply all of our available cash to repay these borrowings; or

 

   

could prevent us from making payments on the Unsecured Notes;

any of which could result in an event of default under the Unsecured Notes and our Securitization Facilities.

 

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If we were unable to repay those amounts, the lenders under our senior secured credit facility could proceed against the collateral granted to them to secure that indebtedness. We have pledged the majority of our assets as collateral under our senior secured credit facility. If the lenders under our senior secured credit facility were to accelerate the repayment of borrowings, we may not have sufficient assets to repay our senior secured credit facility and our other indebtedness, including the Unsecured Notes, or be able to borrow sufficient funds to refinance such indebtedness. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us.

EBITDA and Adjusted EBITDA

EBITDA is defined by the Company as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. Adjusted EBITDA is calculated by adjusting EBITDA by the items described below. Adjusted EBITDA corresponds to the definition of “EBITDA,” calculated on a “pro forma basis,” used in the senior secured credit facility to calculate the senior secured leverage ratio and substantially corresponds to the definition of “EBITDA” used in the indentures governing the Unsecured Notes to test the permissibility of certain types of transactions, including debt incurrence. We present EBITDA because we believe EBITDA is a useful supplemental measure in evaluating the performance of our operating businesses and provides greater transparency into our results of operations. The EBITDA measure is used by our management, including our chief operating decision maker, to perform such evaluation, and Adjusted EBITDA is used in measuring compliance with debt covenants relating to certain of our borrowing arrangements. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP.

We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results.

EBITDA has limitations as an analytical tool, and you should not consider EBITDA either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations are:

 

   

EBITDA does not reflect changes in, or cash requirement for, our working capital needs;

 

   

EBITDA does not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments, on our debt;

 

   

EBITDA does not reflect our income tax expense or the cash requirements to pay our taxes;

 

   

EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

 

   

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these EBITDA measures do not reflect any cash requirements for such replacements; and

 

   

other companies in our industry may calculate these EBITDA measures differently so they may not be comparable.

In addition to the limitations described above with respect to EBITDA, Adjusted EBITDA includes pro forma cost savings and the pro forma full year effect of NRT acquisitions and RFG acquisitions/new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods.

 

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A reconciliation of net loss to EBITDA and Adjusted EBITDA for the twelve months ended June 30, 2009 is set forth in the following table:

 

     Year Ended
December 31,
2008
    Less     Equals     Plus     Equals  
       Six Months
Ended
June 30,
2008
    Six Months
Ended
December 31,
2008
    Six Months
Ended
June 30,
2009
    Twelve Months
Ended
June 30,

2009
 

Net loss

   $ (1,912   $ (160   $ (1,752   $ (274   $ (2,026 ) (a)  

Income tax expense (benefit)

     (380     (102     (278     7        (271
                                        

Loss before income taxes

     (2,292     (262     (2,030     (267     (2,297

Interest expense/(income), net

     624        316        308        291        599   

Depreciation and amortization

     219        111        108        99        207   
                                        

EBITDA

     (1,449     165        (1,614     123        (1,491 ) (b)  

Covenant calculation adjustments:

          

Restructuring costs and former parent legacy cost (benefit) items, net (c)

  

    18   

Impairment of intangible assets, goodwill and investments in unconsolidated entities (d)

  

    1,789   

Non-cash charges for PHH Home Loans impairment

  

    31   

Pro forma cost savings for 2009 restructuring initiatives (e)

  

    60   

Pro forma cost savings for 2008 restructuring initiatives (f)

  

    24   

Pro forma effect of business optimization initiatives (g)

  

    67   

Non-cash charges (h)

  

    58   

Non-recurring fair value adjustments for purchase accounting (i)

  

    6   

Pro forma effect of NRT acquisitions and RFG acquisitions and new franchisees (j)

  

    8   

Apollo management fees (k)

  

    15   

Proceeds from WEX contingent asset (l)

  

    61   

Incremental securitization interest costs (m)

  

    4   

Expenses incurred in debt modification activities (n)

  

    5   
                

Adjusted EBITDA

  

  $ 655   
                

Total senior secured net debt (o)

  

  $ 3,373   

Senior secured leverage ratio

  

    5.1x   

 

(a) Net loss consists of a loss of: (i) $50 million for the third quarter of 2008; (ii) $1,703 million for the fourth quarter of 2008; (iii) $259 million for the first quarter of 2009 and (iv) $15 million for the second quarter of 2009.
(b) EBITDA consists of: (i) a positive $129 million for the third quarter of 2008; (ii) a negative $1,743 million for the fourth quarter of 2008; (iii) a negative $62 million for the first quarter of 2009 and (iv) a positive $185 million for the second quarter of 2009.
(c) Consists of $79 million of restructuring costs offset by a net benefit of $61 million for former parent legacy items.
(d) Represents the non-cash adjustment for the 2008 impairment of goodwill, intangible assets and investments in unconsolidated entities.
(e) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during the first half of 2009. From this restructuring, we expect to reduce our operating costs by approximately $84 million on a twelve month run-rate basis and estimate that $24 million of such savings were realized in the first half of 2009. The adjustment shown represents the impact the savings would have had on the period from July 1, 2008 through the time they were put in place had those actions been effected on July 1, 2008.
(f) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during the second half of 2008. From this restructuring, we expect to reduce our operating costs by approximately $69 million on a twelve month run-rate basis and estimate that $45 million of such savings were realized from the time they were put in place. The adjustment shown represents the impact the savings would have had on the period from July 1, 2008 through the time they were put in place had those actions been effected on July 1, 2008.
(g) Represents the twelve month pro forma effect of business optimization initiatives that have been completed to reduce costs including $20 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $12 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $10 million due to the add back of the retention accrual and $25 million related to other initiatives.
(h) Represents the elimination of non-cash expenses, including $36 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from July 1, 2008 through June 30, 2009, $7 million of stock based compensation expense and $15 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts.

 

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(i) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended June 30, 2009.
(j) Represents the estimated impact of acquisitions made by NRT and RFG acquisitions and new franchisees as if they had been acquired or signed on July 1, 2008. We have made a number of assumptions in calculating such estimate and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities or entered into the franchise contracts as of July 1, 2008.
(k) Represents the elimination of annual management fees payable to Apollo for the twelve months ended June 30, 2009.
(l) Wright Express Corporation (“WEX”) was divested by Cendant in February 2005 through an initial public offering (“IPO”). As a result of such IPO, the tax basis of WEX’s tangible and intangible assets increased to their fair market value which may reduce federal income tax that WEX might otherwise be obligated to pay in future periods. Under Article III of the Tax Receivable Agreement dated February 22, 2005 among WEX, Cendant and Cartus (the “TRA”), WEX was required to pay Cendant 85% of any tax savings related to the increase in fair value utilized for a period of time that we expect will be beyond the maturity of the notes. Cendant is required to pay 62.5% of these tax savings payments received from WEX to us. The Company received $12 million of recurring tax receivable payments from Wright Express Corporation (“WEX”) during the last twelve months. On June 26, 2009, we entered into a Tax Receivable Prepayment Agreement with WEX, pursuant to which WEX simultaneously paid us the sum of $51 million, less expenses of approximately $2 million, as prepayment in full of its remaining contingent obligations to Realogy under Article III of the TRA.
(m) Incremental borrowing costs incurred as a result of the securitization facilities refinancing for the twelve months ended June 30, 2009.
(n) Represents the expenses incurred in connection with the Company’s unsuccessful debt modification activities in the second half of 2008.
(o) Represents total borrowings under the senior secured credit facility, including the revolving credit facility, of $3,717 million plus $12 million of capital lease obligations less $356 million of readily available cash as of June 30, 2009.

LIQUIDITY RISKS

Our liquidity position may be negatively affected as a result of the following specific liquidity risks.

Senior Secured Credit Facility Covenant Compliance

In order to comply with the senior secured leverage ratio for the twelve month periods ending September 30, 2009, December 31, 2009, March 31, 2010 and June 30, 2010 (or to avoid an event of default thereof), the Company will need to achieve a certain amount of Adjusted EBITDA and/or reduce levels of senior secured indebtedness. The factors that will impact the foregoing include: (a) slowing decreases, stabilization or increases in sales volume and the price of existing homesales, (b) continuing to effect cost savings and business productivity enhancement initiatives, (c) increasing new franchise sales, sales associate recruitment and/or brokerage acquisitions, (d) obtaining additional equity financing from our parent company, (e) issuing debt or equity financing, or (f) a combination thereof.

If we fail to maintain the senior secured leverage ratio or otherwise default under our senior secured credit facility and we fail to obtain a waiver from our lenders, then our financial condition, results of operations and business would be materially adversely affected.

Former Parent Contingent Tax Liabilities

Under the Tax Sharing Agreement with Cendant, Wyndham Worldwide and Travelport, we are responsible for 62.5% of any payments made to the Internal Revenue Service (“IRS”) to settle claims with respect to tax periods ending on or prior to December 31, 2006 that relate to income taxes imposed on Cendant and certain of its subsidiaries; the operations (or former operations) which were determined by Cendant not to relate specifically to the respective businesses of Realogy, Wyndham Worldwide, Avis Budget or Travelport. The IRS is currently examining Cendant’s taxable years 2003 through 2006, during which the Company was included in Cendant’s tax returns. Balances due to Cendant for these pre-separation tax returns and related tax attributes were estimated as of December 31, 2006 and have since been adjusted in connection with the filing of the pre-separation tax returns. These balances will be adjusted after the ultimate settlement of the related tax audits of these periods. The Company’s maximum exposure cannot be quantified as tax regulations are subject to interpretation and the outcome of tax audits or litigation is inherently uncertain. Our Condensed Consolidated Balance Sheet at June 30, 2009 reflects $365 million of tax liabilities to our former parent for which we are potentially liable under the Tax Sharing Agreement. Although the Company and Cendant believe there is

 

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appropriate support for the positions taken on Cendant’s tax returns, the Company and Cendant have recorded liabilities representing the best estimates of the probable loss on certain positions. We currently expect that the IRS examination of Cendant’s taxable years 2003 through 2006 may be completed in the first half of 2010. If we are required to pay any or all of the $365 million tax liability to our former parent in the next twelve months, we may not have sufficient cash resources available or borrowing capacity under our revolving credit facility to pay our portion of the Cendant tax liabilities. As a result, we may be required to seek access to capital markets to secure financing. The timing, terms, size and pricing of any debt or new financing will depend on investor interest and market conditions and there can be no assurance that we will be able to obtain any such financing. The inability to successfully obtain additional financing will have a material negative impact on our operations, liquidity and our financial condition.

Interest Rate Risk

Certain of our borrowings, primarily borrowings under our senior secured credit facility, and our securitization obligations are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net loss would increase further. We have entered into interest rate swaps, involving the exchange of floating for fixed rate interest payments, to reduce interest rate volatility for a portion of our floating interest rate debt facilities.

Securitization Programs

Funding requirements of our relocation business are primarily satisfied through the issuance of securitization obligations to finance relocation receivables and advances. The securitization facilities under which the securitization obligations are issued have restrictive covenants and trigger events, including performance triggers linked to the age and quality of the underlying assets, limits on net credit losses incurred, financial reporting requirements, restrictions on mergers and change of control, and cross defaults under our senior secured credit facility, Unsecured Notes and other material indebtedness.

***

We may need to incur additional debt or issue equity. Future indebtedness may impose various restrictions and covenants on us which could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities. We cannot assure that financing will be available to us on acceptable terms or that financing will be available at all. Our ability to make payments to fund working capital, capital expenditures, debt service, strategic acquisitions, joint ventures and investments will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control and may require us to restructure our debt.

CONTRACTUAL OBLIGATIONS

Our future contractual obligations as of June 30, 2009 have not changed significantly from the amounts reported in our 2008 Form 10-K except for $95 million of additional revolver facility borrowings, the issuance of $34 million of Senior Toggle Notes to satisfy the interest payment obligation for the six month interest period ended April 2009 and $261 million of lower securitization obligations.

POTENTIAL DEBT REPURCHASES

Our affiliates have purchased a portion of our indebtedness and we or our affiliates from time to time may purchase additional portions of our indebtedness. Any such future purchases may be made through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices as well as with such consideration as we or any such affiliates may determine.

 

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SEASONALITY

Our businesses are subject to seasonal fluctuations. Historically, operating statistics and revenues for all of our businesses have been strongest in the second and third quarters of the calendar year. A significant portion of the expenses we incur in our real estate brokerage operations are related to marketing activities and commissions and are, therefore, variable. However, many of our other expenses, such as facilities costs and certain personnel-related costs, are fixed and cannot be easily reduced during a seasonal slowdown.

CRITICAL ACCOUNTING POLICIES

In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change in current conditions, it could result in a material adverse impact to our combined results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time.

These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated and Combined Financial Statements included in the 2008 Form 10-K, which includes a description of our critical accounting policies that involve subjective and complex judgments that could potentially affect reported results.

RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 1 of the Notes to the Financial Statements for a discussion of recently adopted and issued accounting pronouncements.

 

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Item 3. Quantitative and Qualitative Disclosures about Market Risks

Our principal market exposure is interest rate risk. At June 30, 2009, our primary interest rate exposure was to interest rate fluctuations in the United States, specifically LIBOR, due to its impact on our variable rate borrowings. Due to our senior secured credit facility which is benchmarked to U.S. LIBOR, this rate will be the primary market risk exposure for the foreseeable future. We do not have significant exposure to foreign currency risk nor do we expect to have significant exposure to foreign currency risk in the foreseeable future.

We assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest rates. In performing the sensitivity analysis, we are required to make assumptions regarding the fair values of relocation receivables and advances and securitization borrowings, which approximate their carrying values due to the short-term nature of these items. We believe our interest rate risk is further mitigated as the rate we incur on our securitization borrowings and the rate we earn on relocation receivables and advances are based on similar variable indices.

Our total market risk is influenced by factors, including the volatility present within the markets and the liquidity of the markets. There are certain limitations inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these analyses are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.

At June 30, 2009, we had total long term debt of $6,875 million, excluding $442 million of securitization obligations. Of the $6,875 million of long term debt, the Company has $3,717 million of variable interest rate debt primarily based on 3-month LIBOR. We have entered into floating to fixed interest rate swap agreements with varying expiration dates with an aggregate notional value of $575 million and effectively fixed our interest rate on that portion of variable interest rate debt. The remaining variable interest rate debt is subject to market rate risk as our interest payments will fluctuate as a result of market changes. We have determined that the impact of a 100 bps change in LIBOR (1% change in the interest rate) on our term loan facility variable rate borrowings would affect our interest expense by approximately $31 million. While these results may be used as benchmarks, they should not be viewed as forecasts.

At June 30, 2009, the fair value of our long term debt approximated $4,036 million, which was determined based on quoted market prices. Since considerable judgment is required in interpreting market information, the fair value of the long-term debt is not necessarily indicative of the amount that could be realized in a current market exchange. A 10% decrease in market rates would have a $57 million impact on the fair value of our long-term debt.

 

Item 4T. Controls and Procedures

 

(a) We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

 

(b) As of the end of the period covered by this quarterly report on Form 10-Q, we have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the “reasonable assurance” level.

 

(c) There has not been any change in our internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonable likely to materially affect, our internal control over financial reporting.

 

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PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings

The following updates certain disclosures with respect to legal and regulatory proceedings contained in our 2008 Form 10-K.

Legal—Real Estate Business

The following litigation relates to Cendant’s Real Estate business, and pursuant to the Separation and Distribution Agreement, we have agreed to be responsible for all of the related costs and expenses.

Berger v. Property ID Corp., et al. , (CV 05-5373 GHK (CTx) (U.S.D.C., C.D. Cal.)). On August 28, 2008, the Court granted preliminary approval of the settlement of this action as it relates to claims against the Company and its subsidiaries. The settlement provides for the reimbursement of the amounts paid to purchase a Property I.D. natural hazard disclosure report where the consumer was represented by an agent of a Realogy broker or franchisee in the transaction. As previously disclosed, under the terms of the settlement, the Company paid $4 million in September 2008 to fund attorneys’ fees and costs of claims administration and expected that it would have no obligation to fund claims under the settlement agreement based upon its assumptions that insurance proceeds would be sufficient to meet the claims payment obligations under the settlement agreement. The Company believes that it has no further payment obligations with respect to this litigation.

Re Homestore.com Securities Litigation, No. 10-CV-11115 (MJP) (U.S.D.C., C.D. Cal.). This action was settled in July 2008, subject to notice to class members and Court approval. The court granted preliminary approval of the settlement in December 2008 and final approval of the settlement in March 2009. Under the terms of the settlement, Cendant agreed to receive approximately $11.5 million, plus interest but waived its right to the remaining $4 million cash escrow balance. Cendant also waived any right it may have to any settlement proceeds that may be distributed from a future settlement with defendant Stuart Wolf. Under the terms of the Separation Agreement, Realogy is entitled to 100% of the proceeds payable to Cendant under the settlement agreement.

On April 27, 2009, Realogy received $11 million of settlement proceeds and will be entitled to an additional $0.8 million when the individual settlements of this action are distributed to all defendants by the plaintiffs.

Proa, Jordan and Schiff v. NRT Mid-Atlantic, Inc . d/b/a Coldwell Banker Residential Brokerage et al. (Case No. 1:05-cv-02157 (AMD), U.S.D.C., District of Maryland, Northern Division). In May 2009, summary judgment was granted in favor of defendant NRT and the case was dismissed, subject to Plaintiffs’ right to appeal. A discussion of the proceedings leading up the summary judgment decision follows.

On August 8, 2005, plaintiffs Proa and Jordan filed a lawsuit against NRT Mid-Atlantic, Inc., NRT Incorporated (now known as NRT LLC) and Angela Shearer, Branch Vice President of Coldwell Banker Residential Brokerage’s Chestertown, Maryland office. On October 27, 2005, plaintiffs filed an amended complaint that includes Schiff as a plaintiff, names Sarah Sinnickson, Executive Vice President and General Sales Manager of Coldwell Banker Residential Brokerage as an individual defendant and asserts eight claims. Plaintiffs’ claims involve alleged conduct arising from the plaintiffs’ affiliation with NRT’s Chestertown, Maryland office as real estate agents on an independent contractor basis. The plaintiffs allege violations of Title VII of the Civil Rights Act and violations of the Civil Rights Act of 1866 claiming discrimination and retaliation on the basis of race, religion, ethnicity, racial heritage and/or ethnic or racial associations. The plaintiffs are also seeking declaratory relief on behalf of themselves and a putative class that they are common law employees as opposed to independent contractors. The plaintiffs are also alleging various breach of contract, wrongful discharge and negligent supervision claims. In addition, plaintiffs are alleging that defendant Shearer made false and defamatory remarks about plaintiffs Proa and Jordan to their co-workers.

 

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The plaintiffs are seeking compensatory and punitive damages in an amount to be determined at trial, as well as attorneys’ fees. On November 14, 2005, the defendants filed an answer to the plaintiffs’ amended complaint. A stipulation of voluntary dismissal of the defamation claim against Angela Shearer was entered on January 18, 2006. On March 13, 2007, the Court granted defendants’ motion to dismiss with prejudice Jordan’s Title VII claim for failing to file suit within the statute of limitations. The court also granted defendants’ motion to dismiss with prejudice plaintiffs’ declaratory judgment claim, which sought to obtain a declaration that real estate agents are not independent contractors. The court dismissed the declaratory claim because there is no actual controversy that requires declaratory relief and because there is no claim that is appropriate for class relief as pled by plaintiffs. On March 21, 2007, plaintiffs filed a motion for leave to file a third amended complaint attempting to add class-wide FLSA claims for unpaid minimum wages, overtime and benefits that employees receive. On May 8, 2007, the court denied the motion. As discussed above, in May 2009, summary judgment was granted in favor of defendant and the case was dismissed, subject to Plaintiffs’ right to appeal.

***

The Company also monitors litigation and claims asserted against other industry participants together with new statutory and regulatory enactments for potential impacts to its business. Two key areas that the Company is currently monitoring are RESPA compliance and rules concerning use of customer information with affiliates. Although the Company responds, as appropriate, to these developments, such developments may impose costs or obligations that adversely affect the Company’s business operations or financial results.

Legal—Cendant Corporate Litigation

The following litigation relates to Cendant Corporate Litigation, which, pursuant to the Separation and Distribution Agreement, we have agreed to be responsible for 62.5% of all of the related costs and expenses.

CSI Investment et. al. vs. Cendant et. al. , (Case No. 1:00-CV-01422 (DAB-DFE) (S.D.N.Y.) (“Credentials Litigation) is an action for breach of contract and fraud arising out of Cendant’s acquisition of the Credentials business in 1998. The Stock Purchase Agreement provided for the sale of Credentials Services International to Cendant for a set price of $125 million plus an additional amount which was contingent on Credentials’ future performance. The closing occurred just prior to Cendant’s April 15, 1998 disclosure of potential accounting irregularities relating to CUC. Plaintiffs seek payment of certain “hold back” monies in the total amount of $6 million, as well as a contingent payment based upon future performance that plaintiffs contend should have been approximately $50 million.

In a written opinion issued on September 7, 2007, the Court granted summary judgment to dismiss plaintiffs’ fraud claims and to grant plaintiffs’ motion for the hold back monies. In addition, the Court granted summary judgment in favor of the plaintiffs’ motion, ruling that defendants breached the stock purchase agreement. The summary judgment award plus interest through June 30, 2009 for Cendant is approximately $98 million and also provides for the award of attorneys’ fees to the plaintiff.

In September 2007, Cendant filed a motion for reconsideration of the decision. The plaintiffs subsequently opposed the motion and cross moved for reconsideration of the Court’s dismissal of plaintiffs’ fraud claims. On May 7, 2008, the court denied Cendant’s and the plaintiffs’ motions for reconsideration.

Cendant filed a notice of appeal on May 23, 2008 and appellate bonds were posted in the aggregate amount of approximately $109 million (Realogy for the benefit of Cendant posting a bond for 62.5% thereof, or approximately $68 million, and Wyndham Worldwide Corporation for the benefit of Cendant posting a bond for 37.5%, or approximately $41 million.) On June 2, 2008, Plaintiffs filed a notice of cross appeal. Also on June 2, 2008, the Court stayed plaintiffs’ application for attorneys’ fees pending the outcome of the appeal. In October 2008, Realogy and Wyndham paid their proportionate share of the $720 thousand of sanctions awarded against Cendant.

 

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On July 1, 2009, following oral argument held on June 26, 2009, the appellate court affirmed the trial court’s decisions, denying the appeals filed by both parties and on July 23, 2009 the summary judgment award was paid in full (including $62 million to satisfy Realogy’s 62.5% of the liability). Promptly thereafter, the court entered a satisfaction of judgment (subject to plaintiffs’ right to petition the lower court for reasonable attorneys’ fees) and cancelled the surety bonds.

 

Item 6. Exhibits.

See Exhibit Index. In response to a comment received from the Securities and Exchange Commission on June 1, 2009 in a limited review of the Company’s Form 10-K for the year ended December 31, 2008, and in accordance with Item 601(b)(10) of Regulation S-K, the Company is re-filing Exhibits 10.1 through 10.15 with all attachments thereto, subject to certain requests for confidential treatment with respect to Exhibits 10.9, 10.10, 10.12 and 10.13.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    REALOGY CORPORATION
Date: August 11, 2009    

/s/ Anthony E. Hull

    Anthony E. Hull
   

Executive Vice President and

Chief Financial Officer

Date: August 11, 2009    

/s/ Dea Benson

    Dea Benson
   

Senior Vice President,

Chief Accounting Officer and

Controller

 

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EXHIBIT INDEX

 

Exhibit

  

Description

10.1    Tax Sharing Agreement by and among Realogy Corporation, Cendant Corporation, Wyndham Worldwide Corporation and Travelport Inc. dated as of July 28, 2006.
10.2    Credit Agreement dated as of April 10, 2007, by and among Realogy Corporation, Domus Intermediate Holdings Corp., the Lenders party thereto, JPMorgan Chase Bank, N.A., Credit Suisse, Bear Stearns Corporate Lending Inc., Citicorp North America, Inc. and Barclays Bank plc.
10.3    Guarantee and Collateral Agreement dated as of April 10, 2007, among Domus Intermediate Holdings Corp., Realogy Corporation, each Subsidiary Loan Party party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.
10.4    Employment Agreement, dated as of April 10, 2007 between Realogy Corporation and Richard A. Smith.
10.5    Employment Agreement, dated as of April 10, 2007 between Realogy Corporation and Anthony E. Hull.
10.6    Employment Agreement, dated as of April 10, 2007 between Realogy Corporation and Alexander E. Perriello.
10.7    Employment Agreement, dated as of April 10, 2007 between Realogy Corporation and Bruce G. Zipf.
10.8    Form of Restricted Stock Agreement between Domus Holdings Corp. and the Purchaser party thereto.
10.9+    Amended and Restated Limited Liability Company Operating Agreement of PHH Home Loans, LLC dated as of January 31, 2005, by and between PHH Broker Partner Corporation and Cendant Real Estate Services Venture Partner, Inc.
10.10+    Strategic Relationship Agreement, dated as of January 31, 2005, by and among Cendant Real Estate Services Group, LLC, Cendant Real Estate Services Venture Partner, Inc., PHH Corporation, Cendant Mortgage Corporation, PHH Broker Partner Corporation and PHH Home Loans.
10.11    Joinder Agreement dated as of January 1, 2005, between SPTC Delaware LLC, Sotheby’s (as successor to Sotheby’s Holdings, Inc.), and Cendant Corporation and Sotheby’s International Realty Licensee Corporation.
10.12+    Sixth Omnibus Amendment Agreement and Consent, dated as of June 6, 2007, among Cartus Corporation, Cartus Financial Corporation, Apple Ridge Services Corporation, Apple Ridge Funding LLC, Realogy Corporation, The Bank of New York, the conduit purchasers, committed purchasers, managing Agents and Calyon New York Branch.
10.13+    Amended and Restated Series 2007-1 Indenture Supplement, dated as of April 10, 2007 and Amended and Restated as of July 6, 2007, between Apple Ridge Funding LLC and The Bank of New York, as indenture trustee, paying agent, authentication agent, transfer agent and registrar, which modifies the Master Indenture, dated as of April 25, 2000, among Apple Ridge Funding LLC and The Bank of New York, as indenture trustee, paying agent, authentication agent, transfer agent and registrar.
10.14    Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 and Amended and Restated as of July 6, 2007 among Apple Ridge Funding LLC, Cartus Corporation, the conduit purchasers, committed purchases and managing agents party thereto and Calyon New York Branch, as administrative and lead arranger.

 

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10.15    Amended and Restated Note Purchase Agreement, dated as of April 10, 2007, among Kenosia Funding, LLC, Cartus Corporation, Cartus Relocation Corporation, the commercial paper conduits from time to time party thereto, the financial Institutions from time to time party thereto, the persons from time to time party thereto as managing agents and Calyon New York Branch, as administrative agent and lead arranger.
10.16    Tax Receivable Prepayment Agreement dated June 26, 2009, by and between Wright Express Corporation and Realogy Corporation (Incorporated by reference to Exhibit 10.1 to Realogy’s Current Report on Form 8-K filed June 29, 2009).
31.1    Certification of the Chief Executive Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2    Certification of the Chief Financial Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

+ Confidential treatment has been requested for certain portions of this Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, which portions have been omitted and filed separately with the Securities and Exchange Commission.

 

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Exhibit 10.1

TAX SHARING AGREEMENT

THIS TAX SHARING AGREEMENT (this “ Agreement ”) is made and entered into as of the 28th day of July, 2006, by and among Cendant Corporation, a Delaware corporation (“ Cendant ”), Realogy Corporation, a Delaware corporation (“ Realogy ”), Wyndham Worldwide Corporation, a Delaware corporation (“ Wyndham ”) and Travelport Inc., a Delaware corporation (“ Travelport ”). Each of Cendant, Realogy, Wyndham and Travelport is sometimes referred to herein as a “ Party ” and collectively, as the “ Parties ”.

W I T N E S S E T H:

WHEREAS, Cendant, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including (i) the Real Estate Business, (ii) the Travel Business, (iii) the Hospitality Business and (iv) the Vehicle Rental Business;

WHEREAS, the Board of Directors of Cendant has determined that it is appropriate, desirable and in the best interests of Cendant and its stockholders to separate Cendant into four separate, publicly traded companies, one for each of (i) the Real Estate Business, which shall be owned and conducted, directly or indirectly, by Realogy, (ii) the Hospitality Business, which shall be owned and conducted, directly or indirectly, by Wyndham, (iii) the Travel Business, which shall be owned and conducted, directly or indirectly, by Travelport and (iv) the Vehicle Rental Business, which shall be owned and conducted, directly or indirectly, by Cendant;

WHEREAS, in order to effect such separation, the Board of Directors of Cendant has determined that it is appropriate, desirable and in the best interests of Cendant and its stockholders (i) for Cendant and certain of its subsidiaries to enter into a series of transactions whereby, among other things, (A) Cendant and/or Cendant Finance Holding Company, LLC, will contribute to Realogy certain assets relating to the Real Estate Business (and Realogy will assume certain liabilities), and (B) Cendant and/or Cendant Finance Holding Company, LLC, will contribute to Wyndham certain assets relating to the Hospitality Business (and Wyndham will assume certain liabilities) and (ii) for Cendant to distribute to the holders of Cendant Common Stock on a pro rata basis (in each case without consideration being paid by such stockholders) (A) all of the outstanding shares of common stock, par value $0.01 per share, of Realogy (the “ Realogy Common Stock ”), (B) all of the outstanding shares of common stock, par value $0.01 per share, of Wyndham (the “ Wyndham Common Stock ”) and (C) all of the outstanding shares of common stock, par value $0.01 per share, of Travelport (the “ Travelport Common Stock ”) (such transactions as they may be amended or modified from time to time, collectively, the “ Plan of Separation ”);

WHEREAS, Cendant announced that as part of the Plan of Separation, as an alternative to Cendant’s plan to distribute Travelport Common Stock to holders of Cendant Common Stock, Cendant is also exploring the possible sale of Travelport to a third-party (whether by sale of stock, assets (direct or indirect) or merger, a “ Travelport Sale ”);

WHEREAS, it is the intention of the Parties that each of the contributions of assets to, and the assumption of liabilities by, Realogy and Wyndham together with the corresponding


distribution of all of the Realogy Common Stock and the Wyndham Common Stock, respectively, shall qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”);

WHEREAS, it is the intention of the Parties that the distribution of Travelport Common Stock (if effected) shall qualify as a distribution within the meaning of Section 355(c) of the Code to Cendant;

WHEREAS, it is the intention of the Parties that each of the distribution of Realogy Common Stock, Wyndham Common Stock and Travelport Common Stock, respectively, to the stockholders of Cendant will qualify as a tax-free distribution within the meaning of Section 355(a) of the Code to such stockholders;

WHEREAS, in connection with the Plan of Separation, Realogy, Wyndham and Travelport shall, subject to the terms and provisions of the Separation and Distribution Agreement (as defined herein), enter into separate credit facilities for both revolving and term loan borrowings, all or a portion of the proceeds which shall be distributed to Cendant;

WHEREAS, with respect to the debt proceeds distributed by Realogy and Wyndham, respectively, to Cendant, such proceeds shall be placed by Cendant in a separate account and used by Cendant solely to repay its existing indebtedness;

WHEREAS, with respect to the debt proceeds distributed by Travelport to Cendant, such proceeds shall be placed by Cendant into a separate bank account and used by Cendant solely to reduce and/or repay its existing indebtedness and certain other liabilities of Cendant;

WHEREAS, it is the intention of the Parties that the distribution of cash proceeds from such borrowings by Realogy and Wyndham, respectively, to Cendant shall qualify as a tax-free distribution of cash pursuant to Section 361 of the Code;

WHEREAS, it is the intention of the Parties that the distribution of cash proceeds from such borrowings by Travelport shall be treated, in part, as a distribution of cash pursuant to Section 301 of the Code and applicable Treasury Regulations; and

WHEREAS, in connection with the Plan of Separation, each of the Parties desire to set forth their agreement on the rights and obligations with respect to handling and allocating Taxes and related matters.

 

2


NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the parties mutually covenant and agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 General . As used in this Agreement, the following terms shall have the following meanings:

(1) “ AAA ” has the meaning set forth in Section 12.2 .

(2) “ Accounting Dispute ” has the meaning set forth in Section 12.2 .

(3) “ Affiliate ” means a Person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. For purposes hereof, none of the Parties or their respective Subsidiaries (determined, in the case of Cendant, immediately after the Final Separation Date, in the case of Realogy, immediately after the Realogy Distribution, in the case of Wyndham, immediately after the Wyndham Distribution and in the case Travelport, immediately after the Final Separation Date) shall be considered an “Affiliate” of any of the other Parties or their respective Subsidiaries (determined on the same basis).

(4) “ Agreement ” has the meaning set forth in the preamble hereto.

(5) “ Ancillary Agreement ” has the meaning set forth in the Separation and Distribution Agreement.

(6) “ Applicable Realogy DCLs ” has the meaning set forth in Section 10.2(m)(iv) .

(7) “ Applicable Tax Benefit Party ” means the Party or its Affiliate that would have, but for a Final Determination with respect to a Pre-2007 Shared Entity Audit that results in an increase in the items of taxable income or gain of (or the disallowance of items of deduction, loss or credit with respect to) a Shared Entity, been Apportioned net operating loss carryovers and/or Credit Carryovers as of its first Post-Distribution Tax Period.

(8) “ Applicable Travelport DCLs ” has the meaning set forth in Section 10.2(m)(v) .

(9) “ Applicable Wyndham DCLs ” has the meaning set forth in Section 10.2(m)(iv) .

(10) “ Apportioned ” has the meaning set forth in Section 3.5 .

(11) “ Assets ” has the meaning set forth in the Separation and Distribution Agreement.

(12) “ Audit ” means any audit, assessment of Taxes, other examination by any Taxing Authority, proceeding, or appeal of such a proceeding relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.

 

3


(13) “ Business Day ” means any day other than a Saturday, Sunday or a day on which banks are required to be closed in New York, New York.

(14) “ Business Entity ” means any corporation, partnership, limited liability company or other entity.

(15) “ CCRG Audit Sharing Percentage ” means a ratio:

 

  (i) the numerator of which is the sum of:

 

  (I) the aggregate amount of income and gain directly attributable to or resulting from any of the Distributions failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to any of the Distributions, to the extent such income or gain results from or is directly attributable to the Fault of Cendant or any of its Affiliates;

 

  (II) in the event of a Pre-2007 Shared Entity Audit that results in a Pre-2007 Correlative Adjustment that is directly related or attributable to the business or operations any of the CCRG Entities, the aggregate amount of disallowed deduction, loss and credit (and income and gain) resulting from such Pre-2007 Correlative Adjustment; and

 

  (III) the aggregate amount of income and gain (and all disallowed deduction, loss and credit) resulting from a breach by Cendant of a representation, covenant or obligation under this Agreement;

 

  (ii) the denominator of which is the sum of:

 

  (I) the aggregate amount of income and gain resulting from such Pre-2007 Shared Entity Audit; and

 

  (II) the aggregate amount of disallowed deduction, loss and credit resulting from such Pre-2007 Shared Entity Audit.

provided , however , that, for purposes of this definition, all credits shall be deemed to equal 2.857143.

 

4


(16) “ CCRG Entities ” means Avis Budget Holdings, LLC, and Avis Budget Car Rental LLC and its direct and indirect Subsidiaries other than Cendant Canada.

(17) “ CCRG Entity Tax Return ” means:

 

  (i) any Income Tax Returns required to be filed by any Tax Group of which a CCRG Entity is the Common Parent;

 

  (ii) any U.S., state, local or foreign separate Income Tax Return required to be filed by a CCRG Entity; and

 

  (iii) any U.S., state, local or foreign Non-Income Tax Return required to be filed by a CCRG Entity.

(18) “ CCRG Entity Taxes ” means all Taxes required to be paid by or imposed upon a CCRG Entity with respect to all CCRG Entity Tax Returns.

(19) “ Cendant ” has the meaning set forth in the preamble of this Agreement.

(20) “ Cendant Canada ” means Cendant Canada, Inc., a Canadian corporation.

(21) “ Cendant Common Stock ” has the meaning set forth in the Separation and Distribution Agreement.

(22) “ Cendant Contingent Assets ” has the meaning set forth in the Separation and Distribution Agreement.

(23) “ Cendant Employee ” has the meaning set forth in the Separation and Distribution Agreement.

(24) “ Cendant Group ” means Cendant, CFHC LLC, Cendant Canada, Advance Ross Corporation, Advance Ross Intermediate Corporation, Advance Ross Sub Company and each of the CCRG Entities and each Business Entity that becomes a Subsidiary of Cendant.

(25) “ Cendant Indemnitees ” means Cendant, each member of the Cendant Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, except the Realogy Indemnitees, the Travelport Indemnitees and the Wyndham Indemnitees.

(26) “ Cendant Operations ” has the meaning set forth in Section 2.5(g) .

(27) “ Cendant Option ” means an option to acquire Cendant Common Stock.

(28) “ Cendant Option Holder ” means a holder of a Cendant Option.

(29) “ Cendant RSU ” means a restricted stock unit payable in shares of Cendant Common Stock.

(30) “ Cendant RSU Holder ” means a holder of a Cendant RSU.

 

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(31) “ Cendant Shared Entities ” means:

 

  (i) Cendant or any entity that merged with and into Cendant;

 

  (ii) CFHC or its successor, CFHC LLC or any entity that merged with and into CFHC or CFHC LLC, including, without limitation, Cendant Internet Group, Inc., Cendant Operations, Inc., TM Acquisition Corporation, Wizcom International, Ltd. and Travel Link Group, Inc.;

 

  (iii) Advance Ross Corporation, Advance Ross Intermediate Corporation and Advance Ross Sub Company; and

 

  (iv) CD Intellectual Property Holdings LLC and Cendant Canada.

(32) “ Cendant Subsidiaries ” means all direct and indirect Subsidiaries of Cendant, determined immediately after the Final Separation Date, including all CCRG Entities and all Cendant Shared Entities.

(33) “ CFHC ” means Cendant Finance Holding Corporation, a Delaware corporation and the predecessor of CFHC LLC.

(34) “ CFHC LLC ” means Cendant Finance Holding Company, LLC, a Delaware limited liability company that is directly and wholly-owned by Cendant.

(35) “ Code ” has the meaning referred to in the recitals to this Agreement.

(36) “ Common Parent ” means (i) for U.S. federal income tax purposes, the “common parent corporation” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code) filing a U.S. federal consolidated income tax return, or (ii) for state, local or foreign income tax purposes, the common parent (or similar term) of a consolidated, unitary, combined or similar group.

(37) “ Credit Carryover ” means the aggregate of all alternative minimum Tax credit carryovers, general business credit carryovers and foreign Tax credit carryovers.

(38) “ DCL ” has the meaning set forth in Section 10.2(m)(i) .

(39) “ Dispute ” means any dispute, controversy or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to, this Agreement or the transactions contemplated thereby, including any claim based in contract, tort, statute or constitution.

(40) “ Dispute Notice ” has the meaning set forth in Section 12.1 .

(41) “ Distributions ” means, collectively, the Realogy Distribution, the Wyndham Distribution and the Travelport Distribution (if effected).

 

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(42) “ Distribution Taxes ” means the sum of all Realogy Distribution Taxes, Wyndham Distribution Taxes and Travelport Distribution Taxes, provided , however , if the Travelport Sale occurs, Travelport Distribution Taxes shall be deemed to equal zero.

(43) “ DRC ” has the meaning set forth in Section 10.2(m)(iii) .

(44) “ Due Date ” means the date (taking into account all valid extensions) upon which a Tax Return is required to be filed.

(45) “ Estimated Tax Return ” shall have the meaning set forth in Section 2.1(a)(iii)(E).

(46) “ Extraordinary Transaction ” means any transaction that is not in the Ordinary Course of Business and is not set forth or referred to in the Steps Memorandum, provided , however , that Extraordinary Transaction shall not include any Travelport Sale.

(47) “ Fault ” has the meaning set forth in Section 5.2 .

(48) “ Fifty Percent or Greater Interest ” means a “50-percent or greater interest” for purposes of Sections 355(d) and (e) of the Code and the Treasury Regulations promulgated thereunder.

(49) “ Final Determination ” means the final resolution of liability for any Tax for any taxable period, by or as a result of:

 

  (i) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed;;

 

  (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the entire Tax liability for any taxable period;

 

  (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax; or

 

  (iv) any other final disposition, including by reason of the expiration of the applicable statute of limitations.

(50) “ Final Tax Attribute Allocation ” has the meaning set forth in Section 10.1(b) .

(51) “ Final Separation Date ” has the meaning set forth in the Separation and Distribution Agreement.

(52) “ Group ” means the Cendant Group, the Realogy Group, the Wyndham Group or the Travelport Group.

 

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(53) “ Hospitality Business ” has the meaning set forth in the Separation and Distribution Agreement.

(54) “ Hypothetical Tax Benefit Amount ” means, with respect to an Applicable Tax Benefit Party, the sum of:

 

  (i) product of (A) thirty-eight percent (38%) and (B) the excess, if any, of (x) the net operating loss carryovers (if any) that would have been Apportioned to the Applicable Tax Benefit Party or its Affiliates for its first Post-Distribution Tax Period assuming that the applicable Pre-2007 Shared Entity Audit had not resulted in any increase of taxable income and gain (or the disallowance of deduction, loss and credit) for such taxable period (but taking into account all increases of taxable income and gain (and all disallowances of items of deduction, loss and credit) resulting from Audits for all prior periods and utilization of net operating loss carryovers and Credit Carryovers as a result thereof) over (y) the net operating loss carryovers (if any) that will be Apportioned to the Applicable Tax Benefit Party or its Affiliates as of its first Post-Distribution Tax Period taking into account all increases of income and gain (and all disallowances of items of deductions, loss and credit) resulting from such applicable Pre-2007 Shared Entity Audit (and all increases of income and gain and all disallowances of deduction, loss and credit resulting from all Audits for all prior periods and utilization of net operating loss carryovers and Credit Carryovers as a result thereof); and

 

  (ii) the excess, if any, of (A) the Credit Carryovers (if any) that would have been Apportioned to the Applicable Tax Benefit Party or its Affiliates as of its first Post-Distribution Taxable Period assuming that the applicable Pre-2007 Shared Entity Audit had not resulted in any increases in taxable income and gain (or disallowances of deduction, loss or credit) for such taxable period (but taking into account all increases of taxable income and gain (and all disallowances of deduction, loss and credit) resulting from Audits for all prior periods and utilization of net operating loss carryovers and Credit Carryovers as a result thereof) over (y) the Credit Carryovers (if any) that will be Apportioned to the Applicable Tax Benefit Party or its Affiliates as of its first Post-Distribution Tax Period taking into account all increases of income and gain (and all disallowances of deduction, loss and credit) resulting from such applicable Pre-2007 Shared Entity Audit (and increases of income and gain and all disallowances of deduction, loss and credit resulting from all Audits for all prior periods and utilization of net operating loss carryovers and Credit Carryovers as a result thereof);

 

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provided , however , that, for the avoidance of doubt, the determination of amounts pursuant to this definition shall be made in a manner consistent with the provisions of Article X and provided , further , that, for the avoidance of doubt, there shall be no Hypothetical Tax Benefit Amount except in the case of a Section 8.9 Final Determination.

(55) “ Income Tax Returns ” mean all Tax Returns relating to Income Taxes.

(56) “ Income Taxes ” means: (i) all Taxes based upon, measured by, or calculated with respect to: (A) net income or profits (including, but not limited to, any capital gains, minimum Tax or any Tax on items of Tax preference, but not including sales, use, real or personal property, gross or net receipts, transfer or similar Taxes) or (B) multiple bases (including, but not limited to, corporate franchise, doing business and occupation Taxes) if one or more bases upon which such Tax may be based, measured by, or calculated with respect to, is described in clause (i)(A) above; or (ii) all U.S., state, local or foreign franchise Taxes, including in the case of each of (i) and (ii) any related interest and any penalties, additions to such Tax or additional amounts imposed with respect thereto by any Tax Authority.

(57) “ Independent Firm ” means a nationally recognized accounting firm other than Ernst & Young (LLP).

(58) “ Indemnified Party ” means the Party (or Indemnitee) which is or may be entitled pursuant to this Agreement to receive any payments (including reimbursement for Taxes or costs and expenses) from another Party or Parties to this Agreement.

(59) “ Indemnifying Party ” means the Party which is or may be required pursuant to this Agreement to make indemnification or other payments (including reimbursement for Taxes and costs and expenses) to another Party to this Agreement.

(60) “ Indemnitee ” means a Cendant Indemnitee, a Realogy Indemnitee, a Wyndham Indemnitee, or a Travelport Indemnitee.

(61) “ IP Companies ” means, collectively, ERA TM Corp., a California corporation, C21 TM Corp., a California corporation, and CB TM Corp., a California corporation.

(62) “ IRS ” means the United States Internal Revenue Service or any successor thereto, including, but not limited to its agents, representatives, and attorneys.

(63) “ Law ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).

(64) “ Majority of the Parties ” means the consent of three of the Parties, provided , however , that if a Travelport Sale occurs, “Majority of the Parties” means the consent of two of the Parties (excluding Travelport).

 

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(65) “ New Realogy Gain Recognition Agreements ” has the meaning set forth in Section 10.3(m)(vii) .

(66) “ New Travelport Gain Recognition Agreements ” has the meaning set forth in Section 10.3(m)(ii) .

(67) “ New Wyndham Gain Recognition Agreements ” has the meaning set forth in Section 10.3(m)(v) .

(68) “ New York Courts ” has the meaning set forth in the Separation and Distribution Agreement.

(69) “ Non-Income Tax Returns ” mean all Tax Returns other than Income Tax Returns.

(70) “ Non-Income Taxes ” mean all Taxes other than Income Taxes.

(71) “ Non-Monetary Impairment ” has the meaning set forth in the Separation and Distribution Agreement.

(72) “ Ongoing Federal Income Tax Audit ” has the meaning set forth in Section 8.9(a) .

(73) “ Ongoing State Income Tax Audit ” has the meaning set forth in Section 8.9(a) .

(74) “ Options ” means, collectively, and as the context requires, Cendant Options, Realogy Options, Wyndham Options and Travelport Options.

(75) “ Ordinary Course of Business ” means an action taken by a Person only if such action is taken in the ordinary course of the normal day-to-day operations of such Person consistent with the past practices of such Person.

(76) “ Other Dispute ” has the meaning set forth in Section 12.2(b) .

(77) “ Party ” has the meaning set forth in the preamble hereto.

(78) “ Person ” means any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any governmental entity.

(79) “ Plan of Separation ” has the meaning set forth in the recitals hereto.

(80) “ Post-2006 Cendant Shared Entity Tax Return ” means:

 

  (i) any Income Tax Return required to be filed by any Tax Group of which a Cendant Shared Entity is the Common Parent for Tax years beginning on or after January 1, 2007;

 

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  (ii) any U.S., state, local or foreign separate Income Tax Return required to be filed by a Cendant Shared Entity for Tax years beginning on or after January 1, 2007; and

 

  (iii) any U.S., state, local or foreign Non-Income Tax Return required to be filed by a Cendant Shared Entity for Tax years beginning on or after January 1, 2007.

(81) “ Post-2006 Cendant Shared Entity Taxes ” means all Taxes required to paid by or imposed upon a Cendant Shared Entity with respect to all Post-2006 Cendant Shared Entity Tax Returns.

(82) “ Post-2006 Existing Realogy Gain Recognition Agreements ” has the meaning set forth in Section 10.3(m)(xi).

(83) “ Post-2006 Existing Travelport Gain Recognition Agreements ” has the meaning set forth in Section 10.3(m)(ix).

(84) “ Post-2006 Existing Wyndham Gain Recognition Agreements ” has the meaning set forth in Section 10.3(m)(x).

(85) “ Post-2006 Shared Entity Tax Returns ” means, collectively, all Post-2006 Cendant Shared Entity Tax Returns and all Post-2006 Wyndham Shared Entity Tax Returns.

(86) “ Post-2006 Shared Entity Taxes ” means, collectively, all Post-2006 Cendant Shared Entity Taxes and all Post-2006 Wyndham Shared Entity Taxes.

(87) “ Post-2006 Wyndham Shared Entity Tax Returns ” means:

 

  (i) any Income Tax Returns required to be filed by any Tax Group of which a Wyndham Shared Entity is the Common Parent for Tax years beginning on or after January 1, 2007;

 

  (ii) any U.S. state, local or foreign separate Income Tax Return required to be filed by a Wyndham Shared Entity for Tax years beginning on or after January 1, 2007; and

 

  (iii) any U.S. state, local or foreign Non-Income Tax Return required to be filed by a Wyndham Shared Entity for taxable years beginning on or after January 1, 2007.

(88) “ Post-2006 Wyndham Shared Entity Taxes ” means all Taxes required to be paid or imposed upon a Wyndham Shared Entity with respect to all Post-2006 Wyndham Shared Entity Tax Returns.

(89) “ Post-Distribution Tax Detriment ” has the meaning set forth in Section 8.13 .

 

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(90) “ Post-Distribution Tax Period ” means:

 

  (i) in the case of Cendant, a Tax year beginning on or after January 1, 2007;

 

  (ii) in the case of Realogy, a Tax year beginning after the Realogy Distribution Date;

 

  (iii) in the case of Wyndham, a Tax year beginning after the Wyndham Distribution Date; and

 

  (iv) in the case of Travelport, a Tax year beginning after the Travelport Distribution Date.

(91) “ Pre-2007 Cendant Shared Entity Tax Returns ” means:

 

  (i) any Income Tax Returns required to be filed by any Tax Groups of which a Cendant Shared Entity is the Common Parent for Tax years ending on or prior to December 31, 2006;

 

  (ii) any U.S., state, local or foreign separate Income Tax Return required to be filed by a Cendant Shared Entity for Tax years ending on or prior to December 31, 2006; and

 

  (iii) any U.S., state, local or foreign Non-Income Tax Return required to be filed by a Cendant Shared Entity for Tax years ending on or prior to December 31, 2006.

(92) “ Pre-2007 Cendant Shared Entity Taxes ” means all Taxes required to paid by or imposed upon a Cendant Shared Entity with respect to all Pre-2007 Cendant Shared Entity Tax Returns.

(93) “ Pre-2007 Correlative Adjustment ” means a disallowance of an item of deduction, loss or credit (or an increase of an item of income or gain) included in the applicable Pre-2007 Shared Entity Tax Return that is related or attributable to the business or operations of any of the CCRG Entities, Realogy or its Subsidiaries, Wyndham or its Subsidiaries or Travelport or its Subsidiaries (as the case may be) and also is more likely than not to result in a related correlative increase of an item of deduction, loss or credit (or reduction of an item of income or gain for a Post-Distribution Tax Period of such entity). For purposes of this Agreement, a Correlative Adjustment shall not include any such disallowance or increase that more likely than not will result in an increase in basis in property the basis of which is neither deductible, depreciable or amortizable.

(94) “ Pre-2007 Realogy Separate Company Shared Tax Audit ” means all Audits relating to or involving Realogy Separate Company Shared Taxes.

(95) “ Pre-2007 Realogy Separate Company Shared Taxes ” means each of the separate company Taxes set forth on Schedule B (relating to periods ending on or prior to

 

12


December 31, 2006) that could be required to be paid by Realogy or any of its Subsidiaries relating to the specific Tax issue(s) set forth on such Schedule; provided , however , that, notwithstanding anything to the contrary contained herein, each such Pre-2007 Realogy Separate Company Shared Tax shall be equal to the lesser of (i) the actual incremental Tax liability resulting from any Pre-2007 Realogy Separate Company Shared Tax Audit relating solely to such specific Tax issues set forth on Schedule B and (ii) the amount set forth on Schedule B relating to such specific Tax issue.

(96) “ Pre-2007 Separate Company Shared Tax Audits ” means, collectively, all Audits relating to Pre-2007 Separate Company Shared Taxes.

(97) “ Pre-2007 Separate Company Shared Taxes ” means, collectively, all Pre-2007 Realogy Separate Company Shared Taxes, all Pre-2007 Travelport Separate Company Shared Taxes and all Pre-2007 Wyndham Separate Company Shared Taxes.

(98) “ Pre-2007 Shared Entity Audit Other Adjustments ” means the sum of all increases in income and gain and all disallowances of deductions and losses resulting from a Pre-2007 Shared Entity Audit other than:

 

  (i) the aggregate amount of income and gain set forth in clause (i)(I), and the aggregate amount of disallowed deduction, loss and credit (and increased income and gain) set forth in clause (i)(II), of the defined term “CCRG Audit Sharing Percentage”;

 

  (ii) the aggregate amount of income and gain set forth in clause (i)(I), the aggregate amount of income and gain set forth in Clause (i)(II), the aggregate amount of disallowed deduction, loss and credit (and increased income and gain) set forth in clause (i)(III) and the aggregate amount of income and gain set forth in clause (i)(IV), of the defined term “Realogy Audit Sharing Percentage”;

 

  (iii) the aggregate amount of income and gain set forth in clause (i)(I), the aggregate amount of income and gain set forth in Clause (i)(II), the aggregate amount of disallowed deduction, loss and credit (and increased income and gain) set forth in clause (i)(III) and the aggregate amount of income and gain set forth in clause (i)(IV), of the defined term “Wyndham Audit Sharing Percentage”, and

 

  (iv) the aggregate amount of income and gain set forth in clause (i)(I), the aggregate amount of income and gain set forth in Clause (i)(II), the aggregate amount of disallowed deduction, loss and credit (and increased income and gain) set forth in clause (i)(III) and the aggregate amount of income and gain set forth in clause (i)(IV), of the defined term “Travelport Audit Sharing Percentage”, provided , however , that if the Travelport Sale occurs, all amounts referred to in this clause (iv) of this definition shall be deemed to equal zero.

provided , however , that, for purposes of this definition, all credits shall be deemed to equal 2.857143.

 

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(99) “ Pre-2007 Shared Entity Audits ” means all Audits relating to all Pre-2007 Shared Entity Tax Returns.

(100) “ Pre-2007 Shared Entity Audit Tax Amount ” has the meaning set forth in Section 8.8.

(101) “ Pre-2007 Shared Entity Taxes ” means, collectively, all Pre-2007 Cendant Shared Entity Taxes and all Pre-2007 Wyndham Shared Entity Taxes.

(102) “ Pre-2007 Shared Entity Tax Returns ” means, collectively, all Pre-2007 Cendant Shared Entity Tax Returns and all Pre-2007 Wyndham Shared Entity Tax Returns.

(103) “ Pre-2007 Travelport Separate Company Shared Tax Audit ” means all Audits relating to or involving Travelport Separate Company Shared Taxes.

(104) “ Pre-2007 Travelport Separate Company Shared Taxes ” means each of the separate company Taxes set forth on Schedule B (relating to periods ending on or prior to December 31, 2006) that could be required to be paid by Travelport or any of its Subsidiaries relating to the specific Tax issue(s) set forth on such Schedule; provided , however , that, notwithstanding anything to the contrary contained herein, each such Pre-2007 Travelport Separate Company Shared Tax shall be equal to the lesser of (i) the actual incremental Tax liability resulting from any Pre-2007 Travelport Separate Company Shared Tax Audit relating solely to such specific Tax issues set forth on Schedule B and (ii) the amount set forth on Schedule B relating to such specific Tax issue, provided , further , that Travelport Separate Company Shared Taxes shall be deemed to equal zero if the Travelport Sale occurs.

(105) “ Pre-2007 Wyndham Separate Company Shared Tax Audit ” means all Audits relating to or involving Wyndham Separate Company Shared Taxes.

(106) “ Pre-2007 Wyndham Separate Company Shared Taxes ” means each of the separate company Taxes set forth on Schedule B (relating to periods ending on or prior to December 31, 2006) that could be required to be paid by Wyndham or any of its Subsidiaries relating to the specific Tax issue(s) set forth on such Schedule; provided , however , that, notwithstanding anything to the contrary contained herein, each such Pre-2007 Wyndham Separate Company Shared Tax shall be equal to the lesser of (i) the actual incremental Tax liability resulting from any Pre-2007 Wyndham Separate Company Shared Tax Audit relating solely to such specific Tax issues set forth on Schedule B and (ii) the amount set forth on Schedule B relating to such specific Tax issue.

(107) “ Pre-2007 Wyndham Shared Entity Tax Returns ” means:

 

  (i) all Income Tax Returns required to be filed by all Tax Groups of which a Wyndham Shared Entity is the Common Parent for taxable years ending on or prior to December 31, 2006;

 

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  (ii) all U.S., state, local and foreign separate Income Tax Returns required to be filed by a Wyndham Shared Entity for taxable years ending on or prior to December 31, 2006; and

 

  (iii) all U.S., state, local and foreign Non-Income Tax Returns required to be filed by a Wyndham Shared Entity for taxable years ending on or prior to December 31, 2006.

(108) “ Pre-2007 Wyndham Shared Entity Taxes ” means all Taxes required to be paid or imposed upon a Wyndham Shared Entity with respect to all Pre-2007 Wyndham Shared Entity Tax Returns.

(109) “ Prime Rate ” has the meaning set forth in the Separation and Distribution Agreement.

(110) “ Proposed Acquisition Transaction ” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, to enter into a transaction or series of related transactions), as a result of which any of the Parties (or any successor thereto) would merge or consolidate with any other Person or as a result of which any Person or any group of Persons would (directly or indirectly) acquire, or have the right to acquire (through an option or otherwise) from any of the Parties (or any successor thereto) and/or one or more holders of their common stock, respectively, any amount of stock of any of the Parties, as the case may be, that would, when combined with any other changes in ownership of the stock of such Party pertinent for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, comprise more than thirty–five percent (35%) or more of (i) the value of all outstanding stock of such Party as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (ii) the total combined voting power of all outstanding stock of such Party as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. For purposes of determining whether a transaction constitutes an indirect acquisition for purposes of the first sentence of this definition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted accordingly by the parties in good faith.

(111) “ Real Estate Business ” has the meaning set forth in the Separation and Distribution Agreement.

(112) “ Realizable Tax Benefit ” means the Tax benefit potentially realizable (without applying a discount for the time value of money or for the lack of certainty of realization) by a Party or its Affiliates, which potential Tax benefit is solely attributable to the accrual or payment of a Tax, cost, expense, liability or other amount by such Party or its Affiliates which accrual or payment resulted in the right by such Party or it Affiliates to receive a payment from another Party pursuant to this Agreement, assuming an effective Tax rate of thirty-eight percent (38%).

 

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(113) “ Realogy ” has the meaning set forth in the recitals to this Agreement.

(114) “ Realogy Audit Sharing Percentage ” means a ratio:

 

  (i) the numerator of which is the sum of:

 

  (I) the Realogy Sharing Percentage of the aggregate amount of all income and gain directly attributable to or resulting from any of the Distributions failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to any of the Distributions, to the extent such items of income or gain does not result and is not directly attributable to the Fault of any Party and/or its Affiliates;

 

  (II) the aggregate amount of all income and gain directly attributable to or resulting from the Realogy Distribution failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to the Realogy Distribution, to the extent such items of income or gain results from or is directly attributable to the Fault of Realogy or any of its Affiliates;

 

  (III) in the event of a Pre-2007 Shared Entity Audit that results in a Pre-2007 Correlative Adjustment that is directly related or attributable to the business or operations of Realogy or any of its Subsidiaries, the aggregate amount of disallowed deduction, loss and credit (and increases of income and gain) resulting from such Pre-2007 Correlative Adjustment;

 

  (IV) the aggregate amount of income and gain (and disallowed deduction, loss and credit) resulting from a breach by Realogy of a representation, covenant or obligation under this Agreement; and

 

  (V) the Realogy Sharing Percentage of the aggregate amount of all Pre-2007 Shared Entity Other Adjustments; and

 

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  (ii) the denominator of which is the sum of:

 

  (I) all aggregate amount of income and gain resulting from such Pre-2007 Shared Entity Audit; and

 

  (II) all aggregate amount of all disallowed deduction, loss and credit resulting from such Pre-2007 Shared Entity Audit.

provided , however , that, for purposes of this definition, all credits shall be deemed to equal 2.857143.

(115) “ Realogy Common Stock ” has the meaning set forth in the recitals hereto.

(116) “ Realogy Distribution ” means the distribution on the Realogy Distribution Date to holders of record of shares of Cendant Common Stock as of the Realogy Distribution Record Date of the Realogy Common Stock owned by Cendant on the basis of one (1) share of Realogy Common Stock for every four (4) outstanding shares of Cendant Common Stock.

(117) “ Realogy Distribution Date ” means the date on which Cendant distributes all of the issued and outstanding shares of Realogy Common Stock to the holders of Cendant Common Stock.

(118) “ Realogy Distribution Record Date ” means such date as may be determined by Cendant’s board of directors as the record date for the Realogy Distribution.

(119) “ Realogy Distribution Taxes ” means any and all Taxes required to be paid by or imposed on Cendant (or any Tax Group of which it is a member) resulting from, or directly arising in connection with, the failure of the Realogy Distribution to qualify under Section 355(a) or (c) of the Code or, if applicable, Section 361(c) of the Code, or the application of Sections 355(d) or (e) of the Code to the Realogy Distribution, or under the corresponding provisions of the Laws of other jurisdictions.

(120) “ Realogy Employee ” has the meaning set forth in the Separation and Distribution Agreement.

(121) “ Realogy Group ” means Realogy and each of the Realogy Subsidiaries and each Business Entity that becomes a Subsidiary of Realogy.

(122) “ Realogy Indemnitees ” means Realogy, each member of the Realogy Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(123) “ Realogy Option ” means an option to acquire Realogy Common Stock.

(124) “ Realogy Option Holder ” means a holder of a Realogy Option.

(125) “ Realogy RSU ” means a restricted stock unit payable in shares of Realogy Common Stock.

 

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(126) “ Realogy RSU Option ” means a holder of a Realogy RSU.

(127) “ Realogy Sharing Percentage ” means fifty percent (50%); provided , however , that in the event a Travelport Sale occurs, Realogy Sharing Percentage means sixty-two and one-half percent (62.5%) for all purposes (including with retroactive application).

(128) “ Realogy Subsidiaries ” means all direct and indirect Subsidiaries of Realogy, determined immediately after the Realogy Distribution (and predecessors of such entities).

(129) “ Realogy Subsidiary Corporation ” has the meaning as set forth in Section 10.3(m)(viii) .

(130) “ Realogy Tax Return ” means:

 

  (i) any Income Tax Returns required to be filed by any Tax Group of which Realogy or a Realogy Subsidiary is the Common Parent;

 

  (ii) any U.S., state, local or foreign separate Income Tax Return required to be filed by Realogy or a Realogy Subsidiary; and

 

  (iii) any U.S., state, local or foreign Non-Income Tax Return required to be filed by Realogy or a Realogy Subsidiary.

(131) “ Realogy Taxes ” means all Taxes required to be paid by or imposed upon Realogy or a Realogy Subsidiary with respect to all Realogy Tax Returns.

(132) “ Refund ” means any refund of Taxes (including any overpayment of Taxes for a period ending on or prior to December 31, 2006 that can be refunded or, alternatively, applied to future Taxes payable), including any interest paid on or with respect to such refund of Taxes, provided , however , that with respect to any refund of Taxes imposed on any Person, refunds shall be net of any Taxes imposed on or related or attributable to the receipt or accrual of such refund.

(133) “ Requesting Party ” has the meaning set forth in Section 5.3 .

(134) “ Restricted Period ” means:

 

  (i) in the case of Cendant, the period beginning the day after the Travelport Distribution Date and ending on the two-year anniversary thereof, provided , however , that, if the Travelport Sale occurs, the period beginning the day after the Wyndham Distribution Date and ending on the two-year anniversary thereof.

 

  (ii) in the case of Realogy, the period beginning the day after the Realogy Distribution Date and ending on the two-year anniversary thereof;

 

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  (iii) in the case of Wyndham, the period beginning the day after the Wyndham Distribution Date and ending on the two-year anniversary thereof; and

 

  (iv) in the case of Travelport, the period beginning the day after the Travelport Distribution Date and ending on the two-year anniversary thereof.

(135) “ RSU Effective Time ” means August 15, 2006.

(136) “ RSUs ” means, collectively, Cendant RSUs, Realogy RSUs, Wyndham RSUs and Travelport RSUs.

(137) “ Rules ” has the meaning set forth in Section 13.2 .

(138) “ Section 8.9 Final Determination ” has the meaning set forth in Section 8.9(a) .

(139) “ Separation and Distribution Agreement ” means the Separation and Distribution Agreement by and among Cendant, Realogy, Travelport and Wyndham, dated as of July 27, 2006.

(140) “ Shared Entities ” means, collectively, all Cendant Shared Entities and all Wyndham Shared Entities.

(141) “ Skadden ” means Skadden, Arps, Slate, Meagher & Flom LLP.

(142) “ Specified Shared Expenses ” has the meaning set forth in the Separation and Distribution Agreement.

(143) “ Spinco Parties ” means, collectively, Realogy, Wyndham and Travelport.

(144) “ Steps Memorandum ” means the memorandum attached hereto as Exhibit A.

(145) “ SU ” has the meaning set forth in Section 10.2(m)(ii) .

(146) “ Subsidiary ” of any Person means, on any date, any Person of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests or more than 50% of the profits or losses of which are, as of such date, owned, controlled or held by the applicable Person or one or more subsidiaries of such Person. For purposes hereof, none of the Parties or their respective Subsidiaries (determined, in the case of Cendant, immediately after the Final Distribution Date, in the case of Realogy, immediately after the Realogy Distribution, in the case of Wyndham, immediately after the Wyndham Distribution and in the case Travelport, immediately after the Final Distribution Date) shall be considered a “Subsidiary” of any of the other Parties or their respective Subsidiaries (determined on the same basis).

 

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(147) “ Tax Benefit Actually Realized ” means an actual reduction in Taxes otherwise due and payable by a Party or its Affiliates which reduction is solely attributable to the accrual or payment of a Tax, cost, expense, liability or other amount by such Party or its Affiliates which accrual or payment resulted in the right by such Party or its Affiliates to receive a payment from another Party pursuant to this Agreement.

(148) “ Taxes ” means all taxes, charges, fees, duties, levies, imposts, or other similar assessments imposed by any federal, state, local or foreign Taxing Authority, including, but not limited to, income, gross receipts, excise, property, sales, use, license, capital stock, transfer, franchise, payroll, withholding, social security, value added and other taxes, and any interest, penalties or additions attributable thereto.

(149) “ Tax-Free Status ” means the qualification of the applicable Distribution and related transactions as a distribution in which no gain or loss is recognized, and no amount is included in income, including by reason of Distribution Taxes, for U.S. federal income Tax purposes (other than intercompany items, excess loss accounts or other items required to be taken into account pursuant to Treasury Regulations promulgated under Section 1502 of the Code).

(150) “ Tax Group ” means any U.S. federal, state, local or foreign affiliated, consolidated, combined, unitary or similar group that files an Income Tax Return.

(151) “ Tax Package ” means:

 

  (i) a pro forma Tax Return relating to the operations of a Spinco Party and/or its Subsidiaries that are required to be included in any Tax Group of which a Shared Entity is or was the Common Parent and such Spinco Party and/or such Subsidiaries is or was a member for one or more days in a taxable year; and

 

  (ii) all information relating to the operations of a Spinco Party and/or its Subsidiaries that is reasonably necessary to prepare and file the applicable Income Tax Return required to be filed by any Tax Group of which a Shared Entity is or was the common parent and such Spinco Party or any of its Subsidiaries is or was a member for one or more days in a Tax year.

(152) “ Tax Representation Letter ” means a letter containing certain representations and covenants issued by a Party to Skadden, Arps, Slate, Meagher & Flom LLP in connection with certain Tax opinions to be rendered by Skadden, Arps, Slate, Meagher & Flom LLP to Cendant in connection with the Plan of Separation.

(153) “ Tax Return ” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim for refund or declaration of estimated tax) required to be supplied to, or filed with, a Taxing Authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations or administrative requirements relating to any Tax.

 

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(154) “ Tax Sharing Agreement Termination Date ” means, as between the applicable Parties and their respective Subsidiaries:

 

  (i) in the case of Realogy or any of its Subsidiaries, on the one hand, and any other Party or its Subsidiaries, on the other hand, the Realogy Distribution Date;

 

  (ii) in the case of Wyndham or any of its Subsidiaries, on the one hand, and any other Party or its Subsidiaries, on the other hand, the Wyndham Distribution Date; and

 

  (iii) in the case of Travelport or any of its Subsidiaries, on the one hand, and any other Party or its Subsidiaries, on the other hand, the Travelport Distribution Date.

(155) “ Taxing Authority ” means any governmental authority or any subdivision, agency, commission or authority thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

(156) “ Travelport ” has the meaning set forth in the recitals to this Agreement.

(157) “ Travelport Audit Sharing Percentage ” means a ratio:

 

  (i) the numerator of which is the sum of:

 

  (I) the Travelport Sharing Percentage of the aggregate amount of all income and gain directly attributable to or resulting from any of the Distributions failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to any of the Distributions, to the extent such income or gain does not result and is not directly attributable to the Fault of any Party and/or its Affiliates;

 

  (II) the aggregate amount of all income and gain directly attributable to or resulting from the Travelport Distribution failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to the Travelport Distribution, to the extent such income or gain results from or is directly attributable to the Fault of Travelport or any of its Affiliates;

 

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  (III) in the event of a Pre-2007 Shared Entity Audit that results in a Pre-2007 Correlative Adjustment that is directly related or attributable to the business or operations of Travelport or any of its Subsidiaries, the aggregate amount of all disallowed deduction, loss and credit (and increases of income and gain) resulting from such Pre-2007 Correlative Adjustment;

 

  (IV) the aggregate amount of all income and gain (and disallowed deduction, loss and credit) resulting from a breach by Travelport of a representation, covenant or obligation under this Agreement;

 

  (V) the Travelport Sharing Percentage of the aggregate amount of all Pre-2007 Shared Entity Other Adjustments; and

 

  (ii) the denominator of which is the sum of:

 

  (I) all aggregate amount of all income and gain resulting from such Pre-2007 Shared Entity Audit; and

 

  (II) all aggregate amount of all disallowed deduction, loss and credit resulting from such Pre-2007 Shared Entity Audit.

provided , however , that, for purposes of this definition, all credits shall be deemed to equal 2.857143; provided , further , that if the Travelport Sale occurs, “Travelport Audit Sharing Percentage” shall be deemed to equal zero percent (0%).

(158) “ Travelport Common Stock ” has the meaning set forth in the recitals hereto.

(159) “ Travelport Distribution ” means the distribution (if effected) on the Travelport Distribution Date to holders of record of shares of Cendant Common Stock as of the Travelport Distribution Record Date of the Travelport Common Stock owned by Cendant on the basis of one share of Travelport Common Stock for a number of outstanding shares of Cendant Common Stock, to be determined prior to such Distribution.

(160) “ Travelport Distribution Date ” means the date on which Cendant distributes (if effected) all of the issued and outstanding shares of Travelport Common Stock to the holders of Cendant Common Stock.

 

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(161) “ Travelport Distribution Record Date ” means such date as may be determined by Cendant’s board of directors as the record date for the Travelport Distribution.

(162) “ Travelport Distribution Taxes ” means any and all Taxes required to be paid by or imposed on Cendant (or any Tax Group of which Cendant is a member) resulting from, or directly arising in connection with, the failure of the Travelport Distribution to qualify under Section 355(a) or (c) of the Code or, if applicable, Section 361(c) of the Code, or the application of Sections 355(d) or (e) of the Code to the Travelport Distribution, or under the corresponding provisions of the Laws of other jurisdictions, provided , however , if the Travelport Sale occurs, Travelport Distribution Taxes shall be deemed to equal zero.

(163) “ Travelport Employee ” has the meaning set forth in the Separation and Distribution Agreement.

(164) “ Travelport Gain Recognition Agreements ” has the meaning set forth in 10.3(m)(i).

(165) “ Travelport Group ” means Travelport and each of the Travelport Subsidiaries and each Business Entity that becomes a Subsidiary of Travelport.

(166) “ Travelport Indemnitees ” means Travelport, each member of the Travelport Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(167) “ Travelport Option ” means an option to acquire Travelport Common Stock.

(168) “ Travelport Option Holder ” means a holder of a Travelport Option.

(169) “ Travelport RSU ” means a restricted stock unit payable in shares of Travelport Common Stock.

(170) “ Travelport RSU Holder ” means a holder of a Travelport RSU.

(171) “ Travelport Sale ” has the meaning set forth in the recitals hereto.

(172) “ Travelport Sale Income Tax Amount ” has the meaning set forth in the Separation and Distribution Agreement.

(173) “ Travelport Sharing Percentage ” means twenty percent (20%); provided , however , that in the event a Travelport Sale occurs, Travelport Sharing Percentage zero percent (0%) for all purposes (including with retroactive application).

(174) “ Travelport Subsidiary ” means all direct and indirect Subsidiaries of Travelport, determined immediately after the Travelport Distribution.

(175) “ Travelport Subsidiary Corporation ” has the meaning set forth in Section 10.3(m)(iii) .

 

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(176) “ Travelport Tax Return ” means:

 

  (i) any Income Tax Returns required to be filed by any Tax Group of which Travelport or a Travelport Subsidiary is the Common Parent;

 

  (ii) any U.S., state, local or foreign separate Income Tax Return required to be filed by Travelport or a Travelport Subsidiary; and

 

  (iii) any U.S., state, local or foreign Non-Income Tax Return required to be filed by Travelport or a Travelport Subsidiary.

(177) “ Travelport Taxes ” means all Taxes required to be paid by or imposed upon Travelport or a Travelport Subsidiary with respect to all Travelport Tax Returns.

(178) “ Travel Distribution Business ” has the meaning set forth in the Separation and Distribution Agreement.

(179) “ Treasury Regulations ” means the final and temporary (but not proposed) income tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

(180) “ Unqualified Tax Opinion ” means an unqualified “will” opinion of a Law firm of nationally recognized standing in the field of taxation, which opinion is reasonably acceptable to a Majority of the Parties and upon which each of the Parties may rely to confirm that a transaction (or transactions) will not result in Distribution Taxes, including confirmation in accordance with Circular 230 or otherwise that may be provided for purposes of avoiding any applicable penalties or additions to Tax.

(181) “ U.S. ” shall mean United States.

(182) “ Vehicle Rental Business ” has the meaning set forth in the Separation and Distribution Agreement.

(183) “ Wyndham ” has the meaning set forth in the recitals hereto.

(184) “ Wyndham Audit Sharing Percentage ” means a ratio:

 

  (i) the numerator of which is the sum of:

 

  (I)

the Wyndham Sharing Percentage of the aggregate amount of all income and gain directly attributable to or resulting from any of the Distributions failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to any of the

 

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Distributions, to the extent such items of income or gain do not result and is not directly attributable to the Fault of any Party and/or its Affiliates;

 

  (II) the aggregate amount of all income and gain directly attributable to or resulting from the Wyndham Distribution failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to the Wyndham Distribution, to the extent such items of income or gain result from or is directly attributable to the Fault of Wyndham or any of its Affiliates;

 

  (III) in the event of a Pre-2007 Shared Entity Audit that results in a Pre-2007 Correlative Adjustment that is directly related or attributable to the business or operations of Wyndham or any of its Subsidiaries, the aggregate amount of all disallowed deduction, loss and credit (and increases of income and gain) resulting from such Pre-2007 Correlative Adjustment;

 

  (IV) the aggregate amount of all income and gain (or disallowed deduction, loss and credit) resulting from a breach by Wyndham of a representation, covenant or obligation under this Agreement;

 

  (V) the Wyndham Sharing Percentage of the aggregate amount of all Pre-2007 Shared Entity Other Adjustments; and

 

  (ii) the denominator of which is the sum of:

 

  (I) all aggregate amount of all income and gain resulting from such Pre-2007 Shared Entity Audit; and

 

  (II) all aggregate amount of all disallowed deduction, loss and credit resulting from such Pre-2007 Shared Entity Audit.

provided , however , that, for purposes of this definition, all credits shall be deemed to equal 2.857143.

 

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(185) “ Wyndham Common Stock ” has the meaning set forth in the recitals hereto.

(186) “ Wyndham Distribution ” means the distribution on the Wyndham Distribution Date to holders of record of shares of Cendant Common Stock as of the Wyndham Distribution Record Date of the Wyndham Common Stock owned by Cendant on the basis of one share of Wyndham Common Stock for every five (5) outstanding shares of Cendant Common Stock.

(187) “ Wyndham Distribution Date ” means the date on which Cendant distributes all of the issues and outstanding shares of Wyndham Common Stock to the holders of Cendant Common Stock.

(188) “ Wyndham Distribution Record Date ” means such date as may be determined by Cendant’s board of directors as the record date for the Wyndham Distribution.

(189) “ Wyndham Distribution Taxes ” means any and all Taxes required to be paid by or imposed on Cendant (or any Tax Group of which Cendant is a member) resulting from, or directly arising in connection with, the failure of the Wyndham Distribution to qualify under Section 355(a) or (c) of the Code or, if applicable, Section 361(c) of the Code, or the application of Sections 355(d) or (e) of the Code to the Wyndham Distribution, or under the corresponding provisions of the Laws of other jurisdictions.

(190) “ Wyndham Employee ” has the meaning set forth in the Separation and Distribution Agreement.

(191) “ Wyndham Gain Recognition Agreement ” has the meaning set forth in Section 10.3(m)(iv) .

(192) “ Wyndham Group ” means Wyndham, each of the Wyndham Subsidiaries, each of the Wyndham Shared Entities and each Business Entity that becomes a Subsidiary of Wyndham.

(193) “ Wyndham Indemnitees ” means Wyndham, each member of the Wyndham Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(194) “ Wyndham Option ” means an option to acquire Wyndham Common Stock.

(195) “ Wyndham Option Holder ” means a holder of a Wyndham Option.

(196) “ Wyndham RSU ” means a restricted stock unit payable in shares of Wyndham Common Stock.

(197) “ Wyndham RSU Holder ” means a holder of a Wyndham RSU.

 

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(198) “ Wyndham Shared Entities ” means:

 

  (i) Hospitality Operations, Inc. (fka Cendant Transportation Corporation);

 

  (ii) Wyndham Finance (UK);

 

  (iii) Pointlux S.a.r.l. (Luxembourg);

 

  (iv) Cendant Europe Limited (UK) and its Subsidiaries;

 

  (v) Pointeuro V Limited (UK);

 

  (vi) Pointeuro IV Limited (UK);

 

  (vii) RCI Global Vacation Network Aps (fka Cendant Denmark Aps) and its Subsidiaries;

 

  (viii) EMEA Holdings C.V. (Netherlands) and its Subsidiaries;

 

  (ix) RCI Global Vacation Network (UK) (fka Cendant (UK) Holdings Limited) and its Subsidiaries;

 

  (x) Pointtravel Co. Ltd. (UK) and its Subsidiaries; and

 

  (xi) Cycleagent Ltd. (UK).

(199) “ Wyndham Sharing Percentage ” means thirty percent (30%); provided , however , that in the event a Travelport Sale occurs, Wyndham Sharing Percentage means thirty-seven and one-half percent (37.5%) for all purposes (including with retroactive application).

(200) “ Wyndham Subsidiaries ” means all direct and indirect Subsidiaries of Wyndham, determined immediately after the Wyndham Distribution (and predecessors of such entities), provided , however , that Wyndham Subsidiaries shall not include any Wyndham Shared Entity (or any direct or indirect Subsidiary of any Wyndham Shared Entity).

(201) “ Wyndham Subsidiary Corporation ” has the meaning set forth in Section 10.3(m)(vi) .

(202) “ Wyndham Tax Returns ” means:

 

  (i) any Income Tax Returns required to be filed by any Tax Group of which Wyndham or a Wyndham Subsidiary is the Common Parent;

 

  (ii) any U.S., state, local or foreign separate Income Tax Return required to be filed by Wyndham or a Wyndham Subsidiary; and

 

  (iii) any U.S., state, local or foreign Non-Income Tax Return required to be filed by Wyndham or a Wyndham Subsidiary.

 

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(203) “ Wyndham Taxes ” means all Taxes required to be paid by or imposed upon Wyndham or a Wyndham Subsidiary with respect to all Wyndham Tax Returns.

Section 1.2 References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

Section 1.3 Effective Time; Suspension .

(a) This Agreement shall be effective as of the Realogy Distribution Date.

(b) Notwithstanding Section 1.3(a) above, as between any of the Parties that are Affiliates (without regard to the last sentence set forth in the definition of Affiliates), the provisions of, and the obligations under, this Agreement shall be suspended as between such Parties until:

 

  (i) in the case of Cendant and Wyndham, the Wyndham Distribution Date;

 

  (ii) subject to Section 1.3(c) , in the case of Wyndham and Travelport, the first to occur of the Wyndham Distribution Date or the Travelport Distribution Date; and

 

  (iii) subject to Section 1.3(c) , in the case of Cendant and Travelport, the Travelport Distribution Date.

(c) Notwithstanding anything to the contrary contained in this Agreement:

 

  (i) for so long as any Party is still an Affiliate (without regard to the last sentence set forth in such definition) of Cendant, Cendant shall be responsible for any Taxes or other amounts required to be paid by such Party pursuant to this Agreement; and

 

  (ii) if a Travelport Sale occurs, any and all rights and obligations of and to Travelport pursuant to this Agreement (including any and all obligations of Travelport to any other Person pursuant to Section 6.4 and any and all obligations of any of the Parties to Travelport Indemnitees pursuant to Article VI) shall be terminated and deemed null and void and be of no further force or effect.

 

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For the avoidance of doubt, in the event of a conflict between this Section 1.3(c) and any other provision of this Agreement, this Section 1.3(c) shall govern and control.

ARTICLE II

PREPARATION AND FILING OF TAX RETURNS

Section 2.1 Responsibility of Cendant to prepare and file Pre-2007 Cendant Shared Entity Tax Returns, Post-2006 Cendant Shared Entity Tax Returns and CCRG Entity Tax Returns .

(a) Pre-2007 Cendant Shared Entity Tax Returns .

 

  (i) General . To the extent not previously filed, subject to the rights and obligations of each of the Spinco Parties set forth herein, Cendant shall (at Cendant’s own cost and expense) prepare and file or cause to be prepared and filed, all Pre-2007 Cendant Shared Entity Tax Returns, provided , however , that all reasonable out-of-pocket costs and expenses incurred by Cendant in connection therewith shall be borne twenty-five percent (25%) by each of the Parties, provided , further , that, if the Travelport Sale occurs, such costs and expenses shall be borne thirty-three percent (33%) by each of Cendant, Realogy and Wyndham. Such Pre-2007 Cendant Shared Entity Tax Returns shall be prepared in a manner consistent with the past practice of each Cendant Shared Entity unless otherwise required by applicable Law. Payments by Realogy, Wyndham and Travelport, respectively, to Cendant for reasonable out-of-pocket costs and expenses incurred by Cendant shall be treated as amounts deductible by the paying Party pursuant to Section 162 of the Code, and none of the Parties shall take any position inconsistent with such treatment, except to the extent a Final Determination with respect to the paying Party causes such payment to not be so treated. Notwithstanding anything to the contrary contained in this Section 2.1(a)(i) , each of the state and local Income Tax Returns required to be filed by Cendant set forth on Schedule A shall be prepared by the Party identified on Schedule A (at its own cost and expense, including any out-of-pocket costs and expenses) on or prior to the date referred to in Schedule A.

 

  (ii)

Tax Package . To the extent not previously provided, each of the Spinco Parties (at its own cost and expense) shall prepare and provide or cause to be prepared and provided to Cendant (and make available or cause to be made available to the other Spinco Parties) a Tax Package relating to each Pre-2007 Cendant Shared Entity Tax Return

 

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required to be filed by any Tax Group of which a Cendant Shared Entity was the Common Parent and such Spinco Party or any of its Subsidiaries was a member for one or more days in the relevant Tax year. The Tax Package shall: (A) with respect to any Tax year of a Cendant Shared Entity ending on or prior to December 31, 2005, be provided to Cendant no later than July 31, 2006; and (B) with respect to any Tax year of a Cendant Shared Entity ending after December 31, 2005 and on or before December 31, 2006, be provided to Cendant no later than May 31, 2007 (other than U.S. Tax Returns for such Tax year of any foreign Subsidiary of the relevant Spinco Party, which shall be provided no later than July 31, 2007). For the avoidance of doubt, in the event a Spinco Party does not fulfill its obligations pursuant to this Section 2.1(a)(ii) , Cendant shall be entitled, at the sole cost and expense of such Spinco Party to prepare or cause to be prepared the information required to be included in the Tax Package for purposes of preparing any such Pre-2007 Cendant Shared Entity Tax Return.

 

  (iii) Procedures relating to the preparation and filing of Pre-2007 Cendant Shared Entity Tax Returns .

(A) Pre-2007 Cendant Shared Entity Tax Returns for Tax years ending on or prior to December 31, 2005 . In the case of Pre-2007 Cendant Shared Entity Tax Returns for Tax years ending on or prior to December 31, 2005, to the extent not previously filed, no later than thirty (30) days prior to the Due Date of each such Tax Return, Cendant (or in the case of a state or local Income Tax Return set forth in Schedule A , the Party responsible for preparing such Tax Return) shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to each of the Spinco Parties (or in the case of a state or local Income Tax Return set forth in Schedule A , to the other Parties). Each of the Parties shall have access to any and all data and information necessary for the preparation of all such Pre-2007 Cendant Shared Entity Tax Returns and the Parties shall cooperate fully in the preparation and review of such Tax Returns. Subject to the preceding sentence, no later than September 1, 2006 (or in the case of a state or local Income Tax Return set forth in Schedule A , the date set forth therein with respect to such Tax Return), a Party shall have a right to object to such Pre-2007 Shared Entity Tax Return (or items with respect thereto) by written notice to the other Parties; such written notice shall contain such disputed item (or items) and the basis for its objection.

(B) Pre-2007 Cendant Shared Entity Tax Returns for Tax years ending after December 31, 2005 . In the case of Pre-2007 Cendant Shared Entity Tax Returns for Tax years ending after December 31, 2005, to the extent not previously filed, no later than sixty (60) days prior to the Due Date of each such Pre-2007 Cendant Shared Entity Tax Return, Cendant

 

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shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to each of the Spinco Parties. Each of the Spinco Parties shall have access to any and all data and information necessary for the preparation of all such Pre-2007 Cendant Shared Entity Tax Returns and the Parties shall cooperate fully in the preparation and review of such Tax Returns. No later than August 1, 2007 (or in the case of a state or local Income Tax Return set forth in Schedule A , forty-five days prior to the Due Date of such Tax Return), a Spinco Party shall have a right to object by written notice to Cendant and the other Spinco Parties; such written notice shall contain such disputed item (or items) and the basis for its objection.

(C) With respect to a Pre-2007 Cendant Shared Entity Tax Return prepared by Cendant (or in the case of a state or local Income Tax Return set forth in Schedule A , another Party) and submitted to the Spinco Parties (or Cendant) pursuant to Section 2.1(a)(iii)(A) or Section 2.1(a)(iii)(B) , as the case may be, if a Party does not object by proper written notice to the party responsible for preparing such Tax Return and the other Parties within the time period described in such sections, such Pre-2007 Cendant Shared Entity Tax Return shall be deemed to have been accepted and agreed upon, and final and conclusive, for purposes of this Section 2.1(a)(iii) . If a Party does object by proper written notice to the other Parties within such applicable time period, the Parties shall act in good faith to resolve any such dispute as promptly as practicable, provided , however , that, notwithstanding anything to the contrary contained herein, if the Parties have not reached a final resolution with respect to all disputed items for which proper written notice was given within fifteen (15) days prior to the Due Date for such Pre-2007 Cendant Shared Entity Tax Return, such Tax Return shall be filed as prepared by the Party responsible for preparing such Tax Return pursuant to this Section 2.1(a) (revised to reflect all initially disputed items that the Parties have agreed upon prior to such date). All Taxes required to be paid by a Spinco Party to Cendant with respect to a Pre-2007 Cendant Shared Entity Tax Return pursuant to Article III shall be based upon the amounts shown to be due and owing on such Tax Return as filed by Cendant and such Taxes shall be paid by such Spinco Party to Cendant no later than 5 days prior to the Due Date of such Tax Return.

(D) In the event that Cendant files a Pre-2007 Cendant Shared Entity Tax Return that includes properly disputed items pursuant to this Section 2.1(a)(iii) that were not finally resolved and agreed upon, such disputed item (or items) shall be resolved in accordance with Article XII . In the event that the resolution of such disputed item (or items) in accordance with Article XII with respect to a Pre-2007 Cendant Shared Entity Tax Return is inconsistent with such Pre-2007 Cendant Shared Entity Tax Return as filed by Cendant, Cendant (with cooperation from the other Parties) shall, as promptly as practicable, amend such Tax Return

 

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to properly reflect the final resolution of the disputed item (or items). In the event that the amount of Taxes shown to be due and owing on a Pre-2007 Cendant Shared Entity Tax Return is adjusted as a result of a resolution pursuant to Article XII , proper adjustment shall be made to the amounts previously paid or required to be paid in accordance with Article III in a manner that reflects such resolution.

(E) Pre-2007 Cendant Shared Entity Tax Returns for estimated Income Taxes . Notwithstanding anything to the contrary in this Section 2.1 , in the case of any Pre-2007 Cendant Shared Entity Tax Return for estimated Income Taxes (“ Estimated Tax Returns ”) for periods ending after December 31, 2005, to the extent not previously filed, as soon as practicable prior to the Due Date of each such Estimated Tax Return, Cendant shall make available or cause to be made available drafts of such Estimated Tax Return (together with all related work papers) to each of the Spinco Parties. Each of the Spinco Parties shall have access to any and all data and information necessary for the preparation of such Estimated Tax Returns and the Parties shall cooperate fully in the preparation and review of such Estimated Tax Return. Subject to the preceding sentence, a Spinco Party shall have a right to object by written notice to Cendant and the other Spinco Parties (and such written notice shall contain such disputed item (or items) and the basis for its objection) and the principles of Section 2.1(a)(iii)(C) and Section 2.1(a)(iii)(D) shall apply to such Estimated Tax Return.

(b) Preparation and filing of Post-2006 Cendant Shared Entity Tax Returns and CCRG Entity Tax Returns .

 

  (i) To the extent not previously filed, no later than thirty (30) days prior to the Due Date of each CCRG Entity Tax Return for any Tax year ending on or prior to December 31, 2006 which CCRG Entity Tax Return includes income that is also included in a Pre-2007 Cendant Shared Entity Tax Return or a Pre-2007 Wyndham Shared Entity Tax Return, Cendant shall make available or cause to be made available drafts of such Tax Return to each of the Spinco Parties. All such CCRG Entity Tax Returns shall be prepared in accordance with past practice unless otherwise required by applicable Law.

 

  (ii) Cendant shall (at its own cost and expense) prepare and file or cause to be prepared and filed:

(A) all Post-2006 Cendant Shared Entity Tax Returns; and

(B) to the extent not previously filed and, subject to Section 2.1(b)(i) , all CCRG Entity Tax Returns.

 

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Section 2.2 Responsibility of Realogy to prepare and file Realogy Tax Returns .

(a) To the extent not previously filed, no later than thirty (30) days prior to the Due Date of each Realogy Tax Return for any taxable period ending on or prior to December 31, 2006 which Realogy Tax Return includes income that is also included in a Pre-2007 Cendant Shared Entity Tax Return or a Pre-2007 Wyndham Shared Entity Tax Return, Realogy shall make available or cause to be made available drafts of such Tax Return to each of the other Spinco Parties and Cendant. All such Realogy Tax Returns shall be prepared in accordance with past practice unless otherwise required by applicable Law.

(b) To the extent not previously filed, Realogy shall (at its own cost and expense), subject to Section 2.2(a) , prepare and file or caused to be prepared and filed all Realogy Tax Returns.

Section 2.3 Responsibility of Wyndham to prepare and file Pre-2007 Wyndham Shared Entity Tax Returns, Post-2006 Wyndham Shared Entity Tax Returns and Wyndham Tax Returns .

(a) Pre-2007 Wyndham Shared Entity Tax Returns .

 

  (i) General . To the extent not previously filed, subject to the rights and obligations of each of Realogy and Travelport set forth herein, Wyndham shall (at Wyndham’s own cost and expense) prepare and file or cause to be prepared and filed all Pre-2007 Wyndham Shared Entity Tax Returns, provided , however , that all reasonable out-of-pocket costs and expenses incurred by Wyndham in connection therewith shall be borne twenty-five percent (25%) by each of Cendant, Realogy, Wyndham and Travelport, provided , further , that, if the Travelport Sale occurs, such costs and expenses shall be borne thirty-three percent (33%) by each of Cendant, Realogy and Wyndham. Such Pre-2007 Wyndham Shared Entity Tax Returns shall be prepared in a manner consistent with the past practice of each Wyndham Shared Entity unless otherwise required by applicable Law. Payments by Cendant, Realogy and Travelport, respectively, to Wyndham for reasonable out-of-pocket costs and expenses incurred by Wyndham shall be treated as amounts deductible by the paying Party pursuant to Section 162 of the Code, and none of the Parties shall take any position inconsistent with such treatment, except to the extent a Final Determination with respect to the Paying Party causes such payment to not be so treated.

 

  (ii)

Tax Package . To the extent not previously provided, each of the other Spinco Parties and Cendant (at its own cost and expense) shall prepare and provide or cause to be prepared and provided to Wyndham (and make available or cause to be made available to the other Parties) a

 

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Tax Package relating to each Pre-2007 Wyndham Shared Entity Tax Return required to be filed by any Tax Group of which a Wyndham Shared Entity was the Common Parent and such Spinco Party or any of its Subsidiaries or Cendant or any of its Subsidiaries was a member for one or more days in the relevant Tax year. The Tax Package shall: (A) with respect to any Tax year of a Wyndham Shared Entity ending on or prior to December 31, 2005, be provided to Wyndham no later than July 31, 2006; and (B) with respect to any Tax year of a Wyndham Shared Entity ending after December 31, 2005 and on or before December 31, 2006, be provided to Wyndham no later than May 31, 2007 (other than U.S. Tax Returns for such Tax year of any foreign Subsidiary of the relevant Party, which shall be provided no later than July 31, 2007). For the avoidance of doubt, in the event a Spinco Party does not fulfill its obligations pursuant to this Section 2.3(a)(ii) , Wyndham shall be entitled, at the sole cost and expense of such Spinco Party, to prepare or cause to be prepared the information required to be included in the Tax Package for purposes of preparing any such Pre-2007 Wyndham Shared Entity Tax Return.

 

  (iii) Procedures relating to the preparation and filing of Pre-2007 Wyndham Shared Entity Tax Returns .

(A) Pre-2007 Wyndham Shared Entity Tax Returns for Tax years ending on or prior to December 31, 2005 . In the case of Pre-2007 Wyndham Shared Entity Tax Returns for Tax years ending on or prior to December 31, 2005, to the extent not previously filed, no later than thirty (30) days prior to the Due Date of each such Tax Return, Wyndham shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to each of the other Spinco Parties. Each of the other Spinco Parties shall have access to any and all data and information necessary for the preparation of all such Pre-2007 Wyndham Shared Entity Tax Returns and the Spinco Parties shall cooperate fully in the preparation and review of such Tax Returns. Subject to the preceding sentence, no later than September 1, 2006, a Spinco Party shall have a right to object by written notice to Wyndham and the other Spinco Party; such written notice shall contain such disputed item (or items) and the basis for its objection.

(B) Pre-2007 Wyndham Shared Entity Tax Returns for Tax years ending after December 31, 2005 . In the case of Pre-2007 Wyndham Shared Entity Tax Returns for Tax years ending after December 31, 2005, to the extent not previously filed, no later than sixty (60) days prior to the Due Date of each such Pre-2007 Wyndham Shared Entity Tax Return, Wyndham shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to each of the other Spinco Parties. Each of the other Spinco Parties shall have access to any and all data and information necessary for the preparation of all such

 

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Pre-2007 Wyndham Shared Entity Tax Returns and the Spinco Parties shall cooperate fully in the preparation and review of such Tax Returns. No later than August 1, 2007, a Spinco Party shall have a right to object by written notice to Wyndham and the other Spinco Party; such written notice shall contain such disputed item (or items) and the basis for its objection.

(C) With respect to a Pre-2007 Wyndham Shared Entity Tax Return prepared by Wyndham and submitted to the Spinco Parties pursuant to Section 2.3(a)(iii)(A) or Section 2.3(a)(iii)(B) , as the case may be, if a Spinco Party does not object by proper written notice to Wyndham and the other Spinco Party within the time period described in such sections, such Pre-2007 Wyndham Shared Entity Tax Return shall be deemed to have been accepted and agreed upon, and final and conclusive, for purposes of this Section 2.3(a)(iii) . If a Spinco Party does object by proper written notice to Wyndham and the other Spinco Party within such applicable time period, Wyndham and such Spinco Party (or Parties) shall act in good faith to resolve any such dispute as promptly as practicable, provided , however , that, notwithstanding anything to the contrary contained herein, if a Spinco Party (or Parties) and Wyndham have not reached a final resolution with respect to all disputed items for which proper written notice was given within fifteen (15) days prior to the Due Date for such Pre-2007 Wyndham Shared Entity Tax Return, such Tax Return shall be filed as prepared by Wyndham (revised to reflect all initially disputed items that the Spinco Parties have agreed upon prior to such date). All Taxes required to be paid by a Spinco Party to Wyndham with respect to a Pre-2007 Wyndham Shared Entity Tax Return pursuant to Article III shall be based upon the amounts shown to be due and owing on such Tax Return as filed by Wyndham and such Taxes shall be paid by such Spinco Party to Wyndham no later than five (5) days prior to the Due Date of such Tax Return.

(D) In the event that Wyndham files a Pre-2007 Wyndham Shared Entity Tax Return that includes properly disputed items pursuant to this Section 2.3(a)(iii) that were not finally resolved and agreed upon, such disputed item (or items) shall be resolved in accordance with Article XII . In the event that the resolution of such disputed item (or items) in accordance with Article XII with respect to a Pre-2007 Wyndham Shared Entity Tax Return is inconsistent with such Pre-2007 Wyndham Shared Entity Tax Return as filed by Wyndham, Wyndham shall, as promptly as practicable, amend such Tax Return to properly reflect the final resolution of the disputed item (or items). In the event that the amount of Taxes shown to be due and owing on a Pre-2007 Wyndham Shared Entity Tax Return is adjusted as a result of a resolution pursuant to Article XII , proper adjustment shall be made to the amounts previously paid or required to be paid in accordance with Article III in a manner that reflects such resolution.

 

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(E) Pre-2007 Wyndham Shared Entity Tax Returns for estimated Income Taxes . Notwithstanding anything to the contrary contained in this Section 2.3 , in the case of any Estimated Tax Return for Pre-2007 Wyndham Shared Entity Taxes for periods ending after December 31, 2005, to the extent not previously filed, as soon as practicable prior to the Due Date of each such Estimated Tax Return, Wyndham shall make available or cause to be made available drafts of such Estimated Tax Return (together with all related work papers) to each of the Parties. Each of the Parties shall have access to any and all data and information necessary for the preparation of all such Estimated Tax Returns and the Parties shall cooperate fully in the preparation and review of such Estimated Tax Return. Subject to the preceding sentence, a Party shall have a right to object by written notice to Wyndham and the other Parties (and such written notice shall contain such disputed item (or items) and the basis for its objection) and the principles of Section 2.3(a)(iii)(C) and Section 2.3(a)(iii)(D) shall apply to such Estimated Tax Return.

(b) Filing of Post-2006 Wyndham Shared Entity Tax Returns and Wyndham Tax Returns .

 

  (i) To the extent not previously filed, no later than 30 days prior to the Due Date of each Wyndham Tax Return for any Tax year ending on or prior to December 31, 2006 which Wyndham Tax Return includes income that is also included in a Pre-2007 Cendant Shared Entity Tax Return or a Pre-2007 Wyndham Shared Entity Tax Return, Wyndham shall make available or cause to be made available drafts of such Tax Return to each of the other Parties. All such Wyndham Tax Returns shall be prepared in accordance with past practice unless otherwise required by applicable Law.

 

  (ii) Wyndham shall (at its own cost and expense) prepare and file or cause to be prepared and filed:

(A) all Post-2006 Wyndham Shared Entity Tax Returns; and

(B) to the extent not previously filed and, subject to Section 2.3(b)(i) , all Wyndham Tax Returns.

Section 2.4 Responsibility of Travelport to prepare and file Travelport Tax Returns .

(a) To the extent not previously filed, no later than thirty (30) days prior to the Due Date of each Travelport Tax Return for any taxable period ending on or prior to December 31, 2006 which Travelport Tax Return includes income that is also included in a Pre-2007 Cendant Shared Entity Tax Return or a Pre-2007 Wyndham Shared Entity Tax Return, Travelport shall make available or cause to be made available drafts of such Tax Return to each

 

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of the other Parties. All such Travelport Tax Returns shall be prepared in accordance with past practice unless otherwise required by applicable Law.

(b) To the extent not previously filed, Travelport shall (at its own cost and expense), subject to Section 2.4(a) , prepare and file or caused to be prepared and filed all Travelport Tax Returns.

Section 2.5 Time of filing Tax Returns; manner of Tax Return preparation . Each Tax Return shall be filed on or prior to the Due Date for such Tax Return by the Party responsible for filing such Tax Return hereunder. Unless otherwise required by a Taxing Authority pursuant to a Final Determination, the Parties hereto shall prepare and file or cause to be prepared and filed all Tax Returns and take all other actions in a manner consistent with (and shall not take any position inconsistent with):

(a) the conversion of Cendant Car Rental Group, Inc. into a Delaware limited liability company as a tax-free liquidation under Section 332 of the Code;

(b) the conversion of Avis Car Rental Group, Inc. into a Delaware limited liability company as a tax-free liquidation under Section 332 of the Code;

(c) the conversion of Avis Group Holdings, Inc. into a Delaware limited liability company as a tax-free liquidation under Section 332 of the Code;

(d) the conversion of Avis Rent A Car System, Inc. into a Delaware limited liability company as a tax-free liquidation under Section 332 of the Code;

(e) the merger of TM Acquisition Corp. with and into CFHC LLC, with CFHC LLC surviving the merger, as a tax-free liquidation under Section 332 of the Code;

(f) the merger of Wizcom International, Inc. with and into CFHC LLC, with CFHC LLC surviving the merger, as a tax-free liquidation under Section 332 of the Code or as a reorganization under Section 368(a) of the Code;

(g) the contribution by Cendant Operations, Inc., a Delaware corporation (“ Cendant Operations ”), to CDRE TM Corp. (fka Nisbet Corporation), a Delaware corporation, of certain assets (including goodwill) as a transaction described in Section 351 of the Code;

(h) the merger of Cendant Operations with and into CFHC LLC, with CFHC LLC surviving the merger, as a tax-free liquidation under Section 332 of the Code;

(i) the contributions by CFHC LLC to each of the IP Companies of certain assets formerly owned by TM Acquisition Corp. as transactions described in Section 351 of the Code;

(j) the contribution by CFHC LLC to Realogy of all of the outstanding stock of each of the IP Companies as transactions described in Section 351 of the Code;

 

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(k) the contributions to Realogy, together with the distributions of cash from Realogy to Cendant, which cash will be distributed solely to creditors of Cendant, and the distribution by Cendant to its stockholders of all of the stock of Realogy, as a reorganization under Sections 368(a)(1)(D) and 355 of the Code (and to which Sections 355(d) and (e) of the Code do not apply);

(l) the receipt by Cendant of approximately $2.225 billion (subject to adjustment) of cash distributed to it by Realogy in connection with the Realogy Distribution (which cash will be distributed solely to creditors of Cendant) as not resulting in income or gain pursuant to Section 361 of the Code (subject to the limitations set forth therein);

(m) the assumption by Realogy of liabilities, including Assumed Cendant Contingent Liabilities, pursuant to the Separation and Distribution Agreement or other Ancillary Agreements, as not resulting in income or gain pursuant to Section 357 of the Code;

(n) the distribution by Cendant to its stockholders of all of the stock of Realogy as a tax-free distribution under Section 355(a) of the Code to such stockholders;

(o) the contributions to Wyndham, together with the distributions of cash from Wyndham to Cendant, which cash will be distributed solely to creditors of Cendant, and the distribution by Cendant to its stockholders of all of the stock of Wyndham, as a reorganization under Sections 361(c), 368(a)(1)(D) and 355 of the Code (and to which Sections 355(d) and (e) of the Code do not apply);

(p) the receipt by Cendant of approximately $1.36 billion (subject to adjustment) of cash distributed to it by Wyndham in connection with the Wyndham Distribution (which cash will be distributed solely to creditors of Cendant) as not resulting in income or gain pursuant to Section 361 of the Code (subject to the limitations set forth therein);

(q) the assumption by Wyndham of liabilities, including Assumed Cendant Contingent Liabilities, pursuant to the Separation and Distribution Agreement or other Ancillary Agreements, as not resulting in income or gain pursuant to Section 357 of the Code;

(r) the distribution by Cendant to its stockholders of all of the stock of Wyndham as a tax-free distribution under Section 355(a) of the Code to such stockholders; and

(s) the distribution by Cendant to its stockholders of all of the stock of Travelport as a distribution within the meaning of Sections 355(a) and (c ) of the Code (and for which Sections 355(d) and (e) of the Code do not apply), provided , however , that this Section 2.5(s) shall not apply if the Travelport Sale occurs.

 

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ARTICLE III

RESPONSIBILITY FOR PAYMENT OF TAXES

Section 3.1 Responsibility of Cendant to pay Taxes .

(a) General . Except as otherwise provided in this Agreement (e.g., Section 3.5 , Section 8.8 , Section 8.13 , Section 10.2(b) and Section 10.3(d) ), Cendant shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority:

 

  (i) all Post-2006 Cendant Shared Entity Taxes;

 

  (ii) all CCRG Entity Taxes; and

 

  (iii) amounts equal to the amounts Cendant actually receives from the Spinco Parties for Pre-2007 Cendant Shared Entity Taxes.

(b) Timing of Payments . All Taxes required to be paid or caused to be paid by Cendant to an applicable Taxing Authority pursuant to Section 3.1(a) shall be paid or caused to be paid by Cendant to such applicable Taxing Authority on or prior to the Due Date of the applicable Tax Return. Notwithstanding anything to the contrary contained herein, amounts Cendant actually receives from the other Parties for Pre-2007 Cendant Shared Entity Taxes shall be paid or caused to be paid by Cendant to the applicable Taxing Authority no later than the later of (x) the Due Date of the applicable Tax Return or (y) within two (2) Business Days after Cendant actually receives such amounts from the applicable Spinco Parties.

Section 3.2 Responsibility of Realogy to pay Taxes .

(a) Except as otherwise provided in this Agreement (e.g., Section 3.5 , Section 3.6 , Section 8.8 , Section 8.13 , Section 10.2(b) and Section 10.3(d) ), Realogy shall be liable for and shall pay or cause to be paid:

 

  (i) to Cendant, the Realogy Sharing Percentage of all Pre-2007 Cendant Shared Entity Taxes;

 

  (ii) to Wyndham, the Realogy Sharing Percentage of all Pre-2007 Wyndham Shared Entity Taxes;

 

  (iii) to Wyndham, the Realogy Sharing Percentage of all Pre-2007 Wyndham Separate Company Shared Taxes;

 

  (iv) to Travelport, the Realogy Sharing Percentage of all Pre-2007 Travelport Separate Company Shared Taxes;

 

  (v) to the applicable Taxing Authority, the Realogy Sharing Percentage of all Pre-2007 Realogy Separate Company Shared Taxes;

 

  (vi) except to the extent of any Pre-2007 Realogy Separate Company Shared Taxes, to the applicable Taxing Authority, all other Realogy Taxes; and

 

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  (vii) to the applicable Taxing Authority, amounts equal to the amounts Realogy actually receives from the other Parties for Pre-2007 Realogy Separate Company Shared Taxes.

(b) Timing of Payments .

 

  (i) Payment of Taxes required to be made by Realogy to Taxing Authorities . All Taxes required to be paid or caused to be paid by Realogy to an applicable Taxing Authority pursuant to Section 3.2(a) shall be paid or caused to be paid by Realogy to such applicable Taxing Authority on or prior to the Due Date of the applicable Tax Return. Notwithstanding anything to the contrary contained herein, amounts Realogy actually receives from the other Parties for Pre-2007 Realogy Separate Company Shared Taxes shall be paid or caused to be paid by Realogy to the applicable Taxing Authority no later than the later of (x) the Due Date of the applicable Tax Return or (y) within two (2) Business Days after Realogy actually receives such amounts from the applicable Parties.

 

  (ii) Payment of amounts required to be paid by Realogy to another Party pursuant to Section 3.2(a) . All amounts required to be paid or caused to be paid by Realogy to another Party pursuant to Section 3.2(a) shall be paid or caused to be paid by Realogy to such other Party no later than five (5) days prior to the Due Date of the applicable Tax Return.

Section 3.3 Responsibility of Wyndham to pay Taxes .

(a) Except as otherwise provided in this Agreement (e.g., Section 3.5 , Section 3.6 , Section 8.8 , Section 8.13 , Section 10.2(b) and Section 10.3(d) ), Wyndham shall be liable for and shall pay or cause to be paid:

 

  (i) to Cendant, the Wyndham Sharing Percentage of all Pre-2007 Cendant Shared Entity Taxes; and

 

  (ii) to the applicable Taxing Authority, the Wyndham Sharing Percentage of all Pre-2007 Wyndham Shared Entity Taxes;

 

  (iii) to the applicable Taxing Authority, all Post-2006 Wyndham Shared Entity Taxes;

 

  (iv) to Realogy, the Wyndham Sharing Percentage of all Pre-2007 Realogy Separate Company Shared Taxes;

 

  (v) to Travelport, the Wyndham Sharing Percentage of all Pre-2007 Travelport Separate Company Shared Taxes;

 

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  (vi) to the applicable Taxing Authority, the Wyndham Sharing Percentage of all Pre-2007 Wyndham Separate Company Shared Taxes;

 

  (vii) except to the extent of any Pre-2007 Wyndham Separate Company Shared Taxes, to the applicable Taxing Authority, all other Wyndham Taxes; and

 

  (viii) to the applicable Taxing Authority, amounts equal to the amounts Wyndham actually receives from the other Parties for Pre-2007 Wyndham Shared Entity Taxes and Pre-2007 Wyndham Separate Company Shared Taxes.

(b) Timing of Payments .

 

  (i) Payment of Taxes required to be made by Wyndham to Taxing Authorities . All Taxes required to be paid or caused to be paid by Wyndham to an applicable Taxing Authority pursuant to Section 3.3(a) shall be paid or caused to be paid by Wyndham to such applicable Taxing Authority on or prior to the Due Date of the applicable Tax Return. Notwithstanding anything to the contrary contained herein, amounts Wyndham actually receives from the other Parties for Pre-2007 Wyndham Shared Entity Taxes and Pre-2007 Wyndham Separate Company Shared Taxes shall be paid or caused to be paid by Wyndham to the applicable Taxing Authority no later than the later of (x) the Due Date of the applicable Tax Return or (y) within two (2) Business Days after Wyndham actually receives such amounts from the applicable Parties.

 

  (ii) Payment of amounts required to be paid by Wyndham to another Party pursuant to Section 3.3(a) . All amounts required to be paid or caused to be paid by Wyndham to another Party pursuant to Section 3.3(a) shall be paid or caused to be paid by Wyndham to such other Party no later than five (5) days prior to the Due Date of the applicable Tax Return.

Section 3.4 Responsibility of Travelport to pay Taxes .

(a) Except as otherwise provided in this Agreement (e.g., Section 1.3(c) , Section 3.5 , Section 3.6 , Section 8.8 , Section 8.13 , Section 10.2(b) and Section 10.3(d) ), Travelport shall be liable for and shall pay or cause to be paid:

 

  (i) to Cendant, the Travelport Sharing Percentage of all Pre-2007 Cendant Shared Entity Taxes;

 

  (ii) to Wyndham, the Travelport Sharing Percentage of all Pre-2007 Wyndham Shared Entity Taxes;

 

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  (iii) to Realogy, the Travelport Sharing Percentage of all Pre-2007 Realogy Separate Company Shared Taxes;

 

  (iv) to Wyndham , the Travelport Sharing Percentage of all Pre-2007 Wyndham Separate Company Shared Taxes;

 

  (v) to the applicable Taxing Authority, the Travelport Sharing Percentage of all Pre-2007 Travelport Separate Company Shared Taxes;

 

  (vi) except to the extent of Pre-2007 Travelport Separate Company Shared Taxes, to the applicable Taxing Authority, all other Travelport Taxes; and

 

  (vii) to the applicable Taxing Authority, all amounts Travelport actually receives from the other Parties for Pre-2007 Travelport Separate Company Shared Taxes.

(b) Timing of Payments .

 

  (i) Payment of Taxes required to be made by Travelport to Taxing Authorities . All Taxes required to be paid or caused to be paid by Travelport to an applicable Taxing Authority pursuant to Section 3.4(a) shall be paid or caused to be paid by Travelport to such applicable Taxing Authority on or prior to the Due Date of the applicable Tax Return. Notwithstanding anything to the contrary contained herein, amounts Travelport actually receives from the other Parties for Pre-2007 Travelport Separate Company Shared Taxes shall be paid or caused to be paid by Travelport to the applicable Taxing Authority no later than the later of (x) the Due Date of the applicable Tax Return or (y) within two (2) Business Days after Travelport actually receives such amounts from the applicable Parties.

 

  (ii) Payment of amounts required to be paid by Travelport to another Party pursuant to Section 3.4(a) . All amounts required to be paid or caused to be paid by Travelport to another Party pursuant to Section 3.4(a) shall be paid or caused to be paid by Travelport to such other Party no later than five (5) days prior to the Due Date of the applicable Tax Return.

Section 3.5 Extraordinary Transactions .

(a) Cendant . From the period beginning on the Realogy Distribution Date and ending on December 31, 2006, none of the CCRG Entities shall effect or cause to be effected any Extraordinary Transaction. If any such Extraordinary Transaction is effected by any CCRG Entity, then notwithstanding anything to the contrary in this Agreement, Cendant shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority with respect to any Cendant Shared Entity Tax Return all Taxes resulting from such Extraordinary Transaction and shall indemnify the other Parties for the aggregate amount of all net operating loss carryovers

 

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and Credit Carryovers that would have been allocated, apportioned or retained, as the case may be (“ Apportioned ”), to such Party and its Subsidiaries under applicable principles of the Code and the Treasury Regulations thereunder (and Article X hereof) as of its first Post-Distribution Tax Period had all the Extraordinary Transactions effected by the CCRG Entities not occurred (without applying a discount for the time value of money or for the future lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%)). Notwithstanding this Section 3.5(a) , in the event of a Pre-2007 Cendant Shared Entity Audit, (i)  Section 8.8 shall control with respect to any additional Taxes imposed on a Cendant Shared Entity resulting from any Extraordinary Transactions and (ii)  Section 8.9 shall control with respect to any indemnification relating to net operating loss carryovers and Credit Carryovers utilized as a result of any Extraordinary Transactions.

(b) Realogy . On the Realogy Distribution Date, none of Realogy or its Subsidiaries shall effect or cause to be effected any Extraordinary Transaction. If any such Extraordinary Transaction is effected by Realogy or any of its Subsidiaries, then notwithstanding anything to the contrary in this Agreement, Realogy shall be liable for and shall pay or cause to be paid to Cendant with respect to any Cendant Shared Entity Tax Return all Taxes resulting from such Extraordinary Transaction and shall indemnify the other Parties for the aggregate amount of all net operating loss carryovers and Credit Carryovers that would have been Apportioned to such Party and its Subsidiaries under applicable principles of the Code and the Treasury Regulations thereunder (and Article X hereof) as of its first Post-Distribution Tax Period had all the Extraordinary Transactions effected by Realogy and its Subsidiaries not occurred (without applying a discount for the time value of money or for the future lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%)). Notwithstanding this Section 3.5(b) , in the event of a Pre-2007 Cendant Shared Entity Audit, (i)  Section 8.8 shall control with respect to any additional Taxes imposed on a Cendant Shared Entity resulting from Extraordinary Transactions and (ii)  Section 8.9 shall control with respect to any indemnification relating to net operating loss carryovers and Credit Carryovers utilized as a result of any Extraordinary Transactions.

(c) Wyndham . From the period beginning on the Realogy Distribution Date and ending on and including the Wyndham Distribution Date, none of Wyndham or its Subsidiaries shall effect or cause to be effected any Extraordinary Transaction. If any such Extraordinary Transaction is effected by Wyndham or any of its Subsidiaries, then notwithstanding anything to the contrary in the Agreement, Wyndham shall be liable for and shall pay or cause to be paid to Cendant or the applicable Taxing Authority (as the case may be) with respect to any Shared Entity Tax Return all Taxes resulting from such Extraordinary Transaction and shall indemnify the other Parties for the aggregate amount of all net operating loss carryovers and Credit Carryovers that would have been Apportioned to such Party and its Subsidiaries under applicable principles of the Code and the Treasury Regulations thereunder (and Article X hereof) as of its first Post-Distribution Tax Period had all the Extraordinary Transactions effected by Wyndham and its Subsidiaries not occurred (without applying a discount for the time value of money or for the future lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%)). Notwithstanding this Section 3.5(c) , in the event of a Pre-2007 Shared Entity Audit, (i)  Section 8.8 shall control with respect to any additional Taxes imposed on a Shared Entity resulting from any Extraordinary Transactions and (ii)  Section 8.9 shall control with respect to any indemnification relating to net operating loss carryovers and Credit Carryovers utilized as a result of any Extraordinary Transactions.

 

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(d) Travelport . From the period beginning on the Realogy Distribution Date and ending on and including the Final Separation Date, none of Travelport or its Subsidiaries shall effect or cause to be effected any Extraordinary Transaction. If any such Extraordinary Transaction is effected by Travelport or any of its Subsidiaries, then notwithstanding anything to the contrary in the Agreement other than Section 1.3(c), Travelport shall be liable for and shall pay or cause to be paid to Cendant with respect to any Cendant Shared Entity Tax Return all Taxes resulting from such Extraordinary Transaction and shall indemnify the other Parties for the aggregate amount of all net operating loss carryovers and Credit Carryovers that would have been Apportioned to such Party and its Subsidiaries under applicable principles of the Code and the Treasury Regulations thereunder (and Article X hereof) as of its first Post-Distribution Tax Period had all the Extraordinary Transactions effected by Travelport and its Subsidiaries not occurred (without applying a discount for the time value of money or for the future lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%)). Notwithstanding this Section 3.5(d) , in the event of a Pre-2007 Cendant Shared Entity Audit, Section 8.8 shall control with respect to any additional Taxes imposed on a Cendant Shared Entity resulting from any Extraordinary Transactions and Section 8.9 shall control with respect to any indemnification relating to net operating loss carryovers and Credit Carryovers utilized as a result of any Extraordinary Transactions.

Section 3.6 Credit for Travelport Sale Income Tax Amount withheld by Cendant for estimated Taxes imposed on Cendant as a result of a Travelport Sale .

(a) General . Notwithstanding anything to the contrary contained in this Article III , if a Travelport Sale occurs, subject to Section 3.6(b) :

 

  (i) Realogy shall be deemed to have paid to Cendant in respect of Cendant Shared Entity Taxes an amount equal to the Realogy Sharing Percentage of the Travelport Sale Income Tax Amount (as determined in accordance with Section 12.3(a)(iii) of the Separation and Distribution Agreement);

 

  (ii) Wyndham shall be deemed to have paid to Cendant in respect of Cendant Shared Entity Taxes an amount equal to the Wyndham Sharing Percentage of the Travelport Sale Income Tax Amount (as determined in accordance with Section 12.3(a)(iii) of the Separation and Distribution Agreement).

(b) Amounts deemed paid by Realogy or Wyndham, as the case may be, pursuant to Section 3.6(a)(i) shall be deemed paid:

 

  (i) first, in respect of the amount of Income Taxes required to be paid by such Party to Cendant pursuant to this Article III in respect of U.S. federal consolidated income Taxes of Cendant due and owing;

 

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  (ii) second, in respect of the amount of Income Taxes required to be paid by such Party to Cendant pursuant to this Article III in respect of any state, local or foreign Income Taxes of Cendant due and owing; and

 

  (iii) third, any other Taxes required to be paid by such Party to Cendant pursuant to this Article III in respect of any Taxes not described in Section 3.6(b)(i) or Section 3.6(b)(ii) of Cendant due and owing.

(c) In the event that the amounts deemed paid by Realogy or Wyndham, as the case may be, pursuant to Section 3.6(a)(i) are in excess of the aggregate amounts required to be paid by Realogy or Wyndham, as the case may be, pursuant to this Article III , Cendant shall pay to:

 

  (i) Realogy, the Realogy Sharing Percentage of such excess; and

 

  (ii) Wyndham, the Wyndham Sharing Percentage of such excess.

ARTICLE IV

REFUNDS AND OTHER MATTERS

Section 4.1 Refunds relating to Pre-2007 Shared Entity Tax Returns .

(a) Realogy . Subject to Section 8.2(h), Realogy shall be entitled to the Realogy Sharing Percentage of all Refunds of Taxes with respect to: (i) all Pre-2007 Cendant Shared Entity Tax Returns and (ii) all Pre-2007 Wyndham Shared Entity Tax Returns.

(b) Wyndham . Subject to Section 8.2(h), Wyndham shall be entitled to the Wyndham Sharing Percentage of all Refunds of Taxes with respect to: (i) all Pre-2007 Cendant Shared Entity Tax Returns and (ii) all Pre-2007 Wyndham Shared Entity Tax Returns.

(c) Travelport . Subject to Section 8.2(h), Travelport shall be entitled to the Travelport Sharing Percentage of all Refunds of Taxes with respect to: (i) all Pre-2007 Cendant Shared Entity Tax Returns and (ii) all Pre-2007 Wyndham Shared Entity Tax Returns.

(d) Refunds resulting in correlative detriment . Notwithstanding anything to the contrary contained in Sections 4.1(a) , Section 4.1(b) or Section 4.1(c) , to the extent a Refund is reasonably likely to result in a correlative detriment to one or more of the Parties for an applicable Post Distribution Tax Period, such Refund shall to the extent thereof be paid proportionately to the Parties that are reasonably likely to realize such detriment, provided , however , if the Travelport Sale occurs, any correlative detriment to Travelport or any Travelport Subsidiary that is reasonable likely to occur as a result of a Refund shall be ignored.

 

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Section 4.2 Refunds for the benefit of Cendant . Cendant shall be entitled to all Refunds of Taxes with respect to:

(a) all Post-2006 Cendant Shared Entity Tax Returns; and

(b) all CCRG Entity Tax Returns.

Section 4.3 Refunds for the benefit of Realogy . Realogy shall be entitled to all Refunds of Taxes with respect to all Realogy Tax Returns.

Section 4.4 Refunds for the benefit of Wyndham . Wyndham shall be entitled to all Refunds of Taxes with respect to:

(a) all Post-2006 Wyndham Shared Entity Tax Returns; and

(b) all Wyndham Tax Returns.

Section 4.5 Refunds for the benefit of Travelport . Travelport shall be entitled to all Refunds of Taxes with respect to all Travelport Tax Returns.

Section 4.6 Carrybacks . Each of the Parties shall be permitted (but not required) to carry back net operating losses or other Tax attributes realized in any Post-Distribution Tax Period of such Party to any period preceding or including any of the Distributions, provided , however , that a Party shall not be permitted to carry back a net operating loss or other Tax attribute to:

(a) any Tax period relating to a Pre-2007 Cendant Shared Entity Tax Return without the consent of each of the Parties (not including Travelport if the Travelport Sale occurs); and

(b) any Tax period relating to a Pre-2007 Wyndham Shared Entity Tax Return without the consent of each of the Spinco Parties (not including Travelport if the Travelport Sale occurs).

Section 4.7 Amended Tax Returns .

(a) Pre-2007 Shared Entity Tax Returns and Post-2006 Shared Entity Tax Returns . Subject to Article VIII (relating to Audits):

 

  (i) Pre-2007 Cendant Shared Entity Tax Returns . Subject to Section 2.1(a)(iii)(D) , Cendant shall not amend or cause to be amended any Pre-2007 Cendant Shared Entity Tax Return without the consent of each of the Spinco Parties (except for Travelport if the Travelport Sale occurs).

 

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  (ii) Post-2006 Cendant Shared Entity Tax Returns . Cendant shall be entitled to amend or cause to be amended all Post-2006 Cendant Shared Entity Tax Returns.

 

  (iii) Pre-2007 Wyndham Shared Entity Tax Returns . Subject to Section 2.3(a)(iii)(D) , Wyndham shall not amend or cause to be amended any Pre-2007 Wyndham Shared Entity Tax Return without the consent of each of Realogy and Travelport (or, if the Travelport Sale occurs, without the consent of Realogy).

 

  (iv) Post-2006 Wyndham Shared Entity Tax Returns . Wyndham shall be entitled to amend or cause to be amended all Post-2006 Wyndham Shared Entity Tax Returns.

(b) CCRG Entity Tax Returns . Subject to Article VIII (relating to Audits), Cendant shall be entitled to amend or cause to be amended all CCRG Entity Tax Returns.

(c) Realogy Tax Returns . Subject to Article VIII (relating to Audits), Realogy shall be entitled to amend or cause to be amended all Realogy Tax Returns, provided , however , that Realogy shall not amend or cause to be amended any Realogy Tax Return to the extent such amendment affects Pre-2007 Realogy Separate Company Shared Taxes without the consent of each of Wyndham and Travelport (or, if the Travelport Sale occurs, without the consent of Wyndham).

(d) Wyndham Tax Returns . Subject to Article VIII (relating to Audits), Wyndham shall be entitled to amend or cause to be amended all Wyndham Tax Returns, provided , however , that Wyndham shall not amend or cause to be amended any Wyndham Tax Return to the extent such amendment affects Pre-2007 Wyndham Separate Company Shared Taxes, without the consent of Realogy and Travelport (or, if the Travelport Sale occurs, without the consent of Realogy).

(e) Travelport Tax Returns . Subject to Article VIII (relating to Audits), Travelport shall be entitled to amend or cause to be amended all Travelport Tax Returns, provided , however , that Travelport shall not amend or cause to be amended any Travelport Tax Return to the extent such amendment affects Pre-2007 Travelport Separate Company Shared Taxes, without the consent of each of Realogy and Wyndham.

Section 4.8 Payments of Refunds .

(a) Any Refund to which a Party is entitled pursuant to this Article IV that is received by another Party shall be paid by such other Party to such Party in immediately available funds within five (5) Business Days of receipt.

 

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(b) Notwithstanding Section 4.8(a) , to the extent a Party applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such Refund, if received, would have been payable by such Party to another Party (or Parties) pursuant to this Article IV , such Party shall be deemed to have actually received a Refund to the extent thereof and shall pay (in immediately available funds) such Refund to the Parties no later than the Due Date of the Tax Return on which such Refund is applied to reduce Taxes otherwise payable.

ARTICLE V

DISTRIBUTION TAXES

Section 5.1 Liability for Distribution Taxes . In the event that, following a Final Determination relating to a Pre-2007 Shared Entity Audit, it is determined Distribution Taxes are due and payable to a Taxing Authority, notwithstanding Article III , Section 8.8 and Section 8.9 shall govern and control the payment of amounts owed hereunder.

Section 5.2 Definition of Fault . For purposes of this Agreement, Distribution Taxes shall be deemed to result from the fault (“ Fault ”) of a Party if such Taxes are directly attributable to, or result from:

(a) any action, or failure or omission to act, by such Party or such Party’s Affiliates following a Distribution, including, without limitation, a cessation, transfer to Affiliates or others, disposition of its active trade or business within the meaning of Section 355(b) of the Code or other businesses, failure to maintain continuity of business enterprise, an issuance of stock, stock buyback, or payment of an extraordinary dividend by such Party or such Party’s Affiliates following such Distribution;

(b) the direct or indirect acquisition of all or a portion of such Party’s stock and/or its assets (or any transaction or series of related transactions that is deemed to be such an acquisition for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder) by any means whatsoever by any person including pursuant to an issuance of stock by such Party or its Affiliates;

(c) any negotiations, understandings, agreements or arrangements by or involving such Party or its Affiliates with respect to transactions or events (including, without limitation, stock issuances pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions of stock, or a series of such transactions or events) that cause any of the Distributions or related transactions to be treated as part of a plan pursuant to which one or more persons acquire directly or indirectly a Fifty Percent or Greater Interest in any such Party; or

 

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(d) any act or failure to act that is described in Section 5.3 hereof of any such Party (regardless of whether such act or failure to act is covered by a ruling, Unqualified Tax Opinion or waiver, described below).

Section 5.3 Limits on Proposed Acquisition Transactions and other transactions for Restricted Period . For the Restricted Period applicable to each of the Parties, respectively, such Party (a “ Requesting Party ”) shall not:

(a) enter into any Proposed Acquisition Transaction, approve any Proposed Acquisition Transaction for any purpose or permit any Proposed Acquisition Transaction to occur;

(b) merge or consolidate with any other person or liquidate or partially liquidate;

(c) sell or otherwise transfer in a single transaction or series of transactions 50% or more of the gross or net assets of the active trade or business (for purposes of Section 355(b) of the Code) or 50% or more of the consolidated gross or net assets of its businesses (such percentages to be measured based on fair market values as of the date of the applicable Distribution);

(d) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of the stock of such Party; or

(e) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representations or covenants made by such Party in the Tax Representation Letter issued by such Party to Skadden in connection with the issuance by Skadden of its opinion relating to the Tax consequences of a Distribution or any of the positions set forth in Section 2.5 ) which in the aggregate (taking into account other transactions described in this section) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire, directly or indirectly, stock of any of the Parties representing a Fifty Percent or Greater Interest in such Party or otherwise jeopardize Tax-Free Status;

provided , however , that such Requesting Party shall be permitted to take such action or one or more actions set forth in the foregoing clauses (a) through (e) if, prior to taking each such action(s): (1) such Requesting Party shall have requested that Cendant obtain a private letter ruling from the Internal Revenue Service and Cendant shall have received such ruling (or if Cendant is the Requesting Party, Cendant shall have received a ruling) in form and substance reasonably satisfactory to a Majority of the Parties that confirms that such action or actions will not result in Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate, (2) such Requesting Party shall provide each of the other Parties with an Unqualified Tax Opinion in form and substance reasonably satisfactory to a Majority of the Parties that confirms that such action or actions will not result in Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate, or (3) such

 

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Requesting Party shall have received a written statement from each of the other Parties that provides that such other Party waives the requirement to obtain a ruling or opinion described in this paragraph. In determining whether such ruling or opinion is reasonably satisfactory, the Parties may consider, among other factors, the appropriateness of any underlying assumptions, representations and covenants made in connection with such ruling or opinion. The Requesting Party shall bear all costs and expenses of securing any such ruling or opinion and shall reimburse the other Parties for all reasonable out-of-pocket costs and expenses that such Parties may incur in good faith in seeking to obtain or evaluate any such ruling or opinion.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Indemnification obligations of Cendant . Cendant shall and shall cause its Subsidiaries to indemnify the Realogy Indemnitees, the Travelport Indemnitees and the Wyndham Indemnitees and hold them harmless from and against (without duplication):

(a) all Taxes and other amounts for which Cendant is responsible under this Agreement; and

(b) all Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant or obligation of Cendant under this Agreement.

Section 6.2 Indemnification obligations of Realogy . Realogy shall and shall cause its Subsidiaries to indemnify the Cendant Indemnitees, the Travelport Indemnitees and the Wyndham Indemnitees and hold them harmless from and against (without duplication):

(a) all Taxes and other amounts for which Realogy is responsible under this Agreement; and

(b) all Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant or obligation of Realogy under this Agreement.

Section 6.3 Indemnification obligations of Wyndham . Wyndham shall and shall cause its Subsidiaries to indemnify the Cendant Indemnitees, the Realogy Indemnitees and the Travelport Indemnitees and hold them harmless from and against (without duplication):

(a) all Taxes and other amounts for which Wyndham is responsible under this Agreement; and

 

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(b) all Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant or obligation of Wyndham under this Agreement.

Section 6.4 Indemnification obligations of Travelport . Travelport shall and shall cause its Subsidiaries to indemnify the Cendant Indemnitees, the Realogy Indemnitees and the Wyndham Indemnitees and hold them harmless from and against (without duplication):

(a) all Taxes and other amounts for which Travelport is responsible under this Agreement; and

(b) all Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant or obligation of Travelport under this Agreement.

Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 6.4 shall be deemed null and void and be of no further force or effect.

ARTICLE VII

PAYMENTS

Section 7.1 General .

(a) All payments required to be made by one Party to another Party pursuant to this Agreement shall be made within the time prescribed for payment in this Agreement, or if no such time is prescribed, within fifteen (15) Business Days after delivery in accordance with Section 13.4 of written notice of the amount due and owing, together with a schedule calculating in reasonable detail such amounts (and including any relevant Tax Return, statement, bill or invoice related to Taxes, costs, expenses or other amounts due and owing). To the extent a cost or expense incurred by a Party is required to be borne by another Party to this Agreement, such cost or expense shall be paid (or reimbursed) by the Party required to bear such cost and expense to the Party incurring such cost or expense. Payments shall be deemed made when received. Any payment that is not made when due shall bear interest at a rate per annum equal to the Prime Rate plus 4 percent (4%), or the maximum legal rate, whichever is lower, provided , however , that, to the extent that the amount due and owing consists of Taxes, no interest shall accrue pursuant to this Section 7.1 until the later of the time prescribed for payment pursuant to this Agreement or the time such Taxes are actually paid by the Indemnified Party.

Section 7.2 Treatment of payments made pursuant to Tax Sharing Agreement .

(a) General . Unless otherwise required by a Final Determination or this Agreement or permitted under Section 1552 of the Code (or applicable state, local or foreign Law), for U.S. federal income Tax purposes, any payment made pursuant to this Agreement by:

 

  (i) a Spinco Party to Cendant shall be treated for all Tax purposes as a distribution with respect to stock under Section 301 of the Code occurring immediately before the applicable Distribution;

 

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  (ii) Cendant to any of the Spinco Parties shall be treated for all Tax purposes as a tax-free contribution occurring immediately before the applicable Distribution;

 

  (iii) a Spinco Party to another Spinco Party shall be treated for all Tax purposes as a distribution to Cendant with respect to stock under Section 301 of the Code occurring immediately before the applicable Distribution followed by a tax-free contribution by Cendant to the recipient Spinco Party occurring immediately prior to the applicable Distribution; and

in each case, none of the Parties shall take any position inconsistent with such treatment, except to the extent that a Final Determination with respect to a recipient party causes any such payment to not be so treated. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as required pursuant to this Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall use its reasonable best efforts to contest such challenge.

(b) Certain Payments made net of Tax benefits . In calculating amounts payable by a Party to another Party pursuant to this Agreement, the amount payable shall:

 

  (i) if the Indemnified Party is Cendant, be reduced by any Tax Benefit Actually Realized by Cendant or any of its Affiliates during a Post-Distribution Tax Period before such payment is made;

(A) To the extent that any such Tax Benefit Actually Realized by Cendant or its Affiliates during a Post-Distribution Tax Period shall arise after a payment is made to Cendant pursuant to this Agreement, then no later than five (5) Business Days after the filing of a Tax Return reflecting such Tax Benefit Actually Realized, Cendant shall pay to the Indemnifying Party or Indemnifying Parties, proportionately in accordance with the amounts paid by each of the Spinco Parties for the Tax, cost, expense, or other amounts accrued by Cendant that gave rise to such payment, the amount of any such Tax Benefit Actually Realized;

(B) For the avoidance of doubt, in the event that a deduction or other Tax attribute does not result in a Tax Benefit Actually Realized by Cendant or its Affiliates, this Section 7.2(b)(i) shall continue to apply until such deduction or other Tax attribute results in a Tax Benefit Actually Realized or the deduction or other applicable Tax attribute expires without being utilized. In the event that the amount of a Tax Benefit Actually Realized by Cendant or its Affiliates is subsequently reduced or denied,

 

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the Indemnified Party shall promptly repay to Cendant the amount subtracted from or refunded with respect to any payment pursuant to this Section 7.2(b)(i);

 

  (ii) if the Indemnified Party is Realogy, Wyndham or Travelport, as the case may be, be reduced by any Realizable Tax Benefit available to such Party or its Affiliates during any Post-Distribution Tax Period.

(c) Gross-up if payments determined to be taxable upon Final Determination . If, pursuant to a Final Determination, any amount paid by one Party to another Party pursuant to this Agreement (or treated as paid by one Party to another Party pursuant to such Final Determination) is treated other than as required under Section 7.2(a) and results in an increase in gross income of the receiving (or deemed receiving) Party, then it shall be assumed that the increase in gross income resulted in an increase in Taxes to the receiving (or deemed receiving Party) and the paying (or deemed paying) Party shall pay to the receiving (or deemed receiving) Party an additional amount equal to the net amount of increased Taxes assumed to be imposed (i) on the receipt of such payment and (ii) on the receipt of the payment made pursuant to clause (i) of this sentence and this clause (ii), assuming in each case that the recipient (or deemed recipient) pays Taxes at the highest combined federal, state and local statutory rate.

(d) If, pursuant to a Final Determination, a payment made pursuant to this Agreement is treated in a manner other than as required herein, then:

 

  (i) if such Final Determination also results in Cendant or any of its Affiliates being entitled to a net deduction or loss as a result of the Taxes, costs, expense or other amount that gave rise to the payment, then Cendant shall be required to pay to the Indemnifying Party (or Parties) the amounts of any Tax Benefits Actually Realized in accordance with the principles of Section 7.2(b); and

 

  (ii) if such Final Determination also results in any of the Spinco Parties or their respective Affiliates being entitled to a net deduction or loss as a result of the Taxes, costs, expense or other amount that gave rise to the payment, then such Spinco Party shall be required to pay to the Indemnifying Party (or Parties) the amounts of any Realizable Tax Benefits available to such Spinco Party or its Affiliates during any Post-Distribution Tax Period.

Section 7.3 Treatment of payments made pursuant to Separation and Distribution Agreement .

(a) General .

 

  (i)

Unless otherwise required by a Final Determination or this Article VII, for U.S. federal income Tax purposes, payments made pursuant to the Separation and Distribution Agreement shall be treated in accordance with the principles set forth in Section 7.2(a) and none of the Parties shall take any position inconsistent with such treatment, except to the

 

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extent a Final Determination with respect to the recipient Party causes any such payment to not be so treated. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to the Separation and Distribution Agreement should be other than as set forth in this Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall use its reasonable best efforts to contest such challenge.

 

  (ii) Certain Payments made net of Tax benefits . In calculating the amounts payable by a Party to another Party pursuant to the Separation and Distribution Agreement, the amount payable shall be reduced by the Tax Benefit Actually Realized or Realizable Tax Benefit, as applicable, in accordance with, and subject to, the principles set forth in Section 7.2(b).

 

  (iii) Gross-up if indemnity payments determined to be taxable upon Final Determination . If, pursuant to a Final Determination, any amount paid by a Party to another Party pursuant to the Separation and Distribution Agreement (or treated as paid by one Party to another Party pursuant to such Final Determination) is treated other than as required under Section 7.3(a) and results in an increase in gross income of the receiving (or deemed receiving) Party, then it shall be assumed that the increase in gross income resulted in an increase in Taxes to the receiving (or deemed receiving) Party and the paying (or deemed paying ) Party shall pay to the receiving (or deemed receiving) Party, an additional amount calculated in accordance with the principles set forth in Section 7.2(c).

 

  (iv) If, pursuant to a Final Determination, a payment pursuant to the Separation and Distribution Agreement is treated in a manner other than as required pursuant to this Agreement, then:

(A) if such Final Determination also results in Cendant or any of its Affiliates being entitled to a deduction or loss as a result of the Taxes, costs, expense or other amount that gave rise to the payment, then Cendant shall be required to pay to the paying Party (or Parties) the amounts of any Tax Benefits Actually Realized in accordance with the principles of Sections 7.2(b) and (d); and

(B) if such Final Determination also results in any of the Spinco Parties or their respective Affiliates being entitled to a deduction or loss as a result of the Taxes, costs, expense or other amount that gave rise to the payment, then such Spinco Party shall be required to pay to the paying Party (or Parties) the amounts of any Realizable Tax Benefits available to such Party or its Affiliates during any Post-Distribution Tax Period.

 

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(b) Treatment of payments for Assumed Cendant Contingent Liabilities pursuant to the Separation and Distribution Agreement .

 

  (i) Payments made by Realogy and Wyndham . In accordance with Revenue Ruling 95-74, 1995-2, C.B. 36, payments made by Realogy or Wyndham for Assumed Cendant Contingent Liabilities pursuant to this Agreement that, but for such assumption by Realogy or Wyndham, as the case may be, would have been deductible by Cendant under Section 162 of the Code (and applicable provisions of state and local Law) or capitalized by Cendant under Section 263 of the Code (and applicable provisions of state and local Law) or otherwise, as the case may be, pursuant to applicable principles of Tax Law if such amounts had been actually paid by Cendant shall be treated for all Tax purposes as payments actually made by Realogy or Wyndham, as applicable, to unrelated third parties that are deductible to Realogy or Wyndham, as applicable, under Section 162(a) of the Code (and applicable provisions of state and local Law) or capitalized under Section 263 of the Code or otherwise, as the case may be. None of the Parties shall take any position inconsistent with such treatment, except to the extent that Realogy or Wyndham, as the case may be, is required to treat such payment differently as a result of a Final Determination. In the event a Taxing authority asserts that a Party’s treatment of a payment in respect of Assumed Cendant Contingent Liabilities pursuant to this Agreement should be other than as required pursuant to this Section 7.3(b) , such Party shall use its reasonable best efforts to contest such challenge.

 

  (ii) Payments made by Travelport . Payments made by Travelport pursuant to the Separation and Distribution Agreement for Assumed Cendant Contingent Liabilities shall be treated for all Tax purposes as distributions in respect of stock pursuant to Section 301 of the Code occurring immediately before the Travelport Distribution (and, in appropriate circumstances, followed by tax-free capital contributions), and none of the Parties shall take any position inconsistent with such treatment, except to the extent that a Final Determination with respect to the recipient party causes any such payment to not be so treated.

(c) Treatment of payments pursuant to Separation and Distribution Agreement for costs and expenses relating to Assumed Cendant Contingent Liabilities or otherwise pursuant to the Separation and Distribution Agreement and for Specified Shared Expenses . Payments made by a Party for costs and expenses relating to Assumed Cendant Contingent Liabilities or otherwise pursuant to the Separation and Distribution Agreement and for Specified Shared Expenses shall be treated as amounts deductible by such Party pursuant to Section 162 of the Code, and none of the Parties shall take any position inconsistent with such treatment, except to the extent that there is a Final Determination with respect to the paying Party that such payment is not deductible.

 

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(d) Treatment of payments made upon the exercise of Options and for RSUs . A payment of cash or transfer of stock by a Party upon the exercise of Cendant Options, Realogy Options, Wyndham Options or Travelport Options or the vesting of Cendant RSUs, Realogy RSUs, Wyndham RSUs or Travelport RSUs, as applicable, shall be treated for all Tax purposes consistent with the principles of Revenue Ruling 2002-1, C.B. 268 and this Section 7.3(d), and none of the Parties shall take any position inconsistent with such treatment, except to the extent that there is a Final Determination that the Party (or its Subsidiary) of whom such Option Holder or RSU Holder is considered an employee for purposes of the Separation and Distribution Agreement is not entitled to a deduction under Section 162 of the Code with respect to such payment or transfer. In accordance with the foregoing, (i) a payment made by any Party to an Option Holder or RSU Holder who is a Cendant Employee, Realogy Employee, Wyndham Employee or a Travelport Employee shall be deducted by the Party (or its Subsidiary) of whom such Option Holder or RSU Holder is considered an employee for purposes of the Separation and Distribution Agreement under Section 162 of the Code (and corresponding provisions of state and local Law) and (ii) the Parties shall treat such exercise and vesting and corresponding payments as not resulting in gain or loss to any of the Parties or their respective Affiliates.

ARTICLE VIII

AUDITS

Section 8.1 Notice . Within 15 Business Days after a Party receives a written notice or other information from a Taxing Authority of the existence of an Audit that may require indemnification pursuant to this Agreement, the receiving Party shall notify the other Parties of such receipt and, thereafter, shall promptly forward to the other Parties copies of all notices and material communications with any Taxing Authority relating to such Audit. The failure of one Party to notify the other Parties of an Audit shall not relieve such other Party of any liability and/or obligation which it may have under this Agreement, except to the extent that the Indemnifying Party’s rights under this Agreement are materially prejudiced by such failure.

Section 8.2 Pre-2007 Shared Entity Audits .

(a) Administration . Subject to Section 8.2(b) and Section 8.2(c) , Cendant shall administer all Pre-2007 Shared Entity Audits.

(b) Settlement of Pre-2007 Shared Entity Audits . Subject to Section 8.2(d) and Section 8.2(e):

 

  (i)

Cendant shall settle any Pre-2007 Shared Entity Audit upon the request and in the manner directed by a majority of Realogy, Wyndham and Travelport, provided , however , that if the Travelport Sale occurs, Cendant shall settle any Pre-2007 Shared Entity Audit

 

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upon the request and in the manner directed by Realogy in its sole discretion; and

 

  (ii) in the event of any disagreement with respect to any matter relating to any decisions to be made in connection with the conduct, or administration by Cendant, of any Pre-2007 Shared Entity Audit, such matter shall be resolved in the manner directed by a majority of Realogy, Wyndham and Travelport, provided , however , that if the Travelport Sale occurs, such matter shall be resolved in the manner directed by Realogy in its sole discretion.

(c) Participating rights of Spinco Parties with respect to Pre-2007 Shared Entity Audits . Each of the Parties shall be permitted to fully participate in all Pre-2007 Shared Entity Audits, including as set forth in this Section 8.2(c) .

 

  (i) Cendant (in the case of an Audit relating to Pre-2007 Cendant Shared Entity Tax Returns) or Wyndham (in the case of an Audit relating to Pre-2007 Wyndham Shared Entity Tax Returns) shall notify each of the other Parties in writing within 15 Business Days of the commencement of any such Pre-2007 Shared Entity Audit, or at such earlier time that would allow the Parties to timely respond to the commencement of such Pre-2007 Shared Entity Audit.

 

  (ii) Promptly after such notification, Cendant shall arrange for a meeting or conference call that includes all of the Spinco Parties to plan for the management of such Pre-2007 Shared Entity Audit. The Parties shall in good faith cooperate with each other in connection with such Audit and provide such information to each other as may be necessary or useful with respect to such Audit in a timely manner (including with respect to any Party, providing an initial draft of an answer to an IRS Form 4564 (information document request) or similar document or providing a copy of any request from a Taxing Authority relating or attributable to such Party’s direct or indirect historic operations).

 

  (iii) Cendant (with cooperation from Wyndham in the case of an Audit relating to Pre-2007 Wyndham Shared Entity Tax Returns) shall (A) promptly forward to each of the other Parties copies of any correspondence or notices received from any Taxing Authority or judicial authority with respect to Pre-2007 Shared Entity Audits, and (B) provide each of the other Parties with draft copies of any correspondence or filings to be submitted to any Taxing Authority or judicial authority with respect to such Audit for such Party’s review and comment reasonably in advance of the date that such correspondence or filings are to be submitted to the Taxing Authority or judicial authority.

 

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  (iv) Cendant (with cooperation from Wyndham in the case of an Audit relating to Pre-2007 Wyndham Shared Entity Tax Returns) shall provide each of the other Parties with written notice reasonably in advance of, and each of the other Parties shall have the right to attend (or participate in), any meetings (or material conference calls of which Cendant has reasonable advance notice) with Taxing Authorities or before any judicial authorities in connection with all Pre-2007 Shared Entity Audits, and Cendant (or Wyndham, as the case may be) shall execute any documents required by the Taxing Authority to allow for the other Parties to attend (or participate in) such meetings (or conference calls). The Parties shall consult in good faith to determine the submission and content of documentation, protests, memoranda of fact and Law and briefs, the conduct of oral arguments and presentations, the selection of witnesses and the negotiation of stipulations of fact in connection with such Pre-2007 Shared Entity Audits.

(d) Notwithstanding anything to the contrary contained in Section 8.2(a) , Section 8.2(b) or Section 8.2(c) :

 

  (i) in the event of a Pre-2007 Cendant Shared Entity Audit for Income Taxes that results in a Pre-2007 Correlative Adjustment related or attributable to the business or operations of the CCRG Entities, then (A) Cendant shall be entitled to control such Pre-2007 Cendant Shared Entity Audit solely to the extent of the issues that are the subject of such Pre-2007 Correlative Adjustment, (B) each of the other Parties shall be entitled to participate (in accordance with the principles set forth in Section 8.2(c) ) in such Audit to the extent related to such issues, (C) Cendant and the other Parties shall use their reasonable best efforts to sever the issues that are the subject of such Pre-2007 Correlative Adjustment from all other issues arising in such Audit and (D) Cendant shall be entitled to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, such issues.

 

  (ii)

in the event of a Pre-2007 Cendant Shared Entity Audit for Income Taxes that results in a Pre-2007 Correlative Adjustment related or attributable to the business or operations of any of Realogy or its Subsidiaries, then (A) Realogy shall be entitled to control such Pre-2007 Cendant Shared Entity Audit solely to the extent of the issues that are the subject of such Pre-2007 Correlative Adjustment, (B) each of the other Parties shall be entitled to participate (in accordance with the principles set forth in Section 8.2(c) ) in such Audit to the extent related to such issues, (C) Cendant and the other Parties shall use their reasonable best efforts to sever the issues that are the subject of such Pre-2007 Correlative Adjustment from all other issues arising in such Audit and (D) Realogy shall be entitled to resolve, settle or agree to

 

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any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, such issues;

 

  (iii) in the event of a Pre-2007 Shared Entity Audit for Income Taxes that results in a Pre-2007 Correlative Adjustment related or attributable to the business or operations of any of Wyndham or its Subsidiaries, then (A) Wyndham shall be entitled to control such Pre-2007 Shared Entity Audit solely to the extent of the issues that are the subject of such Pre-2007 Correlative Adjustment, (B) each of the other Parties shall be entitled to participate (in accordance with the principles set forth in Section 8.2(c) ) in such Audit to the extent related to such issues, (C) Cendant and the other Parties shall use their reasonable best efforts to sever the issues that are the subject of such Pre-2007 Correlative Adjustment from all other issues arising in such Audit and (D) Wyndham shall be entitled to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, such issues; and

 

  (iv) in the event of a Pre-2007 Cendant Shared Entity Audit for Income Taxes that results in a Pre-2007 Correlative Adjustment related or attributable to the business or operations of any of Travelport or its Subsidiaries, then (A) Travelport shall be entitled to control such Pre-2007 Cendant Shared Entity Audit solely to the extent of the issues that are the subject of such Pre-2007 Correlative Adjustment, (B) each of the other Parties shall be entitled to participate (in accordance with the principles set forth in Section 8.2(c) ) to the extent related to such issues, (C) Cendant and the other Parties shall use their reasonable best efforts to sever the issues that are the subject of such Pre-2007 Correlative Adjustment from all other issues arising in such Audit and (D) Travelport shall be entitled to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, such issues.

(e) Settlements of Pre-2007 Shared Entity Audits that cause Non-Monetary Impairment . Notwithstanding anything to the contrary set forth in this Agreement:

 

  (i) with respect to a Pre-2007 Cendant Shared Entity Audit, if the effect of a settlement of any such Audit is or includes a Non-Monetary Impairment to any of Cendant or its Affiliates, then such settlement may not be agreed to or entered into without the consent of Cendant in its sole discretion; and

 

  (ii) with respect to a Pre-2007 Wyndham Shared Entity Audit, if the effect of a settlement of any such Audit is or includes a Non-Monetary Impairment to any of Wyndham or its Affiliates, then such settlement may not be agreed to or entered into without the consent of Wyndham in its sole discretion.

 

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(f) Sharing of costs and expenses related to Pre-2007 Shared Entity Audits . All costs and expenses (including all costs and expenses relating to calculating Taxes and other amounts payable hereunder) incurred by Cendant relating to all Pre-2007 Shared Entity Audits shall be borne:

 

  (i) by Realogy, in any amount equal to the Realogy Sharing Percentage of all such costs and expenses;

 

  (ii) by Wyndham, in any amount equal to the Wyndham Sharing Percentage of all such costs and expenses; and

 

  (iii) by Travelport, in any amount equal to the Travelport Sharing Percentage of all such costs and expenses.

For purposes of this Section 8.2(f) , costs and expenses shall include internal costs and expenses of Cendant (at the rates set forth in Schedule D) relating to time that Cendant employees have devoted to such Pre-2007 Shared Entity Audits.

(g) Treatment of costs and expenses related to Pre-2007 Shared Entity Audits . Payments borne by Realogy, Wyndham and Travelport, respectively, for costs and expenses relating to Pre-2007 Shared Entity Audits shall be treated as amounts deductible by the paying Party pursuant to Section 162 of the Code, and none of the Parties shall take any position inconsistent with such treatment, except to the extent that a Final Determination with respect to paying Party causes any such payment to not be so treated.

(h) Advance Payment of Taxes .

 

  (i) General . Notwithstanding anything to the contrary in this Agreement, if, in connection with a Pre-2007 Shared Entity Audit, a majority of Realogy, Wyndham and Travelport decide (or, in the event the Travelport Sale has occurred, Realogy in its sole discretion decides) to contest an issue (or issues) arising in such Audit in a court or other venue whose rules or regulations require disputed Taxes to be paid in advance, then, as promptly as practicable in order to allow such issue (or issues) to be litigated in such court:

(A) Cendant shall be required to pay the CCRG Tax Audit Sharing Percentage of all such Taxes to the applicable Taxing Authority;

(B) Realogy shall be required to pay the Realogy Tax Audit Sharing Percentage of all such Taxes to the applicable Taxing Authority;

(C) Wyndham shall be required to pay the Wyndham Tax Audit Sharing Percentage of all such Taxes to the applicable Taxing Authority; and

 

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(D) Travelport shall pay be required to the Travelport Tax Audit Sharing Percentage of all such Taxes to the applicable Taxing Authority.

 

  (ii) Refunds related to amounts paid pursuant to Section 8.2(h)(i) . Notwithstanding anything to the contrary contained in Article IV , Refunds related to Taxes paid by the parties pursuant to Section 8.2(h)(i) shall be paid proportionately to the Parties in the same manner as amounts paid by the Parties pursuant to such Section 8.2(h)(i) .

Section 8.3 Pre-2007 Separate Company Shared Tax Audits .

(a) Pre-2007 Realogy Separate Company Shared Tax Audits . Realogy shall control all Pre-2007 Realogy Separate Company Shared Tax Audits. Each of Wyndham and Travelport shall be entitled to participate (in accordance with the principles set forth in Section 8.2(c) ) in any such Audit solely to the extent it relates to Pre-2007 Realogy Separate Company Shared Taxes, and Realogy shall use its reasonable best efforts to sever all issues relating to Pre-2007 Realogy Separate Company Shared Taxes from all other issues arising in such Audit. Realogy shall not settle any issue relating to Pre-2007 Realogy Separate Company Shared Taxes without the consent of Wyndham and Travelport (or, in the event the Travelport Sale has occurred, the consent of Wyndham), which consent shall not be unreasonably withheld or delayed.

(b) Pre-2007 Wyndham Separate Company Shared Tax Audits . Wyndham shall control all Pre-2007 Wyndham Separate Company Shared Tax Audits. Each of Realogy and Travelport shall be entitled to participate (in accordance with the principles set forth in Section 8.2(c) ) in any such Audit solely to the extent it relates to Pre-2007 Wyndham Separate Company Shared Taxes, and Wyndham shall use its reasonable best efforts to sever all issues relating to Pre-2007 Wyndham Separate Company Shared Taxes from all other issues arising in such Audit. Wyndham shall not settle any issue relating to Pre-2007 Wyndham Separate Company Shared Taxes without the consent of Realogy and Travelport (or in the case the Travelport Sale has occurred, the consent of Realogy), which consent shall not be unreasonably withheld or delayed.

(c) Pre-2007 Travelport Separate Company Shared Tax Audits . Travelport shall control all Pre-2007 Travelport Separate Company Shared Tax Audits. Each of Realogy and Wyndham shall be entitled to participate (in accordance with the principles set forth in Section 8.2(c) ) in any such Audit solely to the extent it relates to Pre-2007 Travelport Separate Company Shared Taxes, and Travelport shall use its reasonable best efforts to sever all issues relating to Pre-2007 Travelport Separate Company Shared Taxes from all other issues arising in such Audit. Travelport shall not settle any issue relating to Pre-2007 Travelport Separate Company Shared Taxes without the consent of Realogy and Wyndham, which consent shall not be unreasonably withheld or delayed.

 

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(d) Costs and expenses related to contesting Pre-2007 Separate Company Shared Taxes . All costs and expenses relating to contesting Pre-2007 Separate Company Shared Taxes that are incurred by the Party controlling such applicable Audit shall be borne:

 

  (i) by Realogy, in any amount equal to the Realogy Sharing Percentage of all such costs and expenses;

 

  (ii) by Wyndham, in any amount equal to the Wyndham Sharing Percentage of all such costs and expenses; and

 

  (iii) by Travelport, in any amount equal to the Travelport Sharing Percentage of all such costs and expenses.

For purposes of this Section 8.3(d) , costs and expenses shall include internal costs and expenses of the Party controlling such applicable Audit (at the rates set forth in Schedule D) relating to time that such Party’s employees have devoted to such Pre-2007 Shared Entity Audits.

(e) Treatment of payments for costs and expenses related to Pre-2007 Separate Company Shared Tax Audits . Payments made by Realogy, Wyndham and Travelport, respectively, for costs and expenses relating to contesting Pre-2007 Separate Company Shared Taxes shall be treated as amounts deductible by the Party paying such expense pursuant to Section 162 of the Code, and none of the Parties shall take any position inconsistent with such treatment, except to the extent that a Final Determination with respect to paying Party causes any such payment to not be so treated.

Section 8.4 Audits exclusively controlled by Cendant . Except to the extent set forth in Section 8.3 , Cendant shall have the exclusive right and sole discretion to control and contest, at Cendant’s own cost and expense and, in Cendant’s sole discretion, to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, any Audit relating to:

(a) all Post-2006 Cendant Shared Entity Tax Returns; and

(b) all CCRG Entity Tax Returns.

Section 8.5 Audits exclusively controlled by Realogy . Except to the extent set forth in Section 8.3 , Realogy shall have the exclusive right and sole discretion to control and contest, at Realogy’s own cost and expense and, in Realogy’s sole discretion, to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, any Audit relating to all Realogy Tax Returns.

 

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Section 8.6 Audits exclusively controlled by Wyndham . Except to the extent set forth in Section 8.3 , Wyndham shall have the exclusive right and sole discretion to control and contest, at Wyndham’s own cost and expense and, in Wyndham’s sole discretion, to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, any Audit relating to:

(a) all Post-2006 Wyndham Shared Entity Tax Returns; and

(b) all Wyndham Tax Returns.

Section 8.7 Audits exclusively controlled by Travelport .

(a) Except to the extent set forth in Section 8.3 , Travelport shall have the exclusive right and sole discretion to control and contest, at Travelport’s own cost and expense and, in Travelport’s sole discretion, to resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of, any Audit relating to all Travelport Tax Returns.

Section 8.8 Payment of Pre-2007 Shared Entity Audit Tax Amounts .

(a) In connection with any Final Determination with respect to a Pre-2007 Shared Entity Audit that results in an additional amount of Tax required to be paid to a Taxing Authority (a “ Pre-2007 Shared Entity Audit Tax Amount ”), then, subject to Section 8.10 (relating to the Caps and Incremental Costs):

 

  (i) Cendant shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority an amount equal to the product of:

 

  (A) the Pre-2007 Shared Entity Audit Tax Amount; and

 

  (B) the CCRG Audit Sharing Percentage;

 

  (ii) Realogy shall be liable for and shall pay or cause to be paid to Cendant or Wyndham (as the case may be) an amount equal to the product of:

 

  (A) the Pre-2007 Shared Entity Audit Tax Amount; and

 

  (B) the Realogy Audit Sharing Percentage;

 

  (iii) Wyndham shall be liable for and shall pay or cause to be paid to the Applicable Taxing Authority or Cendant (as the case may be) an amount equal to the product of:

 

  (A) the Pre-2007 Shared Entity Audit Tax Amount; and

 

  (B) the Wyndham Audit Sharing Percentage; and

 

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  (iv) Travelport shall be liable for and shall pay or cause to be paid to Cendant or Wyndham (as the case may be) an amount equal to the product of:

 

  (A) the Pre-2007 Shared Entity Audit Tax Amount; and

 

  (B) the Travelport Audit Sharing Percentage.

(b) In connection with any Pre-2007 Shared Entity Audit that results in a Pre-2007 Shared Entity Audit Tax Amount, then Cendant or Wyndham, as the case may be, shall, within 20 Business Days following a final resolution of such Audit, submit in writing to the Parties a preliminary determination (calculated in reasonable detail) of the portion of such Pre-2007 Shared Entity Audit Tax Amount that each Party is liable for pursuant to Section 8.8(a). Each of the Parties shall have access to all data and information necessary to calculate such amounts and the Parties shall cooperate fully in the determination of such amounts. Within 20 Business Days following the receipt by a Party of the information described in this Section 8.8(b) , such Party shall have the right to object by written notice to the other Parties; such written notice shall contain such disputed item or items and the basis for its objection. If no Party objects by proper written notice to the other Parties within the time period described in this Section 8.8(a) , the calculation of the amounts due and owing from each Party shall be deemed to have been accepted and agreed upon, and final and conclusive, for purposes of this Section 8.8(a) . If any Party objects by proper written notice to the other Parties within such time period, the Parties shall act in good faith to resolve any such dispute as promptly as practicable. Any dispute shall be resolved in accordance with Article XII . Amounts payable pursuant to this Section 8.8 shall be paid no later than five (5) Business Days following a final resolution of the portion of the Pre-2007 Shared Entity Audit Tax Amount that each party is liable for pursuant to this Section 8.8 . No later than three (3) Business Days after Cendant and Wyndham, respectively, receives an amount from another Party pursuant to this Section 8.8, such Party shall pay or cause to be paid to the Applicable Taxing Authority amounts equal to the amounts such Party actually receives from the other Parties pursuant to this Section 8.8 .

Section 8.9 Certain Tax Benefit Payments in connection with Section 8.9 Final Determinations .

(a) In connection with any Final Determination that occurs after the date hereof in respect of a Pre-2007 Shared Entity Audit (x) other than a Final Determination in respect of any federal Income Tax audit of the affiliated group of which Cendant was the common parent for all taxable years through December 31, 2002 (the “Ongoing Federal Income Tax Audits”) or (y) a Final Determination as to the correlative state Income Tax consequences that follow from any Final Determination with respect to such Ongoing Federal Income Tax Audits (the “Ongoing State Income Tax Audits”) (such Final Determination, after elimination of the Final Determinations described in clauses (x) and (y), a “Section 8.9 Final Determination”), which Section 8.9 Final Determination results in the utilization of a net operating loss carryover or Credit Carryover as a result of an increase of items of taxable income or gain of (or the disallowance of items of deduction, loss or credit with respect to) a Shared Entity relating to a

 

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Pre-2007 Shared Entity Tax Return, then, with respect to each Applicable Tax Benefit Party, subject to Section 8.10 (relating to the establishment of Caps and Incremental Costs):

 

  (i) Cendant shall pay to such Applicable Tax Benefit Party an amount equal to the product of:

 

  (A) Hypothetical Tax Benefit Amount; and

 

  (B) the CCRG Audit Sharing Percentage;

 

  (ii) Realogy shall pay to such Applicable Tax Benefit Party an amount equal to the product of:

 

  (A) Hypothetical Tax Benefit Amount; and

 

  (B) the Realogy Audit Sharing Percentage;

 

  (iii) Wyndham shall pay to such Applicable Tax Benefit Party an amount equal to the product of:

 

  (A) Hypothetical Tax Benefit Amount; and

 

  (B) the Wyndham Audit Sharing Percentage; and

 

  (iv) Travelport shall pay to the Applicable Tax Benefit Party an amount equal to the product of:

 

  (A) Hypothetical Tax Benefit Amount; and

 

  (B) the Travelport Audit Sharing Percentage.

(b) In connection with any Section 8.9 Final Determination for a Pre-2007 Shared Entity Audit that results in the utilization of a net operating loss carryover or Credit Carryover, then the Applicable Tax Benefit Party shall, within 20 Business Days following such Section 8.9 Final Determination, submit in writing to the Parties that would be responsible for amounts payable pursuant to this Section 8.9 , a preliminary determination (calculated in reasonable detail) of the portion of the Hypothetical Tax Benefit Amount that is payable by each of the Parties to such Applicable Tax Benefit Party pursuant to Section 8.9(a) . Any calculation of such Hypothetical Tax Benefit Amount shall be based on and consistent with the allocation of Tax attributes pursuant to Section 10.1 , taking into account all prior Audit adjustments. Each of the Parties shall have access to all data and information necessary to calculate any such Hypothetical Tax Benefit Amount (and the portion of such Hypothetical Tax Benefit Amount required to be paid by each of the Parties) and the Parties shall cooperate fully in the determination of such amounts. Within 20 Business Days following the receipt by a Party of the information described in this Section 8.9(b) relating to the calculation of the Hypothetical Tax Benefit Amount (and the portion of such Hypothetical Tax Benefit Amount required to be paid by each of the Parties), each of the Parties shall have the right to object by written notice to the other Parties; such written notice shall contain such disputed item or items and the basis for its

 

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objection. If no Party objects by proper written notice to the other Parties within the time period described in this Section 8.9(a) , the calculation of the Hypothetical Tax Benefit Amount (and the portion of such Hypothetical Tax Benefit Amount required to be paid by each of the Parties) shall be deemed to have been accepted and agreed upon, and final and conclusive, for purposes of this Section 8.9(a) . If any Party objects by proper written notice to the other Parties within such time period, the other Parties shall act in good faith to resolve any such dispute as promptly as practicable. Any dispute shall be resolved in accordance with Article XII . Amounts payable pursuant to this Section 8.9 shall be paid no later than five (5) Business Days following a final resolution of the portion of the Hypothetical Tax Benefit Amount that each Party is liable for pursuant to this Section 8.9 . Notwithstanding anything to the contrary contained in this Section 8.9, no payment required to be made by a Party to another Party pursuant to this Section 8.9 shall be required to be paid prior to November 30, 2007.

(c) Notwithstanding Section 8.9(a) , if there is a Final Determination with respect to an Ongoing Federal Income Tax Audit or an Ongoing State Income Tax Audit, and as a result of such Final Determination, Cendant is required to recognize an expense as determined under Generally Accepted Accounting Principles, which expense is the result of the Final Determination being greater than the amount of the liability established on Cendant’s balance sheet at the end of the third quarter of 2006 in respect of the item or items covered by the relevant Final Determination, then each of Realogy, Travelport and Wyndham shall reimburse Cendant for such excess in an amount equal to the Realogy Sharing Percentage, the Travelport Sharing Percentage, and the Wyndham Sharing Percentage, respectively.

Section 8.10 Caps and Incremental Costs . Notwithstanding anything to the contrary in this Agreement, if the Travelport Sale does not occur:

(a) for purposes of determining Realogy’s liability for additional Taxes imposed on a Shared Entity or for Hypothetical Tax Benefit Amounts required to be paid to an Applicable Tax Benefit Party, in each case, as a result of a Pre-2007 Shared Entity Audit or for additional Taxes imposed on a Company as a result of a Pre-2007 Separate Company Shared Taxes, respectively, the principles of Section 7.2(h) of the Separation and Distribution Agreement (relating to the establishment of a Cap, the payment of Incremental Costs, and the forfeiture of a right to vote to resolve any issue that is the subject of the Cap chosen by a Settling Party (all as defined in the Separation and Distribution Agreement) shall apply to limit Realogy’s liability for the amounts required to be paid by Realogy pursuant to Section 8.8 and Section 8.9 hereof; and

(b) In addition to the obligations of Wyndham and Travelport pursuant to Section 8.8 and Section 8.9 , Wyndham shall be liable for and shall pay or cause to paid sixty percent (60%), and Travelport shall be liable for and shall pay or cause to paid forty percent (40%), of:

 

  (i)

the excess of (A) the amount of Taxes Realogy would have been liable for pursuant to Section 8.8 without regard to this Section 8.10 over (B) the amount Realogy of Taxes would have been liable for pursuant to

 

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Section 8.8 , assuming that the relevant Audit was settled in accordance with the applicable settlement proposal voted on by Realogy; and

 

  (ii) the excess of (A) the amount of the Hypothetical Tax Benefit Amount Realogy would have been liable for pursuant to Section 8.9 without regard to this Section 8.10 over (B) the amount Realogy would have been liable for pursuant to Section 8.9 , assuming that the relevant Audit was settled in accordance with the applicable settlement proposal voted on by Realogy.

Section 8.11 Pre-2007 Cendant Shared Entity Audits resulting in certain Pre-2007 Correlative Adjustments .

(a) General . In the event of a Pre-2007 Cendant Shared Entity Audit for Income Taxes that results in a Pre-2007 Correlative Adjustment related or attributable to business or operations of a Cendant Shared Entity (but not, for the avoidance of doubt, the CCRG Entities, Realogy or its Subsidiaries, Wyndham or its Subsidiaries or Travelport or its Subsidiaries) and an increase in a related correlative deduction, loss or credit (or reduction in income or gain) for a Post-Distribution Tax Period for such Cendant Shared Entity resulting in a Tax Benefit Actually Realized for such Post-Distribution Tax Period, then Cendant shall pay to:

 

  (i) Realogy, the Realogy Audit Sharing Percentage (for such Pre-2007 Cendant Shared Entity Audit) of any such related correlative Tax Benefit Actually Realized by Cendant or any of its Affiliates in a Post-Distribution Tax Period;

 

  (ii) Wyndham, the Wyndham Audit Sharing Percentage (for such Pre-2007 Cendant Shared Entity Audit) of any such related correlative Tax Benefit Actually Realized by Cendant or its Affiliates in a Post-Distribution Tax Period; and

 

  (iii) Travelport, the Travelport Audit Sharing Percentage (for such Pre-2007 Cendant Shared Entity Audit) of any such related correlative Tax Benefit Actually Realized by Cendant or its Affiliates in a Post-Distribution Tax Period.

(b) Timing of Payments . No later than five (5) Business Days after the filing of a Tax Return reflecting the Tax Benefit Actually Realized, Cendant shall pay to each of the applicable Spinco Parties the amount required to be paid by Cendant to such Party pursuant to Section 8.11(a) .

 

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Section 8.12 Certain Tax Attributes for Post-Distribution Periods . In connection with a Final Determination with respect to a Pre-2007 Cendant Shared Entity Tax Return that results in the elimination (in whole or in part) of a basis step up in the assets described in Schedule C:

(a) Realogy shall indemnify Wyndham for an amount equal to the product of:

 

  (i) the Realogy Sharing Percentage; and

 

  (ii) thirty-eight percent (38%) of the amount of Wyndham’s deferred Tax asset set forth on Schedule C (reduced to take into account all amortization or depreciation accrued through the Wyndham Distribution Date) that was eliminated as a result of such Final Determination;

(b) Wyndham shall indemnify Realogy for an amount equal to the product of:

 

  (i) the Wyndham Sharing Percentage; and

 

  (ii) thirty-eight percent (38%) of the amount of Realogy’s deferred Tax asset set forth on Schedule C (reduced to take into account all amortization or depreciation accrued through the Realogy Distribution Date) that was eliminated as a result of such Final Determination;

(c) Travelport shall indemnify:

 

  (i) Realogy for an amount equal to the product of:

(A) the Travelport Sharing Percentage; and

(B) thirty-eight percent (38%) of the amount of Realogy’s deferred Tax asset set forth on Schedule C (reduced to take into account all amortization or depreciation accrued through the Realogy Distribution Date) that was eliminated as a result of such Final Determination;

 

  (ii) Wyndham for an amount equal to the product of:

(A) the Travelport Sharing Percentage; and

(B) thirty-eight percent (38%) of the amount of Wyndham’s deferred Tax asset set forth on Schedule C (reduced to take into account all amortization or depreciation accrued through the Wyndham Distribution Date) that was eliminated as a result of such Final Determination.

Section 8.13 Indemnity by Spinco Parties if settlement results in certain adverse consequences to Cendant . Notwithstanding anything to the contrary contained in this Agreement, to the extent that Cendant notifies the other Parties that it reasonably expects that a settlement of a Pre-2007 Shared Entity Audit will more likely than not result in an increase in income and/or gain to, or, decrease in loss, deduction or credit, for one or more Post-Distribution Tax Periods to

 

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Cendant or any of its Affiliates (a “ Post-Distribution Tax Detriment ”) for which Cendant is not otherwise indemnified pursuant to this Agreement:

(a) Realogy shall pay to Cendant an amount equal to the Realogy Audit Sharing Percentage (with respect to such Pre-2007 Shared Entity Audit) of all such Post-Distribution Tax Detriments, without applying a discount for the time value of money or for lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%);

(b) Wyndham shall pay to Cendant an amount equal to the Wyndham Audit Sharing Percentage (with respect to such Pre-2007 Shared Entity Audit)of all such Post-Distribution Tax Detriments, without applying a discount for the time value of money or for lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%); and

(c) Travelport shall pay to Cendant an amount equal to the Travelport Audit Sharing Percentage (with respect to such Pre-2007 Shared Entity Audit)of all such Post-Distribution Tax Detriments, without applying a discount for the time value of money or for lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%).

ARTICLE IX

COOPERATION AND EXCHANGE OF INFORMATION

Section 9.1 Cooperation and Exchange of Information .

(a) The Parties shall each cooperate fully (and each shall cause its respective Affiliates to cooperate fully) with all reasonable requests from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns, claims for Refund, Audits, determinations by Cendant with respect to the allocation of Tax attributes and the calculation of Taxes (including pursuant to Section 8.8 ) or other amounts (including pursuant to Section 8.9 ) required to be paid hereunder, in each case, related or attributable to or arising in connection with Taxes or Tax attributes of any of the Parties or their respective Subsidiaries covered by this Agreement. Such cooperation shall include, without limitation, at each Party’s own cost:

(b) the retention until the expiration of the applicable statute of limitations, and the provision upon request, of Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;

(c) the execution of any document that may be necessary or reasonably helpful in connection with any Audit of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or Refund claim of the Parties or any of their respective Subsidiaries;

 

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(d) the use of the Party’s reasonable best efforts to obtain any documentation that may be necessary or reasonably helpful in connection with any of the foregoing;

(e) the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records or other information that may be necessary or helpful in connection with any Tax Returns or any of the Parties or their Affiliates.

Each Party shall make its employees and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters.

Section 9.2 Retention of Records . Subject to Section 9.1 , if any of the Parties or their respective Subsidiaries intends to dispose of documentation relating to the Taxes of the Parties or their respective Subsidiaries for which another Party to this Agreement may be responsible pursuant to the terms of this Agreement (including, without limitation, Tax Returns, books, records, documentation and other information, accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities) after the expiration of the applicable statute of limitations (taking into account all waivers and extensions), such Party shall or shall cause written notice to the other Parties describing the documentation to be destroyed or disposed of sixty (60) Business Days prior to taking such action. The other Party may arrange to take delivery of the documentation described in the notice at its expense during the succeeding sixty (60) day period.

ARTICLE X

ALLOCATION OF TAX ATTRIBUTES, DUAL CONSOLIDATED LOSSES GAIN

RECOGNITION AGREEMENTS AND OTHER TAX MATTERS

Section 10.1 Allocation of Tax Attributes .

(a) General . To the extent not already provided, no later than 20 Business Days after the end of each fiscal quarter ending on or prior to June 30, 2007, Cendant shall provide to each of the Spinco Parties an estimate (or an updated estimate) of the Tax attributes (including earnings and profits, net operating loss carryovers, capital loss carryovers, alternative minimum Tax credit carryovers and general business credits) allocated or inuring to such Party as a result of the Distributions and related transactions for U.S. federal, state, local and foreign income Tax purposes, provided , however , that the allocation of Tax attributes by Cendant shall be in accordance with applicable Law (as reasonably determined by Cendant) and consistent with the allocations of Tax attributes reflected in the financial statements included in the registration statement on Form 10 filed by each of Realogy, Wyndham and Travelport (if applicable).

 

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(b) No later than November 30, 2007, Cendant shall provide to each of the Spinco Parties a final allocation of the Tax attributes allocated to such Party, which allocation shall be in accordance with the proviso in Section 10.1(a) (the “ Final Tax Attribute Allocation ”).

(c) None of the Parties shall take any position inconsistent with the estimated allocation of Tax attributes pursuant to Section 10.1(a) (in the case of positions taken prior to the Final Tax Attribute Allocation) or the Final Tax Attribute Allocation pursuant to Section 10.1(b) (in the case of positions taken at the time of or after the Final Tax Attribute Allocation), except to the extent:

 

  (i) a reallocation of such Tax attributes is required pursuant to a Final Determination with respect to a Pre-2007 Cendant Shared Entity Audit; or

 

  (ii) in connection with a Final Determination with respect to a Pre-2007 Cendant Shared Entity Audit, as a result of an increase in Taxable income or gain (or disallowance of a deduction, loss, or credit) of such Cendant Shared Entity and the utilization of Tax attributes as a result thereof.

Section 10.2 Dual Consolidated Losses .

(a) For the U.S. federal affiliated group of which Cendant is the Common Parent filing U.S. federal consolidated Income Tax Returns, Cendant (with assistance and cooperation from Wyndham) shall comply with all applicable reporting requirements contained in Treasury Regulation Sections 1.1503-2 and 1.1503-2T (or any successor Treasury Regulation) with respect to the Applicable Wyndham DCLs for each Taxable year up to and including the Taxable year that includes the Wyndham Distribution.

(b) For the U.S. federal affiliated group of which Cendant is the Common Parent filing U.S. federal consolidated Income Tax Returns, Cendant (with assistance and cooperation from Travelport) shall comply with all applicable reporting requirements contained in Treasury Regulation Sections 1.1503-2 and 1.1503-2T (or any successor Treasury Regulation) with respect to the Applicable Travelport DCLs for each Taxable year up to and including the Taxable year that includes the Travelport Distribution. Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.2(b) shall be deemed null and void and be of no further force or effect.

(c) For the U.S. federal affiliated group of which Cendant is the Common Parent filing U.S. federal consolidated Income Tax Returns, Cendant (with assistance and cooperation from Realogy) shall comply with all applicable reporting requirements contained in Treasury Regulation Sections 1.1503-2 and 1.1503-2T (or any successor Treasury Regulation) with respect to the Applicable Realogy DCLs for each Taxable year up to and including the Taxable year that includes the Realogy Distribution.

(d) In conjunction with the Wyndham Distribution, Cendant and Wyndham shall enter into a closing agreement with the Internal Revenue Service as described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) with respect to the Applicable Wyndham DCLs.

 

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In the event of a successor Treasury Regulation, Cendant and/or Wyndham shall execute any agreement or election required in lieu of or in addition to the closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i). If, as a result of an act or omission by Wyndham, such a closing agreement or successor agreement or election is not entered in conjunction with the Wyndham Distribution, then Cendant shall include any Applicable Wyndham DCL recapture income in its U.S. federal consolidated Taxable income for the year of the Wyndham Distribution and Wyndham shall be liable for and shall indemnify Cendant and its Affiliates for the U.S. Tax liability (before taking into account any Tax credit utilization) and all interest due pursuant to Treasury Regulation Section 1.1503-2(g)(2)(vii) or any successor Treasury Regulation.

(e) In conjunction with the Travelport Distribution, Cendant and Travelport shall enter into a closing agreement with the Internal Revenue Service as described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) with respect to the Applicable Travelport DCLs. In the event of a successor Treasury Regulation, Cendant and/or Travelport shall execute any agreement or election required in lieu of or in addition to the closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i). If, as a result of an act or omission by Travelport, such a closing agreement or successor agreement or election is not entered in conjunction with the Travelport Distribution, then Cendant shall include any Applicable Travelport DCL recapture income in its U.S. federal consolidated Taxable income for the year of the Travelport Distribution and Travelport shall be liable for and shall indemnify Cendant and its Affiliates for the U.S. Tax liability (before taking into account any Tax credit utilization) and all interest due pursuant to Treasury Regulation Section 1.1503-2(g)(2)(vii) or any successor Treasury Regulation. Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.2(e) shall be deemed null and void and be of no further force or effect.

(f) In conjunction with the Realogy Distribution, Cendant and Realogy shall enter into a closing agreement with the Internal Revenue Service as described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) with respect to the Applicable Realogy DCLs. In the event of a successor Treasury Regulation, Cendant and/or Realogy shall execute any agreement or election required in lieu of or in addition to the closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i). If, as a result of an act or omission by Realogy, such a closing agreement or successor agreement or election is not entered in conjunction with the Realogy Distribution, then Cendant shall include any Applicable Realogy DCL recapture income in its U.S. federal consolidated Taxable income for the year of the Realogy Distribution and Realogy shall be liable for and shall indemnify Cendant and its Affiliates for the U.S. Tax liability (before taking into account any Tax credit utilization) and all interest due pursuant to Treasury Regulation Section 1.1503-2(g)(2)(vii) or any successor Treasury Regulation.

(g) If a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) is entered into for the Applicable Wyndham DCLs, or if a similar agreement or election is entered pursuant to a successor Treasury Regulation, Wyndham shall, with respect to the Applicable Wyndham DCLs, comply with all of the applicable DCL filing requirements contained in Treasury Regulation Sections 1.1503-2 and 1.1503-2T or any successor Treasury Regulation, including the filing of a “new (g)(2) election” as described in Treasury Regulation

 

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Section 1.1503-2T(g)(2)(iv)(B)(3)(iii) or any successor Treasury Regulation. This paragraph shall also apply in the event Wyndham files a Federal Income Tax Return for a Taxable year following its Distribution at a time when a request for a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) (or a request for a similar agreement under a successor Treasury Regulation) is pending with the Internal Revenue Service.

(h) If a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) is entered into for the Applicable Travelport DCLs, or if a similar agreement or election is entered pursuant to a successor Treasury Regulation, Travelport shall, with respect to the Applicable Travelport DCLs, comply with all of the applicable DCL filing requirements contained in Treasury Regulation Sections 1.1503-2 and 1.1503-2T or any successor Treasury Regulation, including the filing of a “new (g)(2) election” as described in Treasury Regulation Section 1.1503-2T(g)(2)(iv)(B)(3)(iii) or any successor Treasury Regulation. This paragraph shall also apply in the event Travelport files a Federal Income Tax Return for a Taxable year following its Distribution at a time when a request for a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) (or a request for a similar agreement under a successor Treasury Regulation) is pending with the Internal Revenue Service. Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.2(h) shall be deemed null and void and be of no further force or effect.

(i) If a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) is entered into for the Applicable Realogy DCLs, or if a similar agreement or election is entered pursuant to a successor Treasury Regulation, Realogy shall, with respect to the Applicable Realogy DCLs, comply with all of the applicable DCL filing requirements contained in Treasury Regulation Sections 1.1503-2 and 1.1503-2T or any successor Treasury Regulation, including the filing of a “new (g)(2) election” as described in Treasury Regulation Section 1.1503-2T(g)(2)(iv)(B)(3)(iii) or any successor Treasury Regulation. This paragraph shall also apply in the event Realogy files a Federal Income Tax Return for a Taxable year following its Distribution at a time when a request for a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i) (or a request for a similar agreement under a successor Treasury Regulation) is pending with the Internal Revenue Service.

(j) If, subsequent to the Wyndham Distribution, an event occurs that requires an Applicable Wyndham DCL to be recaptured pursuant to Treasury Regulation Section 1.1503-2(g)(2)(vii) and/or a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i), or if an event occurs that requires an Applicable Wyndham DCL to be recaptured pursuant to a successor to Treasury Regulation Section 1.1503-2(g)(2)(vii) and/or an agreement or election pursuant to a successor to Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i), Wyndham shall include the DCL recapture in its U.S. federal consolidated Taxable income and shall pay any associated interest due pursuant to the applicable Treasury Regulation and/or agreement or election.

(k) If, subsequent to the Travelport Distribution, an event occurs that requires an Applicable Travelport DCL to be recaptured pursuant to Treasury Regulation Section 1.1503-2(g)(2)(vii) and/or a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i), or if an event occurs that requires an Applicable Travelport DCL to be recaptured pursuant to a successor to Treasury Regulation Section 1.1503-2(g)(2)(vii) and/or an

 

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agreement or election pursuant to a successor to Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i), Travelport shall include the DCL recapture in its U.S. federal consolidated Taxable income and shall pay any associated interest due pursuant to the applicable Treasury Regulation and/or agreement or election. Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.2(k) shall be deemed null and void and be of no further force or effect.

(l) If, subsequent to the Realogy Distribution, an event occurs that requires an Applicable Realogy DCL to be recaptured pursuant to Treasury Regulation Section 1.1503-2(g)(2)(vii) and/or a closing agreement described in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i), or if an event occurs that requires an Applicable Realogy DCL to be recaptured pursuant to a successor to Treasury Regulation Section 1.1503-2(g)(2)(vii) and/or an agreement or election pursuant to a successor to Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(3)(i), Realogy shall include the DCL recapture in its U.S. federal consolidated Taxable income and shall pay any associated interest due pursuant to the applicable Treasury Regulation and/or agreement or election.

(m) For purposes of this Agreement:

 

  (i) DCL ” means “ dual consolidated loss ” within the meaning of Section 1503(d) of the Code and Treasury Regulation Section 1.1503-2(c)(5).

 

  (ii) SU ” means “ separate unit ” within the meaning of Treasury Regulation Section 1.1503-2(c)(3).

 

  (iii) DRC ” means “ dual resident corporation ” within the meaning of Treasury Regulation Section 1.1503-2(c)(2).

 

  (iv) Applicable Wyndham DCLs ” means each of the DCLs with respect to interests in the following entities (or foreign branches of the following entities) that constitute SUs, for the following years:

(A) 1997: RCI Colombia, Inc.; RCI Argentina Inc.; RCI Brazil Ltd.; RCI Chile, Inc.; and RCI Russia.

(B) 1998: RCI Argentina Inc.; RCI Brazil Ltd.; RCI Russia; and Galileo Canada ULC.

(C) 1999: RCI Thailand; RCI Russia; and Galileo Canada ULC.

(D) 2000: RCI Asia Pacific Pte. Ltd.; RCI Brazil Ltd.; and RCI Russia.

(E) 2001: RCI Argentina Inc; RCI Brazil Ltd.; and RCI Chile, Inc.

(F) 2002: Vacation Care Israel, Inc. and RCI Thailand.

 

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(G) 2003: RCI Asia Pacific Pte. Ltd.; Vacation Care Israel, Inc.; and RCI Thailand.

(H) 2004: RCI Canada, Inc. and Hotel Dynamics International Ltd.

(I) Any DCLs for 2002, 2003 or 2004 attributable to Hotel Dynamics International Ltd. or to any separate unit owned directly or indirectly by Hotel Dynamics International Ltd.

(J) 2005: any DCLs generated by any SUs or DRCs held by Wyndham that are taken into account in computing Cendant’s U.S. federal consolidated Taxable income for the year ended December 31, 2005.

(K) 2006: any DCLs generated by any SUs or DRCs held by Wyndham that are taken into account in computing Cendant’s U.S. federal consolidated Taxable income for the year ended December 31, 2006.

 

  (v) Applicable Travelport DCLs ” means each of the DCLs with respect to interests in the following entities (or foreign branches of the following entities) that constitute SUs, for the following years:

(A) 1998: Galileo Canada ULC.

(B) 1999: Galileo Canada ULC.

(C) 2000: Galileo Canada ULC.

(D) 2001: Galileo Canada ULC.

(E) 2003: Galileo International Services, Inc. and Galileo do Brazil & CIA.

(F) 2004: Galileo International Services, Inc.

(G) 2005: any DCLs generated by any SUs or DRCs held by Travelport that are taken into account in computing Cendant’s U.S. federal consolidated Taxable income for the year ended December 31, 2005.

(H) 2006: any DCLs generated by any SUs or DRCs held by Travelport that are taken into account in computing Cendant’s U.S. federal consolidated Taxable income for the year ended December 31, 2006.

 

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  (vi) Applicable Realogy DCLs ” means each of the DCLs with respect to interests in the following entities (or foreign branches of the following entities) that constitute SUs, for the following years:

(A) Any DCLs for 2002, 2003 or 2004 attributable to Cendant Mobility Holdings Ltd. or to any separate unit owned directly or indirectly by Cendant Mobility Holdings Ltd.

(B) 2005: any DCLs generated by any SUs or DRCs held by Realogy that are taken into account in computing Cendant’s U.S. federal consolidated Taxable income for the year ended December 31, 2005.

(C) 2006: any DCLs generated by any SUs or DRCs held by Realogy that are taken into account in computing Cendant’s U.S. federal consolidated Taxable income for the year ended December 31, 2006.

(n) Notwithstanding anything to the contrary in this Agreement (other than Section 1.3(c), in the event of a breach of an obligation of a Party pursuant to this Section 10.2, (i) in connection with any Tax liability for a Post-Distribution Tax Period, the breaching Party’s indemnification obligation to the non-breaching Party (or Parties) pursuant to Article VI shall be determined without regard to any Tax credit utilization and (ii) in connection with any Tax period other than a Post-Distribution Tax Period, then in addition to the obligations of a breaching Party pursuant to Article VI , the breaching Party shall indemnify the other Parties for the aggregate amount of all Credit Carryovers and/or other Tax attributes that would have been apportioned to such Party and its Subsidiaries under applicable principles of the Code and the Treasury Regulations thereunder (and Article X hereof) as of its first Post-Distribution Tax Period had the breach not occurred (without applying a discount for the time value of money or for the future lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%)).

Section 10.3 Gain Recognition Agreements .

(a) For the U.S. federal affiliated group of which Cendant is the Common Parent filing U.S. federal consolidated Income Tax Returns, Cendant (with assistance and cooperation from Wyndham) shall include with its return for each Taxable year up to and including the Taxable year that includes the Wyndham Distribution any New Wyndham Gain Recognition Agreements, including any related waivers of the statute of limitations under Treasury Regulation Section 1.367(a)-8(b)(4). Cendant shall also file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to the Wyndham Gain Recognition Agreement or any New Wyndham Gain Recognition Agreement. These filings shall include any “new gain recognition agreements” required under Treasury Regulation Section 1.367(a)-8(g), as well as any other reporting that may be required pursuant to Treasury Regulation Section 1.367(a)-8.

(b) For the U.S. federal affiliated group of which Cendant is the Common Parent filing U.S. federal consolidated Income Tax Returns, Cendant (with assistance and cooperation from Travelport) shall include with its return for each Taxable year up to and including the Taxable year that includes the Travelport Distribution any New Travelport Gain Recognition Agreements, including any related waivers of the statute of limitations under Treasury Regulation Section 1.367(a)-8(b)(4). Cendant shall also file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to the Travelport Gain

 

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Recognition Agreements and any New Travelport Gain Recognition Agreements. These filings shall include any “new gain recognition agreements” required under Treasury Regulation Section 1.367(a)-8(g), as well as any other reporting that may be required pursuant to Treasury Regulation Section 1.367(a)-8. Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.3(b) shall be deemed null and void and be of no further force or effect.

(c) For the U.S. federal affiliated group of which Cendant is the Common Parent filing U.S. federal consolidated Income Tax Returns, Cendant (with assistance and cooperation from Realogy) shall include with its return for each Taxable year up to and including the Taxable year that includes the Realogy Distribution any New Realogy Gain Recognition Agreements, including any related waivers of the statute of limitations under Treasury Regulation Section 1.367(a)-8(b)(4). Cendant shall also file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to any New Realogy Gain Recognition Agreements. These filings shall include any “new gain recognition agreements” required under Treasury Regulation Section 1.367(a)-8(g), as well as any other reporting that may be required pursuant to Treasury Regulation Section 1.367(a)-8.

(d) If the Travelport Distribution is effected on or before December 31, 2006, then, for the U.S. federal affiliated group of which Travelport is the Common Parent filing a U.S. federal consolidated Income Tax Return, Travelport shall file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to the Travelport Gain Recognition Agreements and any New Travelport Gain Recognition Agreements, as well as comply with any other reporting obligations that may be required pursuant to Treasury Regulation Section 1.367(a)-8. These filings shall include any “new gain recognition agreements” required under Treasury Regulation Section 1.367(a)-8(g). Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.3(d) shall be deemed null and void and be of no further force or effect.

(e) If the Travelport Distribution is effected after December 31, 2006, then, for the U.S. federal affiliated group of which Travelport is the Common Parent filing U.S. federal consolidated Income Tax Returns, Travelport shall file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to any Post-2006 Existing Travelport Gain Recognition Agreements, and will comply with any other reporting obligations that may be required pursuant to Treasury Regulation Section 1.367(a)-8. These filings shall include any “new gain recognition agreements” required under Treasury Regulation Section 1.367(a)-8(g). Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.3(e) shall be deemed null and void and be of no further force or effect.

(f) If the Wyndham Distribution is effected on or before December 31, 2006, then, for the U.S. federal affiliated group of which Wyndham is the Common Parent filing a U.S. federal consolidated Income Tax Return, Wyndham shall file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to the Wyndham Gain Recognition Agreement and any New Wyndham Gain Recognition Agreements, as well as comply with any other reporting obligations that may be required pursuant to Treasury Regulation Section

 

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1.367(a)-8. These filings shall include any “ new gain recognition agreements ” required under Treasury Regulation Section 1.367(a)-8(g).

(g) If the Wyndham Distribution is effected after December 31, 2006, then, for the U.S. federal affiliated group of which Wyndham is the Common Parent filing U.S. federal consolidated Income Tax Returns, Wyndham shall file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to any Post-2006 Existing Travelport Gain Recognition Agreements, and will comply with any other reporting obligations that may be required pursuant to Treasury Regulation Section 1.367(a)-8. These filings shall include any “new gain recognition agreements” required under Treasury Regulation Section 1.367(a)-8(g).

(h) If the Realogy Distribution is effected on or before December 31, 2006, then, for the U.S. federal affiliated group of which Realogy is the Common Parent filing a U.S. federal consolidated Income Tax Return, Realogy shall file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to any New Realogy Gain Recognition Agreements, as well as comply with any other reporting obligations that may be required pursuant to Treasury Regulation Section 1.367(a)-8. These filings shall include any “new gain recognition agreements” required under Treasury Regulation Section 1.367(a)-8(g).

(i) If the Realogy Distribution is effected after December 31, 2006, then, for the U.S. federal affiliated group of which Realogy is the Common Parent filing U.S. federal consolidated Income Tax Returns, Realogy shall file any annual certification required by Treasury Regulation Section 1.367(a)-8(b)(5) with respect to the Post-2006 Existing Realogy Gain Recognition Agreements, and will comply with any other reporting obligations that may be required pursuant to Treasury Regulation Section 1.367(a)-8. These filings shall include any “ new gain recognition agreements ” required under Treasury Regulation Section 1.367(a)-8(g).

(j) If, following the Travelport Distribution, a Travelport Gain Recognition Agreement or a New Travelport Gain Recognition Agreement is “triggered” pursuant to such Agreement or pursuant to Treasury Regulation Section 1.367(a)-8, notwithstanding anything to the contrary contained in this Agreement (including Article III), Travelport shall reimburse Cendant and its Affiliates for the US Tax liability and all interest due as a result of the trigger. Notwithstanding anything to the contrary contained herein, in the event that the Travelport Sale occurs, this Section 10.3(j) shall be deemed null and void and be of no further force or effect.

(k) If, following the Wyndham Distribution, the Wyndham Gain Recognition Agreement or a New Wyndham Gain Recognition Agreement is “triggered” pursuant to such Agreement or pursuant to Treasury Regulation Section 1.367(a)-8, notwithstanding anything to the contrary contained in this Agreement (including Article III), Wyndham shall reimburse Cendant and its Affiliates for the US Tax liability and all interest due as a result of the trigger.

(l) If, following the Realogy Distribution, a New Realogy Gain Recognition Agreement is “triggered” pursuant to such Agreement or pursuant to Treasury Regulation Section 1.367(a)-8, notwithstanding anything to the contrary contained in this Agreement (including Article III), Realogy shall reimburse Cendant and its Affiliates for the US Tax liability and all interest due as a result of the trigger.

 

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(m) For purposes of this Agreement:

 

  (i) Travelport Gain Recognition Agreements ” means the “gain recognition agreements” that Cendant has entered into pursuant to Treasury Regulation Section 1.367(a)-8(a)(3) with respect to the following “transferred foreign corporations:”

(A) Galileo Switzerland AG;

(B) Galileo Venezuela CLA;

(C) Galileo Belgium SA;

(D) Galileo Espana SA;

(E) Galileo Deutschland GmbH;

(F) Jogwin Ltd.;

(G) Galileo Portugal Ltd.;

(H) Galileo France S.a.r.l.;

(I) Trust International Hotel Reservation Services GmbH (Germany);

(J) Galileo Nederland B.V; and

(K) Galileo International B.V.

 

  (ii) New Travelport Gain Recognition Agreements ” means any gain recognition agreements pursuant to Treasury Regulation Section 1.367(a)-8(a)(3) that are required in order to prevent gain recognition under Section 367(a) with respect to a transfer of a Travelport Subsidiary Corporation after December 31, 2004, but prior to the date of the Travelport Distribution.

 

  (iii) Travelport Subsidiary Corporation ” means any corporation in which Travelport owns a direct or indirect interest.

 

  (iv) Wyndham Gain Recognition Agreement ” means the “ gain recognition agreement ” that Cendant will enter into pursuant to Treasury Regulation Section 1.367(a)-8(a)(3) with respect to Cendant Canada, Inc. as part of the 2006 Cendant consolidated Tax Return.

 

  (v)

New Wyndham Gain Recognition Agreements ” means any gain recognition agreements pursuant to Treasury Regulation Section 1.367(a)-8(a)(3) that are required in order to prevent gain recognition under Section 367(a) with respect to a transfer of a Wyndham

 

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Subsidiary Corporation after December 31, 2004, but prior to the date of the Wyndham Distribution.

 

  (vi) Wyndham Subsidiary Corporation ” means any corporation in which Wyndham owns a direct or indirect interest.

 

  (vii) New Realogy Gain Recognition Agreements ” means any gain recognition agreements pursuant to Treasury Regulation Section 1.367(a)-8(a)(3) that are required in order to prevent gain recognition under Section 367(a) with respect to a transfer of a Realogy Subsidiary Corporation after December 31, 2004, but prior to the date of the Realogy Distribution.

 

  (viii) Realogy Subsidiary Corporation ” means any corporation in which Realogy owns a direct or indirect interest.

 

  (ix) Post-2006 Existing Travelport Gain Recognition Agreements ” means any New Travelport Gain Recognition Agreements that remain in effect, as well as the Travelport Gain Recognition Agreement with respect to the following transferred foreign corporations:

(A) Trust International Hotel Reservation Services GmbH (Germany); and

(B) Galileo Nederland B.V.

provided these Travelport Gain Recognition Agreements remain in effect.

 

  (x) Post-2006 Existing Wyndham Gain Recognition Agreements ” means any New Wyndham Gain Recognition Agreements that remain in effect, as well as the Wyndham Gain Recognition Agreement, provided that Agreement remains in effect.

 

  (xi) Post-2006 Existing Realogy Gain Recognition Agreements ” means any New Realogy Gain Recognition Agreements that remain in effect.

(n) Notwithstanding anything to the contrary in this Agreement other than Section 1.3(c), in the event of a breach of an obligation of a Party pursuant to this Section 10.3, in addition to the obligations of a breaching Party pursuant to Article VI , the breaching Party shall indemnify the other Parties for the aggregate amount of all net operating loss carryovers, Credit Carryovers and/or other Tax attributes that would have been apportioned to such Party and its Subsidiaries under applicable principles of the Code and the Treasury Regulations thereunder (and Article X hereof) as of its first Post-Distribution Tax Period had the breach not occurred (without applying a discount for the time value of money or for the future lack of certainty of realization and assuming an effective Tax rate of thirty-eight percent (38%)).

 

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Section 10.4 Elections pursuant to Section 362(e)(2)(C) of the Code .

(a) Cendant and Wyndham, on the one hand, and Cendant and Realogy, on the other hand, shall each file the election pursuant to Section 362(e)(2)(C) of the Code for each of the Cendant Contingent Assets set forth in Schedule 1.1(24) of the Separation and Distribution Agreement that are contributed to Wyndham or Realogy, as the case may be, in connection with the transactions contemplated by this Agreement.

(b) At the request of Wyndham or Realogy, as the case may be, Cendant and such Party shall file the election pursuant to Section 362(e)(2)(C) of the Code for each of any other assets contributed to such Party in connection with the transactions contemplated by this Agreement.

ARTICLE XI

DEFAULTED AMOUNTS

Section 11.1 General .

(a) In the event that one or more Parties defaults on any of its obligations to pay any Taxes or other amounts required to be paid by a Party to another Party pursuant to this Agreement, then each non-defaulting Party (including Cendant but excluding Travelport if the Travelport Sale has occurred) shall be required to pay an equal portion of the amount in default; provided , however , that any such payment by a non-defaulting Party shall in no way release the defaulting Party from its obligations to pay amounts required to be paid pursuant to this Agreement and any non-defaulting Party may exercise any available legal remedies available against such defaulting Party; provided , further , that interest shall accrue on any such defaulted amounts at a rate per annum equal to the Prime Rate plus 4 percent, or the maximum legal rate, whichever is lower. In connection with the foregoing, it is expressly understood that any defaulting Party’s share of the proceeds from any Cendant Contingent Tax Asset or any other amounts entitled to be received by such defaulting Party hereunder may be used via a right of offset to satisfy, in whole or in part, the obligations of such defaulting Party (and obligations for Assumed Cendant Contingent Liabilities as such term is defined for purposes of the Separation and Distribution Agreement) pursuant to the Separation and Distribution Agreement); such rights of offset shall be applied in favor of the non-defaulting Party or Parties in proportion to the additional amounts paid by any such non-defaulting Party.

ARTICLE XII

DISPUTE RESOLUTION

Section 12.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the

 

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transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (collectively, “ Disputes ”), the general counsels of the relevant Parties (or such other executive officers designated by the relevant Party) shall negotiate for a reasonable period of time to settle such Dispute; provided , that such reasonable period shall not, unless otherwise agreed by the relevant Parties in writing, exceed forty-five (45) days from the date of receipt by a Party of written notice of such Dispute (“ Dispute Notice ”); provided , further , that in the event of any arbitration in accordance with Section 12.2 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Dispute has been resolved. If the general counsels of the relevant Parties (or such other executive officers designated by the relevant Party) are unable to resolve the Dispute within forty-five (45) days from the receipt by a Party (or Parties) of a Dispute Notice, the Dispute shall be resolved in accordance with Section 12.2(a) or Section 12.2(b) as the case may be.

Section 12.2 Arbitration .

(a) Accounting Disputes . If (i) the Dispute arises out of the determination of any amount under Section 2.1 (relating to a Pre-2007 Cendant Shared Entity Tax Return), Section 2.3 (relating to a Pre-2007 Wyndham Shared Entity Tax Return), Article III (relating to payment of Taxes and other amounts), Section 8.8 (relating to certain Tax benefit payments in connection with Pre-2007 Shared Entity Audits), Section 8.9 , Section 8.10 , Section 8.11 , Section 8.12 or Section 8.13 or (ii) any other Dispute under this Agreement that, where there are two Parties to the Dispute, each agrees should be resolved pursuant to this Section 12.2(a) and, where there are more than two Parties to such Dispute, a majority of the Parties to such Dispute agrees should be resolved pursuant to this Section 12.2(a) (each, an “ Accounting Dispute ”), then, subject to Section 12.1 , the Parties to the Accounting Dispute shall jointly retain an Independent Firm acceptable to each of the Parties to the Accounting Dispute to resolve the Accounting Dispute. If the Parties to the Accounting Dispute cannot agree upon an Independent Firm in accordance with this Section 12.2(a) within ten (10) days from the receipt by a Party (or Parties) of the Dispute Notice relating to such Accounting Dispute, then any Party may request that the American Arbitration Association (“ AAA ”) appoint a partner in an Independent Firm (other than an accounting firm that is then providing auditing services to any Party). The Independent Firm or partner selected by the Parties to the Dispute or the AAA, as the case may be (the “ Accounting Arbitrator ”), shall act in accordance with the Expedited Procedures of the AAA’s Commercial Arbitration Rules to resolve all points of disagreement, and its decision shall be final and binding upon all Parties and may be entered and enforced in any court having jurisdiction. Following the decision of the Accounting Arbitrator, the Parties to the Accounting Dispute shall each promptly take or cause to be taken any action necessary to implement the decision of such Accounting Arbitrator.

(b) Other Disputes . If a Dispute is not an Accounting Dispute (“ Other Dispute ”), then, subject to Section 12.1 , such Other Dispute shall be determined, at the request of any relevant Party, by arbitration conducted in New York City, in accordance with the then-

 

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existing Commercial Arbitration Rules of the AAA (the “ Rules ”), except as modified herein. There shall be three arbitrators. If there are only two Parties to the arbitration, each Party shall appoint one arbitrator within twenty (20) days of receipt by the requesting Party of a copy of the demand for arbitration. The two Party-appointed arbitrators shall have twenty (20) days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. If there are more than two Parties to the arbitration, such Parties shall have twenty (20) days to agree on a panel of three arbitrators. On the request of any Party to the arbitration, any arbitrator not timely appointed by the Parties shall be appointed by the AAA in accordance with the listing, ranking and striking procedure in the Rules, and in any such procedure, each party shall be given a limited number of strikes, excluding strikes for cause.

(c) Any controversy concerning whether a Dispute is arbitrable, whether arbitration has been waived, whether a Party to or assignee of this Agreement is bound to arbitrate, or as to the interpretation, applicability or enforceability of this Article XII shall be determined by the arbitrators. In resolving any Dispute, the Parties intend that the arbitrators shall apply applicable Tax Laws and the substantive Laws of the State of New York, without regard to any choice of Law principles thereof that would mandate the application of the Laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply and cause the members of their applicable Group to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award, in any court of competent jurisdiction, including but not limited to (a) the Supreme Court of the State of New York, New York County, or (b) the United States District Court for the Southern District of New York. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings in accordance with the terms of this Agreement and applicable Law, including monetary damages, specific performance and all other forms of legal and equitable relief; provided , however , the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages unless in connection with indemnification for a third-party claim (and in such a case, only to the extent awarded in such third party claim). Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause the members of their applicable Group to keep, confidential all matters relating to the arbitration or the award, and any negotiations, conferences and discussions pursuant to Section 12.1 shall be treated as compromise and settlement negotiations and the existence of the arbitration, the pleadings submitted therein and the outcome thereof shall be kept confidential by all of the Parties thereto; provided , that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or the regulations of any stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration or litigation. Nothing contained herein is intended to or shall be construed to prevent any Party, from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary

 

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relief issued by such court, and to award damages for the failure of any party to respect the arbitral tribunal’s orders to that effect.

Section 12.3 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement during the course of Dispute resolution pursuant to the provisions of this Article XII with respect to all matters not subject to such Dispute resolution.

Section 12.4 Costs . Except as otherwise may be provided in this Agreement, the costs of any mediation or arbitration pursuant to this Article XII shall be borne by the losing Party or Parties in such proportion as the arbitrator or arbitrators determine based on the facts and circumstances.

ARTICLE XIII

MISCELLANEOUS

Section 13.1 Certain representations .

(a) Realogy represents and warrants that it has no plan or intention (and it has no plan or intention to cause any of its Affiliates) to sell, transfer, exchange or otherwise dispose of (or cause to be sold, transferred or otherwise disposed of) any of the stock of Realogy Intellectual Property Holdings, I, a Delaware corporation and a direct, wholly-owned subsidiary of Cendant Real Estate Services Group, LLC, or liquidate (or cause to be liquidated) Realogy Intellectual Property Holdings, I, convert (or cause to be converted) Realogy Intellectual Property Holdings, I, into another Person, or merge (or cause to be merged) Realogy Intellectual Property Holdings, I with any other Person.

(b) Realogy represents and warrants that it has no plan or intention (and it has no plan or intention to cause any of its Affiliates) to sell, transfer, exchange or otherwise dispose of (or cause to be sold, transferred or otherwise disposed of) any of the stock of Realogy Intellectual Property Holdings, II, a Delaware corporation and a direct, wholly-owned subsidiary of Cendant Real Estate Services Group, LLC, or liquidate (or cause to be liquidated) Realogy Intellectual Property Holdings, II, convert (or cause to be converted) Realogy Intellectual Property Holdings, II into another Person, or merge (or cause to be merged) Realogy Intellectual Property Holdings, II with any other Person.

 

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(c) Realogy represents and warrants that it has no plan or intention (and it has no plan or intention to cause any of its Affiliates) to sell, transfer, exchange or otherwise dispose of (or cause to be sold, transferred or otherwise disposed of) any of the stock of:

 

  (i) ERA TM Corp. (fka Cleveland Financial Services Group, Inc.), a California corporation the issued and outstanding stock of which is held fifty percent (50%) by Realogy Intellectual Property Holdings, I and fifty percent (50%) by Realogy Intellectual Property Holdings, II, or liquidate (or cause to be liquidated) ERA TM Corp. convert (or cause to be converted) ERA TM Corp. into another Person, or merge (or cause to be merged) ERA TM Corp. with any other Person.

 

  (ii) C21 TM Corp. (fka Seville Properties, Inc.), a California corporation the issued and outstanding stock of which is held fifty percent (50%) by Realogy Intellectual Property Holdings, I and fifty percent (50%) by Realogy Intellectual Property Holdings, II, or liquidate (or cause to be liquidated) C21 TM Corp., convert (or cause to be converted) C21 TM Corp. into another Person, or merge (or cause to be merged) C21 TM Corp. with any other Person.

 

  (iii) CB TM Corp. (fka Cornish & Carey Residential, Inc.), a California corporation the issued and outstanding stock of which is held fifty percent (50%) by Realogy Intellectual Property Holdings, I and fifty percent (50%) by Realogy Intellectual Property Holdings, II, or liquidate (or cause to be liquidated) CB TM Corp., convert (or cause to be converted) CB TM Corp. into another Person, or merge (or cause to be merged) CB TM Corp. with any other Person.

Section 13.2 Counterparts; Facsimile Signatures . This Agreement may be executed in more than one counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties. For purposes of this Agreement, facsimile signatures shall be deemed originals.

Section 13.3 Survival . Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Realogy Distribution Date and remain in full force and effect in accordance with their applicable terms, provided , however , that all indemnification for Taxes shall survive until 90 days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification, provided , further , that, in the event of notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.

Section 13.4 Notices . All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile

 

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with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 13.4 ):

To Cendant:

Prior to the Final Separation Date :

Cendant Corporation

9 West 57 th Street

New York, New York 10019

Attn: General Counsel

Facsimile: (212) 413-1826

Prior to and following the Final Separation Date:

Cendant Corporation

Six Sylvan Way

Parsippany, New Jersey 07054

Attn: General Counsel

Facsimile: (973) 496-3712

To Realogy:

Realogy Corporation

One Campus Drive

Parsippany, New Jersey 07054

Attn: General Counsel

Facsimile: (973) 496-1127

To Wyndham:

Wyndham Worldwide Corporation

Seven Sylvan Way

Parsippany, New Jersey 07054

Attn: General Counsel

Facsimile: (973) 496-5915

To Travelport:

Travelport, Inc.

339 Jefferson Road

Parsippany, New Jersey 07054

Attn: General Counsel

Facsimile: (973) 496-6160

 

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Section 13.5 Waivers . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

Section 13.6 Amendments . Subject to the terms of Section 13.9 hereof, this Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties.

Section 13.7 Assignment . Except as otherwise provided for in this Agreement, this Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party without the prior written consent of the other Parties, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided, that a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided, that the surviving entity of such merger or the transferee of such Assets shall agree in writing, reasonably satisfactory to the other Parties, to be bound by the terms of this Agreement as if named as a “Party” hereto.

Section 13.8 Successors and Assigns . The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns.

Section 13.9 Certain Termination and Amendment Rights . This Agreement (including indemnification obligations hereunder) may be terminated and each Distribution may be amended, modified or abandoned at any time prior to the Realogy Distribution Date by and in the sole discretion of Cendant without the approval of Realogy, Wyndham or Travelport or the stockholders of Cendant. In the event of such termination, no Party shall have any liability of any kind to any other Party or any other Person.

(a) Subject to Section 13.9(b) :

 

  (i) after the Realogy Distribution Date but prior to the Wyndham Distribution Date, this Agreement may not be terminated except by an agreement in writing signed by Cendant and Realogy.

 

  (ii) after the Wyndham Distribution Date, but prior to the Travelport Distribution Date, this Agreement may not be terminated except by an agreement in writing signed by Cendant, Realogy and Wyndham; provided, that if the Travelport Distribution Date is prior to the Wyndham Distribution Date, by an agreement in writing signed by each of the Parties.

 

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  (iii) after the Travelport Distribution Date, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties; provided, that if the Travelport Distribution Date is prior to the Wyndham Distribution Date, by an agreement in writing signed by Cendant, Realogy and Travelport.

 

  (iv) Notwithstanding anything to the contrary contained in Section 13.9(a)(i) , Section 13.9(a)(ii) or Section 13.9(a)(iii) (but, for the avoidance of doubt, subject to Section 13.9(b) );

(A) any indemnification provided for hereunder shall not be terminated or amended after the Realogy Distribution Date in a manner adverse to the third party beneficiaries thereof without the consent of any such Person; and

(B) this Agreement may be terminated or amended as among any Parties that remain Affiliates (without regard to the last sentence of such definition), so long as such amendment does not adversely affect any Party that is no longer an Affiliate, in which case, only with the consent of such Party.

(b) In the event the Travelport Distribution occurs after December 31, 2006, Cendant shall amend this Agreement to provide:

 

  (i) for Travelport’s liability for Taxes imposed on a Cendant Shared Entity for Tax years beginning after December 31, 2006 (other than Travelport Distribution Taxes) and the filing of Tax Returns and payments of Taxes relating to Tax years beginning after December 31, 2006, Refunds relating to Tax years beginning after December 31, 2006, amendment of Tax Returns for Tax years beginning after December 31, 2006 and certain other customary Tax matters relating to Tax years beginning after December 31, 2006, provided , however , that any such amendment shall be subject to the consent of Realogy and Wyndham, which consent shall not be unreasonably withheld or delayed;

 

  (ii)

in connection with any Final Determination with respect to any Audit relating to the Tax year in which the Travelport Distribution occurs, that Realogy, Wyndham and Travelport, respectively, shall be liable for and shall pay or cause to be paid to Cendant their respective portion of the Tax liability resulting from the aggregate amount of all income and gain directly attributable to or resulting from the Travelport Distribution failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to the Travelport Distribution, to the extent such income or gain does not

 

88


 

result and is not directly attributable to the Fault of any Party and/or its Affiliates, which portion shall determined in a manner consistent with the principles of the Realogy Audit Sharing Percentage, the Wyndham Audit Sharing Percentage, the Travelport Audit Sharing Percentage and Section 8.8 ,

 

  (iii) in connection with any Final Determination with respect to any Audit relating to the Tax year in which the Travelport Distribution occurs, that Cendant shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority the Tax liability resulting from the aggregate amount of all income and gain directly attributable to or resulting from the Travelport Distribution failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to the Travelport Distribution, to the extent such income or gain results or is directly attributable to the Fault of Cendant or its Affiliates, which liability shall determined in a manner consistent with the principles of the Cendant Audit Sharing Percentage and Section 8.8;

 

  (iv) in connection with any Final Determination with respect to any Audit relating to the Tax year in which the Travelport Distribution occurs, that Travelport shall be liable for and shall pay or cause to be paid to Cendant the Tax liability resulting from the aggregate amount of all income and gain directly attributable to or resulting from the Travelport Distribution failing to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or as a distribution within the meaning of Section 355 of the Code, as the case may be, or the application of Sections 355(d) or (e) of the Code to the Travelport Distribution, to the extent such income or gain results or is directly attributable to the Fault of Travelport or its Affiliates, which liability shall determined in a manner consistent with the principles of the Travelport Audit Sharing Percentage and Section 8.8 ; and

 

  (v) provisions that are substantially similar to the principles set forth in Section 8.9 (relating to lost net operating loss carryovers or Credit Carryovers as a result of an Audit) and to the other provisions of this Agreement to the extent not described above.

Section 13.10 No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement, the Separation and Distribution Agreement or any other Ancillary Agreement (including adversely affecting the

 

89


rights or ability of any Party to successfully pursue indemnification or payment pursuant to the provisions of this Agreement).

Section 13.11 Subsidiaries . Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the applicable Distribution Date.

Section 13.12 Third Party Beneficiaries . Except as provided in Article VI relating to Indemnitees, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 13.13 Title and Headings . Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

Section 13.14 Exhibits and Schedules . The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

Section 13.15 Governing Law . This Agreement shall be governed by and construed in accordance with the internal Laws, and not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York.

Section 13.16 Consent to Jurisdiction . Subject to the provisions of Article XII , each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York (the “ New York Courts ”), for the purposes of any suit, action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article XII or to prevent irreparable harm, and to the non-exclusive jurisdiction of the New York Courts for the enforcement of any award issued there under. Each of the Parties further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in the New York Courts with respect to any matters to which it has submitted to jurisdiction in this Section 13.16 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions

 

90


contemplated hereby in the New York Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 13.17 Specific Performance . The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to an injunction or injunctions to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at Law or in equity.

Section 13.18 Waiver of Jury Trial . EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.18 .

Section 13.19 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 13.20 Force Majeure . No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure (as defined in the Separation and Distribution Agreement). A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

 

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Section 13.21 Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 13.22 Changes in Law .

(a) Any reference to a provision of the Code, Treasury Regulations, or a Law of another jurisdiction shall include a reference to any applicable successor provision or Law.

(b) If, due to any change in applicable Law or regulations or their interpretation by any court of Law or other governing body having jurisdiction subsequent to the date hereof, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties hereto shall use their commercially reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.

Section 13.23 Authority . Each of the Parties hereto represents to each of the other Parties that (a) it has the corporate power (corporate or otherwise) and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 13.24 Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof. The Parties shall engage in good faith negotiations to replace any provision which is declared invalid, illegal or unenforceable with a valid, legal and enforceable provision, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provision which it replaces.

Section 13.25 Tax Sharing Agreements . All Tax sharing, indemnification and similar agreements, written or unwritten, as between any of the Parties or their respective Subsidiaries, on the one hand, and any other Party or its respective Subsidiaries, on the other hand (other than this Agreement or in any other Ancillary Agreement or pursuant to any agreement relating to the Travelport Sale), shall be or

 

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shall have been terminated as of the applicable Tax Sharing Agreement Termination Date and, after the Tax Sharing Agreement Termination Date, none of such Parties (or their Subsidiaries) to any such Tax sharing, indemnification or similar agreement shall have any further rights or obligations under any such agreement.

Section 13.26 Exclusivity . Except as specifically set forth in the Separation and Distribution Agreement or any other Ancillary Agreement, all matters related to Taxes or Tax Returns of the Parties and their respectively Subsidiaries shall be governed exclusively by this Agreement. In the event of a conflict between this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement with respect to such matters, this Agreement shall govern and control.

Section 13.27 No Duplication; No Double Recovery . Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed the day and year first above written.

 

CENDANT CORPORATION
/s/ Ronald L. Nelson
Name: Ronald L. Nelson
Title: President and Chief Financial Officer

 

REALOGY CORPORATION
/s/ Richard A. Smith
Name: Richard A. Smith
Title: Vice Chairman and President

 

WYNDHAM WORLDWIDE CORPORATION
/s/ Stephen P. Holmes
Name: Stephen P. Holmes
Title: Chairman and Chief Executive Officer

 

TRAVELPORT INC.
/s/ Eric J. Bock
Name: Eric J. Bock
Title: Executive Vice President and General Counsel


SCHEDULE A

Scheduling of Combined State Tax Returns for 2005

 

Jurisdiction

 

Assume Travelport Sold

 

Assume Travelport Spin

 

To be Completed by (2006)

AK

  Wyndham   Wyndham   9/15

AL

  Wyndham   Travelport   9/1

AR

  Wyndham   Wyndham   9/1

AZ

  Realogy   Realogy   9/15

CA

  Cendant   Cendant   9/29

CO

  Realogy   Travelport   9/15

CT

  Wyndham   Travelport   9/15

DC

  Realogy   Realogy   9/1

FL

  Cendant   Cendant   9/15

HI

  Realogy   Travelport   9/15

IA

  Cendant   Travelport   9/15

ID

  Realogy   Realogy   9/15

IL

  Cendant   Travelport   9/15

IN

  Wyndham   Wyndham   9/15

KS

  Wyndham   Wyndham   9/15

KY

  Realogy   Realogy   9/15

MA

  Realogy   Realogy   9/1

ME

  Wyndham   Wyndham   9/15

MN

  Cendant   Travelport   9/15

MS

  Cendant   Cendant   9/1

MT

  Realogy   Realogy   9/15

ND

  Wyndham   Wyndham   9/15

NE

  Wyndham   Wyndham   9/15

NH

  Realogy   Travelport   9/15

NM

  Cendant   Cendant   9/1

NYC

  Cendant   Cendant   10/31

NYS

  Cendant   Cendant   10/31

OH

  Wyndham   Wyndham   9/15

OK

  Cendant   Cendant   9/15

OR

  Cendant   Cendant   9/15

OR-M

  Cendant   Cendant   9/15

 

1


RI

  Wyndham   Wyndham   9/1

SC

  Realogy   Realogy   9/1

UT

  Wyndham   Travelport   9/15

VA

  Realogy   Realogy   9/15

VT

  Realogy   Realogy   9/15

 

2


SCHEDULE B – Page 1

Pre-2007 Separate Company Shared Taxes

 

Issue

 

Spinco Parties

 

Type of Return

 

Year(s)

 

Amount

Galileo India Income Tax Assessments

  Travelport   Income Tax   2005   3,109,000

Hotel Occupancy Tax Issues

  Wyndham   Sales & Occupancy Tax   2001-2004   2,454,594

Hotel Occupancy Tax Issues

  Travelport   Sales & Occupancy Tax   2001-2004   487,500

General Transfer Pricing

  Wyndham   Income Tax   2003-2005   6,644,000

General Transfer Pricing

  Travelport   Income Tax   2003-2005   10,719,000

Various State Tax Exposures

  Realogy   Income Tax   1994-2005   1,666,439

Various State Tax Exposures

  Wyndham   Income Tax   1992-2005   2,639,868

Various State Tax Expenses

  Travelport   Income Tax   1992-2005   103,563

Sales & Use Tax Issues

  Realogy   Sales & Use   2001-2004   3,660

Sales & Use Tax Issues

  Wyndham   Sales & Use   1990-2001   1,378,600

 

3


SCHEDULE C

CERTAIN TAX ATTRIBUTES

 

     Spinco Party    Approximate Gross
Deferred Tax Asset at
12/31/05 
(millions)

Tax basis difference in assets of foreign subsidiaries (as noted in footnote 6 of the Wyndham Worldwide Form 10)

   Wyndham    $ 308

Tax basis in Coldwell Banker trademark

   Realogy    $ 549

 

4


SCHEDULE D

EMPLOYEE RATES

 

Title of Employee

   Rate     

Executive Vice President

   $ 250    per hour

Vice President

   $ 150    per hour

Director

   $ 125    per hour

Manager and below

   $ 100    per hour

 

5


EXHIBIT A

 

PROJECT NOVA — TRANSACTIONS STEPS


INDEX OF DEFINED TERMS

 

Avis Budget Car Rental, LLC

   4

Avis Budget Holdings, LLC

   5

Avis Car Rental Group, LLC

   4

Avis Group Holdings, LLC

   4

Avis Rent A Car Systems, LLC

   4

BRACS

   8

CCRG Canada

   8

CD Intellectual Property Holdings Contribution

   6

CDRE TM Corp

   15

Cendant

   4

Cendant Hospitality

   4

Cendant Internet

   1

Cendant Internet Merger

   1

Cendant Operations

   2

Cendant Operations Dividend Note

   21

Cendant Operations Merger

   15

Cendant Supplier Services

   2

Cendant Supplier Services Dividend Note

   21

Century 21 Dividend Note

   22

Century 21 IP Company

   17

CFHC LLC

   1

Coldwell Banker Dividend Note

   21

Coldwell Banker IP Company

   17

Days Inn

   2

Days Inn Dividend Note

   21

Dividend Notes

   21

EMEA

   12

Equivest

   13

Equivest Capital

   14

Equivest Capital LLC

   14

ERA IP Company

   17

Fairfield

   2

Fairfield Dividend Note

   21

Fairfield Note

   9

Fairfield Resorts

   9

FMSI

   14

GIT

   12

GIW

   12

Knight/Villager Dividend Note

   21

Knights Dividend Note

   21

Ramada Worldwide Dividend Note

   21

 

i


RCI Dividend Note

   22

RCI Global

   1

RCI TM Corp.

   7

Real Estate IP Companies

   17

Realogy

   6

Realogy Distribution

   20

Realogy Franchise Group, Inc.

   7

Realogy Intellectual Property Holdings I, Inc.

   6

Realogy Intellectual Property Holdings II, Inc.

   7

Realogy Operations, Inc.

   7

Realogy Services Group LLC

   3

Super 8 Dividend Note

   21

TDS Operations

   7

TM Acquisition

   17

TM Acquisition Hospitality IP

   17

TM Acquisition IP

   17

TM Acquisition Merger

   17

TM Acquisition Patent Contribution

   19

TM Acquisition RCI IP

   17

TM Acquisition Real Estate IP

   17

Travel Link

   13

Travel Link Merger

   13

Travelodge Dividend Note

   21

Travelport

   5

Travelport Contribution

   6

Travelport Distribution

   20

Trendwest

   9

Trendwest Note

   10

WHG TM Corp.

   7

Wizcom

   5

Wizcom Merger

   5

Wizcom, Inc.

   5

WVO

   10

WWCI

   8

Wyndham Finance UK

   12

Wyndham Hotel Group, LLC

   7

Wyndham Worldwide

   2

Wyndham Worldwide Distribution

   20

Wyndham Worldwide Operations

   8

 

ii


TO INSURE COMPLIANCE WITH TREASURY DEPARTMENT REGULATIONS, WE ADVISE YOU THAT, UNLESS OTHERWISE EXPRESSLY INDICATED, ANY FEDERAL TAX ADVICE CONTAINED HEREIN WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF (I) AVOIDING TAX-RELATED PENALTIES UNDER THE INTERNAL REVENUE CODE OR (II) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED MATTERS ADDRESSED HEREIN.

Transaction effected on or prior to 12/31/05

 

1. Cendant Internet Group, Inc. (DE) (“ Cendant Internet ”), Dividend Notes and Preferred Stock of Real Estate Services, Inc.

 

  (a) Cendant Finance Holding Company LLC (DE) (“ CFHC LLC ”) and Century 21 Real Estate LLC (DE) cancel the Century 21 Dividend Note. ( Effected December 31, 2005.)

 

  (b) Cendant Vacation Holdco, Inc. (DE) (later renamed RCI Global Vacation Network, Inc.) (“ RCI Global ”) contributes the RCI Dividend Note to RCI General Holdco 2, Inc. (DE). ( Effected December 31, 2005.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (c) Coldwell Banker Corporation (DE) contributes the Coldwell Banker Dividend Note to Coldwell Banker Real Estate Corporation (CA). ( Effected December 31, 2005.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (d) Cendant Internet merges with and into CFHC LLC, with CFHC LLC surviving (the “ Cendant Internet Merger ”). ( Effected December 31, 2005. 10:00 A.M.) As a result of the merger, CFHC LLC will acquire the following 9 Dividend Notes: (1) the Cendant Operations Dividend Note; (2) the Cendant Supplier Services Dividend Note; (3) the Days Inn Dividend Note; (4) the Ramada Worldwide Dividend Note; (5) the Super 8 Dividend Note, (6) the Knights/Villager Dividend Note; (7) the Knights Dividend Note; (8) the Travelodge Dividend Note; and (9) the Fairfield Dividend Note.

 

  (e) Immediately after the Cendant Internet Merger:

 

  (a) Fairfield Dividend Note .

 

  (1) CFHC LLC contributes the Fairfield Dividend Note to RCI Global, formerly known as Cendant Vacation Holdco, Inc. ( Effected December 31, 2005 immediately after the Cendant Internet Merger.)

 

1


  (2) Immediately thereafter, RCI Global, formerly known as Cendant Vacation Holdco, Inc., contributes the Fairfield Dividend Note to RCI General Holdco 2, Inc. (DE). ( Effected December 31, 2005 immediately after the contribution of the Fairfield Dividend Note by CFHC LLC to RCI Global)

 

  (3) Immediately thereafter, RCI General Holdco 2, Inc. (DE) contributes the Fairfield Dividend Note to Fairfield Resort Management Services, Inc. (IN) (“ Fairfield ”). ( Effected December 31, 2005 immediately after the contribution of the Fairfield Dividend Note by RCI Global. to RCI General Holdco 2, Inc.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (b) Cendant Operations Dividend Note . CFHC LLC contributes to Cendant Operations, Inc. (DE) (“ Cendant Operations ”) the Cendant Operations Dividend Note. ( Effected December 31, 2005.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (c) Cendant Supplier Services Dividend Note . CFHC LLC contributes to Cendant Supplier Services, Inc. (DE) (“ Cendant Supplier Services ”) the Cendant Supplier Services Dividend Note. ( Effected December 31, 2005.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (d) Dividend Notes issued by subsidiaries of Cendant Hotel Group, Inc. (DE) (“ Wyndham Worldwide ”).

 

  (1) CFHC LLC contributes to Wyndham Worldwide: (i) the Days Inn Dividend Note, (ii) the Ramada Worldwide Dividend Note, (iii) the Super 8 Dividend Note, (iv) the Knights/Villager Dividend Note, (v) the Knights Dividend Note and (vi) the Travelodge Dividend Note. ( Effected December 31, 2005.)

 

  (2) Immediately thereafter:

 

  (A) Wyndham Worldwide contributes the Days Inn Dividend Note to Days Inn of America, Inc. (DE) (“ Days Inn ”). ( Effected December 31, 2005 immediately after the contribution of the Days Inn Dividend Note by CFHC LLC to Wyndham Worldwide.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

2


  (B) Wyndham Worldwide contributes the Ramada Franchise Dividend Note to RamadaWorldwide, Inc. (DE). ( Effected December 31, 2005 immediately after the contribution of the Ramada Worldwide Dividend Note by CFHC LLC to Wyndham Worldwide.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (C) Wyndham Worldwide contributes the Super 8 Dividend Note to Super 8 Motels, Inc. (DE). ( Effected December 31, 2005 immediately after the contribution of the Super 8 Dividend Note by CFHC LLC to Wyndham Worldwide.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (D) Wyndham Worldwide contributes the Knights/Villager Dividend Note and the Knights Dividend Note to Knights Franchise Systems, Inc. (DE). ( Effected December 31, 2005 immediately after the contribution of the Knights/Villager Dividend Note and the Knights Dividend Note by CFHC LLC to Wyndham Worldwide.) Immediately thereafter, both such notes are cancelled. ( Effected December 31, 2005.)

 

  (E) Wyndham Worldwide contributes the Travelodge Dividend Note to Travelodge Hotels, Inc. (DE). ( Effected December 31, 2005 immediately after the contribution of the Travelodge Dividend Note by CFHC LLC to Wyndham Worldwide.) Immediately thereafter, such note is cancelled. ( Effected December 31, 2005.)

 

  (e) Real Estate Services, Inc. Preferred Stock .

 

  (1) CFHC LLC contributes all of the outstanding preferred stock of Real Estate Services, Inc. to Cendant Real Estate Services, Group LLC (DE) (“ Realogy Services Group LLC ”). ( Effected December 31, 2005.)

 

  (2) Immediately after such contribution, Realogy Services Group LLC contributes such preferred stock to NRT Incorporated (DE). ( Effected December 31, 2005 immediately following the contribution of the preferred stock of Real Estate Services, Inc. from CFHC LLC to Realogy Services Group LLC.)

 

3


2. HFS Licensing, Inc. (DE) . CFHC LLC contributes to Realogy Services Group LLC all of the outstanding stock of HFS Licensing, Inc. (DE). ( Effected December 31, 2005.)

 

3. Cendant Franchise Finance, Inc. (DE) . CFHC LLC contributes to Realogy Services Group LLC and of the outstanding stock of Cendant Franchise Finance, Inc. (DE). ( Effected December 31, 2005.)

 

4. Cendant Global Services, Inc. (DE) . CFHC LLC contributes to Realogy Services Group LLC all of the outstanding stock of Cendant Global Services, Inc. (DE). ( Effected December 31, 2005.)

 

5. Cendant Hospitality, Inc. (DE) (“ Cendant Hospitality ”). Cendant Corporation (DE) (“ Cendant ”) contributes to CFHC LLC all of the outstanding stock of Cendant Hospitality. ( Effected December 31, 2005.)

Transactions to be effected after December 31, 2005

 

6. Car Rental Group Restructuring .

 

  (a) Conversions . The following Delaware corporations will be converted into Delaware limited liability companies on the dates set forth below.

 

  (a) Cendant Car Rental Group, Inc. (DE) (resolutions executed and conversion effective as of January 9, 2006) (such successor limited liability company, “ Avis Budget Car Rental, LLC ”) .

 

  (b) Avis Car Rental Group, Inc. (DE) ( resolutions executed and conversion effective as of January 12, 2006 ) (such successor limited liability company, “ Avis Car Rental Group, LLC ”).

 

  (c) Avis Group Holdings, Inc. (DE) ( resolutions executed and conversion effective as of January 17, 2006 ) (such successor limited liability company, “ Avis Group Holdings, LLC ”).

 

  (d) Avis Rent A Car Systems, Inc. (DE) ( resolution executed and conversion effective as of January 19, 2006 ) (such successor limited liability company, “ Avis Rent A Car Systems, LLC ”).

 

  (b) Formation of limited liability company by CFHC LLC and contribution by CFHC LLC to newly formed limited liability company of all of the membership interests of Avis Budget Car Rental, LLC.

 

  (a) CFHC LLC forms a Delaware limited liability company (“ Avis Budget Holdings, LLC ”) ( effected March 16, 2006 ).

 

4


  (b) CFHC LLC contributes all of the outstanding membership interests in Avis Budget Car Rental, LLC to Avis Budget Holdings, LLC ( effected April 3, 2006 ).

 

  (c) Formation of corporation by Avis Budget Car Rental, LLC.

 

  (a) Avis Budget Car Rental, LLC forms a Delaware corporation, Avis Budget Finance, Inc. ( effected March 16, 2006 ).

 

  (d) Wizcom International, Inc. (DE) (“ Wizcom )

 

  (a) Wizcom Merger . Wizcom merges with and into CFHC LLC, with CFHC LLC continuing as the surviving entity (“ Wizcom Merger ”) ( effected March 23, 2006 ).

 

  (b) Contributions by CFHC LLC to Avis Budget Car Rental, LLC . After the Wizcom Merger, CFHC LLC contributes to Avis Budget Car Rental Group, LLC:

 

  (1) The real property in Virginia Beach and all assets and contracts relating to the Wizard System that it received in the Wizcom Merger ( effected March 24, 2006 );

 

  (2) Any remaining assets and liabilities primarily related to the Car Rental business that it received in the Wizcom Merger not contributed pursuant to step (1) above ( effected May 17, 2006) .

 

  (c) Contributions by CFHC LLC to Travelport .

 

  (1) Travelport Inc. (formerly known as Cendant Travel Distribution Services Group, Inc.) (DE) (“ Travelport ”) forms a Delaware corporation, Wizcom, Inc. (“ Wizcom, Inc. ”) ( effected January 5, 2006 ).

 

  (2) After the Wizcom Merger, CFHC LLC contributes to Travelport all assets and liabilities primarily related to the Travel Distribution services business that it received in the Wizcom Merger (including the assets and contracts relating to Travelport’s Wizcom business) (such contribution, the “ Travelport Contribution ”) (effected May 22, 2006) ; and

 

  (3) After the Travelport Contribution, Travelport contributes those assets it received in the Travelport Contribution to Wizcom, Inc. (effected May 31, 2006) .

 

  (e) CD Intellectual Property Holdings, LLC (“ CD Intellectual Property Holdings ”)

 

5


  (a) Contributions by CD Intellectual Property Holdings to Realogy entities, Wyndham entities, Travelport entities and RCI TM Corp.

 

  (1) CD Intellectual Property Holdings contributes to Realogy, Wyndham, Travelport and RCI TM Corp. all assets and liabilities relating to certain patents and patent license rights (such contribution, the “ CD Intellectual Property Holdings Contribution ”) (effected July 26, 2006) ; and

 

  (2) After the CD Intellectual Property Holdings Contribution, each of Realogy, Wyndham Worldwide and Travelport contributes those assets and liabilities it received in the CD Intellectual Property Holdings Contribution to Realogy Operations, Inc., Wyndham Worldwide Operations, Inc. and Travelport Operations, Inc. (effected July 26, 2006) .

 

  (f) Software Contributions

 

  (a) Cendant shall contribute to CFHC all of its rights to certain software (“ Shared Corporate Proprietary Software ”) (effected July 27, 2006) ;

 

  (b) Thereafter CFHC shall (i) grant to Realogy, Wyndham and Travelport a license to certain Shared Corporate Proprietary Software (“Realogy Licenses”, “Wyndham Licenses” and “Travelport Licenses”, as applicable), and (ii) contribute to Realogy a license to the Shared Corporate Proprietary Software known as “Cendant Legal Internet Portal” (“CLIP” and “CLIP License”, as applicable) (effected July 27, 2006);

 

  (c) Thereafter CFHC shall (i) contribute to Realogy certain Shared Corporate Proprietary Software (“Realogy Owned Software”), (ii) contribute to Wyndham the CLIP and certain Shared Corporate Proprietary Software (“Wyndham Owned Software”), and (iii) contribute to Travelport certain Shared Corporate Proprietary Software (“Travelport Owned Software”) (effected July 27, 2006) ;

 

  (d) Thereafter (i) Realogy shall contribute to Realogy Operations, Inc. the Realogy Owned Software, the Realogy Licenses and the CLIP License, (ii) Wyndham shall contribute to Wyndham Worldwide Operations, Inc. the Wyndham Owned Software and the Wyndham Licenses, and (iii) Travelport shall contribute to Travelport Operations, Inc. the Travelport Owned Software and the Travelport Licenses (effected July 27, 2006) .

 

7. Formation of Certain Corporations .

 

  (a) Realogy and Subsidiaries

 

6


  (a) CFHC LLC forms a Delaware corporation, Realogy Corporation (“ Realogy ”) ( effected January 27, 2006 );

 

 

(b)

Realogy forms a Delaware corporation, Realogy Intellectual Property Holdings I, Inc. (“ Realogy Intellectual Property Holdings I, Inc. ”) ( effected March 14, 2006 ); 1

 

 

(c)

Realogy forms a Delaware corporation, Realogy Intellectual Property Holdings II, Inc. (“ Realogy Intellectual Property Holdings II, Inc. ”) ( effected March 14, 2006 ); 2

 

  (d) Real Estate Operations, Inc. (formerly, Jon Douglas Company, now “ Realogy Operations, Inc. ”) (CA), a direct, wholly-owned subsidiary of Cendant Operations, forms a Delaware corporation, FedState Strategic Consulting, Incorporated ( effected March 27, 2006 ); and

 

 

(e)

Realogy Services Group LLC forms a Delaware corporation, Real Estate Franchise Group, Inc. (“ Realogy Franchise Group, Inc. ”) ( effected January 10, 2006 ). 3

 

  (b) Wyndham Worldwide and Subsidiaries.

 

  (a) Wyndham Worldwide forms a Delaware limited liability company, Wynhdam Hotel Group, LLC formerly known as CHG Brands Holdings, LLC (“ Wyndham Hotel Group, LLC ”) ( effected December 14, 2005 );

 

  (b) Wyndham Worldwide forms a Delaware corporation, RCI TM Corp. (“ RCI TM Corp. ”) ( effected December 14, 2005 ); and

 

  (c) Wyndham Worldwide forms a Delaware corporation, WHG TM Corp. (formerly known as CHG TM Corp.) (“ WHG TM Corp. ”) ( effected December 14, 2005 ).

 

1

Will own 50% of each of the Real Estate IP Companies.

 

2

Will own 50% of each of the Real Estate IP Companies

 

3

Realogy Franchise Group, Inc. (formerly known as Real Estate Franchise Group, Inc.) will be the real estate operations company for the brands only and will be renamed Realogy Franchise Group Inc. Realogy Operations, Inc. (formerly, Jon Douglas Company, a direct, wholly-owned subsidiary of Cendant Operations) will be the operations company for the remaining operations of Realogy and will be renamed Realogy Operations, Inc.

 

7


  (c) Travelport and Subsidiaries. Travelport forms a Delaware corporation, TDS Operations, Inc. (“ TDS Operations ”) ( effected January 5, 2006 ); and

 

8. Wyndham Worldwide Restructuring .

 

  (a) Cendant Hospitality. CFHC LLC contributes to Wyndham Worldwide all of the outstanding stock of Cendant Hospitality ( effected January 13, 2006 ).

 

 

(b)

Cendant Transportation Corp. (DE) (“ Wyndham Worldwide Operations ”) . CFHC LLC contributes to Wyndham Worldwide all of the outstanding stock of Wyndham Worldwide Operations, formerly known as Cendant Transportation) ( effected February 17, 2006 ). 4

 

  (c) Cendant Canada .

 

  (a) Wyndham Worldwide forms a Canadian corporation, Wyndham Worldwide Canada Inc. (“ WWCI ”) ( effected April 13, 2006 ).

 

  (b) WWCI purchases for $16.1 million Canadian from Cendant Canada all of its assets and liabilities related to lodging business (effected June 1, 2006) .

 

  (c) After the sale described in 8(c)(a), CFHC LLC effects a stock split with respect to the common shares of Cendant Canada from 1 share with a stated capital of $1.00 to 100 shares, each with a stated capital of $0.01, and then contributes 96% of the outstanding stock of Cendant Canada to Avis International Ltd. ( effected July 31, 2006 ) and 4% of the outstanding stock of Cendant Canada to Budget Rent a Car Systems Inc. (DE) (“ BRACS ”) (effected July 31, 2006);

 

  (d) After the contributions described in 8(c)(c), Avis International Ltd. and BRACS each sell the outstanding stock of Cendant Canada to CCRG Canada ULC (“ CCRG Canada ”) for 4 common shares of CCRG Canada and 96 common shares of CCRG Canada, respectively ( effected August 1, 2006 );

 

  (e) After the sale described in 8(c)(d), CCRG Canada sells all the outstanding stock of Cendant Canada to WTH Canada, Inc. in exchange for 100 shares of WTH Canada, Inc. ( effected August 2, 2006 ).

 

4

Cendant Transportation was initially renamed Hospitality Operations, Inc and will be renamed Wyndham Worldwide Operations, Inc.

 

8


  (d) INTENTIONALLY OMITTED

 

  (e) Wyndham Worldwide contributes to Wyndham Hotel Group, LLC the following assets: (effected July 21, 2006) .

 

  (a) all of the outstanding stock of Wingate Inns International, Inc. (DE);

 

  (b) all of the outstanding stock of Super 8 Motels, Inc. (SD);

 

  (c) all of the outstanding stock of Travel Rewards, Inc. (DE);

 

  (d) all of the outstanding stock of Cendant Hotel Group International (EAST), Inc. (DE);

 

  (e) all of the outstanding stock of Cendant Hotel Group International, Inc. (DE);

 

  (f) all of the outstanding stock of Knights Franchise Systems, Inc. (DE);

 

  (g) all of the outstanding stock of AmeriHost Franchise Systems, Inc. (DE);

 

  (h) all of the outstanding stock of Days Inn;

 

  (i) all of the outstanding stock of Travelodge Hotels, Inc. (DE);

 

  (j) all of the outstanding membership interests of Wyndham Hotels & Resorts, LLC (DE);

 

  (k) all of the outstanding stock of Aston Hotels & Resorts International, Inc. (DE);

 

  (l) all of the outstanding stock of Howard Johnson International, Inc. (DE);

 

  (m) all of the outstanding stock of Ramada Worldwide Inc. (DE);

 

  (n) all of the outstanding stock of Cendant Hotel Management, Inc. (DE);

 

  (o) all of the outstanding stock of Hotel TM Corp. (DE);

 

  (p) all of the outstanding stock of Cendant Hotel Group (BVI) Inc., a British Virgin Islands corporation; and

 

  (q) all of the outstanding stock of WHG TM Corp. (DE).

 

9


  (f) Wyndham Worldwide Subsidiary Debt to Cendant

 

  (a) Cendant contributes the note owed by Fairfield Resorts, Inc. (DE) (“ Fairfield Resorts ”) to Cendant (the “ Fairfield Note ”) and the note owed by Trendwest Resorts, Inc. (OR) (“ Trendwest ”) to Cendant (the “ Trendwest Note ”) to CFHC LLC ( effected July 14, 2006 );

 

  (b) CFHC LLC contributes the Fairfield Note and the Trendwest Note to Wyndham Vacation Ownership, Inc. (DE), formerly known as Cendant Timeshare Resort Group, Inc. (“ WVO ”) ( effected July 14, 2006 );

 

  (c) WVO, formerly known as Cendant Timeshare Resort Group, Inc., contributes the Fairfield Note to Fairfield Resorts, and thereafter such Fairfield Note is cancelled ( effected July 14, 2006 ); and

 

  (d) WVO, formerly known as Cendant Timeshare Resort Group, Inc., contributes the Trendwest Note to Trendwest, and thereafter such Trendwest Note is cancelled ( effected July 14, 2006 ).

 

  (g) CFHC LLC contributes the following assets to Wyndham Worldwide

 

  (a) all of the issued and outstanding stock of WVO, formerly known as Cendant Timeshare Resort Group, Inc. ( effected July 28, 2006 ); and

 

  (b) all of the issued and outstanding stock of Cendant Supplier Services, which was renamed WWC Supplier Services (effected May 17, 2006) .

 

  (h) INTENTIONALLY OMITTED

 

  (i) Wyndham Worldwide contributes to Wyndham Hotel Group, LLC Certain contracts relating to the lodging business (effected at various times on or prior to the date of the Wyndham Worldwide Distribution, as defined below) .

 

  (j) CFHC LLC contributes the following assets to RCI Global, formerly known as Cendant Vacation Holdco, Inc. ( effected July 27, 2006 ) .

 

  (a) all of the outstanding stock of RCI Pacific Pty. Ltd. (Australia);

 

10


  (b) 224,173 quotas of the outstanding quotas of RCI Brazil Ltda. (Brazil); 5

 

  (c) all of the outstanding stock of Intercambios Endless Vacations IEV, Inc. (IN);

 

  (d) all of the outstanding stock of RCI Cayman Ltd.(Cayman);

 

  (e) 99.98% (9,998 shares) of the outstanding stock of RCI Travel Club S.A. (Spain); 6

 

  (f) all of the outstanding stock of Resort Condominium International de Venezuela, C.A. (Venezuela);

 

  (g) .04% of the outstanding stock of Resort Condominium International de Mexico S. de RL de CV (Mexico); 7 and

 

  (h) all of the outstanding stock of RCI Travel Pte. Ltd. (Singapore).

 

  (k) Certain international restructuring . The following have been or will be completed in the following and are necessary to complete the Wyndham spin.

 

  (a) Cendant pays $43 million to Galileo International, Inc. to pay down an intercompany payable balance ( effected June, 2006 ).

 

  (b) Galileo International, Inc. purchases the stock of gta North America, Inc from Donvand, Ltd for $39,817,363 and the stock of Octopus Travel.com (USA) Ltd. from Octopus Travel Group Ltd. for $3,182,637 million. The combined purchase price is $42,999,726, subject to a valuation to be completed by Deloitte ( effected June 1, 2006 ).

 

5 CFHC LLC owns 224,173 quotas of the outstanding quotas of RCI Brazil Ltda; the remaining outstanding quotas are owned by Resort Condominiums International, LLC (DE) (an indirect subsidiary of RCI Global).

 

6 CFHC LLC owns 99.98% (9,998 shares) of the outstanding stock of RCI Travel Club S.A.; the remaining stock is owned by the following two entities—.01% (1 share) is owned by RCI Europe (UK) (an indirect subsidiary of RCI Global/EMEA Holdings C.V. (Netherlands)) and .01% (1 share) is owned by RCI Espana S.A. (and indirect subsidiary of RCI Global/EMEA Holdings C.V. (Netherlands)).

 

7 CFHC LLC owns .04% of the outstanding stock of Resort Condominium International de Mexico S. de RL de CV (Mexico); the remaining 99.96% is owned by Resort Condominiums International, LLC (DE) (an indirect subsidiary of RCI Global).

 

11


  (c) Donvand, Ltd and Octopus Travel Group Ltd. deposit the cash received in 8(k)(b) with Wyndham Finance UK ( effected June, 2006 ).

 

  (d) Wyndham Finance UK makes a loan of $40.6 million Australian Dollars (approximately $30 million) to Travel Acquisition Corporation Pty Ltd (Australia) ( effected June, 2006 ) ( effected via book entry, interest on the loan is approximately LIBOR + 150 basis points) .

 

  (e) Travel Acquisition Corporation Pty Ltd (Australia) repays a loan in the amount of $ 17.3 million Australian Dollars (approximately $12.8 million) that it owes to Trendwest South Pacific Pty Ltd (Australia) ( effected June 16, 2006 ).

 

  (f) Trendwest South Pacific Pty Ltd (Australia) deposits the cash it received in 8(k)(e) above with Wyndham Finance UK ( effected June, 2006 via book entry).

 

  (g) Travel Acquisition Corporation Pty Ltd (Australia) repays a loan in the amount of $40.6 million Australian Dollars (approximately $30 million) that it owes to We Try Harder Pty. Limited ( effected June, 2006 ).

 

  (h) Avis Rent a Car Limited withdraws a deposit in the amount of 18.3 million New Zealand Dollars (approximately $11.3 million) from Wyndham Finance UK ( effected June, 2006 ).

 

  (i) Cendant withdraws a deposit in the amount of $1.5 million from Wyndham Finance UK ( effected June, 2006 ).

 

  (j) Cendant purchases all of the Wyndham Finance UK’s deposits and loans relating to Travelport entities for an amount equal to the net value of the assets (approximately $3.3 million) ( effected via journal entry on July 21, 2006 ). As a result of such purchase, Cendant becomes the debtor and creditor with respect to all deposits and loans previously made by Wyndham Finance UK. Cendant records a payable to Wyndham Finance UK. Such payable will be settled by means of a dividend for approximately $1.9 million declared by the Wyndham Finance UK to Cendant ( effected July 26, 2006 ).

 

  (k)

RCI Global assumes the liability of Galileo International Technology, LLC, a Delaware limited liability company (“ GIT ”) on the loan from EMEA Holdings C.V., a Netherlands limited partnership (“ EMEA ”) and the liability of GIW Holdings C.V., a Netherlands limited partnership (“ GIW ”) on its loan from EMEA. Both sides of

 

12


 

these loans are now within the Wyndham Worldwide chain. The parties shall treat such assumption as deemed capital contributions from Cendant to Travelport (all the way down the Travelport chain to GIT and GIW), followed by a deemed distribution from RCI Global to Cendant ( effected July 26, 2006) .

 

  (l) RCI, LLC distributes $452,685 receivable to Cendant ( effected July 27, 2006 ).

 

  (m) RCI Global assumes the liabilities listed on Schedule B1 pursuant to an assignment and assumption agreement ( effective July 27, 2006 ).

 

  (n) Travelport assumes the liabilities listed on Schedule B2 pursuant to an assignment and assumption agreement ( effective July 27, 2006 ).

 

  (o) Cendant contributes to RCI Global the receivables listed on Schedule C1 ( effective July 27, 2006 ).

 

  (p) Cendant contributes to Travelport the receivables listed on Schedule C2 ( effective July 27, 2006 ).

 

  (l) After the transactions described in 8 (k)(a)-(p)above have been effected, CFHC LLC contributes to Wyndham Worldwide all of the outstanding stock of RCI Global, formerly known as Cendant Vacation Holdco, Inc. (effected July 28, 2006).

 

  (m) Wyndham Finance UK. After the transactions described in 8(k)(a)-(p) above have been effected:

 

  (a) Cendant contributes 1% of the issued and outstanding stock of Wyndham Finance UK to Wyndham Worldwide ( effected July 28, 2006 );

 

  (b) Wyndham Worldwide contributes 1% of the issued and outstanding stock of Wyndham Finance UK to Wyndham Worldwide Operations ( effected July 28, 2006 ); and

 

  (c) CFHC LLC contributes the remaining 99% of the issued and outstanding stock of Wyndham Finance UK to Wyndham Worldwide after the contribution described above in 8(m)(b)is effective ( effective July 28, 2006 ).

 

  (n) Travel Rewards, Inc. (DE) (an indirect subsidiary of Wyndham Worldwide) purchases from Trip.com, Inc (DE) (an indirect subsidiary of Travelport) certain trademarks relating to Trip Rewards for $2.2 million (effected June 21, 2006) .

 

13


  (o) Travel Link Group, Inc. (DE) (“ Travel Link ”).

 

  (a) Travel Link Merger . Travel Link merges with and into CFHC LLC, with CFHC LLC continuing as the surviving entity (“ Travel Link Merger ”) ( effected July 27, 2006 ).

 

  (b) Contributions by CFHC LLC to Wyndham Worldwide . After the Travel Link Merger, CFHC LLC contributes to Wyndham Worldwide certain assets relating to the lodging business ( effected July 28, 2006 ).

 

  (c) Contributions by Wyndham Worldwide to Wyndham Hotel Group, LLC . After the Travel Link Merger and the contribution described in (b) above, Wyndham Worldwide contributes to Wyndham Hotel Group, LLC the assets received in Step 8(o)(b) ( effected July 28, 2006 ).

 

  (p) Fairfield Resorts and Equivest Finance, Inc. (DE) (“ Equivest ”) Excess Loss Accounts. The following steps will be completed in the following order to address the Fairfield and Equivest excess loss accounts.

 

  (a) BFICP Corp. (DE) will merge with and into Equivest Capital, Inc. (DE) (“ Equivest Capital ”), with Equivest Capital continuing as the surviving entity ( effected July 26, 2006 );

 

  (b) After reclassing the Equivest Capital allowance account Equivest Capital will convert into a Delaware limited liability company (“ Equivest Capital LLC ”) ( effected July 26, 2006 );

 

  (c) St. Augustine Resort Development Group, Inc. (FL) will be converted into a Delaware limited liability company ( effected July 26, 2006 );

 

  (d) Equivest Florida, Inc. (DE) will merge with and into Equivest, with Equivest continuing as the surviving entity ( effected July 26, 2006 );

 

  (e) Equivest Texas, Inc. (DE) will convert into a limited liability company and will withdraw from Illinois ( effected July 26, 2006 ); and

 

  (f) Fairfield Resorts will contribute all the of outstanding stock of the following entities to APEX Marketing, Inc. (AK) (“ APEX ”):

 

  (1) Vacation Break USA, Inc. (FL) (“ Vacation Break ”) ( effected July 26, 2006 ); and

 

14


  (2) Fairfield Management Services, Inc. (FL) (“ FMSI ”) ( effected July 26, 2006 ).

 

  (g) After the contribution described in 8(p)(f)(2), APEX will contribute all of the stock of Vacation Break to FSMI ( effected July 26, 2006 ).

 

  (q) RCI Technology Corp. RCI Technology Corp. converts into a Delaware limited liability company, RCI Technology LLC ( effected July 26, 2006 ).

 

9. TDS Restructuring .

 

  (a) Galileo Danmark ApS (an indirect subsidiary of Travelport) purchases from Cendant Denmark ApS (UK) (an indirect subsidiary of RCI Global, formerly known as Cendant Vacation Holdco, Inc.) all of the stock of Travelwire ApS for 1 Danish Kroner in cash ( effected March 31, 2006 ).

 

  (b) Wizcom, Inc. purchases from Wizard Co., Inc. (a subsidiary of Avis Budget Car Rental, LLC) certain trademarks relating to Travelport’s Wizcom business for $500,000 ( effected June 21, 2006 ).

 

10. Merger of Cendant Operations, Inc.

 

  (a) Prior to the Cendant Operations Merger (as defined below), Cendant Operations contributes certain IP assets relating to the real estate business to CDRE TM Corp, an Ohio corporation (“ CDRE TM Corp ”, formerly named Nisbet Corporation) ( effected May 31, 2006 prior to the Cendant Operations Merger as defined below ).

 

  (b) Cendant Operations merges (the “ Cendant Operations Merger ”) with and into CFHC LLC, with CFHC LLC continuing as the surviving entity (effected May 31, 2006) .

 

11. Transfers of assets of Cendant Operations (other than Real Estate IP Companies) . Immediately after the Cendant Operations Merger, CFHC LLC makes the following contributions.

 

  (a) Real Estate related assets and liabilities .

 

  (a) After the Cendant Operations Merger, CFHC LLC contributes all assets and liabilities (other than its interests in the Real Estate IP Companies) relating to the real estate business received in the Cendant Operations Merger (including all of the stock of Realogy Operations, Inc., formerly known as Jon Douglas Company, and all of the membership interests of NRT Relocation LLC) to Realogy Services Group LLC (effected June 1, 2006) ; and

 

15


  (b) Thereafter, Realogy Services Group LLC contributes such assets (other than the stock or equity interest of any entity) and liabilities to Realogy Operations, Inc. (effected June 1, 2006, immediately after the contribution described in Step 11(a)(a) above).

 

  (b) Hospitality/RCI related assets and liabilities .

 

  (a) After the Cendant Operations Merger, CFHC LLC contributes all assets and liabilities relating to the Hospitality and RCI businesses (which, for the avoidance of doubt shall not include interests in the Real Estate IP Companies) received in the Cendant Operations Merger to Wyndham Worldwide (effected June 1, 2006) ; and

 

  (b) Thereafter, Wyndham Worldwide contributes all such assets and liabilities received by CFHC LLC in the Cendant Operations Merger and contributed to Wyndham Worldwide to Wyndham Worldwide Operations (effected June 1, 2006 immediately after the contribution described in Step 11(b)(a) above) .

 

  (c) Travel Link related assets and liabilities .

 

  (a) After the Cendant Operations Merger, CFHC LLC contributes all assets and liabilities relating to the Travel Link businesses (which, for the avoidance of doubt shall not include interests in the Real Estate IP Companies) received in the Cendant Operations Merger to Wyndham Worldwide ( effected June 1, 2006 ); and

 

  (b) Thereafter, Wyndham Worldwide contributes all such assets and liabilities received by CFHC LLC in the Cendant Operations Merger and contributed to Wyndham Worldwide to Wyndham Hotel Group, LLC ( effected June 1, 2006 immediately after the contribution described in Step 11(c)(b)(a) above ).

 

  (d) TDS related assets and liabilities .

 

  (a) After the Cendant Operations Merger, CFHC LLC contributes all assets and liabilities relating to the TDS business (which, for the avoidance of doubt shall not include interests in the Real Estate IP Companies) received in the Cendant Operations Merger to Travelport (effected June 1, 2006) ; and

 

  (b) Thereafter, Travelport contributes such assets and liabilities to TDS Operations (effected June 1, 2006 immediately after the contribution described in Step 11(d)(a) above).

 

  (e)

Car Rental related assets and liabilities . After the Cendant Operations Merger, CFHC LLC contributes all assets and liabilities relating to the Car Rental business (which, for the avoidance of doubt shall not include

 

16


 

interests in the Real Estate IP Companies) received in the Cendant Operations Merger to Avis Budget Car Rental, LLC (effected June 1, 2006).

 

12. Real Estate Restructuring .

 

  (a) CFHC LLC contributes to Realogy all of the issued and outstanding membership interests of Realogy Services Group LLC ( effected June 30, 2006 ).

 

  (b) Realogy contributes all of the outstanding stock of Realogy Intellectual Property Holdings I, Inc. and Realogy Intellectual Property Holdings II, Inc. to Realogy Services Group LLC ( effected June 30, 2006 ).

 

  (c) Reincorporation of CDRE TM Corp., formerly known as Nisbet Corporation .

 

  (a) Cendant Operations forms a Delaware limited liability company and

 

  (b) CDRE TM Corp reincorporates in Delaware via merger with and into such Delaware corporation ( effected June 5, 2006 ).

 

  (d) Cendant Mobility Limited (Hong Kong) . Cendant contributes to Realogy Services Group LLC (DE) 1% of the outstanding stock of Cendant Mobility Limited (Hong Kong) that it owns ( effected June 9, 2006 ).

Transactions to be effected after the record date of the Realogy Distribution and Wyndham Worldwide Distribution, and before the Realogy Distribution and Wyndham Worldwide Distribution.

 

13. TM Acquisition Corporation (DE) (“ TM Acquisition ”) . TM Acquisition owns intellectual property relating to the real estate services businesses (“ TM Acquisition Real Estate IP ”), the lodging businesses (“ TM Acquisition Lodging IP ”) and the RCI business (the “ TM Acquisition RCI IP ” and, together with the TM Acquisition Real Estate IP and the TM Acquisition Lodging IP the “ TM Acquisition IP ”)).

 

  (a) After the record date for the Realogy Distribution, TM Acquisition merges (the “ TM Acquisition Merger ”) with and into CFHC LLC, with CFHC LLC continuing as the surviving corporation ( effected July 25, 2006 ); and

 

  (b) TM Acquisition Real Estate IP . After both the Cendant Operations Merger and the TM Acquisition Merger, each of the following transactions will be effected in the following order.

 

  (a) CFHC LLC contributes ( effected July 26, 2006) :

 

17


  (1) TM Acquisition Real Estate IP relating to ERA to NRT TM Corp. (CA), formerly known as Cleveland Financial Services Group (CA) (Name to be changed to ERA TM Corp.) (“ ERA IP Company ”);

 

  (2) CFHC LLC contributes the TM Acquisition Real Estate IP relating to Century 21 to C21 TM Corp. (CA), formerly known as Seville Properties, Inc. (CA) (“C entury 21 IP Company ”);

 

  (3) CFHC LLC contributes the TM Acquisition Real Estate IP relating to Coldwell Banker to CB TM Corp. (CA), formerly known as Cornish & Carey Residential, Inc. (CA) (“ Coldwell Banker IP Company ” and together with ERA IP Company, and Century 21 IP Company, the “ Real Estate IP Companies ”); and

 

  (b) CFHC LLC contributes the TM Acquisition Real Estate IP other than any IP set forth above to Realogy ( effected July 26, 2006 ).

 

  (c) CFHC LLC contributes all of the outstanding stock of (i) each of the Real Estate IP Companies, and (ii) CDRE TM Corp. (DE), formerly known as Nisbet Corporation to Realogy ( effected July 26, 2006 after the transactions described in 13(b)(a) ).

 

  (d) Realogy contributes 50% of each of the Real Estate IP Companies to Realogy Intellectual Property Holdings I, Inc., and 50% of each of the Real Estate IP Companies to Realogy Intellectual Property Holdings II, Inc. ( effected July 26, 2006 after the transactions described in 13(b)(c)).

 

  (e) Realogy contributes all of the outstanding stock of CDRE TM Corp. to NRT Inc. ( effected July 26, 2006 after the transactions described in 13(b)(c)).

 

  (c) TM Acquisition Lodging IP . After both the Cendant Operations Merger and the TM Acquisition Merger, each of the following transactions will be effected in the following order:

 

 

(a)

CFHC LLC contributes to Wyndham Worldwide all of the TM Acquisition Lodging IP, its 99% of the membership interests of Two Flags Joint Venture LLC (owned by TM Acquisition prior to the TM Acquisition Merger) 8 and all of the stock of TM

 

8

TM Acquisition currently owns 99% of Two Flags Joint Venture LLC (DE); the remaining 1% is owned by TM Acquisition Sub, Inc., a direct, wholly-owned, subsidiary of TM Acquisition.

 

18


 

Acquisition Sub. Inc. (DE) (owns 1% of Two Flags Joint Venture LLC) (effected July 26, 2006) ;

 

 

(b)

Wyndham Worldwide contributes to WHG TM Corp. all of the TM Acquisition Lodging IP except for the TM Acquisition Lodging IP described in 13(c)(c) below, its 99% of the membership interests of Two Flags Joint Venture LLC (owned by TM Acquisition prior to the TM Acquisition Merger) 9 and all of the stock of TM Acquisition Sub. Inc. (DE) (owns 1% of Two Flags Joint Venture LLC) (effected July 26, 2006) ; and

 

  (c) Wyndham Worldwide makes the following contributions of TM Acquisition Lodging IP (effected July 26, 2006) :

 

  (1) Certain international marks relating to the Super 8 brand to Super 8 Motels, Inc.

 

  (2) Certain international marks relating to the Howard Johnson brand to Howard Johnson International, Inc.

 

  (3) Certain international marks relating to the Days Inn brand to Days Inn Worldwide, Inc.

 

  (4) Certain international marks relating to the Knights brand to Knights Franchise Systems, Inc.

 

  (5) Certain international marks relating to the Ramada brand to Ramada International, Inc.

 

  (d) TM Acquisition RCI IP . After both the Cendant Operations Merger and the TM Acquisition Merger, the following transactions will be effected in the following order:

 

  (a) CFHC LLC contributes to Wyndham Worldwide all of the TM Acquisition RCI IP (effected July 26, 2006) ; and

 

  (b) Wyndham Worldwide contributes to RCI TM Corp. all of the TM Acquisition RCI IP (effected July 26, 2006) .

 

  (e) TM Acquisition’s Patents

 

  (a) After both the Cendant Operations Merger and the TM Acquisition Merger, CFHC LLC contributes to Realogy certain patents and

 

 

9

TM Acquisition currently owns 99% of Two Flags Joint Venture LLC (DE); the remaining 1% is owned by TM Acquisition Sub, Inc., a direct, wholly-owned, subsidiary of TM Acquisition.

 

19


 

Realogy assumes certain related liabilities (such contribution and assumption, the “ TM Acquisition Patent Contribution ”) (effected July 26, 2006) ; and

 

  (b) After the TM Acquisition Patent Contribution, Realogy contributes to Realogy Operations, Inc. the assets referred to in (a) and Realogy Operations assumes the related liabilities (effected July 26, 2006) .

 

14. Realogy Distribution (distribution to be effected 7/31/06) .

 

  (a) Immediately prior to the Realogy Distribution, Realogy issues to CFHC LLC a stock dividend (effected June 15, 2006) .

 

  (b) CFHC LLC distributes to Cendant all of the outstanding stock of Realogy (effected July 27, 2006) .

 

  (c) Distribution of Cash by Realogy to Cendant—which cash will be placed into a separate account and used solely to repay debt of Cendant . Realogy distributes cash to Cendant in an amount equal to $2.225 billion, which cash is placed into a separate account and used solely to repay Cendant debt (effected July 27, 2006) .

 

  (d) Cendant distributes all of the stock of Realogy pro rata to its shareholders (the “ Realogy Distribution ”) ( effective July 31, 2006 ).

Transactions to be effected at the Realogy Distribution

 

15. Wyndham Worldwide Distribution (distribution to be effected 7/31/06) .

 

  (a) Immediately prior to the Wyndham Worldwide Distribution, Wyndham Worldwide issues to CFHC LLC a stock dividend (effected July 13, 2006) .

 

  (b) CFHC LLC distributes to Cendant all of the outstanding stock of Wyndham Worldwide (effected July 27, 2006) .

 

  (c) Distribution of Cash by Wyndham Worldwide to Cendant—which cash will be placed into a separate account and used solely to repay debt of Cendant . Wyndham Worldwide distributes cash to Cendant in an amount equal to $1.36 billion, which cash is placed into a separate account and used solely to repay Cendant debt (effected July 27, 2006) .

 

  (d) Cendant distributes all of the stock of Wyndham Worldwide pro rata to its shareholders (the “ Wyndham Worldwide Distribution ”) ( effective July 31, 2006 ).

Transactions to be effected after the Wyndham Worldwide Distribution.

 

20


16. Closing of Travelport Sale; or

17. Travelport Distribution (the following steps to occur only if the closing of the sale of Travelport does not occur).

 

  (a) Immediately prior to the Travelport Distribution, Travelport issues to CFHC LLC a stock dividend.

 

  (b) CFHC LLC Distributes to Cendant all of the outstanding stock of Travelport.

 

  (c) Dividend declaration date for the Travelport Distribution to occur after October 2, 2006; and

 

  (d) Cendant distributes all of the stock of Travelport pro rata to its shareholders (the “ Travelport Distribution ”).

 

21


SCHEDULE A

CENDANT CORPORATION DIVIDEND NOTES (collectively, “ Dividend Notes ”)

 

CURRENT OBLIGOR

   PAYEE   PRINCIPAL     

1. Cendant Operations, Inc.

   Cendant Internet
Group, Inc.
  850,000,000    Cendant Operations
Dividend Note

2. Cendant Supplier Services, Inc.

   Cendant Internet
Group, Inc.
  20,000,000    Cendant Supplier
Services Dividend
Note

3. Days Inn of America, Inc.

   Cendant Internet
Group, Inc.
  240,000,000    Days Inn Dividend
Note

4. Ramada Worldwide, Inc. (Ramada Franchise Systems, Inc.’s name was changed to Ramada Worldwide, Inc.)

   Cendant Internet
Group, Inc.
  262,000,000    Ramada Worldwide
Dividend Note

5. Super 8 Motels, Inc.

   Cendant Internet
Group, Inc.
  100,000,000    Super 8 Dividend
Note

6. Knights Franchise Systems, Inc. (Villager Franchise Systems, Inc. was merged into Knights Franchise System, Inc. in 2004)

   Cendant Internet
Group, Inc.
  1,500,000    Knights/Villager
Dividend Note

7. Knights Franchise Systems, Inc.

   Cendant Internet
Group, Inc.
  5,200,000    Knights Dividend
Note

8. Travelodge Hotels, Inc.

   Cendant Internet
Group, Inc.
  50,000,000    Travelodge
Dividend Note

9. Fairfield Resort Management Services, Inc. (f/k/a RCI Management, Inc.)

   Cendant Internet
Group, Inc.
  96,000,000    Fairfield Dividend
Note

10. Coldwell Banker Real Estate Corporation

   Coldwell Banker
Corporation, Inc.
  366,700,000    Coldwell Banker
Dividend Note

11. RCI General Holdco 2, Inc.

   Cendant Vacation
Holdco, Inc. (f/k/a RCI
General Holdco I, Inc.)
  458,000,000    RCI Dividend Note

12. Century 21 Real Estate LLC

   Cendant Finance
Holding Company LLC
  199,000,000    Century 21
Dividend Note

 

22


SCHEDULE B1

The following inter-company payables of Cendant will be assumed by RCI Global effected July 27:

 

Debtor (formerly Cendant Corp.)

  

Creditor

   Amount (US$)

RCI Global

   Pointspec II    12,736,521

RCI Global

   Pointeuro 4    37,394,000

RCI Global

   Cendant Europe Corporate    5,528,890

RCI Global

   Days Inns    970,943

RCI Global

   LANDAL    880,898

RCI Global

   RCI Europe    880,469

RCI Global

   Novasol    56,624

RCI Global

   Wyndham Finance UK    80,301

RCI Global

   Cendant Europe Corporate    101,106

RCI Global

   RCI North America    213,483

SCHEDULE B2

The following inter-company payables of Cendant will be assumed by Travelport effected July 27:

 

Debtor (formerly Cendant Corp.)

  

Creditor

   Amount (US$)

Travelport

   Southern Cross Australia    5,718

Travelport

   Southern Cross Australia    47,425

Travelport

   Trust GmbH    1,617

Travelport

   Southern Cross Australia    14,310

Travelport

   Trust GmbH    14,963

Travelport

   Galileo International Limited    139,757

Travelport

   Novi Scotia ULC    26,242

Travelport

   Southern Cross Australia    102,960

Travelport

   Neat Israel    18,550

Travelport

   Galileo International Inc.    4,354,665

Travelport

   Trust GmbH    57,636

 

23


SCHEDULE C1

Cendant contributes the following receivable balances to RCI Global, as set forth below effected July 27, 2006:

Cendant will contribute the following receivables on July 27, 2006

 

Entity Contributed to

   Amount (US $)   

Balance with

RCI Global

   55,327    Days Inn

RCI Global

   35,201    Vacation Rental Management

RCI Global

   5,739,777    Holiday Cottages Group Limited

RCI Global

   4,149,081    Vacation Rental Management

RCI Global

   17,652,207    EMEA Holdings CV

RCI Global

   2,804,714    LANDAL

RCI Global

   2,429,889    Novasol

RCI Global

   411,373    Cuendet

RCI Global

   7,290,125    Vacation Rental Management

RCI Global

   1,144,690    South Pacific

RCI Global

   915,186    RCI Indianapolis

RCI Global

   559,562    RCI Mexico Adjustment Company

RCI Global

   91,820    Cuendet

RCI Global

   462,880    Holiday Cottages Group Limited

SCHEDULE C2

Cendant contributes the following receivable balances to Travelport, Inc., as set forth below, effected July 27, 2006:

Cendant will contribute the following receivables on July 27, 2006

 

Entity Contributed to

   Amount (US $)   

Balance with

Travelport

   34,028    Galileo Canada

Travelport

   100    Gullivers Jersey 2 Ltd

Travelport

   805    Octopus Travel.com (Hong Kong)

Travelport

   1,599,311    Ebookers Purchasing Account

Travelport

   2,250,095    Ebookers PLC ADJ

Travelport

   1,102,421    Trust GmbH

Travelport

   1,236,424    Neat Israel

Travelport

   2,833,031    GTA Donvand LTD London

Travelport

   16,494    Galileo Canada

Travelport

   452,685    Galileo Nederland BV -Operating Divn

Travelport

   156,473    Canada Parent Company

Travelport

   11,087    Galileo Canada

Travelport

   3,062    Galileo International Services

Travelport

   36,697    Galileo Travelware

 

24

Exhibit 10.2

 

 

$3,920,000,000

Term and Revolving Loans

$525,000,000

Synthetic Letter of Credit Facility

CREDIT AGREEMENT

Dated as of April 10, 2007,

Among

DOMUS INTERMEDIATE HOLDINGS CORP.,

REALOGY CORPORATION,

as Borrower,

THE LENDERS PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

CREDIT SUISSE,

as Syndication Agent,

BEAR STEARNS CORPORATE LENDING INC.,

CITICORP NORTH AMERICA, INC.

and

BARCLAYS BANK PLC

as Co-Documentation Agents

J.P. MORGAN SECURITIES INC.,

CREDIT SUISSE SECURITIES (USA) LLC,

BEAR, STEARNS & CO. INC.

and

CITIGROUP GLOBAL MARKETS INC.

as Joint Bookrunners

 

 

J.P. MORGAN SECURITIES INC.

and

CREDIT SUISSE SECURITIES (USA) LLC

as Joint Lead Arrangers

 

 


TABLE OF CONTENTS

 

ARTICLE I
Definitions
SECTION   1.01.    Defined Terms    1
SECTION   1.02.    Terms Generally    56
SECTION   1.03.    Effectuation of Transfers    57
ARTICLE II
The Credits
SECTION   2.01.    Commitments    57
SECTION   2.02.    Loans and Borrowings    58
SECTION   2.03.    Requests for Borrowings    58
SECTION   2.04.    Swingline Loans    59
SECTION   2.05.    Letters of Credit    61
SECTION   2.06.    Funding of Borrowings    69
SECTION   2.07.    Interest Elections    69
SECTION   2.08.    Termination and Reduction of Commitments; Return of Credit-Linked Deposits    71
SECTION   2.09.    Repayment of Loans; Evidence of Debt    72
SECTION   2.10.    Repayment of Term Loans and Revolving Facility Loans    72
SECTION   2.11.    Prepayment of Loans    74
SECTION   2.12.    Fees    75
SECTION   2.13.    Interest    77
SECTION   2.14.    Alternate Rate of Interest    78
SECTION   2.15.    Increased Costs    78
SECTION   2.16.    Break Funding Payments    79
SECTION   2.17.    Taxes    80
SECTION   2.18.    Payments Generally; Pro Rata Treatment; Sharing of Set-offs    82
SECTION   2.19.    Mitigation Obligations; Replacement of Lenders    84
SECTION   2.20.    Incremental Commitments    85
SECTION   2.21.    Credit-Linked Deposit Account    87
SECTION   2.22.    Currency Equivalents    88
ARTICLE III
Representations and Warranties
SECTION   3.01.    Organization; Powers    88


SECTION   3.02.    Authorization    88
SECTION   3.03.    Enforceability    89
SECTION   3.04.    Governmental Approvals    89
SECTION   3.05.    Financial Statements    89
SECTION   3.06.    No Material Adverse Effect    90
SECTION   3.07.    Title to Properties; Possession Under Leases    90
SECTION   3.08.    Subsidiaries    90
SECTION   3.09.    Litigation; Compliance with Laws    91
SECTION   3.10.    Federal Reserve Regulations    91
SECTION   3.11.    Investment Company Act    91
SECTION   3.12.    Use of Proceeds    91
SECTION   3.13.    Tax Returns    92
SECTION   3.14.    No Material Misstatements    92
SECTION   3.15.    Employee Benefit Plans    93
SECTION   3.16.    Environmental Matters    94
SECTION   3.17.    Security Documents    94
SECTION   3.18.    Solvency    95
SECTION   3.19.    Labor Matters    96
SECTION   3.20.    Intellectual Property; Licenses, Etc.    96
SECTION   3.21.    Senior Debt    97
ARTICLE IV
Conditions of Lending
SECTION   4.01.    All Credit Events    97
SECTION   4.02.    Effectiveness of Commitments    98
ARTICLE V
Affirmative Covenants
SECTION   5.01.    Existence; Businesses and Properties    100
SECTION   5.02.    Insurance    101
SECTION   5.03.    Taxes    102
SECTION   5.04.    Financial Statements, Reports, etc.    102
SECTION   5.05.    Litigation and Other Notices    104
SECTION   5.06.    Compliance with Laws    105
SECTION   5.07.    Maintenance of Records; Access to Properties and Inspections    105
SECTION   5.08.    Compliance with Environmental Laws    105
SECTION   5.09.    Further Assurances; Additional Security    105
SECTION   5.10.    Ratings    108
SECTION   5.11.    Compliance with Material Contracts    108
SECTION   5.12.    Post-Closing Covenant    108


ARTICLE VI
Negative Covenants
SECTION   6.01.    Indebtedness    108
SECTION   6.02.    Liens    113
SECTION   6.03.    Sale and Lease-Back Transactions    118
SECTION   6.04.    Investments, Loans and Advances    118
SECTION   6.05.    Mergers, Consolidations, Sales of Assets and Acquisitions    123
SECTION   6.06.    Restricted Payments    126
SECTION   6.07.    Transactions with Affiliates    129
SECTION   6.08.    Business of the Borrower and the Subsidiaries    132
SECTION   6.09.   

Limitation on Payments and Modifications of Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.

   132
SECTION   6.10.    Senior Secured Leverage Ratio    135
SECTION   6.11.    No Other “Designated Senior Debt”    136
ARTICLE VII
Holdings Covenants
ARTICLE VIII
Events of Default
SECTION   8.01.    Events of Default    136
SECTION   8.02.    Exclusion of Immaterial Subsidiaries    140
SECTION   8.03.    Right to Cure    140
ARTICLE IX
The Agents
SECTION   9.01.    Appointment    140
SECTION   9.02.    Delegation of Duties    142
SECTION   9.03.    Exculpatory Provisions    142
SECTION   9.04.    Reliance by Administrative Agent    143
SECTION   9.05.    Notice of Default    144
SECTION   9.06.    Non-Reliance on Agents and Other Lenders    144
SECTION   9.07.    Indemnification    145
SECTION   9.08.    Agent in Its Individual Capacity    145


SECTION   9.09.    Successor Administrative Agent    146
SECTION   9.10.    Agents and Arrangers    146
ARTICLE X
Miscellaneous
SECTION 10.01.    Notices; Communications    146
SECTION 10.02.    Survival of Agreement    147
SECTION 10.03.    Binding Effect    148
SECTION 10.04.    Successors and Assigns    148
SECTION 10.05.    Expenses; Indemnity    153
SECTION 10.06.    Right of Set-off    155
SECTION 10.07.    Applicable Law    155
SECTION 10.08.    Waivers; Amendment    155
SECTION 10.09.    Interest Rate Limitation    157
SECTION 10.10.    Entire Agreement    158
SECTION 10.11.    WAIVER OF JURY TRIAL    158
SECTION 10.12.    Severability    158
SECTION 10.13.    Counterparts    158
SECTION 10.14.    Headings    158
SECTION 10.15.    Jurisdiction; Consent to Service of Process    159
SECTION 10.16.    Confidentiality    159
SECTION 10.17.    Platform; Borrower Materials    160
SECTION 10.18.    Release of Liens and Guarantees    161
SECTION 10.19.    Judgment Currency    161
SECTION 10.20.    USA PATRIOT Act Notice    162
SECTION 10.21.    No Liability of the Issuing Banks    162
SECTION 10.22.    Securitization Acknowledgement    163


Exhibits and Schedules     
Exhibit A    Form of Assignment and Acceptance   
Exhibit B-1    Form of Borrowing Request   
Exhibit B-2    Form of Swingline Borrowing Request   
Exhibit C    Form of Interest Election Request   
Exhibit D    Form of Guarantee and Collateral Agreement   
Schedule 1.01A    Certain Subsidiaries   
Schedule 1.01AA    Certain Domestic Subsidiaries   
Schedule 1.01B    Mortgaged Properties   
Schedule 1.01C    Existing Letters of Credit   
Schedule 1.01D    Immaterial Subsidiaries   
Schedule 1.01E    Refinanced Indebtedness   
Schedule 1.01F    Subsidiary Loan Parties   
Schedule 1.01G    Unrestricted Subsidiaries   
Schedule 1.01H    Joint Ventures   
Schedule 2.01    Commitments   
Schedule 3.01    Organization and Good Standing   
Schedule 3.04    Governmental Approvals   
Schedule 3.07(b)    Intellectual Property   
Schedule 3.08    Subsidiaries   
Schedule 3.13    Taxes   
Schedule 3.16    Environmental Matters   
Schedule 3.20(d)    Intellectual Property Licenses and Franchises   
Schedule 4.02(b)    Local Counsel   
Schedule 4.02(d)    Certain Collateral Matters   
Schedule 5.12    Post-Closing Matters   
Schedule 6.01    Indebtedness   
Schedule 6.02(a)    Liens   
Schedule 6.04    Investments   
Schedule 6.07    Transactions with Affiliates   
Schedule 10.01    Notice Information   


CREDIT AGREEMENT dated as of April 10, 2007 (this “ Agreement ”), among DOMUS INTERMEDIATE HOLDINGS CORP., a Delaware corporation (“ Holdings ”), REALOGY CORPORATION, a Delaware corporation (the “ Borrower ”), the LENDERS party hereto from time to time, JPMORGAN CHASE BANK, N.A. (“ JPMCB ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders, CREDIT SUISSE, as syndication agent (in such capacity, the “ Syndication Agent ”), and BEAR STEARNS CORPORATE LENDING INC., CITICORP NORTH AMERICA, INC. and BARCLAYS BANK PLC, as co-documentation agents (in such capacities, the “ Documentation Agents ”).

WHEREAS, Apollo Management VI, L.P. and other affiliated co-investment partnerships (collectively, the “ Fund ”) have indirectly formed Holdings and Domus Acquisition Corp., a Delaware corporation (“ Merger Sub ”), for the purpose of entering into that certain Agreement and Plan of Merger by and among Holdings, Merger Sub and Realogy Corporation, a Delaware corporation (“ Target ”), dated as of December 15, 2006 (as amended or supplemented as of the date hereof, the “ Merger Agreement ”), pursuant to which (a) Merger Sub will merge (the “ Merger ”) with and into Target, with Target surviving as a Wholly Owned Subsidiary of Holdings; and

WHEREAS, in connection with the consummation of the Merger, the Borrower has requested the Lenders to extend credit in the form of (a) Term B Loans on the Closing Date, and delayed draw Term B Loans in an aggregate principal amount not in excess of $3.17 billion, (b) Revolving Facility Loans and Letters of Credit at any time and from time to time prior to the Revolving Facility Maturity Date, in an aggregate principal amount (or Dollar Amount, in the case of Revolving L/C Exposure) at any time outstanding not in excess of $750.0 million and (c) a synthetic letter of credit facility in an aggregate Dollar Amount not in excess of $525.0 million;

NOW, THEREFORE, the Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms . As used in this Agreement, the following terms shall have the meanings specified below:

ABR ” shall mean, for any day, a fluctuating rate per annum equal to the higher of (a) the Federal Funds Effective Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as announced from time to time by JPMCB as its “prime rate” at its principal office in New York, New York. Any change in such rate announced by JPMCB shall take effect at the opening of business on the day specified in the announcement of such change.

ABR Borrowing ” shall mean a Borrowing comprised of ABR Loans.

ABR Loan ” shall mean any ABR Term Loan, ABR Revolving Loan or Swingline Loan.


ABR Revolving Facility Borrowing ” shall mean a Borrowing comprised of ABR Revolving Loans.

ABR Revolving Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.

ABR Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.

Accepting Lender ” shall have the meaning assigned to such term in Section 2.11(f).

Additional Mortgage ” shall have the meaning assigned to such term in Section 5.09(c).

Adjusted LIBO Rate ” shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, an interest rate per annum equal to (a) the LIBO Rate in effect for such Interest Period divided by (b) one minus the Statutory Reserves applicable to such Eurocurrency Borrowing, if any.

Adjustment Date ” shall have the meaning assigned to such term in the definition of “Pricing Grid.”

Administrative Agent ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

Administrative Agent Fees ” shall have the meaning assigned to such term in Section 2.12(d).

Administrative Questionnaire ” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

Affiliate ” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.

Agents ” shall mean the Administrative Agent, the Collateral Agent, the Syndication Agent and the Documentation Agents.

Agreement ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

Agreement Currency ” shall have the meaning assigned to such term in Section 10.19.

AHYDO Payment ” shall mean the Mandatory Principal Redemption Amount applicable to the Senior Toggle Notes, as each such term is defined in the Notes Offering Memorandum.

 

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Alternative Currency ” shall mean any currency other than Dollars in which an Issuing Bank is willing to issue a Letter of Credit.

Apple Ridge Documents ” shall mean the Transfer and Servicing Agreement, dated as of April 25, 2000, among Apple Ridge Services Corporation, Cartus Corporation, Cartus Financial Corporation, Apple Ridge Funding LLC and The Bank of New York; the Receivables Purchase Agreement, dated as of April 25, 2000, between Cartus Financial Corporation and Apple Ridge Services Corporation; the Purchase Agreement, dated as of April 25, 2000, between Cartus Corporation and Cartus Financial Corporation; the Note Purchase Agreement, dated as of April 10, 2007, among Apple Ridge Funding LLC, Cartus Corporation, Calyon New York Branch and the other parties thereto; the Master Indenture, April 25, 2000, among Apple Ridge Funding LLC and The Bank of New York; the Indenture Supplement, dated as of April 10, 2007, among Apple Ridge Funding LLC and The Bank of New York; the Guaranty, dated as of May 12, 2006, by Realogy Corporation in favor of Cartus Financial Corporation and Apple Ridge Funding LLC; the Assignment Agreement, dated as of April 10, 2007, among Cartus Corporation, Cartus Relocation Corporation, Cartus Financial Corporation, Kenosia Funding, LLC and The Bank of New York; and each other agreement or other document contemplated by or entered into in connection with and/or in replacement of the foregoing; each as amended, restated, refinanced, modified or supplemented on or prior to the Closing Date.

Applicable Commitment Fee ” shall mean for any day 0.50% per annum; provided , that on and after the first Adjustment Date occurring after delivery of the financial statements and certificates required by Section 5.04 upon the completion of one full fiscal quarter of the Borrower after the Closing Date, the Applicable Commitment Fee will be determined pursuant to the Pricing Grid.

Applicable Insurance Regulatory Authority ” shall mean, when used with respect to any Insurance Subsidiary, the insurance department or similar administrative authority or agency located in (x) the state or other jurisdiction in which such Insurance Subsidiary is domiciled or (y) to the extent asserting regulatory jurisdiction over such Insurance Subsidiary, the insurance department, authority or agency in each state or other jurisdiction in which such Insurance Subsidiary is licensed, and shall include any Federal insurance regulatory department, authority or agency that may be created in the future and that asserts regulatory jurisdiction over such Insurance Subsidiary.

Applicable Margin ” shall mean for any day (i) with respect to any Term B Loan, 3.00% per annum in the case of any Eurocurrency Loan and 2.00% per annum in the case of any ABR Loan and (ii) with respect to any Revolving Facility Loan, 2.25% per annum in the case of any Eurocurrency Loan and 1.25% per annum in the case of any ABR Loan; provided , that on and after the first Adjustment Date occurring after delivery of the financial statements and certificates required by Section 5.04 upon the completion of one full fiscal quarter of the Borrower after the Closing Date, the Applicable Margin with respect to Revolving Facility Loans will be determined pursuant to the Pricing Grid.

Applicable Period ” shall mean an Excess Cash Flow Period or an Excess Cash Flow Interim Period, as the case may be.

 

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Approved Fund ” shall have the meaning assigned to such term in Section 10.04(b).

Arbitrage Programs ” shall mean Indebtedness and Investments relating to operational escrow accounts of NRT or Title Resources Group.

Arrangers ” shall mean J.P. Morgan Securities Inc., Credit Suisse Securities (USA) LLC, Bear, Stearns & Co., Inc. and Citigroup Global Markets Inc. in their capacities as joint lead arrangers and joint bookrunners, as applicable.

Asset Sale ” shall mean any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets and any mortgage or lease of Real Property) to, any person of any asset or assets of the Borrower or any Subsidiary.

Assignee ” shall have the meaning assigned to such term in Section 10.04(b).

Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an Assignee, and accepted by the Administrative Agent and the Borrower (if required by Section 10.04), in the form of Exhibit A or such other form as shall be approved by the Administrative Agent and reasonably satisfactory to the Borrower.

Availability Period ” shall mean the period from and including the Closing Date to but excluding (a) in the case of the Revolving Facility (including Swingline Loans and Revolving Letters of Credit thereunder), the earlier of the Revolving Facility Maturity Date and the date of termination of the Revolving Facility Commitments, (b) in the case of the Delayed Draw Term B Loans, the earlier of (x) for $950.0 million of the Delayed Draw Term B Loan Commitments, July 31, 2007 and for the remainder of the Delayed Draw Term B Loan Commitments, October 31, 2007, and (y) the date of termination of the Delayed Draw Term B Loan Commitments and (c) in the case of Synthetic Letters of Credit, the Synthetic L/C Maturity Date.

Available Unused Commitment ” shall mean, with respect to (a) a Revolving Facility Lender at any time, an amount equal to the amount by which (i) the Revolving Facility Commitment of such Revolving Facility Lender at such time exceeds (ii) the Revolving Facility Credit Exposure of such Revolving Facility Lender at such time and (b) a Delayed Draw Term B Lender at any time, an amount equal to the amount by which the (i) Delayed Draw Term B Loan Commitment of such Delayed Draw Term B Lender exceeds (ii) the Delayed Draw Term B Loans made by such Delayed Draw Term B Lender.

Benchmark LIBOR Rate ” shall have the meaning assigned to such term in Section 2.21(b).

Board ” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

Board of Directors ” shall mean, as to any person, the board of directors or other governing body of such person, or if such person is owned or managed by a single entity, the board of directors or other governing body of such entity.

 

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Borrower ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

Borrower Qualified IPO ” shall mean an initial public offering of Equity Interests of the Borrower constituting a Qualified IPO.

Borrowing ” shall mean a group of Loans of a single Type under a single Facility and made on a single date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect.

Borrowing Minimum ” shall mean $5.0 million, except in the case of Swingline Loans, $1.0 million.

Borrowing Multiple ” shall mean $1.0 million, except in the case of Swingline Loans, $500,000.

Borrowing Request ” shall mean a request by a Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit B-1 .

Budget ” shall have the meaning assigned to such term in Section 5.04(e).

Business Day ” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided , that when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in the applicable currency in the London interbank market.

Capital Expenditures ” shall mean, for any person in respect of any period, the aggregate of all expenditures incurred by such person during such period that, in accordance with GAAP, are or should be included in “additions to property, plant or equipment” or similar items reflected in the statement of cash flows of such person, provided , however , that Capital Expenditures for the Borrower and the Subsidiaries shall not include, without duplication:

(a) expenditures to the extent they are made with proceeds of the issuance of Equity Interests of Holdings or any Parent Entity after the Closing Date or funds that would have constituted any Net Proceeds under clause (a) of the definition of the term “Net Proceeds” (but for the application of the first proviso to such clause (a)),

(b) expenditures with proceeds of insurance settlements, condemnation awards and other settlements in respect of lost, destroyed, damaged or condemned assets, equipment or other property to the extent such expenditures are made to replace or repair such lost, destroyed, damaged or condemned assets, equipment or other property or otherwise to acquire, maintain, develop, construct, improve, upgrade or repair assets or properties useful in the business of the Borrower and the Subsidiaries within 15 months of receipt of such proceeds (or, if not made within such period of 15 months, are committed to be made during such period),

(c) interest capitalized during such period,

 

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(d) expenditures that are accounted for as capital expenditures of such person and that actually are paid for by a third party (excluding Holdings, the Borrower or any Subsidiary thereof) and for which neither Holdings, the Borrower nor any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other person (whether before, during or after such period),

(e) the book value of any asset owned by such person prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of such person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; provided , that (i) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period that such expenditure actually is made and (ii) such book value shall have been included in Capital Expenditures when such asset was originally acquired,

(f) the purchase price of equipment purchased during such period to the extent the consideration therefor consists of any combination of (i) used or surplus equipment traded in at the time of such purchase and (ii) the proceeds of a concurrent sale of used or surplus equipment, in each case, in the ordinary course of business,

(g) Investments in respect of a Permitted Business Acquisition,

(h) the Merger,

(i) expenses constituting transition expenses attributable to the Borrower becoming an independent operating company in connection with the Cendant Spin-Off, or

(j) the purchase of property, plant or equipment made within 18 months of the sale of any asset (other than inventory) to the extent purchased with the proceeds of such sale (or, if not made within such period of 18 months, to the extent committed to be made during such period and actually made within a one-year period following such 18-month period).

Capital Lease Obligations ” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other similar arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP and, for purposes hereof, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

Cash Interest Expense ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis for any period, Interest Expense for such period, less the sum of, without duplication, (a) pay in kind Interest Expense or other noncash Interest Expense (including as a result of the effects of purchase accounting), (b) to the extent included in Interest Expense, the amortization of any debt issuance costs, commissions, financing fees and other fees (including fees with respect to Swap Agreements) paid by, or on behalf of, Holdings or any

 

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Subsidiary in connection with the incurrence of Indebtedness, including such fees paid in connection with the Transactions or upon entering into a Permitted Securitization Financing, (c) the amortization of debt discounts included in Interest Expense and (d) cash interest income of the Borrower and the Subsidiaries for such period.

Cash Management Line ” shall have the meaning assigned to such term in Section 6.01(w).

Cendant Contingent Assets ” shall have the meaning assigned to “Cendant Contingent Asset” in the Separation and Distribution Agreement and shall also include any tax benefits and attributes allocated or inuring to the Borrower and its subsidiaries under the Tax Sharing Agreement.

Cendant Contingent Liabilities ” shall have the meaning assigned to “Assumed Cendant Contingent Liabilities” as defined in the Separation and Distribution Agreement and shall also include any liabilities that are related or attributable to or arising in connection with the Taxes or Tax Returns as defined the Tax Sharing Agreement.

Cendant Spin-Off ” shall mean the distribution of all of the capital stock of the Borrower by Cendant Corporation to its shareholders and the transactions related thereto as described in that certain Information Statement of Realogy Corporation dated July 13, 2006, as filed with the SEC.

A “ Change in Control ” shall be deemed to occur if:

(a) at any time, (i) prior to a Borrower Qualified IPO, Holdings shall fail to own, directly or indirectly, beneficially and of record, 100% of the issued and outstanding Equity Interests of the Borrower, (ii) a majority of the seats (other than vacant seats) on the Board of Directors of Holdings (prior to a Borrower Qualified IPO) or the Borrower (following a Borrower Qualified IPO) shall at any time be occupied by persons who were neither (A) nominated by the Board of Directors of Holdings (prior to a Borrower Qualified IPO) or the Borrower (following a Borrower Qualified IPO) or a Permitted Holder, (B) appointed by directors so nominated nor (C) appointed by a Permitted Holder or (iii) a “change of control” (or similar event) shall occur under the Senior Unsecured Notes Indenture, the Senior Subordinated Notes Indenture or any Permitted Refinancing Indebtedness in respect of any of the foregoing;

(b) at any time prior to a Qualified IPO, any combination of Permitted Holders shall fail to own beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act as in effect on the Closing Date), directly or indirectly, in the aggregate Equity Interests representing at least a majority of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Holdings; or

(c) at any time after a Qualified IPO, any person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date), other than any combination of the Permitted Holders or any “group” including any Permitted Holders, shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting interest in Equity Interests of Holdings (prior to a Borrower

 

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Qualified IPO) or the Borrower (following a Borrower Qualified IPO) and the Permitted Holders shall own, directly or indirectly, less than such person or “group” on a fully diluted basis of the voting interest in Equity Interests of Holdings (prior to a Borrower Qualified IPO) or the Borrower (following a Borrower Qualified IPO).

Change in Law ” shall mean (a) the adoption of any law, treaty, rule or regulation after the Closing Date, (b) any change in law, treaty, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.15(b), by such Lender’s or Issuing Bank’s holding company, if any) with any written request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date.

Charges ” shall have the meaning assigned to such term in Section 10.09.

Closing Date ” shall mean April 10, 2007.

Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated and rulings issued thereunder.

Collateral ” shall mean all the “Collateral” as defined in any Security Document and shall also include the Mortgaged Properties and all other property that is subject to any Lien in favor of the Administrative Agent or any Subagent for the benefit of the Lenders pursuant to any Security Documents.

Collateral Agent ” shall mean the party acting as collateral agent for the Secured Parties under the Security Documents. On the Closing Date, the Collateral Agent shall mean the Administrative Agent. Unless the context otherwise requires, the term “Administrative Agent” shall include the Collateral Agent, notwithstanding any express reference to the Collateral Agent herein.

Collateral Agreement ” shall mean the Guarantee and Collateral Agreement, as amended, supplemented or otherwise modified from time to time, in the form of Exhibit D , among Holdings, the Borrower, each Subsidiary Loan Party and the Collateral Agent.

Collateral and Guarantee Requirement ” shall mean the requirement that:

(a) on the Closing Date, the Collateral Agent shall have received (i) from Holdings, the Borrower and each Subsidiary Loan Party, a counterpart of the Collateral Agreement duly executed and delivered on behalf of such person and (ii) an Acknowledgment and Consent in the form attached to the Collateral Agreement, executed and delivered by each issuer of Pledged Collateral, if any, that is a Subsidiary of the Borrower but is not a Loan Party;

(b) on the Closing Date, (i) the Collateral Agent shall have received (A) a pledge of all the issued and outstanding Equity Interests of (x) the Borrower and (y) each Wholly Owned Domestic Subsidiary and Special Purpose Securitization Subsidiary (other than Subsidiaries listed on Schedule 1.01A ) owned on the Closing Date directly by or on behalf of the Borrower or any Subsidiary Loan Party and (B) a pledge of 65% of

 

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the outstanding Equity Interests of each (1) “first tier” Wholly Owned Foreign Subsidiary directly owned by any Loan Party and (2) each “first tier” Qualified CFC Holding Company directly owned by any Loan Party (in each case, other than Subsidiaries listed on Schedule 1.01A ) and (ii) subject to Section 5.12, the Collateral Agent shall have received all certificates or other instruments (if any) representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank;

(c) (i) all Indebtedness of Holdings (prior to a Borrower Qualified IPO), the Borrower and each Wholly-Owned Domestic Subsidiary having, in the case of each instance of Indebtedness, an aggregate principal amount in excess of $5.0 million (other than (A) intercompany current liabilities in connection with the cash management operations of Holdings and its Subsidiaries or (B) to the extent that a pledge of such promissory note or instrument would violate applicable law) that is owing to any Loan Party shall be evidenced by a promissory note or an instrument and shall have been pledged pursuant to the Collateral Agreement (or other applicable Security Document as reasonably required by the Collateral Agent), and (ii) the Collateral Agent shall have received all such promissory notes or instruments, together with note powers or other instruments of transfer with respect thereto endorsed in blank;

(d) in the case of any person that becomes a Subsidiary Loan Party after the Closing Date, the Collateral Agent shall have received a supplement to the Collateral Agreement, in the form specified therein, duly executed and delivered on behalf of such Subsidiary Loan Party;

(e) in the case of any person that becomes a “first tier” Wholly-Owned Foreign Subsidiary directly owned by Holdings (prior to a Borrower Qualified IPO), the Borrower or a Subsidiary Loan Party after the Closing Date, subject to Section 5.09(g), the Collateral Agent shall have received, as promptly as practicable following a request by the Collateral Agent, a Foreign Pledge Agreement, duly executed and delivered on behalf of the direct parent company of such Wholly-Owned Foreign Subsidiary;

(f) after the Closing Date, (i) all the outstanding Equity Interests of (A) any person that becomes a Subsidiary Loan Party after the Closing Date and (B) subject to Section 5.09(g), all the Equity Interests that are acquired by a Loan Party after the Closing Date (other than (x) the Equity Interests of any Insurance Subsidiary established after the Closing Date or (y) to the extent that a pledge of such Equity Interests would violate applicable law or regulation), shall have been pledged pursuant to the Collateral Agreement or a Foreign Pledge Agreement; provided , that in no event shall more than 65% of the issued and outstanding Equity Interests of (1) any “first tier” Foreign Subsidiary or (2) any “first tier” Qualified CFC Holding Company directly owned by such Loan Party be pledged to secure the Obligations, and in no event shall any of the issued and outstanding Equity Interests of any Foreign Subsidiary that is not a “first tier” Foreign Subsidiary of a Loan Party or any Qualified CFC Holding Company that is not a “first tier” Subsidiary of a Loan Party be pledged to secure Obligations, and (ii) the Collateral Agent shall have received all certificates or other instruments (if any) representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank;

 

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(g) except as otherwise contemplated by any Security Document, all documents and instruments, including Uniform Commercial Code financing statements and other similar statements or forms used in any other relevant jurisdiction, required by law or reasonably requested by the Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Documents (in each case, including any supplements thereto) and perfect such Liens to the extent required by, and with the priority required by, the Security Documents, shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or the recording concurrently with, or promptly following, the execution and delivery of each such Security Document;

(h) on the Closing Date, the Collateral Agent shall have received (i) counterparts of each Mortgage to be entered into with respect to each Mortgaged Property set forth on Schedule 1.01B duly executed and delivered by the record owner of such Mortgaged Property and suitable for recording or filing and (ii) such other documents including, but not limited to, any consents, agreements and confirmations of third parties, as the Collateral Agent may reasonably request with respect to any such Mortgage or Mortgaged Property;

(i) on the Closing Date the Collateral Agent shall have received a policy or policies or marked-up unconditional binder of title insurance, as applicable, paid for by the Borrower, issued by a nationally recognized title insurance company insuring the Lien of each Mortgage to be entered into on the Closing Date as a valid first Lien on the Mortgaged Property described therein, free of any other Liens except Permitted Liens, together with such customary endorsements, coinsurance and reinsurance as the Collateral Agent may reasonably request;

(j) evidence of the insurance required by the terms of this Agreement and the Mortgages;

(k) except as otherwise contemplated by any Security Document, each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with (i) the execution and delivery of all Security Documents (or supplements thereto) to which it is a party and the granting by it of the Liens thereunder and (ii) the performance of its obligations thereunder; and

(l) after the Closing Date, the Collateral Agent shall have received (i) such other Security Documents as may be required to be delivered pursuant to Section 5.09, and (ii) upon reasonable request by the Collateral Agent, evidence of compliance with any other requirements of Section 5.09.

Commitment Fee ” shall have the meaning assigned to such term in Section 2.12(a).

 

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Commitments ” shall mean with respect to any Lender, such Lender’s (a) Revolving Facility Commitment (including any Incremental Revolving Facility Commitment), (b) Term Loan Commitment (including any Initial Term B Loan Commitment, Delayed Draw Term B Loan Commitment and Incremental Term Loan Commitment), (c) Synthetic L/C Commitment and (d) with respect to any Swingline Lender, its Swingline Commitment.

Conduit Lender ” shall mean any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided , that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender; provided , further , that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.15, 2.16, 2.17 or 10.05 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

Consolidated Debt ” at any date shall mean the sum of (without duplication) all Indebtedness (excluding (i) any letters of credit or bank guarantees, to the extent undrawn and (ii) Indebtedness in respect of Permitted Securitization Financings) consisting of Indebtedness for borrowed money (including any L/C Disbursements), Capital Lease Obligations and Disqualified Stock, and Indebtedness incurred in connection with notes and earn-out obligations (to the extent shown as a liability on a consolidated balance sheet of the Borrower and the Subsidiaries) payable to sellers in joint ventures and Permitted Business Acquisitions, in each case, of the Borrower and the Subsidiaries and determined on a consolidated basis on such date.

Consolidated Net Income ” shall mean, with respect to any person for any period, the aggregate of the Net Income of such person and its subsidiaries for such period, on a consolidated basis; provided , however , that, without duplication,

(i) any net after tax extraordinary, nonrecurring or unusual gains or losses or income or expense or charge (less all fees and expenses relating thereto) including, without limitation, any severance, relocation or other restructuring expenses, any expenses related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternative uses, fees, expenses or charges relating to new product lines, plant, store and office closure, consolidation, downsizing and/or shutdown costs (including future lease commitments and contract termination costs with respect thereto), curtailments or modifications to pension and post-retirement employee benefit plans, acquisition integration costs, and expenses or charges related to any offering of Equity Interests or debt securities of Holdings or any Parent Entity, any Investment, acquisition, disposition, recapitalization or issuance, repayment, refinancing, amendment or modification of Indebtedness (in each case, whether or not successful), and any fees, expenses, charges or change in control payments related to the Transactions (including any transition-related expenses incurred before, on or after the Closing Date), in each case, shall be excluded,

 

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(ii) any net after-tax income or loss from disposed, abandoned, transferred, closed or discontinued operations and any net after-tax gain or loss on disposal of disposed, abandoned, transferred, closed or discontinued operations shall be excluded,

(iii) any net after-tax gain or loss (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by the Borrower) shall be excluded,

(iv) any net after-tax income or loss (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness, Swap Agreements or other derivative instruments shall be excluded,

(v) (A) except with respect to joint ventures related to Title Resources Group and the mortgage origination business (whether conducted through PHH Home Loans, LLC or other joint ventures of the Borrower or the Subsidiaries), the Net Income for such period of any person that is not a subsidiary of such person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent person or a subsidiary thereof in respect of such period and (B) the Net Income for such period shall include any ordinary course dividend, distribution or other payment in cash received from any person in excess of the amounts included in clause (A),

(vi) Consolidated Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period,

(vii) effects of purchase accounting adjustments (including the effects of such adjustments pushed down to such person and its Subsidiaries) in component amounts required or permitted by GAAP, resulting from the application of purchase accounting in relation to the Transactions or any consummated acquisition or the amortization or write-off of any amounts thereof, net of taxes, shall be excluded,

(viii) any impairment charges or asset write-offs, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP, shall be excluded,

(ix) any non-cash costs or expenses realized or resulting from stock option plans, employee benefit plans or post-employment benefit plans, long-term incentive plans or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other rights shall be excluded,

(x) accruals and reserves that are established or adjusted within twelve months after the Closing Date in each case related to or as a result of the Transactions and that are so required to be established or adjusted in accordance with GAAP or as a result of adoption or modification of accounting policies shall be excluded,

 

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(xi) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 and related interpretations shall be excluded,

(xii) any currency translation gains and losses related to currency remeasurements of Indebtedness, and any net loss or gain resulting from Swap Agreements for currency exchange risk, shall be excluded,

(xiii) (i) the non-cash portion of “straight-line” rent expense shall be excluded and (ii) the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense shall be included,

(xiv) non-cash charges for deferred tax asset valuation allowances shall be excluded,

(xv) any expenses or income (including increases or reversals of reserves) relating to the Cendant Contingent Assets or Cendant Contingent Liabilities shall be excluded; provided that any economic benefits accruing to the Borrower and its Subsidiaries pursuant to assets arising from payments to be received under Article III of the Tax Receivable Agreement dated as of February 22, 2005 by and among Cendant Corporation, Cendant Mobility Services Corporation and Wright Express Corporation shall be included, and

(xvi) fees, expenses and charges incurred in connection with the Cendant Spin-Off shall be excluded.

Consolidated Total Assets ” shall mean, as of any date, the total assets of the Borrower and the consolidated Subsidiaries, determined in accordance with GAAP, as set forth on the consolidated balance sheet of the Borrower as of such date.

Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

Credit Event ” shall have the meaning assigned to such term in Article IV.

Credit-Linked Deposit ” shall mean, as to each Synthetic L/C Lender, the cash deposit made by such Lender pursuant to Section 2.05, as such deposit may be (a) reduced from time to time pursuant to Section 2.05(e)(iii) or Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04 and (c) increased from time to time pursuant to Section 2.05(e) and Section 2.21. The amount of each Synthetic L/C Lender’s Credit-Linked Deposit on the Closing Date is set forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Synthetic L/C Lender shall have acquired its Credit-Linked Deposit, as applicable. The initial Dollar Amount of Credit-Linked Deposits is $525.0 million.

 

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Credit-Linked Deposit Account ” shall mean the account established by the Administrative Agent under its sole and exclusive control maintained at the office of JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, NY 10017, designated as the “Credit-Linked Deposit Account” that shall be used solely to hold the Credit-Linked Deposits.

Cumulative Credit ” shall mean, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to, without duplication:

(a) $175.0 million, plus

(b) the Cumulative Retained Excess Cash Flow Amount at such time, plus

(c) the aggregate amount of proceeds received after the Closing Date and prior to such time that would have constituted Net Proceeds pursuant to clause (a) of the definition thereof except for the operation of clause (x), (y) or (z) of the second proviso thereof (the “ Below Threshold Asset Sale Proceeds ”), plus

(d) the cumulative amount of proceeds (including cash and the fair market value (as determined in good faith by the Borrower) of property other than cash) from the sale of Equity Interests of Holdings or any Parent Entity after the Closing Date and on or prior to such time (including upon exercise of warrants or options) which proceeds have been contributed as common equity to the capital of the Borrower and common Equity Interests of the Borrower issued upon conversion of Indebtedness of the Borrower or any Subsidiary owed to a person other than the Borrower or a Subsidiary not previously applied for a purpose other than use in the Cumulative Credit; provided , that this clause (d) shall exclude (i) Permitted Cure Securities and the proceeds thereof, (ii) sales of Equity Interests financed as contemplated by Section 6.04(e) and (iii) any amounts used to finance the payments or distributions in respect of any Junior Financing pursuant to Section 6.09(b)(i)(C), plus

(e) 100% of the aggregate amount of contributions to the common capital of the Borrower received in cash (and the fair market value (as determined in good faith by the Borrower) of property other than cash) after the Closing Date (subject to the same exclusions as are applicable to clause (d) above), plus

(f) 100% of the aggregate principal amount of any Indebtedness (including the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock) of the Borrower or any Subsidiary thereof issued after the Closing Date (other than Indebtedness issued to a Subsidiary), which has been converted into or exchanged for Equity Interests (other than Disqualified Stock) in the Borrower, Holdings or any Parent Entity, plus

(g) without duplication of any amounts included in the calculation of Cumulative Retained Excess Cash Flow Amount pursuant to clause (b) above, 100% of the aggregate amount received by Borrower or any Subsidiary in cash (and the fair market value (as determined in good faith by the Borrower) of property other than cash received by the Borrower or any Subsidiary) after the Closing Date from:

(A) the sale (other than to the Borrower or any Subsidiary) of the Equity Interests of an Unrestricted Subsidiary, or

 

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(B) any dividend or other distribution by an Unrestricted Subsidiary, plus

(h) in the event any Unrestricted Subsidiary has been redesignated as a Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Borrower or any Subsidiary, the fair market value (as determined in good faith by the Borrower) of the Investments of the Borrower or any Subsidiary in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), plus

(i) an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received by the Borrower or any Subsidiary in respect of any Investments made pursuant to Section 6.04(j) (other than any amounts thereof used to increase the amount of Investments permitted to be made pursuant to Section 6.04(j)(i)), minus

(j) any amounts thereof used to make Investments pursuant to Section 6.04(b)(y) after the Closing Date prior to such time, minus

(k) any amounts thereof used to make Investments pursuant to Section 6.04(j)(ii) after the Closing Date prior to such time, minus

(l) the cumulative amount of Restricted Payments made pursuant to Section 6.06(e) prior to such time, minus

(m) any amounts thereof used to make payments or distributions in respect of Junior Financings pursuant to Section 6.09(b)(i) (other than payments made with proceeds from the issuance of Equity Interests that were excluded from the calculation of the Cumulative Credit pursuant to clause (d)(iii) above);

provided , however , for purposes of Section 6.06(e), the calculation of the Cumulative Credit shall not include any Below Threshold Asset Sale Proceeds except to the extent they are used as contemplated in clauses (j) and (k) above.

Cumulative Retained Excess Cash Flow Amount ” shall mean, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to:

(a) the aggregate cumulative sum of the Retained Percentage of Excess Cash Flow for all Excess Cash Flow Periods ending after the Closing Date and prior to such date, plus

(b) for the Excess Cash Flow Interim Period (if any) most recently ended prior to such date but as to which the corresponding Excess Cash Flow Period has not ended, an amount equal to the Retained Percentage of Excess Cash Flow for such Excess Cash Flow Interim Period.

Cure Amount ” shall have the meaning assigned to such term in Section 8.03.

 

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Cure Right ” shall have the meaning assigned to such term in Section 8.03.

Current Assets ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis at any date of determination, the sum of (a) all assets (other than cash and Permitted Investments or other cash equivalents) that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and the Subsidiaries as current assets at such date of determination, other than amounts related to current or deferred Taxes based on income or profits, and (b) in the event that a Permitted Securitization Financing is accounted for off balance sheet, (x) gross accounts receivable comprising part of the Securitization Assets subject to such Permitted Securitization Financing less (y) collections against the amounts sold pursuant to clause (x).

Current Liabilities ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis at any date of determination, all liabilities that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and the Subsidiaries as current liabilities at such date of determination, other than (a) the current portion of any Indebtedness, (b) accruals of Interest Expense (excluding Interest Expense that is due and unpaid), (c) accruals for current or deferred Taxes based on income or profits, (d) accruals, if any, of transaction costs resulting from the Transactions, (e) accruals of any costs or expenses related to (i) severance or termination of employees prior to the Closing Date or (ii) bonuses, pension and other post-retirement benefit obligations, and (f) accruals for add-backs to EBITDA included in clauses (a)(iv) through (a)(vi) of the definition of such term.

Debt Service ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis for any period, Cash Interest Expense for such period plus scheduled principal amortization of Consolidated Debt for such period.

Default ” shall mean any event or condition which, but for the giving of notice, lapse of time or both would constitute an Event of Default.

Defaulting Lender ” shall mean any Lender with respect to which a Lender Default is in effect.

Delayed Draw Term B Borrowing ” shall mean a Borrowing comprised of Delayed Draw Term B Loans.

Delayed Draw Term B Lender ” shall mean a Lender with a Delayed Draw Term B Loan Commitment or an outstanding Delayed Draw Term B Loan.

Delayed Draw Term B Loan ” shall mean a Loan made by a Delayed Draw Term B Lender pursuant to Section 2.01(a)(ii).

Delayed Draw Term B Loan Commitment ” shall mean, with respect to each Delayed Draw Term B Lender, the commitment of such Lender to make Delayed Draw Term B Loans to the Borrower as set forth in Section 2.01(a)(ii). The initial amount of each Lender’s Delayed Draw Term B Loan Commitment is set forth on Schedule 2.01 , or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Delayed Draw Term B Loan Commitment. The aggregate amount of the Delayed Draw Term B Loan Commitments on the Closing Date is $1,220.0 million.

 

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Delayed Draw Term B Loan Installment Date ” shall have the meaning assigned to such term in Section 2.10(a)(ii).

Delayed Draw Term B Tranche ” shall mean the Delayed Draw Term B Loan Commitments and the Delayed Draw Term B Loans made thereunder.

Delayed Draw Term Loan Funding Event ” shall mean the making of Delayed Draw Term B Loans by the Delayed Draw Term B Lenders.

Designated Non-Cash Consideration ” shall mean the fair market value (as determined in good faith by the Borrower) of non-cash consideration received by the Borrower or one of its Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer, setting forth the basis of such valuation, less the amount of cash or cash equivalents received in connection with a subsequent sale of such Designated Non-Cash Consideration.

Disinterested Director ” shall mean, with respect to any person and transaction, a member of the Board of Directors of such person who does not have any material direct or indirect financial interest in or with respect to such transaction.

Disqualified Stock ” shall mean, with respect to any person, any Equity Interests of such person that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends in cash or (d) at the option of the holders thereof, is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Stock, in each case, prior to the date that is ninety-one (91) days after the earlier of (x) the Term B Facility Maturity Date and (y) the date on which the Loans and all other Obligations that are accrued and payable are repaid in full and the Commitments are terminated; provided , however , that only the portion of the Equity Interests that so mature or are mandatorily redeemable, are so convertible or exchangeable or are so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided further , however , that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Borrower or the Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Borrower in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided further , however , that any class of Equity Interests of such person that by its terms authorizes such person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

 

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Documentation Agents ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

Dollars ” or “ $ ” shall mean lawful money of the United States of America.

Dollar Amount ” shall mean, at any time, (a) with respect to any L/C Exposure (or any risk participation therein), (i) if denominated in Dollars, the amount thereof and (ii) if denominated in an Alternative Currency, the amount thereof converted to Dollars in accordance with Section 2.22, and (b) with respect to the Credit-Linked Deposit, the principal amount thereof in Dollars then held in the Credit-Linked Deposit Account.

Domestic Subsidiary ” shall mean any Subsidiary that is not a Foreign Subsidiary, a Qualified CFC Holding Company, a Special Purpose Securitization Subsidiary, an Insurance Subsidiary or a subsidiary listed on Schedule 1.01AA .

EBITDA ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of the Borrower and the Subsidiaries for such period plus (a) the sum of (in each case without duplication and to the extent the respective amounts described in subclauses (i) through (xii) of this clause (a) reduced such Consolidated Net Income (and were not excluded therefrom) for the respective period for which EBITDA is being determined):

(i) provision for Taxes based on income, profits or capital of the Borrower and the Subsidiaries for such period, including, without limitation, state, franchise and similar taxes and foreign withholding taxes, and Tax Distributions made by the Borrower during such period,

(ii) Interest Expense (and to the extent not included in Interest Expense, (x) all cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock of Disqualified Capital Stock and (y) costs of surety bonds in connection with financing activities and insurance) of the Borrower and the Subsidiaries for such period (net of interest income of the Borrower and its Subsidiaries for such period),

(iii) depreciation and amortization expenses of the Borrower and the Subsidiaries for such period including the amortization of intangible assets, deferred financing fees and capitalized software expenditures and amortization of unrecognized prior service costs, actuarial gains and losses related to pensions and other post-employment benefits, and, for the avoidance of doubt, amortization of expenses attributable to pending real estate brokerage transactions and property listings of acquired persons or acquired operations,

(iv) any expenses or charges (other than depreciation or amortization expense as described in the preceding clause (iii)) related to any issuance of Equity Interests, Investment, acquisition, disposition, recapitalization or the incurrence, modification or repayment of Indebtedness permitted to be incurred by this Agreement (including a

 

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refinancing thereof) (whether or not successful), including (w) such fees, expenses or charges related to the offering of the Senior Unsecured Notes, Senior Subordinated Notes, and the Obligations, (x) any amendment or other modification of the Obligations or other Indebtedness, (y) any “additional interest” with respect to the Senior Unsecured Notes and Senior Subordinated Notes and (iv) commissions, discounts, yield and other fees and charges (including any interest expense) related to any Permitted Securitization Financing,

(v) storefront conversion costs relating to acquired stores by the Borrower or any Subsidiary,

(vi) restructuring charges including those relating to NRT and Title Resource Group office consolidation and closure,

(vii) other business optimization expenses and other restructuring charges or reserves (which, for the avoidance of doubt, shall include, without limitation, the effect of store closure, office closure, plant closure, facility consolidations, retention, severance and systems establishment costs); provided , that with respect to each business optimization expense or other restructuring charge or reserve, the Borrower shall have delivered to the Administrative Agent an officers’ certificate specifying and quantifying such expense, charge or reserve,

(viii) any other non-cash charges; provided , that, for purposes of this subclause (viii) of this clause (a), any non-cash charges or losses shall be treated as cash charges or losses in any subsequent period during which cash disbursements attributable thereto are made (but excluding, for the avoidance of doubt, amortization of a prepaid cash item that was paid in a prior period),

(ix) the amount of management, consulting, monitoring, transaction and advisory fees and related expenses paid to the Fund or any Fund Affiliate (or any accruals related to such fees and related expenses) during such period; provided , that such amount shall not exceed in any four quarter period the sum of (i) the greater of $20.0 million and 2.5% of EBITDA for such four quarter period, plus (ii) the amount of deferred fees (to the extent such fees would otherwise have been permitted to be included in clause (i) if paid, but were not included in such clause (i)), plus (iii) 2.0% of the value of transactions permitted hereunder and entered into by the Borrower or any of the Subsidiaries with respect to which the Fund or any Fund Affiliate provides any of the aforementioned types of services,

(x) the amount of loss on any sale of Securitization Assets to a Special Purpose Securitization Subsidiary in connection with any Permitted Securitization Financing that is not shown as a liability on a consolidated balance sheet prepared in accordance with GAAP,

(xi) any costs or expenses incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are

 

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funded with cash proceeds contributed to the capital of the Borrower or a Subsidiary Loan Party solely to the extent that such net cash proceeds are excluded from the calculation of the Cumulative Credit, and

(xii) non-operating expenses, and

minus (b) the sum of (without duplication and to the extent the amounts described in this clause (b) increased such Consolidated Net Income for the respective period for which EBITDA is being determined) non-cash items increasing Consolidated Net Income of the Borrower and the Subsidiaries for such period (but excluding any such items (A) in respect of which cash was received in a prior period or will be received in a future period or (B) which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that reduced EBITDA in any prior period).

For purposes of determining EBITDA under this Agreement, EBITDA for the fiscal quarter ended March 31, 2006 shall be deemed to be $134.0 million, EBITDA for the fiscal quarter ended June 30, 2006 shall be deemed to be $333.0 million, EBITDA for the fiscal quarter ended September 30, 2006 shall be deemed to be $296.0 million, and EBITDA for the fiscal quarter ended December 31, 2006 shall be deemed to be $162.0 million.

Environment ” shall mean ambient and indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna, or as otherwise defined in any Environmental Law.

Environmental Laws ” shall mean all applicable laws (including common law), rules, regulations, codes, ordinances, orders, decrees, treaties, directives, judgments, or legally binding agreements promulgated or entered into by or with any Governmental Authority, relating in any way to the Environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material or to health and safety matters (to the extent relating to the Environment or Hazardous Materials).

Equity Financing ” shall mean, in connection with the consummation of the Merger, the purchase or contribution by the Permitted Holders, directly or indirectly, of cash equity to or of a Parent Entity in an aggregate amount equal to not less than $1,900.0 million on the Closing Date, which amount shall be used to (a) finance a portion of the Transactions on the Closing Date, (b) pay Transaction Expenses and (c) make a contribution to Holdings and then to the Borrower as cash equity.

Equity Interests ” of any person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing.

ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time and any final regulations promulgated thereunder.

 

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ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with Holdings, the Borrower or a Subsidiary, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

ERISA Event ” shall mean (a) any Reportable Event or the requirements of Section 4043(b) of ERISA apply with respect to a Single Employer Plan; (b) the existence with respect to any Single Employer Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA) and, on and after the effectiveness of the Pension Act, any failure by any Single Employer Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such plan, whether or not waived; (c) the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Single Employer Plan, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Single Employer Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the incurrence by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Single Employer Plan or Multiemployer Plan; (e) on and after the effectiveness of the Pension Act, a determination that any Single Employer Plan is, or is expected to be, in “at-risk” status (within the meaning of Section 430(i)(4)(A) of the Code or Section 303(i)(4)(a) or ERISA), (f) the receipt by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Single Employer Plan or to appoint a trustee to administer any Single Employer Plan under Section 4042 of ERISA; (g) the incurrence by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Single Employer Plan or Multiemployer Plan; (h) the receipt by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Holdings, the Borrower, a Subsidiary or any ERISA Affiliate (x) of any notice, concerning the impending imposition of Withdrawal Liability or (y) a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA (or, after the effectiveness of the Pension Act, that a Multiemployer Plan is in endangered or critical status within the meaning of Section 305 of ERISA); (i) the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Single Employer Plan; or (j) the adoption of an amendment to a Plan requiring the provision of security to such Single Employer Plan pursuant to Section 307 of ERISA.

Eurocurrency Borrowing ” shall mean a Borrowing comprised of Eurocurrency Loans.

Eurocurrency Loan ” shall mean any Eurocurrency Term Loan or Eurocurrency Revolving Loan.

Eurocurrency Revolving Facility Borrowing ” shall mean a Borrowing comprised of Eurocurrency Revolving Loans.

 

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Eurocurrency Revolving Loan ” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

Eurocurrency Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

Event of Default ” shall have the meaning assigned to such term in Section 8.01.

Excess Cash Flow ” shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis for any Applicable Period, EBITDA of the Borrower and its Subsidiaries on a consolidated basis for such Applicable Period, minus , without duplication,

(a) Debt Service for such Applicable Period,

(b) the amount of any voluntary prepayment permitted hereunder of term Indebtedness during such Applicable Period (other than any voluntary prepayment of the Loans, which shall be the subject of Section 2.11(c)), so long as the amount of such prepayment is not already reflected in Debt Service,

(c) (i) Capital Expenditures by the Borrower and the Subsidiaries on a consolidated basis during such Applicable Period that are paid in cash (to the extent permitted under this Agreement) and (ii) the aggregate consideration paid in cash during the Applicable Period in respect of Permitted Business Acquisitions and other Investments permitted hereunder less any amounts received in respect thereof as a return of capital,

(d) Capital Expenditures or Permitted Business Acquisitions that the Borrower or any Subsidiary shall, during such Applicable Period, become obligated to make in cash but that are not made during such Applicable Period (to the extent permitted under this Agreement); provided , that (i) the Borrower shall deliver a certificate to the Administrative Agent not later than 90 days after the end of such Applicable Period, signed by a Responsible Officer of the Borrower and certifying that such Capital Expenditures and the delivery of the related equipment or Permitted Business Acquisitions will be made in cash in the following Applicable Period, and (ii) any amount so deducted shall not be deducted again in a subsequent Applicable Period,

(e) Taxes and Tax Distributions paid in cash by the Borrower and its Subsidiaries on a consolidated basis during such Applicable Period or that will be paid within six months after the close of such Applicable Period; provided , that with respect to any such amounts to be paid after the close of such Applicable Period, (i) any amount so deducted shall not be deducted again in a subsequent Applicable Period, and (ii) appropriate reserves shall have been established in accordance with GAAP,

(f) an amount equal to any increase in Working Capital of the Borrower and its Subsidiaries for the second, third and fourth fiscal quarters of such Applicable Period, plus the good faith estimate of management of any increase in Working Capital of the Borrower and its Subsidiaries for the first fiscal quarter of the next succeeding 12-month period,

 

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(g) cash expenditures made in respect of Swap Agreements during such Applicable Period, to the extent not reflected in the computation of EBITDA or Interest Expense,

(h) permitted Restricted Payments made in cash by the Borrower during such Applicable Period and permitted Restricted Payments made by any Subsidiary to any person other than Holdings, the Borrower or any of the Subsidiaries during such Applicable Period, in each case in accordance with Section 6.06 (other than Section 6.06(e)),

(i) amounts paid in cash during such Applicable Period on account of (A) items that were accounted for as noncash reductions of Net Income in determining Consolidated Net Income or as noncash reductions of Consolidated Net Income in determining EBITDA of the Borrower and its Subsidiaries in a prior Applicable Period and (B) reserves or accruals established in purchase accounting,

(j) to the extent not deducted in the computation of Net Proceeds in respect of any asset disposition or condemnation giving rise thereto, the amount of any mandatory prepayment of Indebtedness (other than Indebtedness created hereunder or under any other Loan Document), together with any interest, premium or penalties required to be paid (and actually paid) in connection therewith,

(k) the aggregate amount of items that were added to or not deducted from Net Income in calculating Consolidated Net Income or were added to or not deducted from Consolidated Net Income in calculating EBITDA to the extent such items represented a cash payment (which had not reduced Excess Cash Flow upon the accrual thereof in a prior Applicable Period), or an accrual for a cash payment, by the Borrower and its Subsidiaries or did not represent cash received by the Borrower and its Subsidiaries, in each case on a consolidated basis during such Applicable Period,

(l) increases in long-term assets funded with cash during such Applicable Period, and without duplication, increases in underwriting reserves funded in cash or in Permitted Investments during such Applicable Period for title insurance, and

(m) cash expenditures with respect to Cendant Contingent Liabilities in excess of cash received in respect of Cendant Contingent Assets and (i) not otherwise deducted from Consolidated Net Income during such Applicable Period or (ii) reasonably expected by management of the Borrower during the first fiscal quarter of the next Applicable period; provided that, any amount so deducted shall not be deducted again in a subsequent Applicable Period,

plus , without duplication,

(n) an amount equal to any decrease in Working Capital of the Borrower and its Subsidiaries for the second, third and fourth fiscal quarters of such Applicable Period,

 

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plus the good faith estimate of management of any decrease in Working Capital of the Borrower and its Subsidiaries for the first fiscal quarter of the next succeeding 12-month period,

(o) all amounts referred to in clauses (b), (c), (d) and (h) above to the extent funded with the proceeds of the issuance or the incurrence of Indebtedness (including Capital Lease Obligations and purchase money Indebtedness, but excluding, solely as relating to Capital Expenditures, proceeds of Revolving Facility Loans), the sale or issuance of any Equity Interests (including any capital contributions) and any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets and any mortgage or lease of Real Property) to any person of any asset or assets, in each case to the extent there is a corresponding deduction from Excess Cash Flow above,

(p) to the extent any permitted Capital Expenditures or Permitted Business Acquisitions referred to in clause (d) above and the delivery of the related equipment do not occur in the following Applicable Period of the Borrower specified in the certificate of the Borrower provided pursuant to clause (d) above, the amount of such Capital Expenditures or Permitted Business Acquisitions that were not so made in such following Applicable Period,

(q) cash payments received in respect of Swap Agreements during such Applicable Period to the extent (i) not included in the computation of EBITDA or (ii) such payments do not reduce Cash Interest Expense,

(r) any extraordinary or nonrecurring gain realized in cash during such Applicable Period (except to the extent such gain consists of Net Proceeds subject to Section 2.11(b)),

(s) to the extent deducted in the computation of EBITDA, cash interest income, and

(t) the amount related to items that were deducted from or not added to Net Income in connection with calculating Consolidated Net Income or were deducted from or not added to Consolidated Net Income in calculating EBITDA to the extent either (i) such items represented cash received by the Borrower or any Subsidiary or (ii) such items do not represent cash paid by the Borrower or any Subsidiary, in each case on a consolidated basis during such Applicable Period.

Excess Cash Flow Interim Period ” shall mean, (x) during any Excess Cash Flow Period, any one-, two-, or three-quarter period (a) commencing on the end of the immediately preceding Excess Cash Flow Period and (b) ending on the last day of the most recently ended fiscal quarter (other than the last day of the fiscal year) during such Excess Cash Flow Period for which financial statements are available and (y) during the period from the Closing Date until the beginning of the first Excess Cash Flow Period, any period commencing on the Closing Date and ending on the last day of the most recently ended fiscal quarter for which financial statements are available.

 

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Excess Cash Flow Period ” shall mean any of each fiscal year of the Borrower, commencing with the fiscal year of the Borrower ending on December 31, 2008; provided that for purposes of determining the Cumulative Retained Excess Cash Flow Amount, the period beginning on January 1, 2007 and ending on December 31, 2007 shall be deemed to be an Excess Cash Flow Period subject to a Required Percentage of 50%.

Excess Credit-Linked Deposits ” shall mean, at any time, the amount by which the total Credit-Linked Deposits of all Synthetic L/C Lenders at such time exceeds the Synthetic L/C Exposure at such time. The Excess Credit-Linked Deposit of any Synthetic L/C Lender at any time shall mean its Pro Rata Share of the Excess Credit-Linked Deposits at such time.

Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

Exchange Rate ” means on any day with respect to any currency other than Dollars, the rate at which such currency may be exchanged into Dollars, as set forth at approximately 11:00 a.m. (London time) on such day on the Reuters World Currency Page for such currency; in the event that such rate does not appear on any Reuters World Currency Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m. (New York City time) on such date for the purchase of Dollars for delivery two Business Days later.

Excluded Indebtedness ” shall mean all Indebtedness permitted to be incurred under Section 6.01.

Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income taxes imposed on (or measured by) its net income (or franchise taxes imposed in lieu of net income taxes) by the United States, any state or locality thereof, or the District of Columbia (including any political subdivision thereof) or the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or any other jurisdiction as a result of such recipient engaging (or having engaged) in a trade or business in such jurisdiction for tax purposes, (b) any branch profits tax or any similar tax that is imposed by any jurisdiction described in clause (a) above, and (c) any withholding tax (including any backup withholding tax) imposed by the United States (or the jurisdiction under the laws of which such Lender is organized or in which its principal office is located or in which its applicable lending office is located or any other jurisdiction as a result of such Lender engaging (or having engaged) in a trade or business in such jurisdiction for tax purposes) that (x) is in effect and would apply to amounts payable hereunder to such Lender at the time such Lender becomes a party to such Loan to the Borrower (or designates a new lending office) except to the extent that such Lender’s assignor (if any) was entitled at the time of assignment, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a) or (y) is attributable to such Lender’s failure to comply with Section 2.17(e) with respect to such Loan.

 

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Existing Joint Ventures ” shall mean the persons set forth on Schedule 1.01H.

Existing Letters of Credit ” shall mean those Letters of Credit issued and outstanding as of the date hereof and set forth on Schedule 1.01C .

Existing Securitization Documents ” shall mean the Apple Ridge Documents, the Kenosia Documents and the UK Securitization Documents.

Existing Securitization Financings ” shall mean the financing programs pursuant to the Apple Ridge Documents, the Kenosia Documents and the UK Securitization Documents, each as amended, restated, refinanced, modified or supplemented prior to the Closing Date.

Existing Senior Notes ” shall mean the collective reference to the Target’s (a) Floating Rate Senior Notes due 2009, (b) 6.150% Senior Notes due 2011 and (c) 6.500% Senior Notes due 2016, in each case, issued pursuant to the Existing Senior Notes Indenture.

Existing Senior Notes Indenture ” shall mean the Indenture dated as of October 20, 2006 under which the Existing Senior Notes were issued, among the Target and the trustee named therein from time to time, as in effect on the Closing Date and as amended, restated, supplemented or otherwise modified from time to time in accordance with the requirements thereof and of this Agreement.

Existing Senior Notes Refinancing/Change of Control Payments ” shall mean the refinancing (substantially with the proceeds of Delayed Draw Term B Loans) of the Existing Senior Notes, whether by tender offer, change of control offer, discharge, defeasance or other legal means.

Facility ” shall mean any of (a) any Term Facility, (b) the Revolving Facility and (c) the Synthetic L/C Facility, as the context may require.

Federal Funds Effective Rate ” shall mean, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided , that (a) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to JPMCB on such day on such transactions as determined by the Administrative Agent.

Fee Letter ” shall mean that certain Amended and Restated Fee Letter dated January 17, 2007 by and among Holdings, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc., Credit Suisse, Cayman Islands Branch, Credit Suisse Securities (USA) LLC, Bear Stearns Corporate Lending Inc., Bear, Stearns & Co. Inc., Citicorp North America, Inc., and Citigroup Global Markets, Inc.

 

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Fees ” shall mean the Commitment Fees, the L/C Participation Fees, amounts payable by the Borrower to the Synthetic L/C Lenders pursuant to Section 2.12(c) or Section 2.21(b), the Issuing Bank Fees and the Administrative Agent Fees.

Financial Officer ” of any person shall mean the Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such person.

Financial Performance Covenant ” shall mean the covenant of the Borrower set forth in Section 6.10.

Flow Through Entity ” shall mean an entity that is treated as a partnership not taxable as a corporation, a grantor trust or a disregarded entity for U.S. federal income tax purposes or subject to treatment on a comparable basis for purposes of state, local or foreign tax law.

Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

Foreign Pledge Agreement ” shall mean a pledge agreement with respect to the Pledged Collateral that constitutes Equity Interests of a “first tier” Foreign Subsidiary, in form and substance reasonably satisfactory to the Administrative Agent; provided , that in no event shall more than 65% of the issued and outstanding Equity Interests of such Foreign Subsidiary be pledged to secure the Obligations.

Foreign Subsidiary ” shall mean any Subsidiary that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any State thereof or the District of Columbia.

Fund ” shall have the meaning assigned to such term in the recitals hereto.

Fund Affiliate ” shall mean (i) each Affiliate of the Fund and (ii) any individual who is a partner or employee of Apollo Management, L.P. or the Fund.

Fund Termination Fee ” shall have the meaning specified in Section 6.07(b)(xiv).

GAAP ” shall mean generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, subject to the provisions of Section 1.02; provided that any reference to the application of GAAP in Sections 3.13(b), 3.19, 5.03, 5.07 and 6.02(e) to a Foreign Subsidiary (and not as a consolidated Subsidiary of the Borrower) shall mean generally accepted accounting principles in effect from time to time in the jurisdiction of organization of such Foreign Subsidiary.

 

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Governmental Authority ” shall mean any federal, state, provincial, territorial, municipal, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body.

Guarantee ” of or by any person (the “ Guarantor ”) shall mean (a) any obligation, contingent or otherwise, of the Guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the Guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay or otherwise) or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part) or (v) as an account party in respect of any letter of credit, bank guarantee or other letter of guaranty issued to support such Indebtedness or other obligation, or (b) any Lien on any assets of the Guarantor securing any Indebtedness (or any existing right, contingent or otherwise, of the holder of Indebtedness to be secured by such a Lien) of any other person, whether or not such Indebtedness or other obligation is assumed by the Guarantor; provided , however , that (i) the term “Guarantee” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted by this Agreement (other than such obligations with respect to Indebtedness) and (ii) for purposes of its use in the definition of the term “Indebtedness”, the term “Guarantee” shall not include any legal or contractual obligation incurred by the Borrower or any Subsidiary in the ordinary course of business to pay the principal of or interest on any Indebtedness owing by a relocating employee of a customer in the relocation services business of the Borrower or any Subsidiary secured by a mortgage on the home and related assets of such employee. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.

Guarantor ” shall have the meaning assigned to such term in the definition of the term “Guarantee.”

Hazardous Materials ” shall mean all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including, without limitation, explosive or radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas, of any nature which can give rise to liability under any Environmental Law.

 

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Holdings ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

Immaterial Subsidiary ” shall mean any Subsidiary that (a) did not, as of the last day of the fiscal quarter of the Borrower most recently ended, have assets with a value in excess of 5.0% of the Consolidated Total Assets or revenues representing in excess of 5.0% of total revenues of the Borrower and the Subsidiaries on a consolidated basis as of such date, and (b) taken together with all Immaterial Subsidiaries as of the last day of the fiscal quarter of the Borrower most recently ended, did not have assets with a value in excess of 10% of Consolidated Total Assets or revenues representing in excess of 10% of total revenues of the Borrower and the Subsidiaries on a consolidated basis as of such date. Each Immaterial Subsidiary as of the Closing Date shall be set forth in Schedule 1.01D .

Increased Amount Date ” shall have the meaning assigned to such term in Section 2.20(a).

Incremental Amount ” shall mean, at any time, the excess, if any, of (a) $650 million over (b) the aggregate amount of all Incremental Term Loan Commitments and Incremental Revolving Facility Commitments established prior to such time pursuant to Section 2.20.

Incremental Limit ” shall have the meaning assigned to such term in Section 2.20(a).

Incremental Assumption Agreement ” shall mean an Incremental Assumption Agreement in form and substance reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and one or more Incremental Term Lenders and/or Incremental Revolving Facility Lenders.

Incremental Revolving Facility Commitment ” shall mean any increased or incremental Revolving Facility Commitment provided pursuant to Section 2.20.

Incremental Revolving Facility Lender ” shall mean a Lender with a Revolving Facility Commitment or an outstanding Revolving Facility Loan as a result of an Incremental Revolving Facility Commitment.

Incremental Term Borrowing ” shall mean a Borrowing comprised of Incremental Term Loans.

Incremental Term Facility Maturity Date ” shall mean, with respect to any series or tranche of Incremental Term Loans established pursuant to an Incremental Assumption Agreement, the maturity date as set forth in such Incremental Assumption Agreement.

Incremental Term Lender ” shall mean a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.

Incremental Term Loan Commitment ” shall mean the commitment of any Lender, established pursuant to Section 2.20, to make Incremental Term Loans to the Borrower.

 

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Incremental Term Loan Installment Date ” shall have, with respect to any series or tranche of Incremental Term Loans established pursuant to an Incremental Assumption Agreement, the meaning assigned to such term in Section 2.10(a)(iii).

Incremental Term Loans ” shall mean Term Loans made by one or more Lenders to the Borrower pursuant to Section 2.01(d). Incremental Term Loans may be made in the form of additional Term B Loans or, to the extent permitted by Section 2.20 and provided for in the relevant Incremental Assumption Agreement, Other Term Loans.

Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person issued or assumed as the deferred purchase price of property or services (other than such obligations accrued in the ordinary course), to the extent the same would be required to be shown as a long-term liability on a balance sheet prepared in accordance with GAAP, (d) all Capital Lease Obligations of such person, (e) all net payments that such person would have to make in the event of an early termination, on the date Indebtedness of such person is being determined, in respect of outstanding Swap Agreements, (f) the principal component of all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit and bank guarantees, (g) the principal component of all obligations of such person in respect of bankers’ acceptances, (h) all Guarantees by such person of Indebtedness described in clauses (a) to (g) above) and (i) the amount of all obligations of such person with respect to the redemption, repayment or other repurchase of any Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock); provided , that Indebtedness shall not include (A) trade payables, accrued expenses and intercompany liabilities arising in the ordinary course of business, (B) prepaid or deferred revenue arising in the ordinary course of business, (C) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset to satisfy unperformed obligations of the seller of such asset, (D) earn-out obligations until such obligations become a liability on the balance sheet of such person in accordance with GAAP, (E) the excess, if any, of the amount of the obligations under or in respect of a Permitted Securitization Financing over the aggregate receivables balances securing or otherwise supporting such obligations but only to the extent that the Borrower or any Subsidiary of the Borrower other than a Special Purpose Securitization Subsidiary is not directly or indirectly liable for such excess, or (F) Cendant Contingent Liabilities. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such person in respect thereof.

Indemnified Taxes ” shall mean all Taxes other than Excluded Taxes.

Indemnitee ” shall have the meaning assigned to such term in Section 10.05(b).

Ineligible Institution ” shall mean the persons identified in writing to the Administrative Agent by the Borrower on the Closing Date, and as may be identified in writing to the Administrative Agent by the Borrower from time to time thereafter, with the written consent of the Administrative Agent, by delivery of a notice thereof to the Administrative Agent setting forth such person or persons (or the person or persons previously identified to the Administrative Agent that are to be no longer considered “Ineligible Institutions”).

 

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Information ” shall have the meaning assigned to such term in Section 3.14(a).

Information Memorandum ” shall mean the Confidential Information Memorandum dated March 1, 2007, as modified or supplemented prior to the Closing Date.

Initial Term B Borrowing ” shall mean a Borrowing comprised of Initial Term B Loans.

Initial Term B Lender ” shall mean a Lender with an Initial Term B Commitment or an outstanding Initial Term B Loan.

Initial Term B Loan ” shall mean a Loan made by an Initial Term B Lender pursuant to Section 2.01(a)(i).

Initial Term B Loan Commitment ” shall mean with respect to each Lender, the commitment of such Lender to make Initial Term B Loans as set forth in Section 2.01(a). The initial amount of each Lender’s Initial Term B Loan Commitment is set forth on Schedule 2.01 , or in the Assignment and Assumption or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Initial Term B Loan Commitment. The aggregate amount of the Initial Term B Loan Commitments on the Closing Date is $1,950.0 million.

Initial Term B Loan Installment Date ” shall have the meaning assigned to such term in Section 2.10(a)(i).

Initial Term B Tranche ” shall mean the Initial Term B Loan Commitments and the Initial Term B Loans made thereunder.

Insurance Business ” shall mean one or more aspects of the business of soliciting, administering, selling, issuing or underwriting insurance or reinsurance.

Insurance Subsidiary ” shall mean any Subsidiary that is licensed by any Applicable Insurance Regulatory Authority to conduct, and conducts, an Insurance Business.

Intellectual Property Rights ” shall have the meaning assigned to such term in Section 3.20.

Interest Election Request ” shall mean a request by the Borrower to convert or continue a Term Borrowing or Revolving Facility Borrowing in accordance with Section 2.07.

Interest Expense ” shall mean, with respect to any person for any period, the sum of (a) gross interest expense of such person and its subsidiaries for such period on a consolidated basis whether paid or accrued, including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees with respect to Swap Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers’

 

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acceptance financings and (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense, and (b) capitalized interest of such person; provided that commissions, discounts, yield and other fees and charges incurred in connection with any Permitted Securitization Financing shall only be included to the extent such amounts have not been deducted from consolidated revenues. For purposes of the foregoing, gross interest expense shall be determined after giving effect to any net payments made or received and costs incurred by the Borrower and the Subsidiaries with respect to Swap Agreements, and interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Borrower to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

Interest Payment Date ” shall mean, (a) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing and, in addition, the date of any refinancing or conversion of such Borrowing with or to a Borrowing of a different Type, (b) with respect to any ABR Loan (other than a Swingline Loan), the last Business Day of each March, June, September and December and (c) with respect to any Swingline Loan, the day that such Swingline Loan is required to be repaid pursuant to Section 2.09(a).

Interest Period ” shall mean, as to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as applicable, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter (or 9 or 12 months, if at the time of the relevant Borrowing, all relevant Lenders consent to such interest periods), as the Borrower may elect, or the date any Eurocurrency Borrowing is converted to an ABR Borrowing in accordance with Section 2.07 or repaid or prepaid in accordance with Section 2.09, 2.10 or 2.11; provided , however , that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

Investment ” shall have the meaning assigned to such term in Section 6.04.

Issuing Bank ” shall mean JPMCB and each other Issuing Bank designated pursuant to Section 2.05(k), in each case in its capacity as an issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i). An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

Issuing Bank Fees ” shall have the meaning assigned to such term in Section 2.12(b).

 

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JPMCB ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

Judgment Currency ” shall have the meaning assigned to such term in Section 10.19.

Junior Financing ” shall have the meaning assigned to such term in Section 6.09(b).

Kenosia Documents ” shall mean the Receivables Purchase Agreement, dated as of March 7, 2002, between Cartus Relocation Corporation and Kenosia Funding, LLC; the CMGFSC Purchase Agreement, dated as of March 7, 2002, between Cartus Corporation and Cartus Relocation Corporation; the Note Purchase Agreement, dated as of April 10, 2007, among Kenosia Funding, LLC, Cartus Relocation Corporation, Cartus Corporation, Calyon New York Branch and the other parties thereto; the Fee Receivables Purchase Agreement, dated as of March 7, 2002, between Cartus Corporation and Kenosia Funding, LLC; the Kenosia Funding, LLC Secured Variable Funding Notes, Series 2002-1 Indenture, dated as of March 7, 2002, between Kenosia Funding, LLC and The Bank of New York, as trustee; the Amended and Restated Performance Guaranty, dated as of April 10, 2007, by Realogy Corporation in favor of Cartus Relocation Corporation and Kenosia Funding, LLC; the Servicing Agreement, dated as of March 7, 2002, among Kenosia Funding, LLC, Cartus Corporation, Cartus Relocation Corporation and The Bank of New York; and each other agreement or other document contemplated by or entered into in connection with and/or in replacement of the foregoing; each as amended, restated, refinanced, modified or supplemented on or prior to the Closing Date.

L/C Disbursement ” shall mean a payment or disbursement made by an Issuing Bank pursuant to a Revolving Letter of Credit or a Synthetic Letter of Credit.

L/C Exposure ” shall mean, at any time, the sum, without duplication, of the Revolving L/C Exposure and the Synthetic L/C Exposure at such time.

L/C Participation Fee ” shall have the meaning assigned such term in Section 2.12(b).

Lender ” shall mean each financial institution listed on Schedule 2.01 (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance in accordance with Section 10.04), as well as any person that becomes a “Lender” hereunder pursuant to Section 10.04 or Section 2.20.

Lender Default ” shall mean (i) the refusal (which has not been retracted) of a Lender to make available its portion of any Borrowing, to acquire participations in a Swingline Loan pursuant to Section 2.04 or to fund its portion of any unreimbursed payment under Section 2.05(e), or (ii) a Lender having notified in writing the Borrower and/or the Administrative Agent that it does not intend to comply with its obligations under Section 2.04, 2.05 or 2.06.

 

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Letter of Credit ” shall mean any letter of credit issued pursuant to Section 2.05. Each Existing Letter of Credit shall be deemed to constitute a Letter of Credit issued hereunder on the Closing Date for all purposes of the Loan Documents.

LIBO Rate ” shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Bloomberg (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided , that if such rate is not available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurocurrency Loan being made, continued or converted by JPMorgan Chase Bank, N.A. and with a term equivalent to such Interest Period would be offered by JPMorgan Chase Bank, N.A.’s London Branch to major banks in the London interbank Eurocurrency market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, hypothecation, pledge, charge, security interest or similar encumbrance in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided that in no event shall an operating lease, an option or an agreement to sell by itself be deemed to constitute a Lien.

Loan Documents ” shall mean this Agreement, the Letters of Credit, the Security Documents and any Promissory Note.

Loan Parties ” shall mean Holdings (prior to a Borrower Qualified IPO), the Borrower and the Subsidiary Loan Parties.

Loans ” shall mean the Term B Loans, the Incremental Term Loans (if any), the Revolving Facility Loans and the Swingline Loans.

Local Time ” shall mean New York City time.

Majority Lenders ” of any Facility shall mean, at any time, Lenders under such Facility having Loans and/or L/C Exposure and unused Commitments (or in the case of the Synthetic L/C Facility, Excess Credit-Linked Deposits) representing more than 50% of the sum of all Loans and/or L/C Exposure outstanding under such Facility and unused Commitments (or in the case of the Synthetic L/C Facility, Excess Credit-Linked Deposits) under such Facility at such time.

Management Group ” shall mean the group consisting of the directors, executive officers and other management personnel of the Borrower, Holdings and their Subsidiaries, as the case may be, on the Closing Date together with (x) any new directors whose election by such

 

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boards of directors or whose nomination for election by the shareholders of the Borrower or Holdings, as the case may be, was approved by a vote of a majority of the directors of the Borrower or Holdings, as the case may be, then still in office who were either directors on the Closing Date or whose election or nomination was previously so approved and (y) executive officers and other management personnel of the Borrower, Holdings and their Subsidiaries, as the case may be, hired at a time when the directors on the Closing Date together with the directors so approved constituted a majority of the directors of the Borrower or Holdings, as the case may be.

Margin Stock ” shall have the meaning assigned to such term in Regulation U.

Material Adverse Effect ” shall mean a material adverse effect on the business, property, operations or condition of the Borrower and its Subsidiaries, taken as a whole, or the validity or enforceability of any of the material Loan Documents or the rights and remedies of the Administrative Agent and the Lenders thereunder; provided , however , that solely for purposes of determining whether the condition in Section 4.01(b) has been satisfied in connection with the Credit Events on the Closing Date, any reference to “Material Adverse Effect” in any of the representations and warranties referred to in Section 4.01(b) shall mean “Material Adverse Effect” as defined in the Merger Agreement.

Material Indebtedness ” shall mean Indebtedness (other than Loans and Letters of Credit) of any one or more of Holdings, the Borrower or any Subsidiary in an aggregate principal amount exceeding $100.0 million. Notwithstanding the foregoing, any Indebtedness under Permitted Securitization Financings shall not be Material Indebtedness.

Material Subsidiary ” shall mean any Subsidiary other than Immaterial Subsidiaries.

Maximum Rate ” shall have the meaning assigned to such term in Section 10.09.

Merger ” shall have the meaning assigned to such term in the recitals hereto.

Merger Agreement ” shall have the meaning assigned to such term in the recitals hereto.

Merger Documents ” shall mean the collective reference to the Merger Agreement, all material exhibits and schedules thereto and all agreements expressly contemplated thereby.

Merger Sub ” shall have the meaning assigned to such term in the recitals hereto.

Moody’s ” shall mean Moody’s Investors Service, Inc.

Mortgaged Properties ” shall mean the Real Properties owned in fee by the Loan Parties that are set forth on Schedule 1.01B and each additional Real Property encumbered by a Mortgage pursuant to Section 5.09.

 

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Mortgages ” shall mean, collectively, the mortgages, trust deeds, deeds of trust, deeds to secure debt, assignments of leases and rents, and other security documents delivered with respect to Mortgaged Properties, each in form and substance reasonably satisfactory to the Administrative Agent.

Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

Net Income ” shall mean, with respect to any person, the net income (loss) of such person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends.

Net Proceeds ” shall mean:

(a) 100% of the cash proceeds actually received by the Borrower or any Subsidiary Loan Party (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise and including casualty insurance settlements and condemnation awards, but only as and when received) from any Asset Sale (other than those pursuant to Section 6.05(a), (b), (c), (d) (except as contemplated by Section 6.03(b)(ii)), (e), (f), (h), (i), (j), (l), (m) (to the extent such proceeds are not cash proceeds), (n) or (r)), net of (i) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, required debt payments and required payments of other obligations relating to the applicable asset to the extent such debt or obligations are secured by a Lien permitted hereunder (other than pursuant to the Loan Documents) on such asset, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith, (ii) Taxes paid or payable as a result thereof or any Tax Distributions resulting therefrom, and (iii) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to the sale price or any liabilities (other than any taxes deducted pursuant to clause (i) above) (x) related to any of the applicable assets and (y) retained by the Borrower or any of the Subsidiaries including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations (however, the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Proceeds of such Asset Sale occurring on the date of such reduction); provided , that, if no Event of Default exists and the Borrower shall deliver a certificate of a Responsible Officer of the Borrower to the Administrative Agent promptly following receipt of any such proceeds setting forth the Borrower’s intention to use any portion of such proceeds, to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in the business of the Borrower and the Subsidiaries or to make investments in Permitted Business Acquisitions, in each case within 18 months of such receipt, such portion of such proceeds shall not constitute Net Proceeds except to the extent not, within 18 months of such receipt, so used or contractually committed to be so used (it being understood that if any portion of such proceeds are not so used within such 18-month period but within such 18-month period are contractually committed to be used, then

 

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upon the earlier to occur of (A) the termination of such contract and (B) the expiration of a 15-month period following such 18-month period, such remaining portion shall constitute Net Proceeds as of the date of such termination or expiry without giving effect to this proviso); provided , further , that (x) no proceeds realized in a single transaction or series of related transactions shall constitute Net Proceeds unless such proceeds shall exceed $10.0 million, (y) no proceeds shall constitute Net Proceeds in any fiscal year until the aggregate amount of all such proceeds in such fiscal year shall exceed $20.0 million, and (z) at any time during the 18-month or 15-month reinvestment period contemplated by the immediately preceding proviso above, if, on a Pro Forma Basis after giving effect to the Asset Sale and the application of the proceeds thereof, the Senior Secured Leverage Ratio is less than or equal to 2.50 to 1.00, up to $200 million of such proceeds shall not constitute Net Proceeds; and

(b) 100% of the cash proceeds from the incurrence, issuance or sale by the Borrower or any Subsidiary Loan Party of any Indebtedness (other than Excluded Indebtedness), net of all taxes and fees (including investment banking fees), commissions, costs and other expenses, in each case incurred in connection with such issuance or sale.

For purposes of calculating the amount of Net Proceeds, fees, commissions and other costs and expenses payable to the Borrower or any Affiliate of any Borrower shall not constitute an expense that is deducted from gross proceeds, except for financial advisory fees customary in type and amount paid to Affiliates of the Fund and otherwise not prohibited from being paid hereunder.

Non-Consenting Lender ” shall have the meaning assigned to such term in Section 2.19(c).

Notes ” shall mean the Senior Unsecured Notes and the Senior Subordinated Notes.

Notes Offering Memorandum ” shall mean the Offering Memorandum, dated April 5, 2007, in respect of the Notes.

NRT ” shall mean NRT Incorporated, a Delaware corporation, and any successors thereto.

Obligations ” shall have the meaning assigned to the term “Loan Obligations” in the Collateral Agreement.

Other Taxes ” shall mean any and all present or future stamp or documentary taxes or any other excise, transfer, sales, property, intangible, mortgage recording, or similar Taxes, charges or levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, the Loan Documents.

Other Term Loans ” shall have the meaning assigned to such term in Section 2.20(a).

 

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Parent Entity ” shall mean any direct or indirect parent of Holdings.

Participant ” shall have the meaning assigned to such term in Section 10.04(d).

PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

Pension Act ” shall mean the Pension Protection Act of 2006, as amended.

Perfection Certificate ” shall mean the Perfection Certificate with respect to Borrower and the other Loan Parties in a form reasonably satisfactory to the Administrative Agent.

Permitted Business Acquisition ” shall mean any acquisition of all or substantially all the assets of, or all the Equity Interests (other than directors’ qualifying shares) in, or merger, consolidation or amalgamation with, a person or division or line of business of a person (or any subsequent investment made in a person, division or line of business previously acquired in a Permitted Business Acquisition), if immediately after giving effect thereto: (i) no Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions related thereto shall be consummated in accordance with applicable laws; (iii) with respect to any such acquisition or investment with a fair market value (as determined in good faith by the Borrower) in excess of $50.0 million, the Borrower and its Subsidiaries shall be in Pro Forma Compliance after giving effect to such acquisition or investment and any related transactions; (iv) any acquired or newly formed Subsidiary shall not be liable for any Indebtedness except for Indebtedness permitted by Section 6.01; (v) the Borrower and the Subsidiaries are in compliance with Section 5.09 to the extent required thereby with respect to any person acquired in such acquisition, and (vi) the aggregate amount of such acquisitions and investments in assets that are not owned by the Borrower or Subsidiary Loan Parties or in Equity Interests in persons that are not Subsidiary Loan Parties or persons that do not become Subsidiary Loan Parties upon consummation of such acquisition shall not exceed the greater of (x) 4.5% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such acquisition or investment for which financial statements have been delivered pursuant to Section 5.04 and (y) $500.0 million.

Permitted Cure Securities ” shall mean any equity securities of Holdings other than Disqualified Stock upon which all dividends or distributions, if any, shall, prior to 91 days after the Term B Facility Maturity Date, be payable solely in additional shares or such equity security.

Permitted Holder ” shall mean each of (i) the Fund and the Fund Affiliates and (ii) the Management Group.

Permitted Investments ” shall mean:

(a) direct obligations of the United States of America or any member of the European Union or any agency thereof or obligations guaranteed by the United States of America or any member of the European Union or any agency thereof, in each case with maturities not exceeding two years;

 

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(b) bank deposits, checking accounts, time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits in excess of $250 million and whose long-term debt, or whose parent holding company’s long-term debt, is rated A (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act);

(c) repurchase obligations with a term of not more than 180 days for underlying securities of the types described in clause (a) above entered into with a bank meeting the qualifications described in clause (b) above;

(d) commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate of the Borrower) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of P-1 (or higher) according to Moody’s, or A-1 (or higher) according to S&P (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act));

(e) securities with maturities of two years or less from the date of acquisition issued or fully guaranteed by any State, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least A by S&P or A by Moody’s (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act));

(f) shares of mutual funds whose investment guidelines restrict 95% of such funds’ investments to those satisfying the provisions of clauses (a) through (e) above;

(g) money market funds that (i) comply with the criteria set forth in Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000.0 million;

(h) instruments equivalent to those referred to in clauses (a) through (g) above denominated in any foreign currency comparable in credit quality and tenor to those referred to above and commonly used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized in such jurisdiction; and

(i) U.S. dollars, pounds sterling, euros, the national currency of any member state in the European Union or, in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business.

Permitted Liens ” shall have the meaning assigned to such term in Section 6.02.

 

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Permitted Refinancing Indebtedness ” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “ Refinance ”), the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness); provided , that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premium (including tender premiums) thereon and underwriting discounts, defeasance costs, fees, commissions and expenses), (b) except with respect to Section 6.01(i), (i) the weighted average life to maturity of such Permitted Refinancing Indebtedness is not shorter than the weighted average life to maturity of the Indebtedness being Refinanced and (ii) the maturity of such Permitted Refinancing Indebtedness is not earlier than 91 days after the Term B Facility Maturity Date (or, if earlier, the stated maturity of the Indebtedness being Refinanced), (c) if the Indebtedness being Refinanced is subordinated in right of payment to the Obligations or any Guarantee thereof, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to the Obligations or such Guarantee, as the case may be, on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced and (d) no Permitted Refinancing Indebtedness shall have different obligors, or greater guarantees or security, than the Indebtedness being Refinanced; (provided that (i) Indebtedness (other than the Notes) (A) of any Loan Party may be Refinanced to add or substitute as an obligor another Loan Party that is reasonably satisfactory to the Administrative Agent and (B) of any Subsidiary that is not a Loan Party may be Refinanced to add or substitute as an obligor another Subsidiary that is not a Loan Party and is reasonably satisfactory to the Administrative Agent and (ii) other guarantees and security may be added to the extent then permitted under Article VI) and (e) if the Indebtedness being Refinanced is secured by any collateral (whether equally and ratably with, or junior to, the Secured Parties or otherwise), such Permitted Refinancing Indebtedness may be secured by such collateral (including in respect of working capital facilities of Foreign Subsidiaries otherwise permitted under this Agreement only, any collateral pursuant to after acquired property clauses to the extent any such collateral secured the Indebtedness being Refinanced) on terms no less favorable to the Secured Parties than those contained in the documentation (including any intercreditor agreement) governing the Indebtedness being Refinanced; provided , however , that any Lien on Collateral securing Permitted Refinancing Indebtedness incurred pursuant to Section 6.01(b) shall be subordinated to the Liens granted under the Loan Documents and an intercreditor agreement reasonably satisfactory to the Administrative Agent shall be entered into providing that such new Liens will be subordinated to the Liens granted under the Loan Documents on customary terms.

Permitted Securitization Documents ” shall mean all documents and agreements evidencing, relating to or otherwise governing a Permitted Securitization Financing.

Permitted Securitization Financings ” shall mean one or more transactions pursuant to which Securitization Assets are sold, conveyed or otherwise transferred to (x) a Special Purpose Securitization Subsidiary (in the case of the Borrower or a Subsidiary of the Borrower) or (y) any other person (in the case of a transfer by a Special Purpose Securitization Subsidiary), or Liens are granted in Securitization Assets (whether existing on the Closing Date or arising in the future); provided, that (1) recourse to the Borrower or any Subsidiary (other than the Special Purpose Securitization Subsidiaries) in connection with such transactions shall be

 

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limited to Standard Securitization Undertakings; (2) no property or assets of the Borrower or any other Subsidiary of the Borrower (other than a Special Purpose Securitization Subsidiary) shall be subject to such Permitted Securitization Financing other than pursuant to Standard Securitization Undertakings; (3) any material contract, agreement, arrangement or understanding with the Borrower or any Subsidiary of the Borrower included in the Permitted Securitization Documents with respect to such Permitted Securitization Financing shall be on terms which the Borrower reasonably believes to be not materially less favorable to the Borrower or such Subsidiary than those that might be obtained at the time from persons that are not Affiliates of the Borrower; and (4) with respect to any Permitted Securitization Financing entered into after the Closing Date, the terms of such Permitted Securitization Financing (including financing terms, advance rates, covenants, termination events and other provisions) are in the aggregate economically fair and reasonable to the Borrower and the Special Purpose Securitization Subsidiaries involved in such Permitted Securitization Financing. For the avoidance of doubt, the Existing Securitization Financings as in effect on the Closing Date shall be Permitted Securitization Financings.

person ” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.

Plan ” shall mean any employee benefit plan, as such term is defined in Section 3(3) of ERISA (other than a Multiemployer Plan) and in respect of which Holdings, the Borrower, any Subsidiary or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

Platform ” shall have the meaning assigned to such term in Section 10.17.

Pledged Collateral ” shall have the meaning assigned to such term in the Collateral Agreement.

 

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Pricing Grid ” shall mean the table set forth below:

Pricing Grid for Revolving Loans

 

Senior Secured Leverage Ratio

   Applicable Margin for
ABR Revolving Loans
    Applicable Margin for
Eurocurrency
Revolving Loans
    Applicable
Commitment Fee
 

Greater than 3.0 to 1.0

   1.25   2.25   0.50

Less than or equal to 3.0 to 1.0 but greater than or equal to 2.5 to 1.0

   1.00   2.00   0.375

Less than 2.5 to 1.0 but greater than or equal to 2.0 to 1.0

   0.75   1.75   0.375

Less than 2.0 to 1.0

   0.50   1.50   0.25

For the purposes of the Pricing Grid, changes in the Applicable Margin and Applicable Commitment Fee resulting from changes in the Senior Secured Leverage Ratio shall become effective on the date (the “ Adjustment Date ”) that is three Business Days after the date on which financial statements are delivered to the Lenders pursuant to Section 5.04, commencing with the delivery of such financial statements for the first full fiscal quarter of the Borrower ending after the Closing Date, and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 5.04, then, at the option of the Administrative Agent or the Required Lenders, until the date that is three Business Days after the date on which such financial statements are delivered, the pricing level that is one pricing level higher than the pricing level theretofore in effect shall apply as of the first Business Day after the date on which such financial statements were to have been delivered but were not delivered. Each determination of the Senior Secured Leverage Ratio pursuant to the Pricing Grid shall be made in a manner consistent with the determination thereof pursuant to Section 6.10.

primary obligor ” shall have the meaning given such term in the definition of the term “Guarantee.”

Pro Forma Basis ” shall mean, as to any person, for any events as described below that occur subsequent to the commencement of a period for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four consecutive fiscal quarter period ended on or before the occurrence of such event (the “ Reference Period ”): (i) in making any determination of EBITDA, effect shall be given to any Asset Sale, any acquisition, Investment, disposition, merger,

 

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amalgamation, consolidation (including the Transactions) (or any similar transaction or transactions not otherwise permitted under Section 6.04 or 6.05 that require a waiver or consent of the Required Lenders and such waiver or consent has been obtained), any dividend, distribution or other similar payment, any designation of any Subsidiary as an Unrestricted Subsidiary and any Subsidiary Redesignation, and any restructurings of the business of the Borrower or any of its Subsidiaries that the Borrower or any of its Subsidiaries has made and are expected to have a continuing impact and are factually supportable, which would include cost savings resulting from head count reduction, closure of facilities and similar operational and other cost savings, which adjustments the Borrower determines are reasonable as set forth in a certificate of a Financial Officer of the Borrower (the foregoing, together with any transactions related thereto or in connection therewith, the “relevant transactions”), in each case that occurred during the Reference Period (or, in the case of determinations made pursuant to the definition of the term “Permitted Business Acquisition” or pursuant to Sections 2.11(b), 6.01(h), 6.01(r), 6.02(u) or 6.06(e), occurring during the Reference Period or thereafter and through and including the date upon which the respective Permitted Business Acquisition or incurrence of Indebtedness or Liens or dividend is consummated), (ii) in making any determination on a Pro Forma Basis, (x) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under this Agreement or otherwise, but excluding normal fluctuations in revolving Indebtedness incurred for working capital purposes and amounts outstanding after any Permitted Securitization Financing, in each case not to finance any acquisition) issued, incurred, assumed or permanently repaid during the Reference Period (or, in the case of determinations made pursuant to the definition of the term “Permitted Business Acquisition” or pursuant to Sections 2.11(b), 6.01(h), 6.01(r), 6.02(u) or 6.06(e), occurring during the Reference Period or thereafter and through and including the date upon which the respective Permitted Business Acquisition or incurrence of Indebtedness or Liens or dividend is consummated) shall be deemed to have been issued, incurred, assumed or permanently repaid at the beginning of such period and (y) Interest Expense of such person attributable to interest on any Indebtedness, for which pro forma effect is being given as provided in preceding clause (x), bearing floating interest rates shall be computed on a pro forma basis as if the rates that would have been in effect during the period for which pro forma effect is being given had been actually in effect during such periods and (iii) (A) any Subsidiary Redesignation then being designated, effect shall be given to such Subsidiary Redesignation and all other Subsidiary Redesignations after the first day of the relevant Reference Period and on or prior to the date of the respective Subsidiary Redesignation then being designated, collectively, and (B) any designation of a Subsidiary as an Unrestricted Subsidiary, effect shall be given to such designation and all other designations of Subsidiaries as Unrestricted Subsidiaries after the first day of the relevant Reference Period and on or prior to the date of the then applicable designation of a Subsidiary as an Unrestricted Subsidiary, collectively.

Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be determined in good faith by a Responsible Officer of the Borrower and may include, (i) adjustments to reflect (1) for any fiscal period ending on or prior to the second anniversary of any relevant pro forma event, operating expense reductions and other operating improvements, synergies or cost savings reasonably expected to result from such relevant pro forma event (including, to the extent applicable, the Transactions) and (2) for any fiscal period ending on or prior to the second anniversary of the Closing Date, all adjustments of the type used in

 

43


connection with the calculation of “Adjusted EBITDA” as set forth in footnote 7 to the “Summary historical and unaudited pro forma financial data” under “Summary” in the Notes Offering Memorandum to the extent such adjustments, without duplication, continue to be applicable. The Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer of the Borrower setting forth such demonstrable or additional operating expense reductions and other operating improvements, synergies or cost savings and information and calculations supporting them in reasonable detail.

Pro Forma Compliance ” shall mean, at any date of determination, that the Borrower and its Subsidiaries shall be in compliance, on a Pro Forma Basis after giving effect on a Pro Forma Basis to the relevant transactions (including the assumption, the issuance, incurrence and permanent repayment of Indebtedness), with the Financial Performance Covenant recomputed as at the last day of the most recently ended fiscal quarter of the Borrower and its Subsidiaries for which the financial statements and certificates required pursuant to Section 5.04 have been delivered, and the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower to such effect, together with all relevant financial information. To the extent that any provision of this Agreement requires or tests for Pro Forma Compliance prior to the first test date under Section 6.10, such provision shall be deemed to refer to the first covenant level set forth therein.

Pro Forma Financial Statements ” shall have the meaning assigned to such term in Section 3.05(a).

Projections ” shall mean the projections of Holdings, the Borrower and the Subsidiaries included in the Information Memorandum and any other projections and any forward-looking statements (including statements with respect to booked business) of such entities furnished to the Lenders or the Administrative Agent by or on behalf of Holdings, the Borrower or any of the Subsidiaries prior to the Closing Date.

Promissory Note ” shall have the meaning assigned to such term in Section 10.04(f).

Pro Rata Share ” shall mean, (a) with respect to any Revolving Facility Lender at any time, the percentage of the total Revolving Facility Commitments represented by such Lender’s Revolving Facility Commitment, (b) with respect to any Synthetic L/C Lender at any time, the percentage of the total Credit-Linked Deposits represented by such Lender’s Credit-Linked Deposit and (c) with respect to any Initial Term B Lender, Delayed Draw Term B Lender or Incremental Term Lender at any time, the percentage of the sum of the total Commitments then in effect and Loans outstanding under the relevant Term Facility represented by the sum of such Lender’s total unused Commitment then in effect and Loans outstanding under such Term Facility. If the Revolving Facility Commitments have terminated or expired, the Revolving Facility Lenders’ Pro Rata Shares shall be determined based upon the Revolving Facility Commitments most recently in effect, giving effect to any assignments. If the Credit-Linked Deposits have been applied in full to reimburse Synthetic L/C Disbursements, the Synthetic L/C Lenders’ Pro Rata Shares shall be determined based upon the Credit-Linked Deposit most recently in effect, giving effect to any assignments.

 

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Qualified CFC Holding Company ” shall mean a Wholly Owned Subsidiary of the Borrower that is a Delaware limited liability company that is treated as a disregarded entity for U.S. federal income tax purposes, the primary asset of which consists of Equity Interests in either (i) one or more Foreign Subsidiaries or (ii) a Delaware limited liability company the primary asset of which consists of Equity Interests in one or more Foreign Subsidiaries.

Qualified Equity Interests ” shall mean any Equity Interests other than Disqualified Stock.

Qualified IPO ” shall mean an underwritten public offering of the Equity Interests of the Borrower, Holdings or any direct or indirect parent of Holdings which generates cash proceeds of at least $250.0 million.

Real Property ” shall mean, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any Loan Party, together with, in each case, all easements, hereditaments and appurtenances relating thereto, and all improvements and appurtenant fixtures incidental to the ownership or lease thereof.

Reference Period ” shall have the meaning assigned to such term in the definition of the term “Pro Forma Basis.”

Refinance ” shall have the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” and “ Refinanced ” shall have a meaning correlative thereto.

Refinanced Indebtedness ” shall mean the Indebtedness described on Schedule 1.01E .

Register ” shall have the meaning assigned to such term in Section 10.04(b)(iv).

Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Related Parties ” shall mean, with respect to any specified person, such person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such person and such person’s Affiliates.

Release ” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the Environment.

Remaining Present Value ” shall mean, as of any date with respect to any lease, the present value as of such date of the scheduled future lease payments with respect to such lease, determined with a discount rate equal to a market rate of interest for such lease reasonably determined at the time such lease was entered into.

 

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Reportable Event ” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan.

Required Lenders ” shall mean, at any time, Lenders having (a) Loans (other than Swingline Loans) outstanding, (b) Revolving L/C Exposures, (c) Swingline Exposures, (d) Synthetic L/C Exposures, (e) Excess Credit-Linked Deposits and (f) Available Unused Commitments, that taken together, represent more than 50% of the sum of (1) all Loans (other than Swingline Loans) outstanding, (2) Revolving L/C Exposures, (3) Swingline Exposures, (4) Synthetic L/C Exposures, (5) Excess Credit-Linked Deposits and (6) the total Available Unused Commitments at such time. The Loans, Revolving L/C Exposures, Swingline Exposures, Synthetic L/C Exposures, Excess Credit-Linked Deposits and Available Unused Commitment of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

Required Percentage ” shall mean, with respect to an Excess Cash Flow Period (or Excess Cash Flow Interim Period), 50%; provided , that (a) if the Senior Secured Leverage Ratio at the end of the Applicable Period (or Excess Cash Flow Interim Period) is greater than 2.50:1.00 but less than or equal to 3.25:1.00, such percentage shall be 25%, and (b) if the Senior Secured Leverage Ratio at the end of the Applicable Period (or Excess Cash Flow Interim Period) is less than or equal to 2.50:1.00, such percentage shall be 0%.

Required Prepayment Date ” shall have the meaning assigned to such term in Section 2.11(f).

Responsible Officer ” of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof responsible for the administration of the obligations of such person in respect of this Agreement.

Restricted Payments ” shall have the meaning assigned to such term in Section 6.06.

Retained Percentage ” shall mean, with respect to any Excess Cash Flow Period (or Excess Cash Flow Interim Period), (a) 100% minus (b) the Required Percentage with respect to such Excess Cash Flow Period (or Excess Cash Flow Interim Period).

Revolving Facility ” shall mean the Revolving Facility Commitments (including any Incremental Revolving Facility Commitments) and the extensions of credit made hereunder by the Revolving Facility Lenders.

Revolving Facility Borrowing ” shall mean a Borrowing comprised of Revolving Facility Loans.

Revolving Facility Commitment ” shall mean, with respect to each Revolving Facility Lender, the commitment of such Revolving Facility Lender to make Revolving Facility Loans pursuant to Section 2.01, expressed as an amount representing the maximum aggregate

 

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permitted amount of such Revolving Facility Lender’s Revolving Facility Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender under Section 10.04, and (c) increased as provided under Section 2.20. The initial amount of each Lender’s Revolving Facility Commitment is set forth on Schedule 2.01 , or in the Assignment and Acceptance or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Revolving Facility Commitment (or Incremental Revolving Facility Commitment), as applicable. The initial aggregate amount of the Lenders’ Revolving Facility Commitments (prior to giving effect to any Incremental Revolving Facility Commitments) is $750.0 million.

Revolving Facility Credit Exposure ” shall mean, at any time, the sum of (a) the aggregate principal amount of the Revolving Facility Loans outstanding at such time, (b) the Swingline Exposure at such time and (c) the Revolving L/C Exposure at such time. The Revolving Facility Credit Exposure of any Revolving Facility Lender at any time shall be the product of (x) such Revolving Facility Lender’s Pro Rata Share and (y) the aggregate Revolving Facility Credit Exposure of all Revolving Facility Lenders, collectively, at such time.

Revolving Facility Lender ” shall mean a Lender (including an Incremental Revolving Facility Lender) with a Revolving Facility Commitment or with outstanding Revolving Facility Loans.

Revolving Facility Loan ” shall mean a Loan made by a Revolving Facility Lender pursuant to Section 2.01(b).

Revolving Facility Maturity Date ” shall mean April 10, 2013.

Revolving L/C Disbursement ” shall mean any L/C Disbursement pursuant to a Revolving Letter of Credit.

Revolving L/C Exposure ” shall mean at any time the sum of (a) the aggregate undrawn Dollar Amount of all Revolving Letters of Credit outstanding at such time and (b) the aggregate Dollar Amount of all Revolving L/C Disbursements that have not yet been reimbursed at such time. The Revolving L/C Exposure of any Revolving Facility Lender at any time shall mean its Pro Rata Share of the aggregate Revolving L/C Exposure at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the International Standard Practices (ISP98), such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , that with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

Revolving Letter of Credit ” shall mean any Letter of Credit that is not a Synthetic Letter of Credit.

 

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Revolving Letter of Credit Commitment ” shall mean, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit pursuant to Section 2.05.

Revolving Letter of Credit Sublimit ” shall mean the aggregate Revolving Letter of Credit Commitments of the Issuing Banks, in a Dollar Amount not to exceed $200.0 million.

S&P ” shall mean Standard & Poor’s Ratings Group, Inc.

Sale and Lease-Back Transaction ” shall have the meaning assigned to such term in Section 6.03.

SEC ” shall mean the Securities and Exchange Commission or any successor thereto.

Secured Parties ” shall mean the “Secured Parties” as defined in the Collateral Agreement.

Securities Act ” shall mean the Securities Act of 1933, as amended.

Securitization Assets ” shall mean rights to receive payments and funds under relocation contracts and related contracts, homes held for resale, receivables relating to mortgage payments, equity payments and mortgage payoffs, other related receivables, beneficial interests in such assets and assets relating thereto and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving receivables and similar assets, made subject to a Permitted Securitization Financing, in each case related to the relocation services business.

Security Documents ” shall mean the Mortgages, the Collateral Agreement, the Foreign Pledge Agreements and each of the security agreements and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.09.

Senior Secured Leverage Ratio ” shall mean, on any date, the ratio of (a) Total Senior Secured Net Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters of the Borrower most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided , that EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis.

Senior Subordinated Note Documents ” shall mean the Senior Subordinated Notes and the Senior Subordinated Notes Indenture.

Senior Subordinated Notes ” shall mean the Borrower’s 12.375% Senior Subordinated Notes due 2015, issued pursuant to the Senior Subordinated Notes Indenture and any notes issued by the Borrower in exchange for, and as contemplated by, the Senior Subordinated Notes and the related registration rights agreement with substantially identical terms as the Senior Subordinated Notes.

 

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Senior Subordinated Notes Indenture ” shall mean the Indenture dated as of April 10, 2007 under which the Senior Subordinated Notes were issued, among the Borrower and certain of the Subsidiaries party thereto and the trustee named therein from time to time, as in effect on the Closing Date and as amended, restated, supplemented or otherwise modified from time to time in accordance with the requirements thereof and of this Agreement.

Senior Unsecured Note Documents ” shall mean the Senior Unsecured Notes and the Senior Unsecured Notes Indenture.

Senior Unsecured Notes ” shall mean the Borrower’s 10.50% Senior Notes due 2014 and the Borrower’s 11.00/11.75% Senior Toggle Notes due 2014, each issued pursuant to the Senior Unsecured Notes Indenture and any notes issued by the Borrowers in exchange for, and as contemplated by, the Senior Unsecured Notes and the related registration rights agreement with substantially identical terms as the Senior Unsecured Notes.

Senior Unsecured Notes Indenture ” shall mean the collective reference the Indentures dated as of April 10, 2007 under which the Senior Unsecured Notes were issued, each among the Borrower and certain of the Subsidiaries party thereto and the trustee named therein from time to time, as in effect on the Closing Date and as amended, restated, supplemented or otherwise modified from time to time in accordance with the requirements thereof and of this Agreement.

Separation and Distribution Agreement ” shall mean that certain Separation and Distribution Agreement, dated as of July 27, 2006, by and among Cendant Corporation, Realogy Corporation, Travelport Inc. and Wyndham Worldwide Corporation.

Single Employer Plan ” shall mean any Plan that is covered by Section 307 or Title IV of ERISA or Section 412 of the Code, but that is not a Multiemployer Plan.

Special Purpose Securitization Subsidiary ” shall mean any Subsidiary (a) party as of the Closing Date to any Existing Securitization Document or (b)(1) to which the Borrower or a Subsidiary of the Borrower transfers or otherwise conveys Securitization Assets, (2) which engages in no activities other than in connection with the receipt, management, transfer and financing of those Securitization Assets and activities incidental or related thereto, (3) none of the obligations of which are guaranteed by the Borrower or any Subsidiary of the Borrower (other than another Special Purpose Securitization Subsidiary) other than pursuant to Standard Securitization Undertakings, and (4) with respect to which neither the Borrower nor any Subsidiary of the Borrower has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

Specified Aircraft ” shall mean that the Aircraft as defined in that certain Aircraft Purchase Agreement, dated as of July 29, 2005, by and between Bombardier Aerospace Corporation and Cendant Corporation.

Specified Aircraft Sale and Leaseback ” shall mean that certain contemplated sale and leaseback transaction in connection with the Specified Aircraft.

 

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Standard Securitization Undertakings ” shall mean representations, warranties (and any related repurchase obligations), servicer obligations, obligations to transfer Securitization Assets (including provisions similar to those found in the UK Securitization Documents as of the Closing Date) guarantees of performance and payments (other than payments of the obligations backed by the Securitization Assets or obligations of Special Purpose Securitization Subsidiaries), and covenants and indemnities entered into by the Borrower or any Subsidiary of the Borrower of a type that are customary in securitizations and/or are reasonably similar to those in the Existing Securitization Financings.

Statutory Reserves ” shall mean, with respect to any currency, any reserve, liquid asset or similar requirements established by any Governmental Authority of the United States of America or of the jurisdiction of such currency or any jurisdiction in which Loans in such currency are made to which banks in such jurisdiction are subject for any category of deposits or liabilities customarily used to fund loans in such currency or by reference to which interest rates applicable to Loans in such currency are determined, expressed in the case of each such requirement as a decimal. Such reserves shall include those imposed pursuant to Regulation D of the Board. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve, liquid asset, fee or similar requirement .

Subagent ” shall have the meaning assigned to such term in Section 9.02.

Subordinated Intercompany Debt ” shall have the meaning assigned to such term in Section 6.01(e).

subsidiary ” shall mean, with respect to any person (herein referred to as the “parent”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

Subsidiary ” shall mean, with respect to any person, (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or persons performing similar functions) is at the time of determination owned or controlled, directly or indirectly, by such person or one or more of the other Subsidiaries of such person or a combination thereof, (b) any partnership, joint venture or limited liability company or similar entity of which (i) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is at the time of determination owned or controlled, directly or indirectly, by such person or one or more of the other Subsidiaries of such person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (ii) such person or any Subsidiary of such person is a controlling general partner or otherwise controls such entity; provided that, except where the context otherwise require, the referred person means the Borrower. Notwithstanding the foregoing (and except for purposes of Sections

 

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3.09, 3.13, 3.15, 3.16, 5.03, 5.06, 5.08 and 8.01(k), and the definition of Unrestricted Subsidiary contained herein), an Unrestricted Subsidiary shall be deemed not to be a Subsidiary of the Borrower or any of its Subsidiaries for purposes of this Agreement.

Subsidiary Loan Party ” shall mean (a) each Domestic Subsidiary of the Borrower listed on Schedule 1.01F on the Closing Date and (b) each additional Subsidiary described in Section 5.09(d).

Subsidiary Redesignation ” shall have the meaning provided in the definition of “Unrestricted Subsidiary” contained in this Section 1.01.

Swap Agreement ” shall mean any agreement with respect to any swap, forward, future, or derivative or foreign exchange spot transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided , that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Holdings, the Borrower or any of the Subsidiaries shall be a Swap Agreement.

Swingline Borrowing ” shall mean a Borrowing comprised of Swingline Loans.

Swingline Borrowing Request ” shall mean a request by a Borrower substantially in the form of Exhibit B-2 .

Swingline Commitment ” shall mean the commitment of the Swingline Lender to make Swingline Loans pursuant to Section 2.04. The aggregate amount of the Swingline Commitments on the Closing Date is $50.0 million.

Swingline Exposure ” shall mean at any time the aggregate principal amount of all outstanding Swingline Borrowings at such time. The Swingline Exposure of any Revolving Facility Lender at any time shall mean its Pro Rata Share of the aggregate Swingline Exposure at such time.

Swingline Lender ” shall mean JPMCB, in its capacity as a lender of Swingline Loans.

Swingline Loans ” shall mean the swingline loans made to the Borrower pursuant to Section 2.04.

Syndication Agent ” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

Synthetic L/C Commitment ” shall mean, with respect to each Synthetic L/C Lender, the Dollar Amount that such Lender is required hereby to deposit as its Credit-Linked Deposit, as set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender assumed its Synthetic L/C Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04 and (c) increased as provided under Section 2.21.

 

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Synthetic L/C Disbursement ” shall mean any L/C Disbursement pursuant to a Synthetic Letter of Credit.

Synthetic L/C Facility ” shall mean the Credit-Linked Deposits and the Synthetic Letters of Credit.

Synthetic L/C Exposure ” shall mean, at any time, the sum of (a) the aggregate undrawn Dollar Amount of all outstanding Synthetic Letters of Credit at such time and (b) the aggregate Dollar Amount of all Synthetic L/C Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The Synthetic L/C Exposure of any Synthetic L/C Lender at any time shall be such Lender’s Pro Rata Share of the aggregate Synthetic L/C Exposure of all Lenders at such time. For all purposes of this Agreement, if on any date of determination a Synthetic Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the International Standby Practices (ISP98), such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , that with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

Synthetic L/C Installment Date ” shall have the meaning assigned to such term in Section 2.10(e).

Synthetic L/C Lender ” shall mean a Lender having a Credit-Linked Deposit or with Synthetic L/C Exposure.

Synthetic Letter of Credit ” shall mean, at any time, Letters of Credit in a Dollar Amount equal to the lesser of (a) the aggregate of the Credit-Linked Deposits of all Synthetic L/C Lenders at such time and (b) the aggregate amount of Letters of Credit issued for the account of the Borrower outstanding at such time. Letters of Credit will from time to time be deemed to be Synthetic Letters of Credit or Revolving Letters of Credit in accordance with the provisions of Section 2.05(a).

Synthetic L/C Maturity Date ” shall mean October 10, 2013.

Target ” shall have the meaning assigned to such term in the recitals hereto.

Taxes ” shall mean any and all present or future taxes, levies, imposts, duties (including stamp duties), deductions, withholdings or similar charges (including ad valorem charges) imposed by any Governmental Authority and any and all interest and penalties related thereto.

 

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Tax Distributions ” shall mean any Restricted Payments described in Section 6.06(b)(y).

Tax Sharing Agreement ” shall mean the Tax Sharing Agreement, dated as of July 28, 2006, by and among Cendant Corporation, Realogy Corporation, Wyndham Worldwide Corporation and Travelport Inc.

Term B Facility ” shall mean (a) the Initial Term B Tranche, (b) the Delayed Draw Term B Tranche and (c) any tranche or series of Incremental Term Commitments under which Term B Loans are made.

Term B Facility Maturity Date ” shall mean October 10, 2013.

Term B Loan Commitment ” shall mean with respect to each Lender, the Initial Term B Loan Commitment of such Lender, the Delayed Draw Term B Loan Commitment of such Lender and such Lender’s commitment to make Incremental Term Loans in the form of Term B Loans as set forth in Section 2.01(d). The aggregate amount of the Term B Loan Commitments on the Closing Date is $3.17 billion.

Term B Loans ” shall mean the term loans made by the Lenders to the Borrower pursuant to Section 2.01(a) and any Incremental Term Loans in the form of Term B Loans made by the Incremental Term Lenders to the Borrower pursuant to Section 2.01(d)

Term B Loan Installment Date ” shall mean any Initial Term B Loan Installment Date or any Delayed Draw Term B Loan Installment Date.

Term Borrowing ” shall mean any Initial Term B Borrowing, any Delayed Draw Term B Borrowing or any Incremental Term Borrowing.

Term Facility ” shall mean each Term B Facility and/or any or all of the Incremental Term Facilities that are not Term B Facilities.

Term Loan Commitment ” shall mean any Term B Loan Commitment or any Incremental Term Commitment other than a Term B Loan Commitment.

Term Loan Installment Date ” shall mean any Term B Loan Installment Date or any Incremental Term Loan Installment Date.

Term Loans ” shall mean the Term B Loans and/or the Incremental Term Loans that are not Term B Loans.

Test Period ” shall mean, on any date of determination, the period of four consecutive fiscal quarters of the Borrower then most recently ended (taken as one accounting period).

Title Resource Group ” shall mean Title Resource Group LLC (formerly known as Cendant Settlement Services Group LLC), a Delaware limited liability company, and any successor thereto.

 

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Total Senior Secured Net Debt ” at any date shall mean (i) the aggregate principal amount of Consolidated Debt of the Borrower and its Subsidiaries outstanding at such date that consists of, without duplication, Indebtedness that in each case is then secured by first priority Liens on property or assets of the Borrower and its Subsidiaries (other than a Lien on property or assets held in a defeasance or similar trust or arrangement for the benefit of the Indebtedness secured thereby), less (ii) without duplication, the Unrestricted Cash and Permitted Investments of the Borrower and its Subsidiaries on such date.

Tranche ” shall mean a category of Commitments and extensions of credit thereunder. For purposes hereof, each of the following comprises a separate Tranche: (i) the Initial Term B Tranche and (ii) the Delayed Draw Term B Tranche.

Transaction Documents ” shall mean the Merger Documents, the Senior Unsecured Note Documents, the Senior Subordinated Note Documents, and the Loan Documents.

Transaction Expenses ” shall mean any fees or expenses incurred or paid by the Fund, Holdings, the Borrower (or any direct or indirect parent of the Borrower) or any of its Subsidiaries in connection with the Transactions, this Agreement and the other Loan Documents (including expenses in connection with Swap Agreements) and the transactions contemplated hereby and thereby.

Transactions ” shall mean, collectively, the transactions to occur pursuant to the Transaction Documents, including (a) the consummation of the Merger; (b) the execution and delivery of the Loan Documents, the creation of the Liens pursuant to the Security Documents, and the initial borrowings hereunder; (c) the Equity Financing; (d) the sale and issuance of the Senior Unsecured Notes; (e) the sale and issuance of the Senior Subordinated Notes; (f) the refinancing (or discharge) of the Refinanced Indebtedness (including the Existing Senior Notes Refinancing/Change of Control Payments); (g) the restructuring of Existing Securitization Financings; and (h) the payment of all fees and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing.

Type ” shall mean, when used in respect of any Loan or Borrowing, the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “ Rate ” shall include the Adjusted LIBO Rate and the ABR.

UK Securitization Documents ” shall mean the Transfer of Receivables Agreement and Trust Deed, dated as of April 10, 2007, among Cartus Limited, Cartus Services Limited, Cartus Funding Limited and UK Relocation Receivables Funding Limited; the Receivables Servicing Agreement, dated as of April 10, 2007, among UK Relocation Receivables Funding Limited, Cartus Limited and Calyon S.A., London Branch; the Receivables Funding Agreement, dated as of April 10, 2007, among UK Relocation Receivables Funding Limited and Calyon S.A., London Branch; the Master Schedule of Definitions, Interpretation and Construction, dated as of April 10, 2007, among UK Relocation Receivables Funding Limited, Calyon S.A., London Branch, Realogy Corporation, Cartus Limited, Cartus Services Limited and Cartus Funding Limited; the Parent Undertaking Agreement, dated as of April 10, 2007, among

 

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Realogy Corporation, UK Relocation Receivables Funding Limited and Calyon S.A., London Branch; the Security Agreement, dated as of April 10, 2007, between UK Relocation Receivables Funding Limited and Calyon S.A., London Branch; and each other agreement or other document contemplated by or entered into in connection with and/or in replacement of the foregoing; each as amended, restated, refinanced, modified or supplemented on or prior to the Closing Date.

Unfunded Pension Liability ” shall mean the excess of a Single Employer Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of such plan’s assets, determined in accordance with the assumptions used for funding the Plan pursuant to Section 412 of the Code for the applicable plan year.

Uniform Commercial Code ” or “ UCC ” shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.

Unrestricted Cash ” shall mean (a) cash or cash equivalents of the Borrower or any of its Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrower or any of its Subsidiaries (including Permitted Investments made in connection with the Arbitrage Programs whether or not so restricted), minus (b) cash or cash equivalents of any Insurance Subsidiary that is not permitted to be distributed or advanced to the Borrower or any other Subsidiary as a matter of law or regulation.

Unrestricted Subsidiary ” shall mean (1) any Subsidiary of the Borrower identified on Schedule 1.01G and (2) any Subsidiary of the Borrower designated by the Borrower as an Unrestricted Subsidiary hereunder by written notice to the Administrative Agent; provided , that the Borrower shall only be permitted to so designate a new Unrestricted Subsidiary after the Closing Date and so long as (a) no Default or Event of Default has occurred and is continuing or would result therefrom, (b) immediately after giving effect to such designation (as well as all other such designations theretofore consummated after the first day of such Reference Period), the Borrower shall be in Pro Forma Compliance, (c) such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by the Borrower or any of its Subsidiaries) through Investments as permitted by, and in compliance with, Section 6.04(j), and any prior or concurrent Investments in such Subsidiary by the Borrower or any of its Subsidiaries shall be deemed to have been made under Section 6.04(j), (d) without duplication of clause (c), any assets owned by such Unrestricted Subsidiary at the time of the initial designation thereof shall be treated as Investments pursuant to Section 6.04(j), and (e) such Subsidiary shall have been designated an “unrestricted subsidiary” (or otherwise not be subject to the covenants and defaults) under the Senior Unsecured Notes Indenture, the Senior Subordinated Notes Indenture, any other Indebtedness permitted to be incurred hereunder (to the extent the concept of unrestricted subsidiaries exists in the documents governing such Indebtedness) and all Permitted Refinancing Indebtedness in respect of any of the foregoing and all Disqualified Stock. The Borrower may designate any Unrestricted Subsidiary to be a Subsidiary for purposes of this Agreement (each, a “ Subsidiary Redesignation ”); provided , that (i) such Unrestricted Subsidiary, both before and after giving effect to such designation, shall be a Wholly Owned Subsidiary of the Borrower, (ii) no Default or Event of Default has occurred and is continuing or would result

 

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therefrom, (iii) immediately after giving effect to such Subsidiary Redesignation (as well as all other Subsidiary Redesignations theretofore consummated after the first day of such Reference Period), the Borrower shall be in Pro Forma Compliance, and (iv) the Borrower shall have delivered to the Administrative Agent an officer’s certificate executed by a Responsible Officer of such Borrower, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i) through (iii), inclusive, and containing the calculations and information required by the preceding clause (iii).

USA PATRIOT Act ” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

Waivable Mandatory Prepayment ” shall have the meaning assigned to such term in Section 2.11(f).

Wholly Owned Domestic Subsidiary ” of any person shall mean a Domestic Subsidiary of such person that is a Wholly Owned Subsidiary.

Wholly Owned Foreign Subsidiary ” of any person shall mean a Foreign Subsidiary of such person that is a Wholly Owned Subsidiary.

Wholly Owned Subsidiary ” of any person shall mean a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly Owned Subsidiary of such person.

Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Working Capital ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis at any date of determination, Current Assets at such date of determination minus Current Liabilities at such date of determination; provided , that, for purposes of calculating Excess Cash Flow, increases or decreases in Working Capital shall be calculated without regard to any changes in Current Assets or Current Liabilities as a result of (a) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent, or (b) the effects of purchase accounting.

SECTION 1.02. Terms Generally . The definitions set forth or referred to in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time. Except as otherwise expressly provided herein, all terms of an accounting or financial nature

 

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shall be construed in accordance with GAAP, as in effect from time to time; provided, that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

SECTION 1.03. Effectuation of Transfers . Each of the representations and warranties of Holdings and the Borrower contained in this Agreement (and all corresponding definitions) are made after giving effect to the Transactions, unless the context otherwise requires.

ARTICLE II

The Credits

SECTION 2.01. Commitments . Subject to the terms and conditions set forth herein:

(a) (i) each Initial Term B Lender agrees to make Initial Term B Loans to the Borrower on the Closing Date in a principal amount not to exceed its Initial Term B Loan Commitment and (ii) each Delayed Draw Term B Lender agrees to make Delayed Draw Term B Loans to the Borrower after the Closing Date during the Availability Period in an aggregate principal amount not to exceed its Delayed Draw Term B Loan Commitment. Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed;

(b) each Lender agrees to make Revolving Facility Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Facility Credit Exposure exceeding such Lender’s Revolving Facility Commitment or (ii) the Revolving Facility Credit Exposure exceeding the total Revolving Facility Commitments; provided , that the aggregate principal amount of Revolving Facility Loans made on the Closing Date shall not exceed $250.0 million. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Facility Loans;

(c) each Synthetic L/C Lender agrees to fund its Credit-Linked Deposit on the Closing Date in Dollars in an amount not to exceed its Synthetic L/C Commitment; and

(d) each Lender having an Incremental Term Loan Commitment agrees, subject to the terms and conditions set forth in the applicable Incremental Assumption Agreement, to make Incremental Term Loans to the Borrower, in an aggregate principal amount not to exceed its Incremental Term Loan Commitment. Amounts borrowed under this Section 2.01(d) and repaid or prepaid may not be reborrowed.

 

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SECTION 2.02. Loans and Borrowings . (a) Each Loan shall be made as part of a Borrowing consisting of Loans under the same Facility and of the same Type made by the Lenders ratably in accordance with their respective Commitments under the applicable Facility (or, in the case of Swingline Loans, in accordance with their respective Swingline Commitments). The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided, that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Subject to Section 2.14, each Borrowing (other than a Swingline Borrowing) shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Borrower may request in accordance herewith. Each Swingline Borrowing shall be an ABR Borrowing. Each Lender at its option may make any ABR Loan or Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided , that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement and such Lender shall not be entitled to any amounts payable under Section 2.15 or 2.17 solely in respect of increased costs resulting from such exercise and existing at the time of such exercise.

(c) At the commencement of each Interest Period for any Eurocurrency Revolving Facility Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. At the time that each ABR Revolving Facility Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided , that an ABR Revolving Facility Borrowing or a Swingline Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Revolving Facility Commitments or that is required to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e). Each Swingline Borrowing shall be in an amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type and under more than one Facility may be outstanding at the same time; provided , that there shall not at any time be more than a total of (i) ten Eurocurrency Borrowings outstanding under the Term B Facility, (ii) ten Eurocurrency Borrowings outstanding under Incremental Term Facilities that are not Term B Facilities and (iii) ten Eurocurrency Borrowings outstanding under the Revolving Facility.

(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Facility Maturity Date, the Term B Facility Maturity Date or the applicable Incremental Term Facility Maturity Date, as the case may be.

SECTION 2.03. Requests for Borrowings . To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 12:00 p.m., Local Time, three Business Days (or, with respect to the Borrowings on the Closing Date, such fewer number of Business Days as may be acceptable to the Administrative Agent) before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., Local Time, on the date of the proposed

 

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Borrowing (which shall be a Business Day); provided, that any such notice of an ABR Revolving Facility Borrowing to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., Local Time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) whether such Borrowing is to be a Borrowing of Revolving Facility Loans, Initial Term B Loans, Delayed Draw Term B Loans or Incremental Term Loans (and, in the case of Incremental Term Loans, whether such Loans are to be Term B Loans or Other Term Loans);

(ii) the aggregate amount of the requested Borrowing;

(iii) the date of such Borrowing, which shall be a Business Day;

(iv) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;

(v) in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

(vi) the location and number of the Borrower’s account to which funds are to be disbursed.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04. Swingline Loans . (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding the Swingline Commitment or (ii) the Revolving Facility Credit Exposure exceeding the total Revolving Facility Commitments; provided , that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Borrowing. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

(b) To request a Swingline Borrowing, the Borrower shall notify the Administrative Agent and the Swingline Lender of such request by telephone (confirmed by a Swingline Borrowing Request by telecopy), not later than 1:00 p.m., Local Time, on the day of

 

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a proposed Swingline Borrowing. Each such notice and Swingline Borrowing Request shall be irrevocable and shall specify (i) the requested date (which shall be a Business Day) and (ii) the amount of the requested Swingline Borrowing. The Swingline Lender shall consult with the Administrative Agent as to whether the making of the Swingline Loan is in accordance with the terms of this Agreement prior to the Swingline Lender funding such Swingline Loan. The Swingline Lender shall make each Swingline Loan in accordance with Section 2.02(a) on the proposed date thereof by wire transfer of immediately available funds by 4:00 p.m., Local Time, to the account of the Borrower (or, in the case of a Swingline Borrowing made to finance the reimbursement of an L/C Disbursement as provided in Section 2.05(e), by remittance to the applicable Issuing Bank).

(c) The Swingline Lender may by written notice given to the Administrative Agent not later than 2:00 p.m., Local Time, on any Business Day require the Revolving Facility Lenders to acquire participations on such Business Day in all or a portion of the outstanding Swingline Loans made by it. Such notice shall specify the aggregate amount of such Swingline Loans in which the Revolving Facility Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each such Lender, specifying in such notice such Lender’s Revolving Facility Lender’s Pro Rata Share of such Swingline Loan or Loans. Each Revolving Facility Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent for the account of the Swingline Lender, such Revolving Facility Lender’s Pro Rata Share of such Swingline Loan or Loans. Each Revolving Facility Lender acknowledges and agrees that its respective obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or Event of Default or reduction or termination of the Revolving Facility Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Facility Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Revolving Facility Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Facility Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph (c), and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Facility Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided , that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

 

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SECTION 2.05. Letters of Credit . (a) General. Subject to the terms and conditions set forth herein (including, with respect to Synthetic Letters of Credit, Section 2.21), the Borrower may request the issuance of Revolving Letters of Credit and Synthetic Letters of Credit, in each case denominated in Dollars (or in any Alternative Currency, not to exceed an aggregate Dollar Amount of $75.0 million for all such Letters of Credit), for its own account (or for the account of a Subsidiary, so long as such Borrower and such Subsidiary are co-applicants) in a form reasonably acceptable to the applicable Issuing Bank, at any time and from time to time during the Availability Period prior to the date that is five Business Days prior to (i) the Revolving Facility Maturity Date (in the case of Revolving Letters of Credit) and (ii) the Synthetic L/C Maturity Date (in the case of Synthetic Letters of Credit). For purposes hereof, (i) all Letters of Credit issued hereunder shall at all times and from time to time be deemed to be Synthetic Letters of Credit up to the aggregate amount of the Credit-Linked Deposit as determined in the definition of the term “Credit-Linked Deposit” and be deemed to be Revolving Letters of Credit only to the extent, and in an amount by which, the aggregate amount of outstanding Letters of Credit that are issued for the account of the Borrower exceeds such amount, (ii) drawings under any Letter of Credit shall be deemed to have been made under Revolving Letters of Credit for so long as, and to the extent that, there are any undrawn Revolving Letters of Credit outstanding (and thereafter drawings under such Letters of Credit shall be deemed to have been made under Synthetic Letters of Credit) and (iii) any Letter of Credit that expires or terminates will be deemed to be a Revolving Letter of Credit for so long as, and to the extent that, there are outstanding Revolving Letters of Credit immediately prior to such expiration or termination; provided , however , that at any time during which an Event of Default shall have occurred and be continuing, (A) Letters of Credit shall be deemed to be in part Revolving Letters of Credit and in part Synthetic Letters of Credit, (B) drawings under Letters of Credit shall be deemed to have been made under Revolving Letters of Credit and Synthetic Letters of Credit and (C) any Letter of Credit that expires or terminates shall be deemed to be in part a Revolving Letter of Credit and in part a Synthetic Letter of Credit, in each case pro rata based upon (1) the total Revolving Facility Commitments at such time and (2) the sum of the total Credit-Linked Deposits of all Synthetic L/C Lenders at such time and the amount of the total Credit-Linked Deposits of all Synthetic L/C Lenders that shall have been applied to reimburse outstanding Synthetic L/C Disbursements at such time. To the extent necessary to implement the foregoing, the identification of a Letter of Credit as a Revolving Letter of Credit or a Synthetic Letter of Credit may change from time to time and a portion of a Letter of Credit may be deemed to be a Synthetic Letter of Credit and the remainder be deemed to be a Revolving Letter of Credit. Notwithstanding the foregoing, the entire face amount of any Letter of Credit with an expiration date after the Revolving Facility Maturity Date shall be deemed to be a Synthetic Letter of Credit, subject to the limitations set forth in clause (i) of the second sentence of this paragraph (a). In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. Each Existing Letter of Credit shall be deemed to be a Letter of Credit under this Agreement and each Lender that is an issuer of an Existing Letter of Credit shall be deemed to be an Issuing Bank with respect to such Existing Letter of Credit and shall have all rights of an Issuing Bank hereunder (but shall have no obligation to extend or renew any Existing Letter of Credit or to issue additional Letters of Credit) until such Existing Letter of Credit has been terminated.

 

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(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal (other than an automatic extension in accordance with paragraph (c) of this Section) or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to the applicable Issuing Bank and the Administrative Agent (three Business Days in advance of the requested date of issuance, amendment or extension or such shorter period as the Administrative Agent and the Issuing Bank in their sole discretion may agree) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended or extended, and specifying the date of issuance, amendment or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the currency of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to issue, amend or extend such Letter of Credit. If requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended or extended only if (and upon issuance, amendment or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment or extension (i) the Revolving L/C Exposure shall not exceed the Revolving Letter of Credit Sublimit, (ii) the Revolving Facility Credit Exposure shall not exceed the total Revolving Facility Commitments, (iii) the Synthetic L/C Exposure will not exceed the total Credit-Linked Deposits of all Synthetic L/C Lenders, and (iv) all conditions precedent in Section 4.01 have been satisfied (or waived by the (x) the Majority Lenders under the Revolving Facility and (y) Synthetic L/C Lenders with Synthetic L/C Exposure and Excess Credit-Linked Deposits representing greater than 50% of the total Synthetic L/C Exposure and Excess Credit-Linked Deposits of all Synthetic L/C Lenders). No Issuing Bank shall permit any such issuance, renewal, extension or amendment resulting in an increase in the amount of any Letter of Credit without first obtaining written confirmation from the Administrative Agent that it is then permitted under this Agreement.

(c) Expiration Date . Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year (unless otherwise agreed upon by the Administrative Agent and the Issuing Bank in their sole discretion) after the date of the issuance of such Letter of Credit (or, in the case of any extension thereof, one year (unless otherwise agreed upon by the Administrative Agent and the Issuing Bank in their sole discretion) after such renewal or extension) and (ii) the date that is five Business Days prior to (A) in the case of any Revolving Letter of Credit, the Revolving Facility Maturity Date and (B) in the case of any Synthetic Letter of Credit, the Synthetic L/C Maturity Date; provided , that any Letter of Credit with one year tenor may provide for automatic extension thereof for additional one year periods (which, in no event, shall extend beyond the date referred to in clause (ii) of this paragraph (c)) so long as such Letter of Credit permits the applicable Issuing Bank to prevent any such extension at least once in such twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof at least 30 days prior to the then-applicable expiration date that such Letter of Credit

 

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will not be renewed; provided further , that if the applicable Issuing Bank and the Administrative Agent each consent in their sole discretion, the expiration date on any Letter of Credit may extend beyond the date referred to in clause (ii) above, provided , that if any such Letter of Credit is outstanding or the expiration date is extended to a date after the date that is five Business Days prior to (A) in the case of any Revolving Letter of Credit, the Revolving Facility Maturity Date and (B) in the case of any Synthetic Letter of Credit, the Synthetic L/C Maturity Date the Borrower shall provide cash collateral pursuant to documentation reasonably satisfactory to the Administrative Agent and the relevant Issuing Bank in an amount equal to 105% of the face amount of each such Letter of Credit or provide a back-to-back letter of credit, in form and substance and from an issuing bank reasonably satisfactory to the relevant Issuing Bank, on or prior to the date that is five Business Days prior to (A) in the case of any Revolving Letter of Credit, the Revolving Facility Maturity Date and (B) in the case of any Synthetic Letter of Credit, the Synthetic L/C Maturity Date.

(d) Participations . (i) By the issuance of a Revolving Letter of Credit (or an amendment to a Revolving Letter of Credit increasing the amount thereof), and without any further action on the part of the applicable Issuing Bank or the Revolving Facility Lenders, such Issuing Bank hereby grants to each Revolving Facility Lender, and each such Revolving Facility Lender hereby acquires from such Issuing Bank, a participation in such Revolving Letter of Credit equal to the product of (A) such Revolving Facility Lender’s Pro Rata Share and (B) the aggregate amount available to be drawn under such Revolving Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Facility Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, an amount equal to the product of (A) such Revolving Facility Lender’s Pro Rata Share and (B) each Revolving L/C Disbursement made by such Issuing Bank not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Revolving Facility Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Revolving Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Revolving Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Facility Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(ii) Each Synthetic L/C Lender hereby acknowledges that it holds a participation in each Synthetic Letter of Credit equal to such Synthetic L/C Lender’s Pro Rata Share of the aggregate amount available to be drawn under such Synthetic Letter of Credit. The Administrative Agent hereby acknowledges that it holds the Credit-Linked Deposit of each Synthetic L/C Lender. Each Synthetic L/C Lender hereby absolutely and unconditionally agrees that if an Issuing Bank makes a Synthetic L/C Disbursement that is not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or is required to refund any reimbursement payment in respect of a Synthetic L/C Disbursement to the Borrower for any reason, the Administrative Agent shall reimburse the applicable Issuing Bank for the amount of such Synthetic L/C Disbursement from such Synthetic L/C Lender’s Credit-Linked Deposit on deposit in the Credit-Linked Deposit Account. In the event the Credit-Linked Deposit Account is charged by the Administrative Agent to reimburse the applicable Issuing Bank for an

 

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unreimbursed Synthetic L/C Disbursement, the Borrower shall have the right, at any time prior to the Synthetic L/C Maturity Date, to pay over to the Administrative Agent in reimbursement thereof an amount equal to the amount so charged and such payment shall be deposited by the Administrative Agent in the Credit-Linked Deposit Account. Each Synthetic L/C Lender acknowledges and agrees that its obligation to acquire and fund participations in respect of Synthetic Letters of Credit pursuant to this subparagraph (ii) is unconditional and irrevocable and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Synthetic Letter of Credit or the occurrence and continuance of a Default or Event of Default or the return of the Credit-Linked Deposits, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Without limiting the foregoing, each Synthetic L/C Lender irrevocably authorizes the Administrative Agent to apply amounts of its Credit-Linked Deposit as provided in this subparagraph (ii).

(e) Reimbursement . (i) If the applicable Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such L/C Disbursement by paying to the Administrative Agent an amount equal to such L/C Disbursement in Dollars, or (subject to the two immediately succeeding sentences) the applicable Alternative Currency, not later than 3:00 p.m., Local Time, on the next Business Day after the Borrower receives notice under paragraph (g) of this Section of such L/C Disbursement, together with accrued interest thereon from the date of such L/C Disbursement at the rate applicable to ABR Loans; provided , that, in the case of any L/C Disbursement made in Dollars, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Facility Borrowing or a Swingline Borrowing, as applicable, in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Facility Borrowing or Swingline Borrowing. If the Borrower’s reimbursement of, or obligation to reimburse, any amounts in any Alternative Currency would subject the Administrative Agent, the applicable Issuing Lender or any Lender to any stamp duty, ad valorem charge or similar tax that would not be payable if such reimbursement were made or required to be made in Dollars, the Borrower shall, at its option, either (x) pay the amount of any such tax requested by the Administrative Agent, the relevant Issuing Lender or Lender or (y) reimburse each L/C Disbursement made in such Alternative Currency in Dollars, in an amount equal to the Dollar Amount of such L/C Disbursement. If the Borrower fails to make such payment when due, then (i) if such payment relates to an Alternative Currency Letter of Credit, automatically and with no further action required, the Borrower’s obligation to reimburse the applicable L/C Disbursement shall be permanently converted into an obligation to reimburse the Dollar Amount of such L/C Disbursement and (ii) the Administrative Agent shall promptly notify the applicable Issuing Lender of the applicable L/C Disbursement and the Dollar Amount thereof.

(ii) If the Borrower fails to reimburse any Revolving L/C Disbursement when due, then the applicable Issuing Bank shall promptly notify the Administrative Agent, which shall promptly notify each Revolving Facility Lender of such L/C Disbursement (as converted to Dollars, if applicable), the amount of the payment then due from the Borrower in respect thereof and, such Lender’s Pro Rata Share thereof. Promptly following receipt of such notice, each Revolving Facility Lender shall pay to the Administrative Agent in Dollars its Pro Rata Share of the payment then due from the Borrower in the same manner as provided in Section 2.06 with

 

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respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis , to the payment obligations of the Revolving Facility Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Revolving Facility Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Revolving Facility Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Revolving Facility Lender pursuant to this paragraph to reimburse an Issuing Bank for any L/C Disbursement (other than the funding of an ABR Revolving Loan or a Swingline Borrowing as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such L/C Disbursement.

(iii) If the Borrower fails to reimburse any Synthetic L/C Disbursement when due, then the Administrative Agent shall notify each Synthetic L/C Lender of the applicable Synthetic L/C Disbursement (as converted to Dollars, if applicable), the payment then due from the Borrower in respect thereof and such Lender’s Pro Rata Share thereof, and the Administrative Agent shall promptly pay to the applicable Issuing Bank each Synthetic L/C Lender’s Pro Rata Share of such Synthetic L/C Disbursement from such Lender’s Credit-Linked Deposit. Promptly following the receipt by the Administrative Agent of any payment by the Borrower in respect of any Synthetic L/C Disbursement, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent payments have been made from the Credit-Linked Deposits, to the Credit-Linked Deposit Account to be added to the Credit-Linked Deposits of the Synthetic L/C Lenders in accordance with their Pro Rata Shares. The Borrower acknowledges that each payment made pursuant to this subparagraph (iii) in respect of any Synthetic L/C Disbursement is required to be made for the benefit of the distributees indicated in the immediately preceding sentence. Any payment from the Credit-Linked Deposit Account, or from funds of the Administrative Agent, pursuant to this paragraph to reimburse an Issuing Bank for any Synthetic L/C Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such Synthetic L/C Disbursement.

(f) Obligations Absolute . The obligation of the Borrower to reimburse L/C Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the applicable Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss

 

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or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of such Issuing Bank, or any of the circumstances referred to in clauses (i), (ii) or (iii) of the first sentence; provided , that the foregoing shall not be construed to excuse the applicable Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are determined by a final and binding decision of a court of competent jurisdiction to have been caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the applicable Issuing Bank, such Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures . The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Such Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of any such demand for payment under a Letter of Credit and whether such Issuing Bank has made or will make a L/C Disbursement thereunder; provided , that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank and the Revolving Facility Lenders or Synthetic L/C Lenders, as applicable, with respect to any such L/C Disbursement.

(h) Interim Interest . If an Issuing Bank shall make any L/C Disbursement, then, unless the Borrower shall reimburse such L/C Disbursement in full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C Disbursement is made to but excluding the date that the Borrower reimburses such L/C Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided , that, if such L/C Disbursement is not reimbursed by the Borrower when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply; provided further that, in the case of an L/C Disbursement made under a Letter of Credit in an Alternative Currency, the amount of interest due with respect thereto shall (i) in the case of any L/C Disbursement that is reimbursed on the Business Day immediately succeeding such L/C Disbursement, (A) be payable in the applicable Alternative Currency and (B) if not reimbursed on the date of such L/C Disbursement, bear interest at a rate equal to the rate reasonably determined by the applicable Issuing Lender to be the cost to such Issuing Lender of funding such L/C Disbursement plus the Applicable Margin applicable to Eurocurrency Revolving Loans at such time and (ii) in the case of any L/C Disbursement that is reimbursed after the Business Day immediately succeeding such L/C Disbursement (A) be payable in Dollars, (B) accrue on the

 

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Dollar Amount of such L/C Disbursement and (C) bear interest as provided above. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Facility Lender pursuant to paragraph (e)(i) of this Section or from the Credit-Linked Deposit Account pursuant to paragraph (e)(ii) of this Section to reimburse such Issuing Bank shall be for the account of such Revolving Facility Lender or Synthetic L/C Lender, as applicable, to the extent of such payment.

(i) Replacement of an Issuing Bank . An Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12. From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of such Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement but shall not be required to issue additional Letters of Credit.

(j) Cash Collateralization . If required pursuant to Section 2.22(b) or if any Event of Default shall occur and be continuing, (i) in the case of an Event of Default described in Section 8.01(h) or (i), on the Business Day or (ii) otherwise, on the third Business Day, in each case, following the date on which the Borrower receives notice from the Administrative Agent (or, if the maturity of the Loans has been accelerated, Majority Lenders with respect to each of the Revolving Facility and the Synthetic L/C Facility) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in a separate account with or at the direction of the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash in Dollars equal to the aggregate L/C Exposure as of such date plus any accrued and unpaid interest thereon or, as applicable, the amount required pursuant to Section 2.22(b); provided , that (i) the portions of such amount attributable to undrawn Alternative Currency Letters of Credit or L/C Disbursements in an Alternative Currency that the Borrower is not late in reimbursing shall be deposited in the applicable Alternative Currencies in the actual amounts of such undrawn Letters of Credit and L/C Disbursements and (ii) upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Section 8.01, the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind. Each such deposit pursuant to this paragraph shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of (i) for so long as an Event of Default shall be continuing, the Administrative Agent and (ii) at any other time, the Borrower,

 

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in each case, in Permitted Investments and at the risk and expense of the Borrower, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for L/C Disbursements for which such Issuing Bank has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the L/C Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Majority Lenders with respect to each of the Revolving Facility and the Synthetic L/C Facility), be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. If the Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.22(b), such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after Section 2.22(b) no longer requires the provision of such cash collateral.

(k) Additional Issuing Banks . From time to time, the Borrower may by notice to the Administrative Agent designate any Revolving Facility Lender (in addition to JPMCB) each of which agrees (in its sole discretion) to act in such capacity and is reasonably satisfactory to the Administrative Agent as an Issuing Bank with respect to Revolving Letters of Credit and Synthetic Letters of Credit.

(l) Reporting . Unless otherwise requested by the Administrative Agent, each Issuing Bank shall (i) provide to the Administrative Agent copies of any notice received from the Borrower pursuant to Section 2.05(b) no later than the next Business Day after receipt thereof and (ii) report in writing to the Administrative Agent (A) on the first Business Day of each week, the activity for each day during the immediately preceding week in respect of Letters of Credit , including all issuances, extensions, amendments and renewals, all expirations and cancellations and all disbursements and reimbursements, (B) on or prior to each Business Day on which the Issuing Bank expects to issue, amend, renew or extend any Letter of Credit, the date of such issuance, amendment renewal or extension, and the aggregate face amount of the Letters of Credit to be issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment or extension occurred (and whether the amount thereof changed), and no Issuing Bank shall be permitted to issue, amend or extend such Letter of Credit without first obtaining written confirmation from the Administrative Agent that such issuance, amendment, renewal or extension is then permitted by the terms of this Agreement, (C) on each Business Day on which such Issuing Bank makes any L/C Disbursement, the date of such L/C Disbursement and the amount of such L/C Disbursement and (D) on any other Business Day, such other information as the Administrative Agent shall reasonably request, including but not limited to prompt verification of such information as may be requested by the Administrative Agent.

(m) Conversion . In the event that the Loans become immediately due and payable on any date pursuant to Section 8.01, all amounts (i) that the Borrower is at the time or thereafter becomes required to reimburse or otherwise pay to the Administrative Agent in respect of L/C Disbursements made under any Alternative Currency Letter of Credit (other than amounts in respect of which such Borrower has deposited cash collateral pursuant to Section

 

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2.05(j), if such cash collateral is deposited in the applicable Alternative Currency to the extent so deposited or applied), (ii) that the Revolving Facility Lenders or the Synthetic L/C Lenders, as the case may be, are at the time or thereafter become required to pay to the Administrative Agent and the Administrative Agent is at the time or thereafter becomes required to distribute to the applicable Issuing Lender pursuant to Section 2.05(e) in respect of unreimbursed L/C Disbursements made under any Alternative Currency Letter of Credit and (iii) of each Revolving Facility Lender’s or Synthetic L/C Lender’s, as the case may be, participation in any Alternative Currency Letter of Credit under which an L/C Disbursement has been made shall, automatically and with no further action required, be converted into the Dollar Amount of such amounts. On and after such conversion, all amounts accruing and owed to the Administrative Agent, the applicable Issuing Lender or any Lender in respect of the Obligations described in this paragraph shall accrue and be payable in Dollars at the rates otherwise applicable hereunder.

SECTION 2.06. Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, Local Time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided, that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower as specified in the Borrowing Request; provided, that ABR Revolving Loans and Swingline Borrowings made to finance the reimbursement of a L/C Disbursement and reimbursements as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank.

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand (without duplication) such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of (A) the Federal Funds Effective Rate and (B) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans at such time. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. In the event the Borrower pays such amount to the Administrative Agent, then such amount shall reduce the principal amount of such Borrowing (but exclusive of any accrued and unpaid interest thereon).

SECTION 2.07. Interest Elections . (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.

 

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Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in the form of Exhibit C and signed by the Borrower.

(c) Each telephonic and written Interest Election Request shall be irrevocable and shall specify the following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and

(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by clause (a) of the definition of the term “Interest Period.”

If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender to which such Interest Election Request relates of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at

 

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the written request (including a request through electronic means) of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid, each Eurocurrency Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

SECTION 2.08. Termination and Reduction of Commitments; Return of Credit-Linked Deposits . (a) Unless previously terminated, (i) the Revolving Facility Commitments shall terminate on the Revolving Facility Maturity Date, (ii) the Initial Term B Loan Commitments shall terminate on the Closing Date, (iii) $950.0 million of the Delayed Draw Term B Loan Commitments shall terminate on July 31, 2007 and the remainder of the Delayed Draw Term B Loan Commitments shall terminate on October 31, 2007 and (iv) the Synthetic L/C Commitments shall terminate on the Closing Date.

(b) The Borrower may at any time terminate, or from time to time reduce, the Revolving Facility Commitments or the Delayed Draw Term Loan Commitments; provided , that (i) each reduction of the Revolving Facility Commitments or the Delayed Draw Term Loan Commitments shall be in an amount that is an integral multiple of $1.0 million and not less than $5.0 million (or, if less, the remaining amount of the Revolving Facility Commitments or Delayed Draw Term Loan Commitments, as applicable) and (ii) the Borrower shall not terminate or reduce the Revolving Facility Commitments if, after giving effect to any concurrent prepayment of the Revolving Facility Loans in accordance with Section 2.11, the Revolving Facility Credit Exposure would exceed the total Revolving Facility Commitments. The Borrower may at any time or from time to time direct the Administrative Agent to reduce the total Credit-Linked Deposits; provided that (x) each reduction of the Credit-Linked Deposits shall be in an amount that is an integral multiple of $1.0 million and not less than $5.0 million (or, if less, the remaining amount of the total Credit-Linked Deposits) and (y) the Borrower shall not direct the Administrative Agent to reduce the Credit-Linked Deposits if, after giving effect to such reduction (and to the provisions of Section 2.05(a)), the aggregate Synthetic L/C Exposure would exceed the total Credit-Linked Deposits or the Revolving Facility Exposure would exceed the total Revolving Facility Commitments. In the event the total Credit-Linked Deposits shall be reduced as provided in the immediately preceding sentence, the Administrative Agent shall return all amounts in the Credit-Linked Deposit Account in excess of the reduced total Credit-Linked Deposits to the Synthetic L/C Lenders, ratably in accordance with their Pro Rata Shares of the total Credit-Linked Deposit (as determined immediately prior to such reduction).

(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Facility Commitments, Delayed Draw Term Loan Commitments or the Credit-Linked Deposits, as applicable, under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided , that a notice of termination of the Revolving Facility Commitments or reduction of the aggregate Credit-Linked Deposits delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be

 

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revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments or Credit-Linked Deposits shall be permanent. Each reduction of the Commitments or Credit-Linked Deposits shall be made ratably among the applicable Lenders in accordance with their respective Pro Rata Shares.

SECTION 2.09. Repayment of Loans; Evidence of Debt . (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Revolving Facility Lender the then unpaid principal amount of each Revolving Facility Loan to the Borrower on the Revolving Facility Maturity Date, (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10 and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the Revolving Facility Maturity Date, it being understood that on the date of any Revolving Facility Borrowing, the Borrower shall repay all outstanding Swingline Loans.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Facility and Type thereof and the Interest Period (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) any amount received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

SECTION 2.10. Repayment of Term Loans and Revolving Facility Loans . (a) Subject to the other paragraphs of this Section:

(i) The Borrower shall repay to the Administrative Agent, for the benefit of the Initial Term B Lenders, on the last day of March, June, September and December of each year (beginning September 30, 2007) or, if such date is not a Business Day, the next preceding Business Day (each such date being referred to as an “ Initial Term B Loan Installment Date ”) through and including the Term B Facility Maturity Date, a principal amount of Initial Term Loans equal to the product of (x) the principal amount of Initial Term B Loans outstanding after the Initial Term B Loan Borrowing on the Closing Date and (y) 0.25%, with the balance of the Initial Term B Loans due in full on the Term B Facility Maturity Date.

 

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(ii) The Borrower shall repay to the Administrative Agent, for the benefit of the Delayed Draw Term B Lenders, on the last day of March, June, September and December of each year (beginning September 30, 2007) or, if such date is not a Business Day, the next preceding Business Day (each such date being referred to as a “ Delayed Draw Term B Loan Installment Date ”) through and including the Term B Facility Maturity Date, a principal amount of Delayed Draw Term B Loans equal to the product of (x) the principal amount of Delayed Draw Term Loans outstanding after giving effect to the most recent Delayed Draw Term B Borrowing and (y) 0.25%, with the balance of the Delayed Draw Term B Loans due in full on the Term B Facility Maturity Date.

(iii) in the event that any Incremental Term Loans are made on an Increased Amount Date, the Borrower shall repay such Incremental Term Loans on the dates and in the amounts set forth in the Incremental Assumption Agreement (each such date being referred to as an “ Incremental Term Loan Installment Date ”); and

(iv) to the extent not previously paid, outstanding Term Loans shall be due and payable on the Term B Facility Maturity Date or the applicable Incremental Term Facility Maturity Date, as the case may be.

(b) To the extent not previously paid, outstanding Revolving Facility Loans shall be due and payable on the Revolving Facility Maturity Date.

(c) Prepayment of the Term Loans from:

(i) all Net Proceeds pursuant to Section 2.11(b) and Excess Cash Flow pursuant to Section 2.11(c) shall be applied to the Term Loans ratably among the Term Facilities, with the application thereof reducing in direct order the remaining installments thereof in forward order of maturity, and

(ii) any optional prepayments of the Term Loans pursuant to Section 2.11(a) shall be applied to the remaining installments of the Term Loans as the Borrowers may direct.

(d) Prior to the scheduled or voluntary repayment of any Loan or reduction of the Credit-Linked Deposits, the Borrower shall select the Borrowing or Borrowings and/or Credit-Linked Deposits to be repaid or reduced and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 1:00 p.m., Local Time, (i) in the case of an ABR Borrowing, one Business Day before the scheduled date of such repayment and (ii) in the case of a Eurocurrency Borrowing or Credit-Linked Deposit, three Business Days before the scheduled date of such repayment. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing and each reduction of the total Credit-Linked Deposits shall be applied ratably to the Credit-Linked Deposits of the Synthetic L/C Lenders. Notwithstanding anything to the contrary in the immediately preceding sentence, prior to any repayment of a Swingline Loan hereunder, the Borrower shall select the Borrowing or Borrowings to be repaid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 1:00 p.m., Local Time, on the scheduled date of such repayment. Repayments of Borrowings shall be accompanied by accrued interest on the amount repaid.

 

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(e) The Administrative Agent shall return the Credit-Linked Deposit to the Synthetic L/C Lenders, on the last day of March, June, September and December of each year (beginning September 30, 2007) or, if such date is not a Business Day, the next preceding Business Day (each such date being referred to as a “ Synthetic L/C Installment Date ”) through and including the Synthetic L/C Maturity Date, in an amount equal to the product of (x) the Credit-Linked Deposit held by the Administrative Agent on the Closing Date and (y) 0.25%, with the balance of the Credit-Linked Deposit returned in full to the Synthetic L/C Lenders on the Synthetic L/C Maturity Date. Any optional return of Credit-Linked Deposits effected pursuant to Section 2.08 shall be applied to reduce the subsequent scheduled returns of Credit-Linked Deposits to be effected pursuant to this Section as directed by the Borrower. Each return of Credit-Linked Deposits pursuant to this Section 2.10(e) shall be accompanied by accrued fees and other amounts payable by the Borrower pursuant to Section 2.12(c) and Section 2.21(b) on the amount of such Credit-Linked Deposits paid to but excluding the date of return.

SECTION 2.11. Prepayment of Loans . (a) The Borrower shall have the right at any time and from time to time to prepay any Loan in whole or in part, without premium or penalty (but subject to Section 2.16), in an aggregate principal amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum or, if less, the amount outstanding, subject to prior notice in accordance with Section 2.10(d), which notice shall be irrevocable except to the extent conditioned on a refinancing of all or any portion of the Facilities.

(b) Promptly upon receipt thereof by Holdings or any of its Subsidiaries, all Net Proceeds shall be applied to prepay Term Loans in accordance with paragraphs (c) and (d) of Section 2.10. Notwithstanding the foregoing, the Borrower may retain Net Proceeds pursuant to clause (b) of the definition thereof, provided that the Senior Secured Leverage Ratio on the last day of the Borrower’s then most recently completed fiscal quarter for which financial statements are available shall be less than or equal to 2.50 to 1.00.

(c) Not later than 90 days after the end of each Excess Cash Flow Period, the Borrower shall calculate Excess Cash Flow for such Excess Cash Flow Period and shall apply an amount equal to (i) the Required Percentage of such Excess Cash Flow, minus (ii) to the extent not financed using the proceeds of, without duplication, the incurrence of Indebtedness and the sale or issuance of any Equity Interests (including any capital contributions), the sum of (A) the amount of any voluntary prepayments of Term Loans made during such Excess Cash Flow Period ( plus , with respect to the Excess Cash Flow Period ending December 31, 2008, the amount of any voluntary prepayments of Term Loans made prior to such Excess Cash Flow Period) and (B) the amount of any prepayments of Revolving Facility Loans made during such Excess Cash Flow Period, solely to the extent of any permanent reductions in the Revolving Facility Commitments accompanying such prepayment, to prepay Term Loans in accordance with paragraphs (c) and (d) of Section 2.10. Not later than the date on which the Borrower is required to deliver financial statements with respect to the end of each Excess Cash Flow Period under Section 5.04(a), the Borrower will deliver to the Administrative Agent a certificate signed by a Financial Officer of the Borrower setting forth the amount, if any, of Excess Cash Flow for such fiscal year and the calculation thereof in reasonable detail.

 

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(d) In the event and on such occasion that the total Revolving Facility Credit Exposure exceeds the total Revolving Facility Commitments, the Borrower shall prepay Revolving Facility Borrowings or Swingline Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(j)) in an aggregate amount equal to such excess.

(e) In the event and on such occasion as the Revolving L/C Exposure exceeds the Revolving Letter of Credit Sublimit, the Borrower shall deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(j) in an amount equal to such excess.

(f) Anything contained herein to the contrary notwithstanding, in the event the Borrower is required to make any mandatory prepayment (a “ Waivable Mandatory Prepayment ”) of the Term Loans, not less than three Business Days prior to the date (the “ Required Prepayment Date ”) on which the Borrower elects (or is otherwise required) to make such Waivable Mandatory Prepayment, the Borrower shall notify Administrative Agent of the amount of such prepayment, and Administrative Agent will promptly thereafter notify each Lender holding an outstanding Term Loan of the amount of such Lender’s pro rata share of such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount. Each such Lender may exercise such option by giving written notice to the Administrative Agent of its election to do so on or before the second Business Day prior to the Required Prepayment Date (it being understood that any Lender which does not notify the Administrative Agent of its election to exercise such option on or before the first Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option.) On the Required Prepayment Date, the Borrower shall pay to Administrative Agent the amount of the Waivable Mandatory Prepayment, which amount shall be applied (i) in an amount equal to that portion of the Waivable Mandatory Prepayment payable to those Lenders that have elected not to exercise such option (each, an “ Accepting Lender ”), to prepay the Term Loans of such Accepting Lenders (which prepayment shall be applied to the scheduled Installments of principal of the Term Loans in accordance with Section 2.11(b)), and (ii) in an amount equal to that portion of the Waivable Mandatory Prepayment otherwise payable to those Lenders that have elected to exercise such option, to the Borrower.

SECTION 2.12. Fees . (a) The Borrower agrees to pay to each Lender (other than any Defaulting Lender), through the Administrative Agent, three Business Days after the last Business Day of March, June, September and December in each year, and three Business Days after the date on which the Revolving Facility Commitments of all the Lenders or Delayed Draw Term Loan Commitments, as applicable, shall be terminated as provided herein, a commitment fee (a “ Commitment Fee ”) on the average daily amount of the Available Unused Commitment of such Lender during the preceding quarter (or other period commencing with the Closing Date or ending with the date on which the last of the Commitments of such Lender shall be terminated) at a rate equal to the Applicable Commitment Fee. All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. For the purpose of calculating any Lender’s Commitment Fee, the outstanding Swingline Loans during

 

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the period for which such Lender’s Commitment Fee is calculated shall be deemed to be zero. The Commitment Fee due to each Lender shall commence to accrue on the Closing Date and shall cease to accrue on the date on which the last of the Commitments of such Lender shall be terminated as provided herein.

(b) The Borrower from time to time agrees to pay (i) to each Revolving Facility Lender (other than any Defaulting Lender), through the Administrative Agent, three Business Days after the last day of March, June, September and December of each year and three Business Days after the date on which the Revolving Facility Commitments of all the Lenders shall be terminated as provided herein, a fee (an “ L/C Participation Fee ”) on such Lender’s Pro Rata Share of the daily aggregate Revolving L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements), during the preceding quarter (or shorter period commencing with the Closing Date or ending with the Revolving Facility Maturity Date or the date on which the Revolving Facility Commitments shall be terminated) at the rate per annum equal to the Applicable Margin for Eurocurrency Revolving Facility Borrowings effective for each day in such period and (ii) to each Issuing Bank, for its own account (x) three Business Days after the last Business Day of March, June, September and December of each year and three Business Days after the date on which the Revolving Facility Commitments of all the Lenders shall be terminated as provided herein, a fronting fee in respect of each Revolving Letter of Credit issued by such Revolving Issuing Bank for the period from and including the date of issuance of such Revolving Letter of Credit to and including the termination of such Revolving Letter of Credit, computed at a rate equal to 1/8 of 1% per annum of the daily stated amount of such Revolving Letter of Credit), plus (y) in connection with the issuance, amendment or transfer of any such Letter of Credit or any L/C Disbursement thereunder, such Issuing Bank’s customary documentary and processing fees and charges (collectively, “ Issuing Bank Fees ”). All L/C Participation Fees and Issuing Bank Fees that are payable on a per annum basis shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(c) The Borrower agrees to pay (i) in addition to the amounts payable by the Borrower to the Synthetic L/C Lenders pursuant to Section 2.21(b), to the Administrative Agent for the account of each Synthetic L/C Lender, three Business Days after the last day of March, June, September and December of each year and three Business Days after the date on which the Credit-Linked Deposit shall be terminated as provided herein, a participation fee with respect to its participations in Synthetic Letters of Credit, which shall accrue at the Applicable Margin from time to time in effect in respect of Eurocurrency Term Loans on the average daily amount of such Synthetic L/C Lender’s Credit-Linked Deposit during the period from and including the Closing Date to but excluding the date on which the entire amount of such Lender’s Credit-Linked Deposit is returned to it and (ii) to each Issuing Bank, for its own account, (x) three Business Days after the last day of March, June, September and December of each year and three Business Days after the date on which the Credit-Linked Deposits shall be terminated as provided herein, a fronting fee in respect of each Synthetic Letter of Credit issued by such Issuing Bank for the period from and including the date of issuance of such Synthetic Letter of Credit to and including the termination of such Synthetic Letter of Credit, computed at a rate equal to 1/8 of 1% per annum of the daily average stated amount of such Synthetic Letter of Credit (or as otherwise agreed with such Issuing Bank), plus (y) in connection with the issuance, amendment or transfer of any such Letter of Credit or any Synthetic L/C

 

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Disbursement thereunder, such Issuing Bank’s customary documentary and processing charges; provided that all such fees shall be payable on the date on which the Credit-Linked Deposits are returned to the Synthetic L/C Lenders and any such fees accruing after the date on which the Credit-Linked Deposits are returned to the Synthetic L/C Lenders shall be payable on demand. Any other fees payable to any Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees in respect of Synthetic Letters of Credit that are payable on a per annum basis shall be computed on the basis of the number of days elapsed in a year of 360 days

(d) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein (the “ Administrative Agent Fees ”).

(e) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that Issuing Bank Fees shall be paid directly to the applicable Issuing Banks. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.13. Interest . (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the ABR plus the Applicable Margin.

(b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.

(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any Fees or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section; provided , that this paragraph (c) shall not apply to any Event of Default that has been waived by the Lenders pursuant to Section 10.08.

(d) Accrued interest on each Loan shall be payable in arrears (i) on each Interest Payment Date for such Loan, (ii) in the case of Revolving Facility Loans, upon termination of the Revolving Facility Commitments and (iii) in the case of the Term Loans, on the Term B Facility Maturity Date and the applicable Incremental Term Facility Maturity Date; provided , that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan or Swingline Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

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(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the ABR at times when the ABR is based on the prime rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable ABR, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.14. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders or the Majority Lenders under the Revolving Facility that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Borrowing denominated in such currency shall be ineffective and such Borrowing shall be converted to or continued as on the last day of the Interest Period applicable thereto an ABR Borrowing, and (ii) if any Borrowing Request requests a Eurocurrency Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.15. Increased Costs . (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or Issuing Bank; or

(ii) impose on any Lender or Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurocurrency Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.

 

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(b) If any Lender or Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower shall pay to such Lender or such Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.

(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or Issuing Bank, as applicable, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Promptly after any Lender or any Issuing Bank has determined that it will make a request for increased compensation pursuant to this Section 2.15, such Lender or Issuing Bank shall notify the Borrower thereof. Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation; provided , that the Borrower shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or Issuing Bank, as applicable, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor; provided , further , that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

(e) The foregoing provisions of this Section 2.15 shall not apply in the case of any Change in Law in respect of Taxes, which shall instead be governed by Section 2.17.

SECTION 2.16. Break Funding Payments . In the event of (a) the payment of any principal of any Eurocurrency Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurocurrency Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to

 

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Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to be the amount determined by such Lender (it being understood that the deemed amount shall not exceed the actual amount) to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue a Eurocurrency Loan, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in dollars of a comparable amount and period from other banks in the Eurocurrency market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.17. Taxes . (a) Except as required by law, any and all payments by or on account of any obligation of any Loan Party hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided, that if a Loan Party shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, any Lender or any Issuing Bank, as applicable, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make such deductions and (iii) such Loan Party shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) In addition, the Loan Parties shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Each Loan Party shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank, as applicable, on or with respect to any payment by or on account of any obligation of such Loan Party hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any interest, penalties and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided that a Loan Party shall not be obligated to make a payment to a Lender or the Administrative Agent pursuant to this Section 2.17 in respect of penalties, interest and other expenses to the extent (i) such penalties, interest and other expenses have accrued after the earlier of (x) the date the Loan Party has paid the indemnification or other amount pursuant to this Section 2.17 or (y) 60 days after the Lender or the Administrative Agent, as the case may be, knew and did not provide written notice to the Borrower of the imposition of the Indemnified Taxes or Other Taxes to which such penalties, interest or other expenses relate or (ii) such penalties, interest and other expenses are attributable to the gross

 

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negligence or willful misconduct of such Lender or the Administrative Agent. A certificate as to the amount of such payment or liability delivered to such Loan Party by a Lender or an Issuing Bank, or by the Administrative Agent on its own behalf, on behalf of another Agent or on behalf of a Lender or an Issuing Bank, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Loan Party to a Governmental Authority, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Each Foreign Lender shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) on or before the date on which such Foreign Lender becomes a Lender under this Agreement (or, in the case of a Participant, on or before the date such Participant purchases the related participation), at other times prescribed by applicable laws, and from time to time thereafter upon the reasonable written request of the Borrower or the Administrative Agent, two original copies of whichever of the following is applicable: (i) duly completed copies of Internal Revenue Service Form W-8BEN (or any subsequent versions thereof or successors thereto), claiming eligibility for benefits of an income tax treaty to which the United States of America is a party, (ii) duly completed copies of Internal Revenue Service Form W-8ECI (or any subsequent versions thereof or successors thereto), (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 871(h) or 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 871(h)(3) or 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W 8BEN (or any subsequent versions thereof or successors thereto), (iv) duly completed copies of Internal Revenue Service Form W-8IMY, together with forms and certificates described in clauses (i) through (iii) above (and additional Form W-8IMYs) as may be required or (v) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made. In addition, in each of the foregoing circumstances, each Foreign Lender shall deliver such forms, if legally entitled to deliver such forms, promptly upon the obsolescence, expiration or invalidity of any form previously delivered by such Foreign Lender. Each Foreign Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the United States of America or other taxing authorities for such purpose). In addition, each Lender that is not a Foreign Lender shall deliver to the Borrower and the Administrative Agent two copies of Internal Revenue Service Form W-9 (or any subsequent versions thereof or successors thereto) on or before the date such Lender becomes a party and upon the expiration of any form previously delivered by such Lender. For any period with respect to which a Lender has failed to provide to the Borrower the forms prescribed by this Section 2.17(e), at the time or times prescribed herein (other than if such failure is due to either (I) a Change in Law occurring after the date on which such Lender

 

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becomes a party to this Agreement or (II) any action taken by any Loan Party after the date of this Agreement, and as a result of such Change in Law or Loan Party action, such Lender is not legally entitled to deliver such form), such Lender shall not be entitled to indemnification or additional amounts under this Section 2.17. Notwithstanding any other provision of this paragraph, a Lender shall not be required to deliver any form pursuant to this paragraph that such Lender is not legally entitled to deliver.

(f) If the Administrative Agent or any Lender determines, in its sole discretion, acting in good faith, that it has received a refund or tax credit of any Indemnified Taxes or Other Taxes as to which it has been indemnified by any Loan Party or with respect to which a Loan Party has paid additional amount pursuant to this Section 2.17, it shall pay over such refund (or the benefit realized as a result of such tax credit) to such Loan Party (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 2.17 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund (or tax credit)), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , however , for the avoidance of doubt, nothing herein shall require the Administrative Agent or any Lender to pay out any benefit realized as a result of a tax credit unless such Administrative Agent or Lender has actual knowledge that such credit is directly attributable to a payment of an additional amount pursuant to this Section 2.17. If a payment is made pursuant to the preceding sentence, the Loan Party that received such payment, upon the request of the Administrative Agent or such Lender, agrees to repay as soon as reasonably practicable the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority except to the extent such penalties, interest or other charges are due to the willful misconduct or gross negligence of the Administrative Agent or such Lender) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it, acting in good faith, deems confidential) to any Loan Party or any other person.

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs . (a) Unless otherwise specified, the Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of L/C Disbursements, or of amounts payable under Section 2.15, 2.16, or 2.17, or otherwise) prior to 2:00 p.m., Local Time, on the date when due, in immediately available funds, without condition or deduction for any defense, recoupment, set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent to the applicable account designated to the Borrower by the Administrative Agent, except payments to be made directly to the applicable Issuing Bank or the Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.05 shall be made directly to the persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest,

 

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interest thereon shall be payable for the period of such extension. Except as provided in Section 2.05(e), all payments under the Loan Documents shall be made in Dollars. Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if the Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by the Administrative Agent to make such payment.

(b) If at any time insufficient funds are received by and available to the Administrative Agent from the Borrower to pay fully all amounts of principal, unreimbursed L/C Disbursements, interest and fees then due from the Borrower hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due from the Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed L/C Disbursements then due from the Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed L/C Disbursements then due to such parties.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans, Revolving Facility Loans or participations in L/C Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans, Revolving Facility Loans and participations in L/C Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans, Revolving Facility Loans and participations in L/C Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans, Revolving Facility Loans and participations in L/C Disbursements and Swingline Loans; provided , that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph (c) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in L/C Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph (c) shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the applicable Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such

 

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payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable Issuing Bank, as applicable, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the applicable Issuing Bank, as applicable, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b) or 2.18(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders . (a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans or Credit-Linked Deposits hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as applicable, in the future and (ii) would not, in the reasonable judgment of the Lender, subject such Lender to any material unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender in any material respect. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. Nothing in this Section shall affect or postpone any of the Obligations or the rights of any Lender pursuant to Section 2.17(a).

(b) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided , that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if in respect of any Revolving Facility Commitment or Revolving Facility Loan, the Swingline Lender and the Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in L/C Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for

 

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compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. Nothing in this Section 2.19 shall be deemed to prejudice any rights that the Borrower may have against any Lender that is a Defaulting Lender.

(c) If any Lender (such Lender, a “ Non-Consenting Lender ”) has failed to consent to a proposed amendment, waiver, discharge or termination which pursuant to the terms of Section 10.08 requires the consent of all of the Lenders affected and with respect to which the Required Lenders shall have granted their consent, then the Borrower shall have the right (unless such Non-Consenting Lender grants such consent) at its sole expense (including with respect to the processing and recordation fee referred to in Section 10.04(b)(ii)(B)) to replace such Non-Consenting Lender by deeming such Non-Consenting Lender to have assigned its Loans, Commitments and Credit-Linked Deposits hereunder to one or more assignees reasonably acceptable to (i) the Administrative Agent (unless, in the case of an assignment of Term Loans, such assignee is a Lender, an Affiliate of a Lender or an Approved Fund) and (ii) if in respect of any Revolving Facility Commitment or Revolving Facility Loan, the Swingline Lender and the Issuing Bank); provided , that: (a) all Obligations owing to such Non-Consenting Lender being replaced shall be paid in full to such Non-Consenting Lender concurrently with such assignment and (b) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon. No action by or consent of the Non-Consenting Lender shall be necessary in connection with such assignment, which shall be immediately and automatically effective upon payment of such purchase price. In connection with any such assignment the Borrower, Administrative Agent, such Non-Consenting Lender and the replacement Lender shall otherwise comply with Section 10.04; provided , that if such Non-Consenting Lender does not comply with Section 10.04 within three Business Days after Borrower’s request, compliance with Section 10.04 shall not be required to effect such assignment.

SECTION 2.20. Incremental Commitments . (a) The Borrower may, by written notice to the Administrative Agent from time to time, request Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments, as applicable, in an amount not to exceed the Incremental Amount from one or more Incremental Term Lenders and/or Incremental Revolving Facility Lenders (which may include any existing Lender) willing to provide such Incremental Term Loans and/or Incremental Revolving Facility Commitments, as the case may be, in their own discretion; provided, that each Incremental Revolving Facility Lender and Incremental Term Lender shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld) unless, in the case of any Incremental Term Lender, such Incremental Term Lender is a Lender, an Affiliate of a Lender or an Approved Fund. Such notice shall set forth (i) the amount of the Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments being requested, (ii) the aggregate amount of all Incremental Term Loan Commitments and Incremental Revolving Facility Commitments, when taken together with all other Incremental Commitments, shall not exceed $650.0 million in the aggregate (the “ Incremental Limit ”), (iii) the date on which such Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments are requested to become effective (the “ Increased Amount Date ”) and (iv) in the case of Incremental Term Loan Commitments, whether such Incremental Term Loan Commitments are to be Term Loan Commitments or commitments to make term loans with pricing and/or amortization terms different from the Term B Loans (“ Other Term Loans ”).

 

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(b) The Borrower and each Incremental Term Lender and/or Incremental Revolving Facility Lender shall execute and deliver to the Administrative Agent an Incremental Assumption Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the Incremental Term Loan Commitment of such Incremental Term Lender and/or Incremental Revolving Facility Commitment of such Incremental Revolving Facility Lender. Each Incremental Assumption Agreement shall specify the terms of the applicable Incremental Term Loans and/or Incremental Revolving Facility Commitments; provided , that (i) the Other Term Loans shall rank pari passu or junior in right of payment and of security with the Term B Loans and, except as to pricing, amortization and final maturity date, shall have (x) the same terms as the Term B Loans, as applicable, or (y) such other terms as shall be reasonably satisfactory to the Administrative Agent, (ii) the final maturity date of any Other Term Loans shall be no earlier than the Term B Facility Maturity Date, (iii) the weighted average life to maturity of any Other Term Loans shall be no shorter than the remaining weighted average life to maturity of the Term B Loans and (iv) from and after the effectiveness of the each Incremental Assumption Agreement, the associated Incremental Revolving Facility Commitments shall thereafter be Revolving Facility Commitments. Each of the parties hereto hereby agrees that, upon the effectiveness of any Incremental Assumption Agreement, this Agreement shall be amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments evidenced thereby as provided for in Section 10.08(e). Any such deemed amendment may be memorialized in writing by the Administrative Agent with the Borrower’s consent (not to be unreasonably withheld) and furnished to the other parties hereto.

(c) Notwithstanding the foregoing, no Incremental Term Loan Commitment or Incremental Revolving Facility Commitment shall become effective under this Section 2.20 unless (i) on the date of such effectiveness, the conditions set forth in paragraphs (b) and (c) of Section 4.01 shall be satisfied and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Responsible Officer of the Borrower, (ii) the Administrative Agent shall have received customary legal opinions, board resolutions and other customary closing certificates and documentation as required by the relevant Incremental Assumption Agreement and, to the extent required by the Administrative Agent, consistent with those delivered on the Closing Date under Section 4.02 and such additional customary documents and filings (including amendments to the Mortgages and other Security Documents and title endorsement bringdowns) as the Administrative Agent may reasonably require to assure that the Incremental Term Loans and/or Revolving Facility Loans in respect of Incremental Revolving Facility Commitments are secured by the Collateral ratably with (or, to the extent agreed by the applicable Incremental Term Lenders in the applicable Incremental Assumption Agreement, junior to) the existing Term B Loans and Revolving Facility Loans and (iii) the Borrower shall be in Pro Forma Compliance after giving effect to such Incremental Term Loan Commitment and/or Incremental Revolving Facility Commitments, the Loans to be made thereunder and the application of the proceeds therefrom as if made and applied on such date.

 

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(d) Each of the parties hereto hereby agrees that the Administrative Agent may take any and all action as may be reasonably necessary to ensure that (i) all Incremental Term Loans (other than Other Term Loans) in the form of additional Term B Loans, when originally made, are included in each Borrowing of outstanding Term B Loans on a pro rata basis, and (ii) all Revolving Facility Loans in respect of Incremental Revolving Facility Commitments, when originally made, are included in each Borrowing of outstanding Revolving Facility Loans on a pro rata basis. The Borrower agrees that Section 2.16 shall apply to any conversion of Eurocurrency Loans to ABR Loans reasonably required by the Lenders to effect the foregoing.

SECTION 2.21. Credit-Linked Deposit Account . (a) The Credit-Linked Deposits shall be held by the Administrative Agent in the Credit-Linked Deposit Account, and no party other than the Administrative Agent shall have a right of withdrawal from the Credit-Linked Deposit Account or any other right or power with respect to the Credit-Linked Deposits, except as expressly set forth in Section 2.05, 2.08 or 2.10. Notwithstanding any provision in this Agreement to the contrary, the sole funding obligation of each Synthetic L/C Lender in respect of its participation in Synthetic Letters of Credit shall be satisfied in full upon the funding of its Credit-Linked Deposit on the Closing Date.

(b) Each of the Borrower, the Administrative Agent, each Issuing Bank issuing any Synthetic Letter of Credit and each Synthetic L/C Lender hereby acknowledges and agrees that each Synthetic L/C Lender is funding its Credit-Linked Deposit to the Administrative Agent for application in the manner contemplated by Section 2.05 and that the Administrative Agent has agreed to invest the Credit-Linked Deposits so as to earn a return (except during periods when, and to the extent to which, such Credit-Linked Deposits are used to cover unreimbursed Synthetic L/C Disbursements, and subject to Section 2.14) for the Synthetic L/C Lenders equal to a rate per annum, reset daily on each Business Day for the period until the next following Business Day, equal to (i) such day’s rate for one month LIBOR deposits (the “ Benchmark LIBOR Rate ”) computed on the basis of the actual number of days elapsed in a year of 365 days (or 366 days in a leap year) minus (ii) 0.15%. Such interest will be paid to the Synthetic L/C Lenders by the Administrative Agent quarterly in arrears when Letter of Credit fees are payable pursuant to Section 2.12. In addition to the foregoing payments by the Administrative Agent, the Borrower agrees to make payments to the Synthetic L/C Lenders quarterly in arrears when Letter of Credit fees are payable pursuant to Section 2.12 (and together with the payment of such fees) in an amount equal to 0.15% per annum on the amounts of their respective Credit-Linked Deposits.

(c) The Borrower shall have no right, title or interest in or to the Credit-Linked Deposits and no obligations with respect thereto (except for the reimbursement obligations provided in Section 2.05 and the obligation to pay fees as provided in this Section 2.21), it being acknowledged and agreed by the parties hereto that the making of the Credit-Linked Deposits by the Synthetic L/C Lenders, the provisions of this Section 2.21 and the application of the Credit-Linked Deposits in the manner contemplated by Section 2.05 constitute agreements among the Administrative Agent, each Issuing Bank issuing any Synthetic Letter of Credit and each Synthetic L/C Lender with respect to the funding obligations of each Synthetic L/C Lender in respect of its participation in Synthetic L/C Letters of Credit and do not constitute any loan or extension of credit to the Borrower.

 

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(d) Subject to the Borrower’s compliance with the cash-collateralization requirements set forth in Section 2.05(j), the Administrative Agent shall return any remaining Credit-Linked Deposits to the Synthetic L/C Lenders following the occurrence of the Synthetic L/C Maturity Date.

SECTION 2.22. Currency Equivalents . (a) The Administrative Agent shall determine the Dollar Amount of the L/C Exposure in respect of Letters of Credit denominated in an Alternative Currency based on the Exchange Rate (i) as of the end of each fiscal quarter of the Borrower and (ii) on or about the date of the related notice requesting the issuance of such Letter of Credit.

(b) If after giving effect to any such determination of a Dollar Amount, the Revolving L/C Exposure exceeds the Revolving Letter of Credit Sublimit or the Synthetic L/C Exposure exceeds the total Credit-Linked Deposits of all Synthetic L/C Lenders, the Borrower shall, within five (5) Business Days of receipt of notice thereof from the Administrative Agent setting forth such calculation in reasonable detail, deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(j) in an amount equal to such excess.

ARTICLE III

Representations and Warranties

On the date of each Credit Event as provided in Section 4.01, the Borrower represents and warrants to each of the Lenders that:

SECTION 3.01. Organization; Powers . Except as set forth on Schedule 3.01 , each of Holdings (prior to a Borrower Qualified IPO), the Borrower and each of the Material Subsidiaries (a) (i) is a partnership, limited liability company or corporation duly organized, validly existing and (ii) in good standing (or, if applicable in a foreign jurisdiction, enjoys the equivalent status under the laws of any jurisdiction of organization outside the United States) under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted, (c) is qualified to do business in each jurisdiction where such qualification is required, except where the failure so to qualify would not reasonably be expected to have a Material Adverse Effect, and (d) has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated thereby to which it is or will be a party and, in the case of the Borrower, to borrow and otherwise obtain credit hereunder.

SECTION 3.02. Authorization . The execution, delivery and performance by Holdings (prior to a Borrower Qualified IPO), the Borrower and each of the Subsidiary Loan Parties of each of the Loan Documents to which it is a party, and the borrowings hereunder and the transactions forming a part of the Transactions (a) have been duly authorized by all corporate, stockholder, partnership or limited liability company action required to be obtained by Holdings, the Borrower and such Subsidiary Loan Parties and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents (including any partnership, limited liability company or operating

 

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agreements) or by-laws of Holdings, the Borrower or any such Subsidiary Loan Party, (B) any applicable order of any court or any rule, regulation or order of any Governmental Authority or (C) any provision of any indenture, certificate of designation for preferred stock, agreement or other instrument to which Holdings, the Borrower or any such Subsidiary Loan Party is a party or by which any of them or any of their property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, give rise to a right of or result in any cancellation or acceleration of any right or obligation (including any payment) or to a loss of a material benefit under any such indenture, certificate of designation for preferred stock, agreement or other instrument, where any such conflict, violation, breach or default referred to in clause (i) or (ii) of this Section 3.02(b), would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by Holdings (prior to a Borrower Qualified IPO), the Borrower or any such Subsidiary Loan Party, other than the Liens created by the Loan Documents and Permitted Liens.

SECTION 3.03. Enforceability . This Agreement has been duly executed and delivered by Holdings and the Borrower and constitutes, and each other Loan Document when executed and delivered by each Loan Party that is party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against each such Loan Party in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) implied covenants of good faith and fair dealing.

SECTION 3.04. Governmental Approvals . No action, consent or approval of, registration or filing with or any other action by any Governmental Authority or third party is or will be required in connection with the Transactions, the perfection or maintenance of the Liens created under the Security Documents or the exercise by any Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral, except for (a) the filing of Uniform Commercial Code financing statements and equivalent filings, registrations or other notifications in foreign jurisdictions, (b) filings with the United States Patent and Trademark Office and the United States Copyright Office and comparable offices in foreign jurisdictions and equivalent filings in foreign jurisdictions, (c) recordation of the Mortgages, (d) such as have been made or obtained and are in full force and effect, (e) such actions, consents and approvals the failure of which to be obtained or made would not reasonably be expected to have a Material Adverse Effect and (f) filings or other actions listed on Schedule 3.04 .

SECTION 3.05. Financial Statements . (a) (i) The unaudited pro forma consolidated balance sheet and (ii) the related consolidated statement of income of the Borrower, together with its consolidated Subsidiaries (including the notes thereto) (the “ Pro Forma Financial Statements ”), for the twelve-month period ending December 31, 2006, copies of which have heretofore been furnished to each Lender (via inclusion in the Information Memorandum), have been prepared in the manner set forth under the heading “Unaudited pro forma condensed consolidated financial statements” in the Notes Offering Memorandum. The Pro Forma Financial Statements have been prepared in good faith based on assumptions believed by the Borrower to have been reasonable as of the date of delivery thereof (it being understood that

 

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such assumptions are based on good faith estimates of certain items and that the actual amount of such items on the Closing Date is subject to change), and presents fairly in all material respects on a pro forma basis the estimated financial position of the Borrower and its consolidated Subsidiaries as at December 31, 2006 and the results of operations of Borrower and its consolidated subsidiaries for the twelve-month period ended December 31, 2006.

(b) The audited consolidated and combined balance sheets of the Target as at December 31, 2005 and 2006, and the related audited consolidated and combined statements of income and cash flows for the years ended December 31, 2004, 2005 and 2006, reported on by and accompanied by a report from Deloitte & Touche LLP, copies of which have heretofore been furnished to each Lender, present fairly in all material respects in accordance with GAAP the consolidated and combined financial position of the Target as at such date and the consolidated and combined results of operations and cash flows of the Target for the years then ended.

SECTION 3.06. No Material Adverse Effect . Since December 31, 2006, there has been no event or circumstance that has had or would reasonably be expected to have a Material Adverse Effect.

SECTION 3.07. Title to Properties; Possession Under Leases . (a) Each of Holdings (prior to a Borrower Qualified IPO), the Borrower and the Subsidiaries has valid fee simple title to, or valid leasehold interests in, or easements or other limited property interests in, all its Real Properties (including all Mortgaged Properties but excluding any real property held by the Borrower or any Subsidiary subject to and in connection with its relocation services business) and has valid title to its personal property and assets, in each case, except for Permitted Liens and except for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All such properties and assets are free and clear of Liens, other than Permitted Liens.

(b) Each of the Borrower and the Subsidiaries owns or possesses, or is licensed to use, all patents, trademarks, service marks, trade names and copyrights, all applications for any of the foregoing and all licenses and rights with respect to the foregoing necessary for the present conduct of its business, without any conflict (of which the Borrower has been notified in writing) with the rights of others, and free from any burdensome restrictions on the present conduct of the business of the Borrower, except where such conflicts and restrictions would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or except as set forth on Schedule 3.07(b) .

SECTION 3.08. Subsidiaries . Schedule 3.08 sets forth as of the Closing Date the name and jurisdiction of incorporation, formation or organization of each direct and indirect subsidiary of Holdings and, as to each such subsidiary, the percentage of each class of Equity Interests owned by Holdings or by any such subsidiary. Such schedule separately identifies each Insurance Subsidiary, Qualified CFC Holding Company and Special Purpose Securitization Subsidiary as of the Closing Date.

 

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SECTION 3.09. Litigation; Compliance with Laws . (a) Except as disclosed in SEC filings of the Borrower made in connection with or after the date of the Cendant Spin-Off and on or before the Closing Date, there are no actions, suits or proceedings at law or in equity or, to the knowledge of Holdings or the Borrower, investigations by or on behalf of any Governmental Authority or in arbitration now pending, or, to the knowledge of Holdings (prior to a Borrower Qualified IPO) or the Borrower, threatened in writing against or affecting Holdings or the Borrower or any of the Subsidiaries or any business, property or rights of any such person which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) None of Holdings (prior to a Borrower Qualified IPO), the Borrower, the Subsidiaries and their respective properties or assets is in violation of (nor will the continued operation of their material properties and assets as currently conducted violate) any law, rule or regulation (including any zoning, building, ordinance, code or approval or any building permit, but excluding any Environmental Laws, which are subject to Section 3.16) or any restriction of record or agreement affecting any Mortgaged Property, or is in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.10. Federal Reserve Regulations . (a) None of Holdings (prior to a Borrower Qualified IPO), the Borrower and the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.

(b) No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation U or Regulation X.

SECTION 3.11. Investment Company Act . None of Holdings (prior to a Borrower Qualified IPO), the Borrower and the Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

SECTION 3.12. Use of Proceeds . The Borrower:

(a) shall use the proceeds of the Revolving Facility Loans and Swingline Loans (i) for general corporate purposes (including, without limitation, for Permitted Business Acquisitions) and (ii) in the case of up to $250.0 million of Revolving Facility Loans made on the Closing Date, (A) to finance a portion of Transactions and (B) to pay Transaction Expenses;

(b) may request the issuance of Letters of Credit (including under the Credit-Linked Deposits) for general corporate purposes (including, without limitation, for Permitted Business Acquisitions); provided that not more than $100.0 million in stated amount of Synthetic Letters of Credit may be requested by the Borrower that are used for purposes other than supporting the Borrower’s obligations in respect of the Cendant Contingent Liabilities;

 

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(c) shall use the proceeds of the Initial Term B Loans made on the Closing Date (i) to finance a portion of the Transactions, (ii) to refinance a portion of the Refinanced Indebtedness and (iii) to pay Transaction Expenses; and

(d) shall use the proceeds of the Delayed Draw Term B Loans made after the Closing Date (i) to finance a portion of the Existing Senior Notes Refinancing/Change of Control Payments and (ii) to pay Transaction Expenses.

SECTION 3.13. Tax Returns . Except as set forth on Schedule 3.13 :

(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of Holdings, the Borrower and the Subsidiaries has filed or caused to be filed all Federal income tax and all material state, local, non-income Federal and non-U.S. tax returns required to have been filed by it and each such tax return is true and correct in all material respects;

(b) Each of Holdings, the Borrower and the Subsidiaries has timely paid or caused to be timely paid all Taxes shown to be due and payable by it on the tax returns referred to in clause (a) and all other material Taxes or assessments (or made adequate provision (in accordance with GAAP) for the payment of all Taxes due) with respect to all periods or portions thereof ending on or before the Closing Date (except Taxes or assessments that are being contested in good faith by appropriate proceedings in accordance with Section 5.03 and for which Holdings, the Borrower or any of the Subsidiaries (as the case may be) has set aside on its books adequate reserves in accordance with GAAP), which Taxes, if not paid or adequately provided for, would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and

(c) Other than as would not be, individually or in the aggregate, reasonably expected to have a Material Adverse Effect, as of the Closing Date, with respect to each of Holdings, the Borrower and the Subsidiaries, there have been no claims asserted in writing with respect to any Taxes.

SECTION 3.14. No Material Misstatements . (a) All written information (other than the Projections, estimates and information of a general economic nature or general industry nature) (the “ Information ”) concerning Holdings, the Borrower, the Subsidiaries, the Target, the Transactions and any other transactions contemplated hereby included in the Information Memorandum or otherwise prepared by or on behalf of the foregoing or their representatives and made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby, when taken as a whole, was true and correct in all material respects, as of the date such Information was furnished to the Lenders and, if delivered prior to the Closing Date, as of the Closing Date and did not, taken as a whole, contain any untrue statement of a material fact as of any such date or omit to state a material fact necessary in order to make the statements contained therein, taken as a whole, not materially misleading in light of the circumstances under which such statements were made.

 

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(b) The Projections and estimates and information of a general economic nature prepared by or on behalf of the Borrower or any of its representatives and that have been made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby (i) have been prepared in good faith based upon assumptions believed by the Borrower to be reasonable as of the date thereof (it being understood that actual results may vary materially from the Projections), as of the date such Projections and estimates were furnished to the Lenders and as of the Closing Date, and (ii) as of the Closing Date, have not been modified in any material respect by the Borrower.

SECTION 3.15. Employee Benefit Plans . (a) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) each Plan is in compliance in all material respects with the applicable provisions of ERISA and the Code; (ii) no Reportable Event has occurred during the past five years as to which the Borrower, Holdings, any of their Subsidiaries or any ERISA Affiliate was required to file a report with the PBGC; (iii) no Single Employer Plan has any Unfunded Pension Liability in excess of $50.0 million; (iv) no ERISA Event has occurred or, to the knowledge of the Borrower, is reasonably expected to occur; (v) none of Holdings (prior to a Borrower Qualified IPO) or the Subsidiaries has engaged in a “prohibited transaction” (as defined in Section 406 of ERISA and Code Section 4975) in connection with any employee pension benefit plan (as defined in Section 3(2) of ERISA) that would subject Holdings or any Subsidiary to tax; and (vi) none of Holdings or the Subsidiaries and the ERISA Affiliates has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan.

(b) Each of Holdings and the Subsidiaries is in compliance (i) with all applicable provisions of law and all applicable regulations and published interpretations thereunder with respect to any Plan, whether or not subject to ERISA governed by the laws of a jurisdiction other than the United States and (ii) with the terms of any such plan, except, in each case, for such noncompliance that would not reasonably be expected to have a Material Adverse Effect.

(c) Except as would not reasonably be expected to result in a Material Adverse Effect, there are no pending, or to the knowledge of Holdings or the Borrower, threatened claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any person as fiduciary or sponsor of any Single Employer Plan that would reasonably be expected to result in liability to Holdings, any of the Subsidiaries or the ERISA Affiliates.

(d) Within the last five years, no Single Employer Plan of Holdings, any Subsidiary or the ERISA Affiliates has been terminated, whether or not in a “standard termination” as that term is used in Section 4041(b)(1) of ERISA, that would reasonably be expected to result in liability to Holdings, any Subsidiary or any of the ERISA Affiliates in excess of $50.0 million, nor has any Single Employer Plan of Intermediate Holdings, any Subsidiary or any of the ERISA Affiliates (determined at any time within the past five years) with Unfunded Pension Liabilities been transferred outside of the “controlled group” (with the meaning of Section 4001(a)(14) of ERISA) that has or would reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 3.16. Environmental Matters . Except as set forth in Schedule 3.16 and except as to matters that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) no written notice, claim, demand, request for information, order, complaint or penalty has been received by the Borrower or any of its Subsidiaries, and there are no judicial, administrative or other actions, suits or proceedings pending or, to the Holdings’ or the Borrower’s knowledge, threatened which allege a violation of or liability under any Environmental Laws, in each case relating to the Borrower or any of its Subsidiaries, (ii) each of the Borrower and its Subsidiaries has all environmental permits, licenses and other approvals necessary for its operations to comply with all applicable Environmental Laws and is, and during the term of all applicable statues of limitation, has been, in compliance with the terms of such permits, licenses and other approvals and with all other applicable Environmental Laws, (iii) to the Borrower’s knowledge, no Hazardous Material is located at, on or under any property currently owned, operated or leased by the Borrower or any of its Subsidiaries that would reasonably be expected to give rise to any cost, liability or obligation of the Borrower or any of its Subsidiaries under any Environmental Laws, and no Hazardous Material has been generated, owned, treated, stored, handled or controlled by the Borrower or any of its Subsidiaries and transported to or Released at any location in a manner that would reasonably be expected to give rise to any cost, liability or obligation of the Borrower or any of its Subsidiaries under any Environmental Laws and (iv) there are no agreements in which the Borrower or any of its Subsidiaries has expressly assumed or undertaken responsibility for any known or reasonably likely liability or obligation of any other person arising under or relating to Environmental Laws, which in any such case has not been made available to the Administrative Agent prior to the date hereof.

SECTION 3.17. Security Documents . (a) The Collateral Agreement is effective to create in favor of the Collateral Agent, for the benefit of the applicable Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. In the case of the Pledged Collateral described in the Collateral Agreement, when certificates or promissory notes, as applicable, representing such Pledged Collateral are delivered to the Collateral Agent, and in the case of the other Collateral described in the Collateral Agreement (other than the Intellectual Property (as defined in the Collateral Agreement)), when financing statements and other filings specified in the Perfection Certificate are filed in the offices specified in the Perfection Certificate, the Collateral Agent (for the benefit of the applicable Secured Parties) shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and, subject to Section 9-315 of the New York Uniform Commercial Code, the proceeds thereof, as security for the Obligations to the extent perfection can be obtained by possession or by filing Uniform Commercial Code financing statements, in each case prior and superior in right to the Lien of any other person (except for Permitted Liens).

(b) When the Collateral Agreement or a summary thereof is properly filed in the United States Patent and Trademark Office and the United States Copyright Office, and, with respect to Collateral in which a security interest cannot be perfected by such filings, upon the proper filing of the financing statements referred to in paragraph (a) above, the Collateral Agent (for the benefit of the applicable Secured Parties) shall have a fully perfected, first priority (subject to Permitted Liens) Lien on, and security interest in, all right, title and interest of the Loan Parties thereunder in the domestic Intellectual Property (as defined in the Collateral

 

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Agreement), in each case prior and superior in right to the Lien of any other person, except for Permitted Liens (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks and patents, trademark and patent applications and registered copyrights acquired by the grantors after the Closing Date).

(c) Each Foreign Pledge Agreement, if any, shall be effective to create in favor of the Collateral Agent, for the benefit of the applicable Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof to the extent permissible under applicable law. In the case of the Pledged Collateral described in a Foreign Pledge Agreement, when certificates representing such Pledged Collateral (if any) are delivered to the Collateral Agent, the Collateral Agent (for the benefit of the applicable Secured Parties) shall have a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations, in each case prior and superior in right to the Lien of any other person (except for Permitted Liens).

(d) Notwithstanding anything herein (including this Section 3.17) or in any other Loan Document to the contrary, other than to the extent set forth in the applicable Foreign Pledge Agreements, neither the Borrower nor any other Loan Party makes any representation or warranty as to the effects of perfection or non-perfection, the priority or the enforceability of any pledge of or security interest in any Equity Interests of any Foreign Subsidiary that is not a Loan Party, or as to the rights and remedies of the Agents or any Lender with respect thereto, under foreign law.

SECTION 3.18. Solvency . (a) Immediately after giving effect to the Transactions on the Closing Date, (i) the fair value of the assets of the Borrower (individually) and Holdings, the Borrower and its Subsidiaries, on a consolidated basis and at a fair valuation, will exceed the debts and liabilities, direct, subordinated, unmatured, unliquidated, contingent or otherwise, of the Borrower (individually) and Holdings, the Borrower and its Subsidiaries, on a consolidated basis, respectively; (ii) the present fair saleable value of the property of the Borrower (individually) and Holdings, the Borrower and its Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of such Borrower (individually) and Holdings, the Borrower and its Subsidiaries on a consolidated basis, respectively, on their debts and other liabilities, direct, subordinated, unmatured, unliquidated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) the Borrower (individually) and Holdings, the Borrower and its Subsidiaries, on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Borrower (individually) and Holdings, the Borrower and its Subsidiaries, on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date.

(b) On the Closing Date, neither Holdings nor the Borrower intends to, and neither Holdings nor the Borrower believes that it or any of its subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing and amounts of cash to be received by it or any such subsidiary and the timing and amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such subsidiary.

 

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SECTION 3.19. Labor Matters . Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes pending or threatened against Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries; (b) the hours worked and payments made to employees of Holdings (prior to a Borrower Qualified IPO), the Borrower and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters; and (c) all payments due from Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries or for which any claim may be made against Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Holdings (prior to a Borrower Qualified IPO), the Borrower or such Subsidiary to the extent required by GAAP. Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, the consummation of the Transactions will not give rise to a right of termination or right of renegotiation on the part of any union under any material collective bargaining agreement to which Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries (or any predecessor) is a party or by which Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries (or any predecessor) is bound.

SECTION 3.20. Intellectual Property; Licenses, Etc . Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) each of Holdings, the Borrower and the Subsidiaries owns, or possesses the right to use, all of the U.S. and foreign intellectual property, including patents, inventions, discoveries, trade secrets, know-how, proprietary information, trademarks, service marks, trade names, logos, domain names and other source indicators (and the goodwill of the business symbolized thereby), copyrights, works of authorship in any media, mask works, and any and all applications or registrations for any of the foregoing (collectively, “ Intellectual Property Rights ”) that are reasonably necessary for the operation of their respective businesses, free of all Liens except Permitted Liens, and all such Intellectual Property Rights are subsisting, unexpired and have not been abandoned, and, to the knowledge of Holdings, the Borrower or the Subsidiaries, their ownership or use of such Intellectual Property Rights does not conflict with the rights of any other person, (b) none of Holdings, the Borrower or the Subsidiaries have any knowledge that any product, process, method, service, practice, substance, part, material now employed, sold or offered by such persons, is interfering with, infringing upon, misappropriating or otherwise violating any intellectual property rights of any person, and no claim, litigation, action, arbitration or investigation regarding any of the foregoing, or otherwise seeking to limit, cancel or invalidate any Intellectual Property Right, is pending or, to the knowledge of Holdings and the Borrower, threatened, (c) to the knowledge of Holdings or the Borrower, no holding, decision or judgment has been rendered by any Governmental Authority which limits, cancels or challenges the validity of, or Holdings’, the Borrower’s or any Subsidiary’s rights in, any Intellectual Property Rights owned or licensed by Holdings, the Borrower or any Subsidiary, and (d) except as disclosed on Schedule 3.20(d), no Intellectual Property Right is the subject of any licensing or franchise agreement pursuant to which Holdings, the Borrower or any Subsidiary has granted an exclusive right to any person other than a franchisee or a master franchisor in the ordinary course of business to use such Intellectual Property Right.

 

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SECTION 3.21. Senior Debt . The Obligations constitute “Senior Debt” (or the equivalent thereof) and “Designated Senior Debt” (or the equivalent thereof, if any) under the Senior Subordinated Notes Indenture and under the documentation governing any other subordinated Indebtedness permitted to be incurred hereunder or any Permitted Refinancing Indebtedness in respect of the Senior Subordinated Notes or any other Indebtedness permitted to be incurred hereunder constituting subordinated Indebtedness.

ARTICLE IV

Conditions of Lending

The obligations of (a) the Lenders (including the Swingline Lender) to make Loans and (b) any Issuing Bank to issue Letters of Credit or renew, extend, amend or increase the stated amounts of Letters of Credit hereunder (other than pursuant to any renewal, extension or amendment of a Letter of Credit without any increase in the stated amount of such Letter of Credit) (each of clauses (a) and (b), a “ Credit Event ”) are subject to the satisfaction of the following conditions:

SECTION 4.01. All Credit Events . On the date of each Borrowing and on the date of each issuance, amendment, extension or renewal of a Letter of Credit:

(a) The Administrative Agent shall have received, in the case of a Borrowing, a Borrowing Request as required by Section 2.03 or, in the case of the issuance of a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance of such Letter of Credit as required by Section 2.05(b).

(b) (i) In the case of each Credit Event that occurs on the Closing Date, the conditions in Section 6.02(a) of the Merger Agreement (but only with respect to representations and warranties that are material to the interests of the Lenders, and only to the extent that Borrower has the right to terminate its obligations under the Merger Agreement as a result of a breach of such representations in the Merger Agreement) shall be satisfied, and the representations and warranties made in Sections 3.01(a)(i), (b) and (d), 3.02(a), 3.03, 3.10, 3.11, 3.17(a), 3.17(c), 3.17(d) and 3.21 shall be true and correct in all material respects; and (ii) in the case of each other Credit Event (other than a Delayed Draw Term Loan Funding Event), the representations and warranties set forth in the Loan Documents shall be true and correct in all material respects as of such date (other than an amendment, extension or renewal of a Letter of Credit without any increase in the stated amount of such Letter of Credit), as applicable, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

(c) (i) In the case of each Credit Event (other than a Delayed Draw Term Loan Funding Event) that occurs after the Closing Date, at the time of and immediately after such Borrowing or issuance, amendment, extension or renewal of a Letter of Credit (other than an amendment, extension or renewal of a Letter of Credit without any increase in the stated amount of such Letter of Credit), as applicable, no Event of Default or Default shall have

 

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occurred and be continuing; and (ii) in the case of each Delayed Draw Term Loan Funding Event that occurs after the Closing Date, at the time of and immediately after such Borrowing, no Event of Default or Default under clauses (b), (c), (h) or (i) of Section 8.01 shall have occurred and be continuing.

Each such Borrowing and each issuance, amendment, extension or renewal of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date of such Borrowing, issuance, amendment, extension or renewal as applicable, as to the matters specified in paragraphs (b) and (c) of this Section 4.01.

SECTION 4.02. Effectiveness of Commitments . The obligations of each Lender to make any extension of credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.08):

(a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received, on behalf of itself, the Lenders and each Issuing Bank on the Closing Date, a favorable written opinion of (i) Akin Gump Strauss Hauer & Feld LLP, special counsel for the Loan Parties, in form and substance reasonably satisfactory to the Administrative Agent and (ii) local counsel reasonably satisfactory to the Administrative Agent as specified on Schedule 4.02(b) , in each case (A) dated the Closing Date, (B) addressed to each Issuing Bank on the Closing Date, the Administrative Agent and the Lenders and (C) in form and substance reasonably satisfactory to the Administrative Agent and covering such other matters relating to the Loan Documents as the Administrative Agent shall reasonably request.

(c) The Administrative Agent shall have received in the case of each Loan Party each of the items referred to in clauses (i), (ii) and (iii) below:

(i) a copy of the certificate or articles of incorporation, certificate of limited partnership or certificate of formation, including all amendments thereto, of each Loan Party, (A) in the case of a corporation, certified as of a recent date by the Secretary of State (or other similar official) of the jurisdiction of its organization, and a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Loan Party as of a recent date from such Secretary of State (or other similar official) or (B) in the case of a partnership or limited liability company, certified by the Secretary or Assistant Secretary of each such Loan Party;

(ii) a certificate of the Secretary or Assistant Secretary or similar officer of each Loan Party dated the Closing Date and certifying

(A) that attached thereto is a true and complete copy of the by-laws (or partnership agreement, limited liability company agreement or

 

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other equivalent governing documents) of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below,

(B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of such Loan Party (or its managing general partner or managing member) authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Closing Date,

(C) that the certificate or articles of incorporation, certificate of limited partnership or certificate of formation of such Loan Party has not been amended since the date of the last amendment thereto disclosed pursuant to clause (i) above,

(D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party and

(E) as to the absence of any pending proceeding for the dissolution or liquidation of such Loan Party; and

(iii) a certificate of a director or another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate pursuant to clause (ii) above.

(d) The elements of the Collateral and Guarantee Requirement required to be satisfied on the Closing Date shall have been satisfied (other than in the case of any security interest in the intended Collateral or any deliverable related to the perfection of security interests in the intended Collateral (other than (i) the pledge and perfection of the security interests in the Equity Interests of the Borrower and each Subsidiary described in clause (b) of the definition of “Collateral and Guarantee Requirement” and (ii) any Collateral the security interest in which may be perfected by the filing of a UCC financing statement) that is not provided on the Closing Date after the Borrower’s use of commercially reasonable efforts to do so, which such security interest or deliverable shall be delivered within the time periods specified with respect thereto in Schedule 4.02(d) ) and the Administrative Agent shall have received a completed Perfection Certificate dated the Closing Date and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby, and the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are Permitted Liens or have been released or should be released upon the funding of the Loans.

 

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(e) The Merger shall have been consummated or shall be consummated simultaneously with or immediately following the closing under this Agreement in accordance with the terms and conditions of the Merger as set forth in the Merger Documents, without material amendment, supplement, modification or waiver thereof by the Borrower which is materially adverse to the Lenders without the prior written consent of the Administrative Agent.

(f) The Equity Financing shall have been consummated.

(g) The Lenders shall have received the pro forma balance sheet referred to in Section 3.05(a)(i), and the related pro forma income statement referred to in Section 3.05(a)(ii).

(h) The Lenders shall have received either (i) a solvency certificate in form and substance reasonably satisfactory to the Administrative Agent and signed by the Chief Financial Officer of the Borrower or (ii) a solvency opinion in form and substance reasonably satisfactory to the Administrative Agent from an independent investment bank or valuation firm reasonably acceptable to the Administrative Agent, in each case confirming the solvency of Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions on the Closing Date.

(i) The Agents shall have received all fees payable thereto or to any Lender on or prior to the Closing Date and, to the extent invoiced, all other amounts due and payable pursuant to the Loan Documents on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of Simpson Thacher & Bartlett LLP) required to be reimbursed or paid by the Loan Parties hereunder or under any Loan Document.

(j) The Administrative Agent shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the USA PATRIOT Act, requested not less than five business days prior to the date hereof.

ARTICLE V

Affirmative Covenants

The Borrower covenants and agrees with each Lender that so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until the Commitments have been terminated or have expired and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired (or have been cash collateralized on terms reasonably satisfactory to the Administrative Agent) and all amounts drawn or paid thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, the Borrower will, and will cause each of the Material Subsidiaries to:

SECTION 5.01. Existence; Businesses and Properties . (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except, in the case of a Subsidiary of the Borrower, where the failure to do so, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, and except as otherwise expressly permitted under Section 6.05; provided that the Borrower may liquidate or dissolve one or more Subsidiaries if the assets of such Subsidiaries to the extent they exceed estimated liabilities are acquired by the Borrower or a Wholly Owned Subsidiary of the Borrower in such liquidation or dissolution, except that Subsidiary Loan Parties may not be liquidated into Subsidiaries that are not Loan Parties and Domestic Subsidiaries may not be liquidated into Foreign Subsidiaries.

 

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(b) Except where the failure to do so, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, do or cause to be done all things necessary to (i) lawfully obtain, preserve, renew, extend and keep in full force and effect the permits, franchises, authorizations, patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect thereto necessary to the normal conduct of its business, and (ii) at all times maintain and preserve all property necessary to the normal conduct of its business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith, if any, may be properly conducted at all times (in each case except as expressly permitted by this Agreement).

SECTION 5.02. Insurance . (a) Maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by similarly situated companies engaged in the same or similar businesses operating in the same or similar locations and cause the Collateral Agent to be listed as loss payee on property and casualty policies and as an additional insured on liability policies; provided that (i) workers’ compensation insurance or similar coverage may be effected with respect to its operations in any particular state or other jurisdiction through an insurance fund operated by such state or jurisdiction and (ii) such insurance may contain self-insurance retention and deductible levels consistent with normal industry practice.

(b) With respect to any Mortgaged Properties, if at any time the area in which the Premises (as defined in the Mortgages) are located is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), obtain flood insurance in such reasonable total amount as the Administrative Agent may from time to time reasonably require, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time.

(c) In connection with the covenants set forth in this Section 5.02, it is understood and agreed that:

(i) none of the Administrative Agent, the Lenders, the Issuing Bank and their respective agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 5.02, it being understood

 

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that (A) the Loan Parties shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Administrative Agent, the Lenders, any Issuing Bank or their agents or employees. If, however, the insurance policies, as a matter of the internal policy of such insurer, do not provide waiver of subrogation rights against such parties, as required above, then each of Holdings and the Borrower, on behalf of itself and behalf of each of its Subsidiaries, hereby agrees, to the extent permitted by law, to waive, and further agrees to cause each of their Subsidiaries to waive, its right of recovery, if any, against the Administrative Agent, the Lenders, any Issuing Bank and their agents and employees; and

(ii) the designation of any form, type or amount of insurance coverage by the Administrative Agent under this Section 5.02 shall in no event be deemed a representation, warranty or advice by the Administrative Agent or the Lenders that such insurance is adequate for the purposes of the business of Holdings, the Borrower and the Subsidiaries or the protection of their properties.

SECTION 5.03. Taxes . Pay and discharge promptly when due all material Taxes, imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims which, if unpaid, might give rise to a Lien (other than a Permitted Lien) upon such properties or any part thereof; provided , however , that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (a) the validity or amount thereof shall be contested in good faith by appropriate proceedings and (b) Holdings, the Borrower or the affected Subsidiary, as applicable, shall have set aside on its books reserves in accordance with GAAP with respect thereto.

SECTION 5.04. Financial Statements, Reports, etc. Furnish to the Administrative Agent (which will promptly furnish such information to the Lenders):

(a) within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet and related statements of operations, cash flows and owners’ equity showing the financial position of the Borrower and its Subsidiaries as of the close of such fiscal year and the consolidated results of its operations during such year and setting forth in comparative form the corresponding figures for the prior fiscal year, which consolidated balance sheet and related statements of operations, cash flows and owners’ equity shall be audited by independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which opinion shall not be qualified as to scope of audit or as to the status of the Borrower or any Material Subsidiary as a “going concern”) to the effect that such consolidated financial statements fairly present, in all material respects, the financial position and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP (it being understood that the delivery by the Borrower of annual reports on Form 10 K of the Borrower and its consolidated Subsidiaries shall satisfy the requirements of this Section 5.04(a) to the extent such annual reports include the information specified herein);

(b) within 45 days after the end of the first three quarterly periods of each fiscal year of the Borrower, a consolidated balance sheet and related statements of operations and

 

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cash flows showing the financial position of the Borrower and its Subsidiaries as of the close of such fiscal quarter and the consolidated results of its operations during such fiscal quarter and the then-elapsed portion of the fiscal year and setting forth in comparative form the corresponding figures for the corresponding periods of the prior fiscal year, all of which shall be in reasonable detail and which consolidated balance sheet and related statements of operations and cash flows shall be certified by a Financial Officer of the Borrower on behalf of the Borrower as fairly presenting, in all material respects, the financial position and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes) (it being understood that the delivery by the Borrower of quarterly reports on Form 10-Q of the Borrower and its consolidated Subsidiaries shall satisfy the requirements of this Section 5.04(b) to the extent such quarterly reports include the information specified herein);

(c) (x) concurrently with any delivery of financial statements under paragraphs (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto, (ii) setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the Financial Performance Covenant, (iii) setting forth the calculation and uses of the Cumulative Credit for the fiscal period then ended, (iv) certifying a list of names of all Immaterial Subsidiaries, that each Subsidiary set forth on such list individually qualifies as an Immaterial Subsidiary and that all such Subsidiaries in the aggregate do not exceed the limitation set forth in clause (b) of the definition of the term “Immaterial Subsidiary” and (v) certifying a list of names of all Unrestricted Subsidiaries and that each Subsidiary set forth on such list individually qualifies as an Unrestricted Subsidiary, and (y) concurrently with any delivery of financial statements under paragraph (a) above, if the accounting firm is not restricted from providing such a certificate by its policies, a certificate of the accounting firm opining on or certifying such statements stating whether they obtained knowledge during the course of their examination of such statements of any Default or Event of Default (which certificate may be limited to accounting matters and disclaim responsibility for legal interpretations);

(d) promptly after the same become publicly available, copies of all periodic and other publicly available reports, proxy statements and, to the extent requested by the Administrative Agent, other materials filed by Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries with the SEC, or after an initial public offering, distributed to its stockholders generally, as applicable; provided , however , that such reports, proxy statements, filings and other materials required to be delivered pursuant to this clause (d) shall be deemed delivered for purposes of this Agreement when posted to the website of the Borrower;

(e) within 90 days after the beginning of each fiscal year of the Borrower, a reasonably detailed consolidated annual budget for such fiscal year (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year, and the related consolidated statements of projected cash flow and projected income), including a description of underlying assumptions with respect thereto (collectively, the “ Budget ”), which Budget shall in each case be accompanied by the statement of a Financial Officer of the Borrower to the effect that, the Budget is based on assumptions believed by such Financial Officer to be reasonable as of the date of delivery thereof;

 

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(f) upon the reasonable request of the Administrative Agent, an updated Perfection Certificate (or, to the extent such request relates to specified information contained in the Perfection Certificate, such information) reflecting all changes since the date of the information most recently received pursuant to this paragraph (f) or Section 5.09(f);

(g) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of Holdings, the Borrower or any of the Subsidiaries, or compliance with the terms of any Loan Document, or such consolidating financial statements (it being understood that consolidating financial statements shall not be requested until such time as the Borrower shall have filed a registration statement with the SEC with respect to the Senior Unsecured Notes and/or the Senior Subordinated Notes), as in each case the Administrative Agent may reasonably request (for itself or on behalf of any Lender); and

(h) in the event that (i) in respect of the Senior Unsecured Notes or the Senior Subordinated Notes, and any Permitted Refinancing Indebtedness with respect thereto, the rules and regulations of the SEC permit the Borrower, Holdings or any Parent Entity to report at Holdings’ or such Parent Entity’s level on a consolidated basis and (ii) Holdings or such Parent Entity, as the case may be, is not engaged in any business or activity, and does not own any assets or have other liabilities, other than those incidental to its ownership directly or indirectly of the Equity Interests of the Borrower and the incurrence of Indebtedness for borrowed money (and, without limitation on the foregoing, does not have any subsidiaries other than the Borrower and the Borrower’s Subsidiaries and any direct or indirect parent companies of the Borrower that are not engaged in any other business or activity and do not hold any other assets or have any liabilities except as indicated above) such consolidated reporting at such Parent Entity’s level in a manner consistent with that described in paragraphs (a) and (b) of this Section 5.04 for the Borrower (together with a reconciliation showing the adjustments necessary to determine compliance by the Borrower and its Subsidiaries with the Financial Performance Covenant) shall satisfy the requirements of such paragraphs.

SECTION 5.05. Litigation and Other Notices . Furnish to the Administrative Agent (which will promptly thereafter furnish to the Lenders) written notice of the following promptly after any Responsible Officer of Holdings (prior to a Borrower Qualified IPO) or the Borrower obtains actual knowledge thereof:

(a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) proposed to be taken with respect thereto;

(b) the filing or commencement of, or any written threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority or in arbitration, against Holdings, the Borrower or any of the Subsidiaries as to which an adverse determination is reasonably probable and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;

 

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(c) any other development specific to Holdings, the Borrower or any of the Subsidiaries that is not a matter of general public knowledge and that has had, or would reasonably be expected to have, a Material Adverse Effect; and

(d) the occurrence of any ERISA Event that, together with all other ERISA Events that have occurred and are occurring, would reasonably be expected to have a Material Adverse Effect.

SECTION 5.06. Compliance with Laws . Comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect; provided, that this Section 5.06 shall not apply to Environmental Laws, which are the subject of Section 5.08, or to laws related to Taxes, which are the subject of Section 5.03.

SECTION 5.07. Maintenance of Records; Access to Properties and Inspections . Maintain all financial records in accordance with GAAP and permit any persons designated by the Administrative Agent or, upon the occurrence and during the continuance of an Event of Default, any Lender to visit and inspect the financial records and the properties of Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries at reasonable times, upon reasonable prior notice to Holdings (prior to a Borrower Qualified IPO) or the Borrower, and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any persons designated by the Administrative Agent or, upon the occurrence and during the continuance of an Event of Default, any Lender upon reasonable prior notice to Holdings (prior to a Borrower Qualified IPO) or the Borrower to discuss the affairs, finances and condition of Holdings (prior to a Borrower Qualified IPO), the Borrower or any of the Subsidiaries with the officers thereof and independent accountants therefor (subject to reasonable requirements of confidentiality, including requirements imposed by law or by contract).

SECTION 5.08. Compliance with Environmental Laws . Comply, and make reasonable efforts to cause all lessees and other persons occupying its properties to comply, with all Environmental Laws applicable to its operations and properties; and obtain and renew all material authorizations and permits required pursuant to Environmental Law for its operations and properties, in each case in accordance with Environmental Laws, except, in each case with respect to this Section 5.08, to the extent the failure to do so, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

SECTION 5.09. Further Assurances; Additional Security . (a) Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, Mortgages and other documents and recordings of Liens in stock registries), that may be required under any applicable law, or that the Collateral Agent may reasonably request, to satisfy the Collateral and Guarantee Requirement and to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties and provide to the Collateral Agent, from time to time upon reasonable request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents, in each case subject to paragraph (g) below.

 

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(b) If any asset (including any owned Real Property (other than owned Real Property covered by paragraph (c) below) or improvements thereto or any interest therein) that has an individual fair market value (as determined in good faith by the Borrower) in an amount greater than $5.0 million is acquired by the Borrower or any other Loan Party after the Closing Date or owned by an entity at the time it becomes a Subsidiary Loan Party (in each case other than (x) assets constituting Collateral under a Security Document that become subject to the Lien of such Security Document upon acquisition thereof and (y) assets that are not required to become subject to Liens in favor of the Collateral Agent pursuant to Section 5.09(g) or the Security Documents) will (i) notify the Collateral Agent thereof, (ii) if such asset is comprised of Real Property, deliver to Collateral Agent an updated Schedule 1.01B reflecting the addition of such asset, and (iii) cause such asset to be subjected to a Lien securing the Obligations and take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Collateral Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the Loan Parties, subject to paragraph (g) below.

(c) Grant and cause each of the Subsidiary Loan Parties to grant to the Collateral Agent security interests and mortgages in such owned Real Property of the Borrower or any such Subsidiary Loan Parties as are not covered by the original Mortgages, to the extent acquired after the Closing Date and having a value at the time of acquisition in excess of $10.0 million pursuant to documentation substantially in the form of the Mortgages delivered to the Collateral Agent on the Closing Date or in such other form as is reasonably satisfactory to the Collateral Agent (each, an “ Additional Mortgage ”) and constituting valid and enforceable Liens subject to no other Liens except Permitted Liens at the time of perfection thereof; record or file, and cause each such Subsidiary to record or file, the Additional Mortgage or instruments related thereto in such manner and in such places as is required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Mortgages and pay, and cause each such Subsidiary to pay, in full, all Taxes, fees and other charges payable in connection therewith, in each case subject to paragraph (g) below. Unless otherwise waived by the Collateral Agent, with respect to each such Additional Mortgage, the Borrower shall deliver to the Collateral Agent contemporaneously therewith a title insurance policy, and a survey.

(d) If any additional direct or indirect Subsidiary of Holdings (prior to a Borrower Qualified IPO) or the Borrower is formed or acquired after the Closing Date (with any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary being deemed to constitute the acquisition of a Subsidiary) and if such Subsidiary is a Domestic Subsidiary (other than a Domestic Subsidiary that is a Subsidiary of a Foreign Subsidiary, an Insurance Subsidiary or an Immaterial Subsidiary designated by the Borrower as not a Loan Party) or a “first tier” Special Purpose Securitization Subsidiary, within five Business Days after the date such Domestic Subsidiary or “first tier” Special Purpose Securitization Subsidiary is formed or acquired, notify the Collateral Agent and the Lenders thereof and, within 20 Business Days after the date such Domestic Subsidiary or “first tier” Special Purpose Securitization Subsidiary is formed or acquired or such longer period as the Collateral Agent shall agree, cause the Collateral and Guarantee Requirement to be satisfied with respect to such Domestic Subsidiary (unless such Domestic Subsidiary is not a Wholly Owned Subsidiary) or “first tier” Special Purpose Securitization Subsidiary and with respect to any Equity Interest in or Indebtedness of such Domestic Subsidiary or “first tier” Special Purpose Securitization Subsidiary owned by or on behalf of any Loan Party, subject to paragraph (g) below.

 

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(e) If any additional Foreign Subsidiary of the Borrower is formed or acquired after the Closing Date (with any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary being deemed to constitute the acquisition of a Subsidiary) and if such Subsidiary is a “first tier” Foreign Subsidiary, within five Business Days after the date such Foreign Subsidiary is formed or acquired, notify the Collateral Agent and the Lenders thereof and, within 20 Business Days after the date such Foreign Subsidiary (unless such Foreign Subsidiary is not a Wholly Owned Subsidiary) is formed or acquired or such longer period as the Collateral Agent shall agree, cause the Collateral and Guarantee Requirement to be satisfied with respect to any Equity Interest in such Foreign Subsidiary owned by or on behalf of any Loan Party, subject to paragraph (g) below.

(f) (i) Furnish to the Collateral Agent prompt written notice of any change (A) in any Loan Party’s corporate or organization name, (B) in any Loan Party’s identity or organizational structure or (C) in any Loan Party’s organizational identification number; provided , that the Borrower shall not effect or permit any such change unless all filings have been made, or will have been made within any statutory period, under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral for the benefit of the applicable Secured Parties and (ii) promptly notify the Collateral Agent if any material portion of the Collateral is damaged or destroyed.

(g) The Collateral and Guarantee Requirement and the other provisions of this Section 5.09 need not be satisfied with respect to (i) any Real Property held by the Borrower or any of its Subsidiaries as a lessee under a lease, (ii) any vehicle, (iii) cash, deposit accounts and securities accounts, (iv) any Insurance Subsidiary except to the extent that a pledge of the Equity Interests thereof is permitted by applicable law, or any Securitization Assets, (v) any Equity Interests acquired after the Closing Date (other than Equity Interests in the Borrower or, in the case of any person which is a Subsidiary, Equity Interests in such person issued or acquired after such person became a Subsidiary) in accordance with this Agreement if, and to the extent that, and for so long as (A) doing so would violate applicable law or a contractual obligation binding on such Equity Interests and (B) with respect to contractual obligations, such obligation existed at the time of the acquisition thereof and was not created or made binding on such Equity Interests in contemplation of or in connection with the acquisition of such Subsidiary, (vi) any assets acquired after the Closing Date, to the extent that, and for so long as, taking such actions would violate an enforceable contractual obligation binding on such assets that existed at the time of the acquisition thereof and was not created or made binding on such assets in contemplation or in connection with the acquisition of such assets (except in the case of assets acquired with Indebtedness permitted pursuant to Section 6.01(i) that is secured by a Permitted Lien), (vii) (A) entities that become Subsidiaries (with any Subsidiary Redesignation resulting in an Unrestricted Subsidiary being designated as a Subsidiary being deemed to constitute the acquisition or formation of a Subsidiary) after the Closing Date if the Administrative Agent, after consultation with Holdings, shall reasonably determine that the costs of obtaining a guarantee of the applicable Obligations from such entities is excessive in relation to the value to be afforded to the Lenders thereby or (B) those assets as to which the

 

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Administrative Agent, after consultation with Holdings, shall reasonably determine that the costs of obtaining or perfecting a security interest in such assets are excessive in relation to the value of the security to be afforded thereby, including (w) the costs and legal and practical difficulties of obtaining such guarantees and security from Foreign Subsidiaries, (x) the costs of obtaining such guarantee or security interest, or perfecting such security interest, in relation to the value of the credit support to be afforded thereby, (y) general statutory limitations, financial assistance, corporate benefit, fraudulent preference, thin capitalization, retention of title claims and similar principles and (z) the fiduciary duties of directors, contravention of legal prohibitions or risk of personal or criminal liability on the part of any officer, (viii) perfection of any security interest in Collateral to the extent such perfection (or the steps required to provide such perfection) would have a material adverse effect on the ability of the relevant Loan Party to conduct its operations and business in the ordinary course as permitted by the Loan Documents, (ix) perfection of any security interest in receivables or other Collateral to the extent such perfection would require notice to customers of Borrower and the Subsidiaries prior to the time that an Event of Default has occurred and is continuing, or (x) any real property acquired by the Borrower or any Subsidiary in the ordinary course of its relocation services business; provided , that, upon the reasonable request of the Administrative Agent, the Borrower shall, and shall cause any applicable Subsidiary to, use commercially reasonable efforts to have waived or eliminated any contractual obligation of the types described in clauses (v) and (vi) above.

SECTION 5.10. Ratings . Exercise commercially reasonable efforts to maintain at all times (a) corporate ratings of the Borrower and (b) ratings of the Facilities, in case from Moody’s and S&P.

SECTION 5.11. Compliance with Material Contracts . Perform and observe all of the terms and conditions of each material agreement to be performed or observed by it, maintain each such material agreement in full force and effect, enforce each such material agreement in accordance with its terms, except where the failure to do so, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

SECTION 5.12. Post-Closing Covenant . Within the periods set forth on Schedule 5.12 (or such longer period as the Administrative Agent may determine), take the actions described on Schedule 5.12.

ARTICLE VI

Negative Covenants

The Borrower covenants and agrees with each Lender that, so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until the Commitments have been terminated or have expired and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) have been paid in full and all Letters of Credit have been canceled or have expired (or have been cash collateralized on terms reasonably satisfactory to the Administrative Agent) and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, the Borrower will not, and will not permit any of the Material Subsidiaries to:

SECTION 6.01. Indebtedness . Incur, create, assume or permit to exist any Indebtedness, except:

(a) Indebtedness existing on the Closing Date and set forth on Schedule 6.01 and any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness (other than intercompany indebtedness Refinanced with Indebtedness owed to a person not affiliated with the Borrower or any Subsidiary);

 

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(b) Indebtedness created hereunder and under the other Loan Documents and any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness;

(c) Indebtedness of the Borrower or any Subsidiary pursuant to Swap Agreements;

(d) Indebtedness owed to (including obligations in respect of letters of credit or bank guarantees or similar instruments for the benefit of) any person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance to the Borrower or any Subsidiary, pursuant to reimbursement or indemnification obligations to such person, in each case in the ordinary course of business; provided , that upon the incurrence of Indebtedness with respect to reimbursement obligations regarding workers’ compensation claims, such obligations are reimbursed not later than 30 days following such incurrence;

(e) Indebtedness of the Borrower to Holdings (prior to a Borrower Qualified IPO) or any Subsidiary and of any Subsidiary to Holdings (prior to a Borrower Qualified IPO), the Borrower or any other Subsidiary; provided , that, other than in the case of intercompany current liabilities incurred in the ordinary course of business in connection with the cash management operations of Holdings and the subsidiaries to finance working capital needs of the subsidiaries, (i) Indebtedness of any Subsidiary that is not a Subsidiary Loan Party owing to the Loan Parties shall be subject to Section 6.04(b) and (ii) Indebtedness of the Borrower to Holdings or any Subsidiary and Indebtedness of any other Loan Party to Holdings or any Subsidiary that is not a Subsidiary Loan Party (the “ Subordinated Intercompany Debt ”) shall, if legally permissible, be subordinated to the Obligations on terms reasonably satisfactory to the Administrative Agent;

(f) Indebtedness (including obligations in respect of letters of credit and bank guarantees) in respect of performance, bid, appeal and surety bonds and completion guarantees provided by the Borrower or any of its Subsidiaries in the ordinary course of business or consistent with past practice or industry practice;

(g) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or other cash management services in the ordinary course of business; provided , that (x) such Indebtedness (other than credit or purchase cards) is extinguished within ten Business Days of notification to the Borrower of its incurrence and (y) such Indebtedness in respect of credit or purchase cards is extinguished within 60 days from its incurrence;

 

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(h) (i) Indebtedness of a Subsidiary acquired after the Closing Date or of an entity merged into or consolidated or amalgamated with the Borrower or any Subsidiary after the Closing Date and Indebtedness assumed in connection with the acquisition of assets, which Indebtedness in each case exists at the time of such acquisition, merger, consolidation or amalgamation and is not created in contemplation of such event and where such acquisition, merger, consolidation or amalgamation is permitted by this Agreement and (ii) any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness; provided , (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom, and (B) immediately after giving effect to such acquisition, merger, consolidation or amalgamation, the assumption and incurrence of any Indebtedness and any related transactions, the Senior Secured Leverage Ratio on a Pro Forma Basis shall not be greater than 4.25 to 1.00;

(i) Capital Lease Obligations, mortgage financings and purchase money Indebtedness incurred by the Borrower or any Subsidiary prior to or within 270 days after the construction, acquisition, lease or improvement of the respective property (real or personal, and whether through the direct purchase of property or the Equity Interests of any person owning such property) permitted under this Agreement in order to finance such construction, acquisition, lease or improvement, and any Permitted Refinancing Indebtedness in respect thereof, in an aggregate principal amount that at the time of, and after giving effect to, the incurrence thereof, together with the Remaining Present Value of outstanding leases permitted under Section 6.03, would not exceed the greater of $550.0 million and 5.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such incurrence for which financial statements have been delivered pursuant to Section 5.04;

(j) Capital Lease Obligations incurred by the Borrower or any Subsidiary in respect of any Sale and Lease-Back Transaction that is permitted under Section 6.03, and any Permitted Refinancing Indebtedness in respect thereof;

(k) other Indebtedness of the Borrower or any Subsidiary, in an aggregate principal amount outstanding that at the time of, and after giving effect to, the incurrence thereof, would not exceed the greater of $550.0 million and 5.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such incurrence for which financial statements have been delivered pursuant to Section 5.04;

(l) Indebtedness of the Borrower pursuant to (i) the Senior Unsecured Notes in an aggregate principal amount that is not in excess of $2,250.0 million (plus any interest paid by increases to principal), (ii) the Senior Subordinated Notes in an aggregate principal amount that is not in excess of $900.0 million, and (iii) any Permitted Refinancing Indebtedness incurred to Refinance any such Indebtedness;

(m) Guarantees (i) by the Subsidiary Loan Parties of the Indebtedness of the Borrower described in Section 6.01(l), so long as the Guarantee of the Senior

 

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Subordinated Notes or any Permitted Refinancing Indebtedness in respect thereof is subordinated on substantially the same terms as set forth in the Senior Subordinated Notes Indenture with respect to the Senior Subordinated Notes, (ii) by the Borrower or any Subsidiary Loan Party of any Indebtedness of the Borrower or any Subsidiary Loan Party permitted to be incurred under this Agreement, (iii) by the Borrower or any Subsidiary Loan Party of Indebtedness of Holdings (prior to a Borrower Qualified IPO) or any Subsidiary that is not a Subsidiary Loan Party that is otherwise permitted hereunder to the extent such Guarantees are permitted by Section 6.04(b), (iv) by any Subsidiary that is not a Loan Party of Indebtedness of another Subsidiary that is not a Loan Party and (v) by the Borrower or any Subsidiary Loan Party of Indebtedness of Subsidiaries that are not Loan Parties incurred for working capital purposes in the ordinary course of business on ordinary business terms so long as such Indebtedness is permitted to be incurred under Section 6.01(s) and to the extent such Guarantees are permitted by 6.04(b); provided , that Guarantees by the Borrower or any Subsidiary Loan Party under this Section 6.01(m) of any other Indebtedness of a person that is subordinated to other Indebtedness of such person shall be expressly subordinated to the Obligations to at least the same extent as the Guarantee of the Senior Subordinated Notes is under the Senior Subordinated Notes Indenture;

(n) Indebtedness arising from agreements of the Borrower or any Subsidiary providing for indemnification, adjustment of purchase or acquisition price or similar obligations, in each case, incurred or assumed in connection with the Transactions, any Permitted Business Acquisition or the disposition of any business, assets or a Subsidiary not prohibited by this Agreement, other than Guarantees of Indebtedness incurred by any person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;

(o) Indebtedness in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations (other than obligations in respect of other Indebtedness) and trade letters of credit in the ordinary course of business;

(p) Indebtedness supported by a Letter of Credit, in a principal amount not in excess of the stated amount of such Letter of Credit;

(q) Indebtedness consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

(r) (i) other Indebtedness incurred by the Borrower or any Subsidiary Loan Party so long as (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (B) immediately after giving effect to the issuance, incurrence or assumption of such Indebtedness, the Senior Secured Leverage Ratio on a Pro Forma Basis shall not be greater than 4.25 to 1.00 and (ii) Permitted Refinancing Indebtedness in respect thereof;

 

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(s) Indebtedness of Subsidiaries that are not Loan Parties in an aggregate amount not to exceed at any time outstanding the greater of $330 million and 3.0% of Consolidated Total Assets;

(t) unsecured Indebtedness in respect of obligations of the Borrower or any Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services; provided , that such obligations are incurred in connection with open accounts extended by suppliers on customary trade terms (which require that all such payments be made within 60 days after the incurrence of the related obligations) in the ordinary course of business and not in connection with the borrowing of money or any Swap Agreements;

(u) Indebtedness representing deferred compensation to employees and directors of the Borrower or any Subsidiary incurred (i) in the ordinary course of business or (ii) in connection with the Transactions (including as a result of the cancellation or vesting of outstanding options and other equity-based awards in connection therewith);

(v) Indebtedness in connection with Permitted Securitization Financings;

(w) Indebtedness of the Borrower and the Subsidiaries incurred under overdraft, lines of credit or cash management facilities (including, but not limited to, intraday, ACH and purchasing card/T&E services) extended by one or more financial institutions reasonably acceptable to the Administrative Agent or one or more of the Lenders and (in each case) established for the Borrower’s and the Subsidiaries’ ordinary course of operations (such Indebtedness, the “ Cash Management Line ”), which Indebtedness may be secured as, but only to the extent, provided in Section 6.02(b) and in the Security Documents;

(x) Indebtedness incurred on behalf of, or representing Guarantees of Indebtedness of, joint ventures not in excess, at any one time outstanding, of the greater of $550.0 million or 5.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such incurrence for which financial statements have been delivered pursuant to Section 5.04;

(y) Indebtedness issued by the Borrower or any Subsidiary to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of Holdings or any Parent Entity permitted by Section 6.06;

(z) Indebtedness consisting of obligations of the Borrower or any Subsidiary under deferred compensation or other similar arrangements incurred by such person in connection with the Transactions and Permitted Business Acquisitions or any other Investment permitted hereunder;

(aa) Indebtedness incurred in connection with notes and earn-out obligations payable to sellers in joint ventures and Permitted Business Acquisitions; provided that required payments in respect thereof shall not exceed $50.0 million in 2007, $75.0 million in either 2008 or 2009, and 40% of the amount of Permitted Business Acquisitions in each subsequent year;

 

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(bb) Indebtedness in respect of Arbitrage Programs in an aggregate principal amount not to exceed the sum of (i) $10.0 million and (ii) the aggregate amount of Permitted Investments related thereto from time to time;

(cc) all premiums (including tender premiums, if any), defeasance costs, interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in paragraphs (a) through (bb) above; and

(dd) Indebtedness of the Borrower existing on the Closing Date pursuant to the Existing Senior Notes and any Permitted Refinancing Indebtedness incurred to Refinance any such Indebtedness.

For purposes of determining compliance with this Section 6.01, the amount of any Indebtedness denominated in any currency other than Dollars shall be calculated based on customary currency exchange rates in effect, in the case of such Indebtedness incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness) on or prior to the Closing Date, on the Closing Date and, in the case of such Indebtedness incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness) after the Closing Date, on the date that such Indebtedness was incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness); provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a currency other than Dollars (or in a different currency from the Indebtedness being refinanced), and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed (i) the outstanding or committed principal amount, as applicable, of such Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums (including tender premiums), defeasance costs and other costs and expenses incurred in connection with such refinancing.

SECTION 6.02. Liens . Create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any person, including the Borrower and any Subsidiary) at the time owned by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, “ Permitted Liens ”):

(a) Liens on property or assets of the Borrower and the Subsidiaries existing on the Closing Date and set forth on Schedule 6.02(a) or, to the extent not listed in such Schedule, where such property or assets have a fair market value (as determined in good faith by the Borrower) that does not exceed $10.0 million in the aggregate, and any modifications, replacements, renewals or extensions thereof; provided , that such Liens shall secure only those obligations that they secure on the Closing Date (and any Permitted Refinancing Indebtedness in respect of such obligations permitted by Section 6.01(a)) and shall not subsequently apply to any other property or assets of the Borrower or any Subsidiary other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien, and (B) proceeds and products thereof;

 

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(b) Liens created under the Loan Documents (including, without limitation, Liens securing (x) obligations in respect of Swap Agreements owed to a person that is a Lender or an Affiliate of a Lender at the time of entry into such Swap Agreements and (y) obligations under the Existing Senior Notes Indenture on a pari passu basis with the Obligations) or permitted in respect of any Mortgaged Property by the terms of the applicable Mortgage; provided , however , that in no event shall the holders of the Indebtedness under the Cash Management Line in the aggregate (other than any Agent, Lender, an Affiliate of the Administrative Agent or an Affiliate of a Lender) have the right to receive proceeds from any realization upon the Collateral or payments from the Guarantors pursuant to the Collateral Agreement in respect of claims in excess of $25.0 million in the aggregate (plus (i) any accrued and unpaid interest in respect of Indebtedness incurred by the Borrower and the Subsidiaries under the Cash Management Line and (ii) any accrued and unpaid fees and expenses owing by the Borrower and the Subsidiaries under the Cash Management Line) from the enforcement of any remedies available to the Secured Parties under all of the Loan Documents; provided , further , that in no event shall the holders of any Indebtedness in the aggregate (other than the Cash Management Line, which shall be governed by the preceding proviso to this clause (b)) incurred in the ordinary course of business of the Borrower or any Subsidiary and permitted under Section 6.01 have the right to receive proceeds from any realization upon the Collateral or payments from the Guarantors pursuant to the Collateral Agreement in respect of claims in excess of $25.0 million in the aggregate from the enforcement of any remedies available to the Secured Parties under all of the Loan Documents except with respect to any such holder that has executed an intercreditor agreement with the Administrative Agent in form and substance satisfactory to the Administrative Agent;

(c) Liens on any property or asset of the Borrower or any Subsidiary securing Indebtedness or Permitted Refinancing Indebtedness permitted by Section 6.01(h); provided , that such Lien (i) does not apply to any other property or assets of the Borrower or any of the Subsidiaries not securing such Indebtedness at the date of the acquisition of such property or asset (other than after acquired property subjected to a Lien securing Indebtedness and other obligations incurred prior to such date and which Indebtedness and other obligations are permitted hereunder that require a pledge of after acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (ii) such Lien is not created in contemplation of or in connection with such acquisition;

(d) Liens for Taxes, assessments or other governmental charges or levies not yet delinquent or that are being contested in compliance with Section 5.03;

(e) Liens imposed by law, including landlord’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, construction or other like Liens arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or that are being contested in good faith by appropriate proceedings and in respect of which, if applicable, the Borrower or any Subsidiary shall have set aside on its books reserves in accordance with GAAP;

 

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(f) (i) pledges and deposits and other Liens made in the ordinary course of business in compliance with the Federal Employers Liability Act or any other workers’ compensation, unemployment insurance and other social security laws or regulations and deposits securing liability to insurance carriers under insurance or self-insurance arrangements in respect of such obligations and (ii) pledges and deposits and other Liens securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary;

(g) deposits and other Liens to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory and regulatory obligations, surety and appeal bonds, performance and return of money bonds, bids, leases, government contracts, trade contracts, agreements with utilities, and other obligations of a like nature (including letters of credit in lieu of any such bonds or to support the issuance thereof) incurred in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;

(h) zoning restrictions, survey exceptions and such other encumbrances as an accurate survey would disclose, easements, trackage rights, leases (other than Capital Lease Obligations), licenses, special assessments, rights-of-way, covenants, conditions, restrictions and declarations on or with respect to the use of Real Property, servicing agreements, development agreements, site plan agreements and other similar encumbrances incurred in the ordinary course of business and title defects or irregularities that are of a minor nature and that, in the aggregate, do not interfere in any material respect with the ordinary conduct of the business of the Borrower or any Subsidiary;

(i) Liens securing Indebtedness permitted by Section 6.01(i) (limited to the assets subject to such Indebtedness);

(j) Liens arising out of sale and lease-back transactions permitted under Section 6.03, so long as such Liens attach only to the subject property and any accessions thereto, proceeds thereof and related property;

(k) Liens securing judgments that do not constitute an Event of Default under Section 8.01(j) and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

(l) Liens disclosed by the title insurance policies delivered on or subsequent to the Closing Date and pursuant to Section 5.09 and any replacement, extension or renewal of any such Lien; provided , that such replacement, extension or renewal Lien

 

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shall not cover any property other than the property that was subject to such Lien prior to such replacement, extension or renewal; provided , further , that the Indebtedness and other obligations secured by such replacement, extension or renewal Lien are permitted by this Agreement;

(m) any interest or title of a lessor or sublessor under any leases or subleases entered into by the Borrower or any Subsidiary in the ordinary course of business;

(n) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower or any Subsidiary or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;

(o) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights;

(p) Liens securing obligations in respect of trade-related letters of credit, trade-related bank guarantees or similar obligations permitted under Section 6.01(f) or (o) and covering the property (or the documents of title in respect of such property) financed by such letters of credit, bank guarantees or similar obligations and the proceeds and products thereof;

(q) leases or subleases, licenses or sublicenses (including with respect to intellectual property and software) granted to others in the ordinary course of business not interfering in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole;

(r) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(s) Liens solely on any cash earnest money deposits made by the Borrower or any of the Subsidiaries in connection with any letter of intent or purchase agreement in respect of any Investment permitted hereunder;

(t) Liens on property or assets of any Subsidiary that is not a Loan Party securing Indebtedness of a Subsidiary that is not a Loan Party permitted under Section 6.01;

(u) other Liens with respect to property or assets of the Borrower or any Subsidiary; provided that (i) after giving effect to any such Lien and the creation, incurrence, acquisition or assumption of Indebtedness, if any, secured by such Lien, the Senior Secured Leverage Ratio on a Pro Forma Basis shall not be greater than 4.25 to 1.00, (ii) at the time of the incurrence of such Lien and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom, (iii) the Indebtedness or other obligations secured by such Lien are otherwise

 

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permitted by this Agreement, (iv) if such Liens are on any Collateral, such Liens on the Collateral are subordinated to the Liens granted under the Loan Documents, and (v) to the extent such Liens are subordinated to the Liens granted hereunder, an intercreditor agreement reasonably satisfactory to the Administrative Agent shall be entered into providing that such new liens will be subordinated to the Liens granted hereunder, in each case, on customary terms;

(v) the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

(w) Liens arising from precautionary Uniform Commercial Code financing statements or consignments entered into in connection with any transaction otherwise permitted under this Agreement;

(x) Liens on Equity Interests in joint ventures securing obligations of such joint venture;

(y) Liens on securities that are the subject of repurchase agreements constituting Permitted Investments under clause (c) of the definition thereof;

(z) Liens in respect of Permitted Securitization Financings on all or a portion of the assets of Special Purpose Securitization Subsidiaries (including pursuant to UCC filings covering sales of accounts, chattel paper, payment intangibles, promissory notes and beneficial interests in such assets with respect to Permitted Securitization Financings);

(aa) Liens on goods or inventory the purchase, shipment or storage price of which is financed by a documentary letter of credit, bank guarantee or bankers’ acceptance issued or created for the account of the Borrower or any Subsidiary in the ordinary course of business; provided , that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit, bank guarantee or banker’s acceptance to the extent permitted under Section 6.01(f) or (o);

(bb) Liens securing insurance premiums financing arrangements, provided , that such Liens are limited to the applicable unearned insurance premiums;

(cc) Liens in favor of the Borrower or any Subsidiary Loan Party; provided that if any such Lien shall cover any Collateral, the holder of such Lien shall execute and deliver to the Administrative Agent a subordination agreement in form and substance reasonably satisfactory to the Administrative Agent;

(dd) Liens on not more than $50.0 million of deposits securing Swap Agreements;

(ee) equal and ratable Liens securing the Existing Senior Notes and Permitted Refinancing Indebtedness in respect of the Existing Senior Notes;

 

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(ff) other Liens with respect to property or assets of the Borrower or any Subsidiary securing obligations in an aggregate principal amount outstanding at any time not to exceed $50.0 million;

(gg) Liens on the Specified Aircraft securing the Specified Aircraft Sale and Leaseback;

(hh) Liens on Permitted Investments (and related segregated deposit and securities accounts) securing Indebtedness outstanding under Section 6.01(bb);

(ii) Liens on any asset of the Borrower or any Subsidiary securing any liability incurred in connection with the acquisition of homes and related assets in the ordinary course of its relocation services business; provided that such Lien (i) does not apply to any other asset of the Borrower or any Subsidiary not securing such Indebtedness at the date of the acquisition of such property or asset and (ii) such Lien is not created in contemplation of or in connection with such acquisition; and

(jj) Liens on proceeds from Cendant Contingent Assets received by the Borrower and held in trust (or otherwise segregated or pledged) for the benefit of the other parties to the Separation and Distribution Agreement (other than Travelport Inc.) to secure the Borrower’s obligations under Section 7.9 thereof.

SECTION 6.03. Sale and Lease-Back Transactions . Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “ Sale and Lease-Back Transaction ”); provided , that a Sale and Lease-Back Transaction shall be permitted (a) with respect to property owned (i) by the Borrower or any Subsidiary Loan Party that is acquired after the Closing Date so long as such Sale and Lease-Back Transaction is consummated within 270 days of the acquisition of such property or (ii) by any Subsidiary that is not a Loan Party regardless of when such property was acquired, (b) with respect to any property owned by the Borrower or any Subsidiary Loan Party, (i) if at the time the lease in connection therewith is entered into, and after giving effect to the entering into of such lease, the Remaining Present Value of such lease, together with Indebtedness outstanding pursuant to Sections 6.01(i) and the Remaining Present Value of outstanding leases previously entered into under this Section 6.03(b), would not exceed the greater of $550.0 million and 5.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date the lease was entered into for which financial statements have been delivered pursuant to Section 5.04 and (ii) if such Sale and Lease-Back Transaction is of property owned by the Borrower or any Subsidiary Loan Party as of the Closing Date, the Net Proceeds therefrom are used to prepay the Term Loans to the extent required by Section 2.11(b), and (c) with respect to the Specified Aircraft Sale and Leaseback.

SECTION 6.04. Investments, Loans and Advances . Purchase, hold or acquire (including pursuant to any merger, consolidation or amalgamation with a person that is not a Wholly Owned Subsidiary immediately prior to such merger, consolidation or amalgamation)

 

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any Equity Interests, evidences of Indebtedness or other securities of, make or permit to exist any loans or advances to or Guarantees of the obligations of, or make or permit to exist any investment or any other interest in (each, an “ Investment ”), any other person, except:

(a) the Transactions (including as a result of the cancellation or vesting of outstanding options and other equity-based awards in connection therewith);

(b) (i) Investments by the Borrower or any Subsidiary in the Equity Interests of any Subsidiary; (ii) intercompany loans from the Borrower or any Subsidiary to the Borrower or any Subsidiary; and (iii) Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness otherwise expressly permitted hereunder of the Borrower or any Subsidiary; provided , that the sum of (A) Investments (valued at the time of the making thereof and without giving effect to any write-downs or write-offs thereof) made after the Closing Date by the Loan Parties pursuant to clause (i) in Subsidiaries that are not Subsidiary Loan Parties, plus (B) the net amount outstanding in respect of intercompany loans made after the Closing Date by Loan Parties to Subsidiaries that are not Subsidiary Loan Parties pursuant to clause (ii), plus (C) Guarantees by Loan Parties of Indebtedness after the Closing Date of Subsidiaries that are not Subsidiary Loan Parties pursuant to clause (iii), shall not exceed an aggregate amount equal to (x) the greater of (1) $500.0 million and (2) 4.5% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such Investment for which financial statements have been delivered pursuant to Section 5.04 ( plus any return of capital actually received by the respective investors in respect of Investments theretofore made by them pursuant to this paragraph (b)); plus (y) the portion, if any, of the Cumulative Credit on the date of such election that the Borrower elects to apply to this Section 6.04(b)(y); provided , further , that intercompany current liabilities incurred in the ordinary course of business in connection with the cash management operations of the Borrower and the Subsidiaries shall not be included in calculating the limitation in this paragraph at any time;

(c) Permitted Investments and Investments that were Permitted Investments when made (including in connection with the Arbitrage Programs);

(d) Investments arising out of the receipt by the Borrower or any Subsidiary of noncash consideration for the sale of assets permitted under Section 6.05;

(e) loans and advances to officers, directors, employees or consultants of the Borrower or any Subsidiary (i) in the ordinary course of business not to exceed $50.0 million as of the end of the fiscal quarter immediately prior to the date of such loan or advance for which financial statements have been delivered pursuant to Section 5.04 in the aggregate at any time outstanding (calculated without regard to write downs or write offs thereof), (ii) in respect of payroll payments and expenses in the ordinary course of business and (iii) in connection with such person’s purchase of Equity Interests of Holdings (or any direct or indirect parent of Holdings) solely to the extent that the amount of such loans and advances shall be contributed to the Borrower in cash as common equity, and advances to real estate agents in the ordinary course of business;

 

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(f) accounts receivable, security deposits and prepayments arising and trade credit granted in the ordinary course of business and any assets or securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss and any prepayments and other credits to suppliers made in the ordinary course of business;

(g) Swap Agreements;

(h) Investments existing on, or contractually committed as of, the Closing Date and set forth on Schedule 6.04 and any extensions, renewals or reinvestments thereof, so long as the aggregate amount of all Investments pursuant to this clause (h) is not increased at any time above the amount of such Investment existing or committed on the Closing Date (other than pursuant to any increase as required by the terms of any such Investment as in existence on the Closing Date);

(i) Investments resulting from pledges and deposits under Sections 6.02(f), (g), (k), (r), (s), (u) and (ee);

(j) other Investments by the Borrower or any Subsidiary in an aggregate amount (valued at the time of the making thereof, and without giving effect to any write-downs or write-offs thereof) not to exceed (i) the greater of $550.0 million and 5.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such incurrence for which financial statements have been delivered pursuant to Section 5.04 ( plus , without duplication for such amounts included in the calculation of the Cumulative Credit, any returns of capital actually received by the respective investor in respect of investments theretofore made by it pursuant to this paragraph (j)) plus (ii) the portion, if any, of the Cumulative Credit on the date of such election that the Borrower elects to apply to this Section 6.04(j)(ii); provided that if any Investment pursuant to this clause (j) is made in any person that is not a Subsidiary of the Borrower at the date of the making of such Investment and such person becomes a Subsidiary of the Borrower after such date, then (so long as such Investment also complies with clause (k) below if such person becomes a Subsidiary as a result of such Investment) such Investment shall thereafter be deemed to have been made pursuant to clause (b) above and shall cease to have been made pursuant to this clause (j) for so long as such person continues to be a Subsidiary of the Borrower;

(k) Investments constituting Permitted Business Acquisitions;

(l) intercompany loans between Subsidiaries that are not Loan Parties and Guarantees by Subsidiaries that are not Loan Parties permitted by Section 6.01(m);

(m) Investments received in connection with the bankruptcy or reorganization of, settlement of delinquent accounts against, and settlement, compromise or resolution of litigation, arbitration or other disputes with or judgments against, any other person that is not an Affiliate of the Borrower, or Investments acquired as a result of a foreclosure by the Borrower or any of the Subsidiaries with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;

 

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(n) Investments of a Subsidiary acquired after the Closing Date or of an entity merged into the Borrower or merged into or consolidated with a Subsidiary after the Closing Date, in each case, (i) to the extent permitted under this Section 6.04 and, (ii) in the case of any acquisition, merger, consolidation or amalgamation, permitted under Section 6.05 and (iii) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, consolidation or amalgamation and were in existence on the date of such acquisition, merger, consolidation or amalgamation;

(o) acquisitions by the Borrower of obligations of one or more officers or other employees of Holdings, any Parent Entity, the Borrower or its Subsidiaries in connection with such officer’s or employee’s acquisition of Equity Interests of Holdings or any Parent Entity, so long as no cash is actually advanced by the Borrower or any of the Subsidiaries to such officers or employees in connection with the acquisition of any such obligations;

(p) Guarantees by the Borrower or any Subsidiary of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by the Borrower or any Subsidiary in the ordinary course of business;

(q) Investments to the extent that payment for such Investments is made with Equity Interests of Holdings (or any Parent Entity);

(r) subject to the limitations of the last paragraph of Section 6.05, Investments in the Equity Interests of one or more newly formed persons that are received as consideration for the contribution by Holdings, the Borrower or the applicable Subsidiary of assets (including Equity Interests and cash) to such person or persons; provided , that (i) the fair market value of such assets, determined in good faith by the Borrower on an arms’-length basis, so contributed pursuant to this paragraph (r) shall not in the aggregate exceed $50.0 million and (ii) in respect of each such contribution, a Responsible Officer of the Borrower shall certify, in a form to be agreed upon by the Borrower and the Administrative Agent (x) after giving effect to such contribution, no Default or Event of Default shall have occurred and be continuing, (y) the fair market value (as determined in good faith by the Borrower) of the assets so contributed and (z) that the requirements of paragraph (i) of this proviso remain satisfied;

(s) Investments consisting of the redemption, purchase, repurchase or retirement of any Equity Interests permitted under Section 6.06;

(t) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers consistent with past practices;

(u) Investments in Subsidiaries that are not Loan Parties not to exceed the greater of $220.0 million and 2.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such Investment for which financial

 

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statements have been delivered pursuant to Section 5.04 (plus an amount equal to any return of capital actually received in respect of Investments theretofore made pursuant to this paragraph (u))in the aggregate, as valued at the fair market value (as determined in good faith by the Borrower) of such Investment at the time such Investment is made;

(v) Guarantees permitted under Section 6.01 (except to the extent such Guarantee is expressly subject to Section 6.04);

(w) advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of the Borrower or such Subsidiary;

(x) Investments by Borrower and its Subsidiaries, including loans and advances to any direct or indirect parent of the Borrower, if the Borrower or any other Subsidiary would otherwise be permitted to make a Restricted Payment in such amount (provided that the amount of any such Investment shall also be deemed to be a Restricted Payment under the appropriate clause of Section 6.06 for all purposes of this Agreement);

(y) Investments arising as a result of Permitted Securitization Financings;

(z) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other persons;

(aa) purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property in each case in the ordinary course of business, to the extent such purchases and acquisitions constitute Investments;

(bb) Investments received substantially contemporaneously in exchange for Equity Interests of Holdings or any Parent Entity; provided that such Investments are not included in any determination of the Cumulative Credit;

(cc) Investments in joint ventures not in excess of the greater of $220.0 million and 2.0% of Consolidated Total Assets as of the end of the fiscal quarter immediately prior to the date of such Investment for which financial statements have been delivered pursuant to Section 5.04 in the aggregate (plus an amount equal to any return of capital actually received in respect of Investments theretofore made pursuant to this paragraph (cc) in the aggregate); provided that if any Investment pursuant to this clause (cc) is made in any person that is not a Subsidiary of the Borrower at the date of the making of such Investment and such person becomes a Subsidiary of the Borrower after such date, then (so long as such Investment also complies with clause (k) above if such person becomes a Subsidiary as a result of such Investment) such Investment shall thereafter be deemed to have been made pursuant to clause (b) above and shall cease to have been made pursuant to this clause (cc) for so long as such person continues to be a Subsidiary of the Borrower;

(dd) Investments in connection with the defeasance or discharge of the Existing Senior Notes;

 

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(ee) any franchise development advances or notes and other loans to franchisees in an aggregate amount not to exceed $75.0 million in any fiscal year; and

(ff) advances or loans to relocating employees of a customer in the relocation services business of the Borrower or any Subsidiary made in the ordinary course of business.

The amount of Investments that may be made at any time pursuant to Section 6.04(b) or 6.04(j) (such Sections, the “ Related Sections ”) may, at the election of the Borrower, be increased by the amount of Investments that could be made at such time under the other Related Section; provided that the amount of each such increase in respect of one Related Section shall be treated as having been used under the other Related Section.

SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions . Merge into, or consolidate or amalgamate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any part of its assets (whether now owned or hereafter acquired), or issue, sell, transfer or otherwise dispose of any Equity Interests of the Borrower or any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial part of the assets of any other person, or liquidate or dissolve, except that this Section shall not prohibit:

(a) (i) the purchase and sale of inventory in the ordinary course of business by the Borrower or any Subsidiary, (ii) the acquisition or lease (pursuant to an operating lease) of any other asset in the ordinary course of business by the Borrower or any Subsidiary, (iii) the sale of surplus, obsolete, damaged or worn out equipment or other property in the ordinary course of business by the Borrower or any Subsidiary or (iv) the sale of Permitted Investments in the ordinary course of business;

(b) if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing or would result therefrom, (i) the merger, consolidation or amalgamation of any Subsidiary into or with the Borrower in a transaction in which the Borrower is the survivor, (ii) the merger, consolidation or amalgamation of any Subsidiary into or with any Subsidiary Loan Party in a transaction in which the surviving or resulting entity is a Subsidiary Loan Party and, in the case of each of clauses (i) and (ii), no person other than the Borrower or Subsidiary Loan Party receives any consideration, (iii) the merger, consolidation or amalgamation of any Subsidiary that is not a Subsidiary Loan Party into or with any other Subsidiary that is not a Subsidiary Loan Party, (iv) the liquidation or dissolution or change in form of entity of any Subsidiary (other than the Borrower) if the Borrower determines in good faith that such liquidation, dissolution or change in form is in the best interests of the Borrower and is not materially disadvantageous to the Lenders or (v) any Subsidiary may merge, consolidate or amalgamate into or with any other person in order to effect an Investment permitted pursuant to Section 6.04 so long as the continuing or surviving person shall be a Subsidiary, which shall be a Loan Party if the merging, consolidating or amalgamating Subsidiary was a Loan Party and which together with each of its Subsidiaries shall have complied with the requirements of Section 5.09;

 

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(c) sales, transfers, leases or other dispositions to the Borrower or a Subsidiary (upon voluntary liquidation or otherwise); provided , that any sales, transfers, leases or other dispositions by a Loan Party to a Subsidiary that is not a Subsidiary Loan Party in reliance on this paragraph (c) shall be made in compliance with Section 6.07 and the aggregate gross proceeds of any such sales, transfers, leases or other dispositions plus the aggregate gross proceeds of any or all assets sold, transferred, leased, licensed or otherwise disposed of in reliance on clause (g) below, shall not exceed, in any fiscal year of the Borrower, the greater of $550.0 million and 5.0% of Consolidated Total Assets as of the end of the fiscal year ended immediately prior to the date of such sale, transfer, lease or other disposition for which financial statements have been delivered pursuant to Section 5.04 (determined based on the balance sheet so delivered for such prior fiscal year);

(d) Sale and Lease-Back Transactions permitted by Section 6.03;

(e) Investments permitted by Section 6.04, Permitted Liens and Restricted Payments permitted by Section 6.06;

(f) the sale or other disposition of defaulted receivables and the compromise, settlement and collection of receivables in the ordinary course of business or in bankruptcy or other proceedings concerning the other account party thereon and not as part of a Permitted Securitization Financing;

(g) sales, transfers, leases, licenses or other dispositions of assets not otherwise permitted by this Section 6.05 (or required to be included in this clause (g) pursuant to Section 6.05(c)); provided , that (i) the aggregate gross proceeds (including noncash proceeds) of any or all assets sold, transferred, leased, licensed or otherwise disposed of in reliance upon this paragraph (g), plus the aggregate gross proceeds of any or all assets sold, transferred, leased or otherwise disposed of to Subsidiaries that are not Loan Parties in reliance on clause (c) above, shall not exceed, in any fiscal year of the Borrower, the greater of $550.0 million and 5.0% of Consolidated Total Assets as of the end of the fiscal year ended immediately prior to the date of such sale, transfer, lease, license or other disposition for which financial statements have been delivered pursuant to Section 5.04 (determined based on the balance sheet so delivered for such prior fiscal year), (ii) no Default or Event of Default exists or would result therefrom, (iii) with respect to any such sale, transfer, lease or other disposition with aggregate gross proceeds (including noncash proceeds) in excess of $10.0 million, immediately after giving effect thereto, the Borrower shall be in Pro Forma Compliance, and (iv) the Net Proceeds thereof are applied in accordance with Section 2.11(b);

(h) Permitted Business Acquisitions (including any merger, consolidation or amalgamation in order to effect a Permitted Business Acquisition); provided , that following any such merger, consolidation or amalgamation (i) involving the Borrower, the Borrower is the surviving corporation, (ii) involving a Subsidiary Loan Party, the surviving or resulting entity shall be a Subsidiary Loan Party that is a Wholly Owned Subsidiary and (iii) involving a Subsidiary that is not a Loan Party, the surviving or resulting entity shall be a Wholly Owned Subsidiary;

 

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(i) leases, licenses, or subleases or sublicenses of any real or personal property in the ordinary course of business;

(j) sales, leases or other dispositions of inventory of the Borrower and its Subsidiaries determined by the management of the Borrower to be no longer useful or necessary in the operation of the business of the Borrower or any of the Subsidiaries;

(k) acquisitions and purchases made with the proceeds of any Asset Sale pursuant to the first proviso of paragraph (a) of the definition of “Net Proceeds”;

(l) the sale or other transfer of Securitization Assets or interests therein pursuant to a Permitted Securitization Financing;

(m) any exchange of assets for services and/or other assets of comparable or greater value; provided , that (i) at least 90% of the consideration received by the transferor consists of assets that will be used in a business or business activity permitted hereunder, (ii) in the event of a swap with a fair market value (as determined in good faith by the Borrower) in excess of $10.0 million, the Administrative Agent shall have received a certificate from a Responsible Officer of the Borrower with respect to such fair market value and (iii) in the event of a swap with a fair market value (as determined in good faith by the Borrower) in excess of $20.0 million, such exchange shall have been approved by at least a majority of the Board of Directors of Holdings or the Borrower; provided , further , that (A) the aggregate gross consideration (including exchange assets, other noncash consideration and cash proceeds) of any or all assets exchanged in reliance on this paragraph (m) shall not exceed, in any fiscal year of the Borrower, 5.0% of Consolidated Total Assets as of the end of the fiscal year ended immediately prior to the date of such exchange transaction for which financial statements have been delivered pursuant to Section 5.04 (determined based on the balance sheet so delivered for such prior fiscal year), (B) no Default or Event of Default exists or would result therefrom, (C) with respect to any such exchange with aggregate gross consideration in excess of $10.0 million, immediately after giving effect thereto, the Borrower shall be in Pro Forma Compliance, and (D) the Net Proceeds, if any, thereof are applied in accordance with Section 2.11(b);

(n) any disposition of Equity Interests of a Subsidiary pursuant to an agreement or other obligation with or to a person (other than the Borrower and its Subsidiaries) from whom such Subsidiary was acquired or from whom such Subsidiary acquired its business and assets (having been newly formed in connection with such acquisition), made as part of such acquisition and in each case comprising all or a portion of the consideration in respect of such sale or acquisition;

(o) the Transactions;

(p) any surrender or waiver of contract rights or the settlement, release, recovery on or surrender of contract, tort or other claims of any kind;

(q) any disposition of Permitted Investments in connection with the Arbitrage Programs;

 

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(r) sales or other dispositions of Equity Interests in Existing Joint Ventures;

(s) any grant of a license in the ordinary course of business under any patents, trademarks, know-how or any other intellectual property or franchise rights; and

(t) the purchase and sale of assets in the ordinary course of the relocation services business of the Borrower or any Subsidiary.

Notwithstanding anything to the contrary contained in Section 6.05 above, (i) no sale, transfer or other disposition of assets shall be permitted by this Section 6.05 (other than sales, transfers, leases, licenses or other dispositions to Loan Parties pursuant to paragraph (c) hereof) unless such disposition is for fair market value (as determined in good faith by the Borrower) and (ii) no sale, transfer or other disposition of assets in excess of $40.0 million shall be permitted by paragraph (d) or (g) of this Section 6.05 unless such disposition is for at least 75% cash consideration; provided that for purposes of clause (ii), (a) the amount of any liabilities (as shown on the Borrower’s or any Subsidiary’s most recent balance sheet or in the notes thereto) of the Borrower or any Subsidiary of the Borrower (other than liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee of any such assets, (b) any notes or other obligations or other securities or assets received by the Borrower or such Subsidiary of the Borrower from such transferee that are converted by the Borrower or such Subsidiary of the Borrower into cash within 180 days of the receipt thereof (to the extent of the cash received) and (c) any Designated Non-Cash Consideration received by the Borrower or any of its Subsidiaries in such Asset Sale having an aggregate fair market value (as determined in good faith by the Borrower), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed $50.0 million at the time of the receipt of such Designated Non-Cash Consideration (with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value) shall be deemed to be cash. To the extent any Collateral is disposed of in a transaction expressly permitted by this Section 6.05 to any person other than Holdings (prior to a Borrower Qualified IPO), the Borrower or any Subsidiary, such Collateral shall be sold free and clear of the Liens created by the Loan Documents, and the Administrative Agent shall take, and shall be authorized by each Lender to take, any actions reasonably requested by the Borrower in order to evidence the foregoing.

SECTION 6.06. Restricted Payments . Declare or pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any of its Equity Interests (other than dividends and distributions on Equity Interests payable solely by the issuance of additional Equity Interests (other than Disqualified Stock) of the person paying such dividends or distributions) or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any of its Equity Interests or set aside any amount for any such purpose (other than through the issuance of additional Equity Interests (other than Disqualified Stock) of the person redeeming, purchasing, retiring or acquiring such shares) (the foregoing, “ Restricted Payments ”; for avoidance of doubt, the payment of the Cendant Contingent Liabilities shall not constitute Restricted Payments); provided, however, that:

(a) any Subsidiary of the Borrower may make Restricted Payments to the Borrower or to any Wholly Owned Subsidiary of the Borrower (or, in the case of non-Wholly Owned Subsidiaries, to the Borrower or any Subsidiary that is a direct or indirect parent of such Subsidiary and to each other owner of Equity Interests of such Subsidiary on a pro rata basis (or more favorable basis from the perspective of the Borrower or such Subsidiary) based on their relative ownership interests so long as any repurchase of its Equity Interests from a person that is not the Borrower or a Subsidiary is permitted under Section 6.04);

 

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(b) (x) the Borrower may make Restricted Payments to Holdings in respect of (i) overhead, legal, accounting and other professional fees and expenses of Holdings or any Parent Entity, (ii) fees and expenses related to any public offering or private placement of equity securities or debt (including debt securities and bank loans) of Holdings or any Parent Entity whether or not consummated, (iii) franchise taxes and other fees, taxes and expenses in connection with the maintenance of its (or its Parent Entity’s) existence and its (or any Parent Entity’s indirect) ownership of the Borrower, (iv) payments permitted by Section 6.07(b), and (v) customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers and employees of Holdings or any Parent Entity, in each case in order to permit Holdings or any Parent Entity to make such payments; provided , that in the case of clauses (i), (ii) and (iii), the amount of such Restricted Payments shall not exceed the portion of any amounts referred to in such clauses (i), (ii) and (iii) that are allocable to the Borrower and its Subsidiaries (which shall be 100% for so long as Holdings or such Parent Entity, as the case may be, owns no assets other than the Equity Interests in the Borrower, Holdings, or another Parent Entity) and (y)(i) with respect to each tax year or portion thereof that the Borrower qualifies as a Flow Through Entity, the Borrower may make Restricted Payments to the holders of Equity Interests of the Borrower (or to any direct or indirect member of the Borrower or holders of Equity Interests in such member) and (ii) with respect to any tax year or portion thereof that the Borrower does not qualify as a Flow Through Entity, the Borrower may make Restricted Payments to any direct or indirect parent company of the Borrower that files a consolidated U.S. federal tax return that includes the Borrower and its subsidiaries, in each case for clause (i) and (ii) of this clause (y) in an amount not to exceed the amount that the Borrower (or any direct or indirect member of the Borrower, as the case may be) and its Subsidiaries would have been required to pay in respect of Federal, state or local Taxes (as the case may be) in respect of such year if the Borrower and its Subsidiaries paid such taxes directly as a stand-alone taxpayer (or stand-alone group);

(c) the Borrower may make Restricted Payments to Holdings the proceeds of which are used to purchase or redeem the Equity Interests of Holdings or any Parent Entity (including related stock appreciation rights or similar securities) held by then present or former directors, consultants, officers or employees of Holdings or any Parent Entity, the Borrower or any of the Subsidiaries or by any Plan or any shareholders’ agreement then in effect upon such person’s death, disability, retirement or termination of

 

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employment or under the terms of any such Plan or any other agreement under which such shares of stock or related rights were issued; provided , that the aggregate amount of such purchases or redemptions under this paragraph (c) shall not exceed in any fiscal year $50.0 million (plus any amount carried over from prior fiscal years, up to a maximum of $75.0 million for such purchases or redemptions in the aggregate in any fiscal year), plus (x) the amount of net proceeds contributed as equity to the Borrower that were received by Holdings or any Parent Entity during such calendar year from sales of Equity Interests of Holdings or any Parent Entity of Holdings to directors, consultants, officers or employees of Holdings, any Parent Entity, the Borrower or any Subsidiary in connection with permitted employee compensation and incentive arrangements and (y) the amount of net proceeds of any key-man life insurance policies received during such calendar year, which, if not used in any year, may be carried forward to any subsequent calendar year; and provided , further , that cancellation of Indebtedness owing to the Borrower or any Subsidiary from members of management of Holdings, any Parent Entity, the Borrower or its Subsidiaries in connection with a repurchase of Equity Interests of Holdings or any Parent Entity will not be deemed to constitute a Restricted Payment for purposes of this Section 6.06;

(d) noncash repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

(e) the Borrower may make Restricted Payments to Holdings in an aggregate amount equal to the portion, if any, of the Cumulative Credit on such date that the Borrower elects to apply to this Section 6.06(e), such election to be specified in a written notice of a Responsible Officer of the Borrower calculating in reasonable detail the amount of Cumulative Credit immediately prior to such election and the amount thereof elected to be so applied; provided , that (i) no Default or Event of Default has occurred and is continuing or would result therefrom and (ii) after giving effect thereto, the Senior Secured Leverage Ratio on a Pro Forma Basis shall not be greater than 4.25 to 1.00;

(f) the Borrower may make Restricted Payments on or following the Closing Date in connection with the consummation of the Transactions (including as a result of the cancellation or vesting of outstanding options and other equity-based awards in connection therewith);

(g) the Borrower may make Restricted Payments to allow Holdings or any Parent Entity to make payments in cash, in lieu of the issuance of fractional shares, upon the exercise of warrants or upon the conversion or exchange of Equity Interests of any such person;

(h) after a Qualified IPO, the Borrower may make Restricted Payments to Holdings so that Holdings or any Parent Entity may make Restricted Payments to its equity holders in an amount equal to 6.0% per annum of the net proceeds received by the Borrower from any public offering of Equity Interests of the Borrower, Holdings or any Parent Entity;

 

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(i) the Borrower may make Restricted Payments to Holdings or any Parent Entity to finance any Investment permitted to be made pursuant to Section 6.04; provided that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment and (B) such parent shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests) to be contributed as equity to the Borrower or a Subsidiary or (2) the merger, consolidation or amalgamation (to the extent permitted in Section 6.05) of the person formed or acquired into the Borrower or a Subsidiary in order to consummate such Permitted Business Acquisition or Investment, in each case, in accordance with the requirements of Section 5.09;

(j) the Borrower or Holdings may make Restricted Payments to its equity holders in an amount necessary to fund payments to the Fund and the Fund Affiliates of the type and in the amounts otherwise permitted pursuant to Sections 6.07(b)(ix) and (xiv);

(k) other Restricted Payments by the Borrower to Holdings or Holdings’ direct Parent Entity to finance expenses and liabilities of Holdings or such Parent Entity, in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (k) not to exceed $50.0 million; and

(l) Restricted Payments made within 60 days after the date of declaration thereof, if at the date of declaration such payment would have been permitted under (and was counted against any applicable baskets under) this Agreement.

SECTION 6.07. Transactions with Affiliates . (a) Sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transaction with, any of its Affiliates or any known direct or indirect holder of 10% or more of any class of Equity Interests of Holdings (prior to a Borrower Qualified IPO) or the Borrower in a transaction involving aggregate consideration in excess of $25.0 million, unless such transaction is (i) otherwise permitted (or required) under this Agreement or (ii) upon terms no less favorable to the Borrower or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate. For purposes of this Section 6.07, any transaction with any Affiliate or any such 10% holder shall be deemed to have satisfied the standard set forth in clause (ii) of the immediately preceding sentence if such transaction is approved by a majority of the Disinterested Directors of the Board of Directors of Holdings or the Borrower.

(b) The foregoing paragraph (a) shall not prohibit, to the extent otherwise permitted under this Agreement,

(i) any issuance of securities, or other payments, loans (or cancellation of loans), awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans or similar employee benefit plans approved by the Board of Directors of Holdings or of the Borrower,

 

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(ii) loans or advances to employees or consultants of Holdings (or any Parent Entity), the Borrower or any of the Subsidiaries in accordance with Section 6.04(e),

(iii) transactions among the Borrower or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction (including via merger, consolidation or amalgamation in which a Subsidiary is the surviving entity),

(iv) the payment of fees, reasonable out-of-pocket costs and indemnities to directors, officers, consultants and employees of Holdings, any Parent Entity, the Borrower and the Subsidiaries in the ordinary course of business (limited, in the case of any Parent Entity, to the portion of such fees and expenses that are allocable to the Borrower and its Subsidiaries (which shall be 100% for so long as Holdings or such Parent Entity, as the case may be, owns no assets other than the Equity Interests in the Borrower, Holdings or another Parent Entity and assets incidental to the ownership of the Borrower and its Subsidiaries)),

(v) subject to the limitations set forth in Section 6.07(b)(xiv), if applicable, transactions pursuant to the Transaction Documents (including as a result of the cancellation or vesting of outstanding options and other equity-based awards in connection therewith) and permitted transactions, agreements and arrangements in existence on the Closing Date and set forth on Schedule 6.07 or any amendment, waiver, consent, renewal, extension or replacement thereto or thereof to the extent such amendment, waiver, consent, renewal, extension or replacement is not adverse to the Lenders in any material respect and other transactions, agreements and arrangements described on Schedule 6.07 and any amendment, waiver, consent, renewal, extension or replacement thereto or thereof or similar transactions, agreements or arrangements entered into by Holdings, the Borrower or any of the Subsidiaries to the extent such amendment is not adverse to the Lenders in any material respect,

(vi) (A) any employment agreements entered into by the Borrower or any of the Subsidiaries in the ordinary course of business, (B) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with employees, officers or directors, and (C) any employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers employees, and any reasonable employment contract and transactions pursuant thereto,

(vii) Restricted Payments permitted under Section 6.06, including payments to Holdings (and any Parent Entity),

(viii) any purchase by Holdings of the Equity Interests of the Borrower; provided , that any Equity Interests of the Borrower purchased by Holdings shall be pledged to the Collateral Agent on behalf of the Lenders pursuant to the Collateral Agreement,

(ix) payments by the Borrower or any of the Subsidiaries to the Fund or any Fund Affiliate made for any financial advisory, financing, underwriting or placement

 

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services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, which payments are approved by the majority of the Board of Directors of the Borrower, or a majority of the Disinterested Directors of the Borrower, in good faith,

(x) transactions with Wholly Owned Subsidiaries for the purchase or sale of goods, products, parts and services entered into in the ordinary course of business in a manner consistent with past practice,

(xi) any transaction in respect of which the Borrower delivers to the Administrative Agent (for delivery to the Lenders) a letter addressed to the Board of Directors of the Borrower from an accounting, appraisal or investment banking firm, in each case of nationally recognized standing that is (A) in the good faith determination of the Borrower qualified to render such letter and (B) reasonably satisfactory to the Administrative Agent, which letter states that such transaction is on terms that are no less favorable to the Borrower or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate,

(xii) subject to paragraph (xiv) below, the payment of all fees, expenses, bonuses and awards related to the Transactions as set forth in the Notes Offering Memorandum or on Schedule 6.07 , including fees payable to the Fund or any Fund Affiliate,

(xiii) transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business and in a manner consistent with past practice,

(xiv) any agreement to pay, and the payment of, monitoring, consulting, management, transaction, advisory or similar fees payable to the Fund or any Fund Affiliate (A) in an aggregate amount in any fiscal year not to exceed the sum of (1) the greater of $20.0 million and 2.5% of EBITDA for such fiscal year, plus reasonable out of pocket costs and expenses in connection therewith and unpaid amounts accrued for prior periods; plus (2) any deferred fees (to the extent such fees were within such amount in clause (A) (1) above originally), plus (B) 2.0% of the value of transactions with respect to which the Fund or any Fund Affiliate provides any transaction, advisory or other services, plus (C) a transaction fee of not more than $75.0 million to be paid to the Fund or a Fund Affiliate in connection with the Transactions on and/or after the Closing Date plus (D) so long as no Event of Default has occurred and is continuing, in the event of a Qualified IPO, the present value of all future amounts payable pursuant to any agreement referred to in clause (A) (1) above in connection with the termination of such agreement with the Fund and its Fund Affiliates (the “ Fund Termination Fee ”); provided , that if any such payment pursuant to clause (D) is not permitted to be paid as a result of an Event of Default, such payment shall accrue and may be payable when no Events of Default are continuing to the extent that no further Event of Default would result therefrom,

(xv) the issuance, sale or transfer of Equity Interests of the Borrower to Holdings and capital contributions by Holdings to the Borrower,

 

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(xvi) the issuance of Equity Interests to the management of Holdings, the Borrower or any Subsidiary in connection with the Transaction,

(xvii) payments by Holdings (and any Parent Entity), the Borrower and the Subsidiaries pursuant to tax sharing agreements among Holdings (and any such Parent Entity), the Borrower and the Subsidiaries on customary terms that require each party to make payments when such taxes are due or refunds received of amounts equal to the income tax liabilities and refunds generated by each such party calculated on a separate return basis and payments to the party generating tax benefits and credits of amounts equal to the value of such tax benefits and credits made available to the group by such party,

(xviii) transactions pursuant to any Permitted Securitization Financing,

(xix) payments or loans (or cancellation of loans) to employees or consultants that are (i) approved by a majority of the Disinterested Directors of the Board of Directors of Holdings or the Borrower in good faith, (ii) made in compliance with applicable law and (iii) otherwise permitted under this Agreement,

(xx) transactions between the Borrower or any of its Subsidiaries and any person, a director of which is also a director of the Borrower or any direct or indirect parent of the Borrower, provided , however , that (A) such director abstains from voting as a director of the Borrower or such direct or indirect parent company, as the case may be, on any matter involving such other person and (B) such person is not an Affiliate of the Borrower for any reason other than such director’s acting in such capacity,

(xxi) transactions permitted by, and complying with, the provisions of Section 6.01, 6.04(b), 6.04(l), 6.04(u), 6.05(b), (l) or (o) or 6.06,

(xxii) transactions among Loan Parties and not involving any other Affiliate, and

(xxiii) transactions undertaken in good faith (as certified by a Responsible Officer of the Borrower) for the purpose of improving the consolidated tax efficiency of the Borrower and the Subsidiaries.

SECTION 6.08. Business of the Borrower and the Subsidiaries . Notwithstanding any other provisions hereof, engage at any time in any business or business activity other than any business or business activity conducted by any of them on the Closing Date and any business or business activities incidental or related thereto, or any business or activity that is reasonably similar or complementary thereto or a reasonable extension, development or expansion thereof or ancillary thereto, and in the case of a Special Purpose Securitization Subsidiary, Permitted Securitization Financings.

SECTION 6.09. Limitation on Payments and Modifications of Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc . (a) Amend or modify in any manner materially adverse to the Lenders, or grant any waiver or release under or terminate in any manner (if such granting or termination shall be materially adverse to the Lenders), the articles or certificate of incorporation, by-laws, limited liability company operating agreement, partnership agreement or other organizational documents of the Borrower or any of the Subsidiaries or the Merger Agreement.

 

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(b) (i) Make, or agree or offer to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on Indebtedness outstanding under the Notes or any Permitted Refinancing Indebtedness in respect thereof or any preferred Equity Interests or any Disqualified Stock (“ Junior Financing ”), or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination in respect of any Junior Financing except for (A) Refinancings permitted by Section 6.01(l), (r) or (v), (B) payments of regularly scheduled interest, and, to the extent this Agreement is then in effect, principal on the scheduled maturity date of any Junior Financing, (C) payments or distributions in respect of all or any portion of the Junior Financing with the proceeds contributed to the Borrower by Holdings from the issuance, sale or exchange by Holdings (or any direct or indirect parent of Holdings) of Equity Interests made within eighteen months prior thereto, (D) the conversion of any Junior Financing to Equity Interests of Holdings or any of its direct or indirect parents; (E) any AHYDO Payment; and (F) so long as no Default or Event of Default has occurred and is continuing or would result therefrom and after giving effect to such payment or distribution the Borrower would be in Pro Forma Compliance, payments or distributions in respect of Junior Financings prior to their scheduled maturity made, in an aggregate amount, not to exceed the sum of (x) $150.0 million and (y) so long as after giving effect thereto, the Senior Secured Leverage Ratio on a Pro Forma Basis shall not be greater than 4.25 to 1.00 (or greater than 4.75 to 1.00 for payments or distributions in respect of principal of or interest on Indebtedness outstanding under the Senior Unsecured Notes), the portion, if any, of the Cumulative Credit on the date of such election that the Borrower elects to apply to this Section 6.09(b)(i)(F); or

(ii) Amend or modify, or permit the amendment or modification of, any provision of any Junior Financing, the Existing Senior Notes or any Permitted Securitization Document (or any Permitted Refinancing Indebtedness in respect of any of the foregoing), or any agreement, document or instrument evidencing or relating thereto, other than amendments or modifications that (A) are not in any manner materially adverse to the Lenders and (B) in the case of a refinancing of any Junior Financing, otherwise comply with the definition of “Permitted Refinancing Indebtedness”;

(c) Permit any Material Subsidiary to enter into any agreement or instrument that by its terms restricts (i) the payment of dividends or distributions or the making of cash advances to the Borrower or any Subsidiary that is a direct or indirect parent of such Subsidiary or (ii) the granting of Liens by the Borrower or such Material Subsidiary pursuant to the Security Documents, in each case other than those arising under any Loan Document, except, in each case, restrictions existing by reason of:

(A) restrictions imposed by applicable law;

 

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(B) contractual encumbrances or restrictions in effect on the Closing Date under Indebtedness existing on the Closing Date and set forth on Schedule 6.01 , the Notes or any agreements related to any Permitted Refinancing Indebtedness in respect of any such Indebtedness that do not expand the scope of any such encumbrance or restriction;

(C) any restriction on a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of the Equity Interests or assets of a Subsidiary;

(D) customary provisions in joint venture agreements, similar agreements applicable to joint ventures and other similar agreements entered into in the ordinary course of business;

(E) any restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent that such restrictions apply only to the property or assets securing such Indebtedness;

(F) any restrictions imposed by any agreement relating to Indebtedness incurred pursuant to Sections 6.01(k) or 6.01(r) or Permitted Refinancing Indebtedness in respect thereof, to the extent such restrictions are not more restrictive, taken as a whole, than the restrictions contained in the Senior Subordinated Note Documents;

(G) customary provisions contained in leases or licenses of intellectual property and other similar agreements entered into in the ordinary course of business;

(H) customary provisions restricting subletting or assignment of any lease governing a leasehold interest;

(I) customary provisions restricting assignment of any agreement entered into in the ordinary course of business;

(J) customary restrictions and conditions contained in any agreement relating to the sale, transfer, lease or other disposition of any asset permitted under Section 6.05 pending the consummation of such sale, transfer, lease or other disposition;

(K) customary restrictions and conditions contained in the document relating to any Lien, so long as (1) such Lien is a Permitted Lien and such restrictions or conditions relate only to the specific asset subject to such Lien, and (2) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 6.09;

(L) customary net worth provisions contained in Real Property leases entered into by Subsidiaries of the Borrower, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and its Subsidiaries to meet their ongoing obligations;

 

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(M) any agreement in effect at the time such subsidiary becomes a Subsidiary, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary;

(N) restrictions in agreements representing Indebtedness permitted under Section 6.01 of a Subsidiary of the Borrower that is not a Subsidiary Loan Party;

(O) customary restrictions on leases, subleases, licenses or Equity Interests or asset sale agreements otherwise permitted hereby as long as such restrictions relate to the Equity Interests and assets subject thereto;

(P) restrictions on cash or other deposits (including escrowed funds) or net worth imposed by customers and franchisees under contracts entered into in the ordinary course of business;

(Q) restrictions contained in any Permitted Securitization Document reasonably required in connection therewith; or

(R) any encumbrances or restrictions of the type referred to in Sections 6.09(c)(i) and 6.09(c)(ii) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (A) through (Q) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

SECTION 6.10. Senior Secured Leverage Ratio . Permit the Senior Secured Leverage Ratio on the last day of any fiscal quarter (beginning with the fiscal quarter ended March 31, 2008) to exceed the ratio set forth below opposite the last day of such fiscal quarter:

 

Fiscal Quarter

 

Senior Secured Leverage Ratio

March 31, 2008

  5.60:1.00

June 30, 2008

  5.60:1.00

September 30, 2008

  5.35:1.00

December 31, 2008

  5.35:1.00

March 31, 2009

  5.35:1.00

June 30, 2009

  5.35:1.00

September 30, 2009

  5.00:1.00

December 31, 2009

  5.00:1.00

March 31, 2010

  5.00:1.00

June 30, 2010

  5.00:1.00

September 30, 2010

  5.00:1.00

December 31, 2010

  5.00:1.00

March 31, 2011 and thereafter

  4.75:1.00

 

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SECTION 6.11. No Other “Designated Senior Debt” Designate, or permit the designation of, any Indebtedness as “Designated Senior Debt” or any other similar term for the purpose of the definition of the same in, or the subordination provisions contained in, (a) the Senior Subordinated Notes Indenture, (b) any other indenture governing Indebtedness permitted to be incurred hereunder that is senior subordinated Indebtedness or (c) the Senior Unsecured Notes or Senior Subordinated Notes, in each case other than the Obligations under this Agreement and the other Loan Documents and the obligations in respect of the Senior Unsecured Notes and any Permitted Refinancing thereof and the obligations in respect of the Existing Senior Notes and any Permitted Refinancing thereof.

ARTICLE VII

Holdings Covenants

Holdings (prior to a Borrower Qualified IPO) covenants and agrees with each Lender that, so long as this Agreement shall remain in effect (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and until the Commitments have been terminated or expired and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled (or have expired or have been cash collateralized on terms reasonably satisfactory to the Administrative Agent) and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, (a) Holdings will not create, incur, assume or permit to exist any Lien (other than Liens of a type described in Section 6.02(d), (e), (k) or (ee)) on any of the Equity Interests issued by the Borrower other than the Liens created under the Loan Documents, and (b) Holdings shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence; provided, that so long as no Default exists or would result therefrom, Holdings may merge with any other person.

ARTICLE VIII

Events of Default

SECTION 8.01. Events of Default . In case of the happening of any of the following events (each, an “ Event of Default ”):

(a) any representation or warranty made or deemed made by Holdings, the Borrower or any other Loan Party herein or in any other Loan Document or any certificate or document delivered pursuant hereto or thereto shall prove to have been false or misleading in any material respect when so made or deemed made;

 

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(b) default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

(c) default shall be made in the payment of any interest on any Loan or the reimbursement with respect to any L/C Disbursement or in the payment of any Fee or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days;

(d) default shall be made in the due observance or performance by Holdings, the Borrower or any of the Subsidiaries of any covenant, condition or agreement contained in Section 2.05(c), 5.01(a) or 5.05(a) or in Article VI or Article VII; provided that any Event of Default arising out of a breach of Section 6.10 shall be subject to cure rights pursuant to Section 8.03;

(e) default shall be made in the due observance or performance by Holdings, the Borrower or any of the Subsidiaries of any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraphs (b), (c) and (d) above) and such default shall continue unremedied for a period of 30 days (or 60 days if such default results solely from a Foreign Subsidiary’s failure to duly observe or perform any such covenant, condition or agreement) after notice thereof from the Administrative Agent to the Borrower;

(f) (i) any event or condition occurs that (A) results in any Material Indebtedness becoming due prior to its scheduled maturity or (B) enables or permits (with all applicable grace periods having expired) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; or (ii) Holdings, the Borrower or any of the Subsidiaries shall fail to pay the principal of any Material Indebtedness at the stated final maturity thereof; provided , that this clause (f) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness;

(g) there shall have occurred a Change in Control;

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any of the Subsidiaries, or of a substantial part of the

 

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property or assets of Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any of the Subsidiaries or for a substantial part of the property or assets of Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any of the Subsidiaries or (iii) the winding-up or liquidation of Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any Subsidiary (except, in the case of any Subsidiary, in a transaction permitted by Section 6.05); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(i) Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in paragraph (h) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any of the Subsidiaries or for a substantial part of the property or assets of Holdings (so long as Holdings directly or indirectly owns a majority of the Equity Interests of the Borrower), the Borrower or any Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) become unable or admit in writing its inability or fail generally to pay its debts as they become due;

(j) the failure by Holdings (prior to a Borrower Qualified IPO), the Borrower or any Subsidiary to pay one or more final judgments aggregating in excess of $100.0 million (to the extent not covered by insurance), which judgments are not discharged or effectively waived or stayed for a period of 60 consecutive days, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of Holdings (prior to a Borrower Qualified IPO), the Borrower or any Subsidiary to enforce any such judgment;

(k) (i) a trustee shall be appointed by a United States district court to administer any Plan, (ii) an ERISA Event or ERISA Events shall have occurred with respect to any Plan or Multiemployer Plan, as applicable, (iii) Holdings (prior to a Borrower Qualified IPO), the Borrower or any Subsidiary shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, or (iv) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (iv) above, such event or condition, together with all other such events or conditions, if any, would reasonably be expected to have a Material Adverse Effect; or

 

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(l) (i) any security interest purported to be created by any Security Document and to extend to assets that are not immaterial to Holdings (prior to a Borrower Qualified IPO), the Borrower and the Subsidiaries on a consolidated basis shall cease to be a valid and perfected security interest (perfected as or having the priority required by this Agreement or the relevant Security Document and subject to such limitations and restrictions as are set forth herein and therein and except for releases thereof as permitted herein and therein) in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the limitations of foreign laws, rules and regulations as they apply to pledges of Equity Interests in Foreign Subsidiaries or the application thereof, or from the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Agreement or to file Uniform Commercial Code continuation statements or take the actions described on Schedule 3.04 and except to the extent that such loss is covered by a lender’s title insurance policy and the Collateral Agent shall be reasonably satisfied with the credit of such insurer, or (ii) the Guarantees pursuant to the Security Documents by Holdings (prior to a Borrower Qualified IPO), the Borrower or the Subsidiary Loan Parties of any of the Obligations shall cease to be in full force and effect (other than in accordance with the terms thereof), or shall be asserted in writing by Holdings (prior to a Borrower Qualified IPO) or the Borrower or any Subsidiary Loan Party not to be in effect or not to be legal, valid and binding obligations;

then, and in every such event (other than an event with respect to the Borrower described in paragraph (h) or (i) above), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders, shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments, (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding, (iii) if the Loans have been declared due and payable pursuant to clause (ii) above, demand cash collateral pursuant to Section 2.05(j), and (iv) exercise all rights and remedies granted to it under any Loan Document and all its rights and remedies under any other applicable law or in equity; and in any event with respect to the Borrower described in paragraph (h) or (i) above, the Commitments shall automatically terminate, the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable and the Administrative Agent shall be deemed to have made a demand for cash collateral to the full extent permitted under Section 2.05(j), without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding.

 

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SECTION 8.02. Exclusion of Immaterial Subsidiaries . Solely for the purposes of determining whether an Event of Default has occurred under clause (h), (i) or (l) of Section 8.01, any reference in any such clause to any Subsidiary shall be deemed not to include any Immaterial Subsidiary affected by any event or circumstance referred to in any such clause.

SECTION 8.03. Right to Cure . Notwithstanding anything to the contrary contained in Section 8.01, in the event that the Borrower fails (or, but for the operation of this Section 8.03, would fail) to comply with the requirements of the Financial Performance Covenant, until the expiration of the 20th day subsequent to the date the certificate calculating such Financial Performance Covenant is required to be delivered pursuant to Section 5.04(c), the Borrower shall have the right to issue Permitted Cure Securities for cash or otherwise receive cash contributions to the capital of Holdings, and, in each case, to contribute any such cash to the capital of the Borrower (collectively, the “ Cure Right ”), and upon the receipt by the Borrower of such cash (the “ Cure Amount ”) pursuant to the exercise by the Borrower of such Cure Right such Financial Performance Covenant shall be recalculated giving effect to a pro forma adjustment by which EBITDA shall be increased with respect to such applicable quarter and any four-quarter period that contains such quarter, solely for the purpose of measuring the Financial Performance Covenant and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; provided , that, (i) in each four-fiscal-quarter period there shall be at least one fiscal quarter in which the Cure Right is not exercised and (ii) for purposes of this Section 8.03, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Performance Covenant. If, after giving effect to the adjustments in this paragraph (b), the Borrower shall then be in compliance with the requirements of the Financial Performance Covenant, the Borrower shall be deemed to have satisfied the requirements of the Financial Performance Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Performance Covenant that had occurred shall be deemed cured for this purposes of the Agreement.

ARTICLE IX

The Agents

SECTION 9.01. Appointment . (a) Each Lender (in its capacities as a Lender and the Swingline Lender (if applicable) and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) and each Issuing Bank (in such capacities and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, including as the Collateral Agent for such Lender and the other Secured Parties under the Security Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. In addition, to the extent required under the laws of any jurisdiction other than the United States, each of the Lenders and the Issuing Banks hereby grants to the

 

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Administrative Agent any required powers of attorney to execute any Security Document governed by the laws of such jurisdiction on such Lender’s or Issuing Bank’s behalf. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

(b) In furtherance of the foregoing, each Lender (in its capacities as a Lender and the Swingline Lender (if applicable) and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) and each Issuing Bank (in such capacities and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) hereby appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent (and any Subagents appointed by the Administrative Agent pursuant to Section 9.02 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights or remedies thereunder at the direction of the Administrative Agent) shall be entitled to the benefits of this Article IX (including, without limitation, Section 9.07) as though the Administrative Agent (and any such Subagents) were an “Agent” under the Loan Documents, as if set forth in full herein with respect thereto.

(c) Each Lender (in its capacities as a Lender and the Swingline Lender (if applicable) and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) and each Issuing Bank (in such capacities and on behalf of itself and its Affiliates as potential counterparties to Swap Agreements) irrevocably authorizes the Administrative Agent, at its option and in its discretion, (i) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (A) upon termination of the Commitments and payment in full of all Obligations (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) and the expiration, termination or cash collateralization of all Letters of Credit, (B) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (C) if approved, authorized or ratified in writing in accordance with Section 10.08 hereof, (ii) to release any Guarantor from its obligations under the Loan Documents if such person ceases to be a Subsidiary as a result of a transaction permitted hereunder; (iii) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(i) and (j); and (iv) to make determinations and update schedules in connection with collateral matters as set forth in clauses (vii) or (viii) of Section 5.09(g). Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release its interest in particular types or items of property, or to release any Guarantor from its obligations under the Loan Documents.

(d) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, (i) the Administrative Agent (irrespective of whether the principal of

 

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any Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (A) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of any or all of the Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent and any Subagents allowed in such judicial proceeding, and (B) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and (ii) any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and Issuing Bank to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Banks, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under the Loan Documents. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Issuing Bank in any such proceeding.

SECTION 9.02. Delegation of Duties . The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents (including for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. The Administrative Agent may also from time to time, when the Administrative Agent deems it to be necessary or desirable, appoint one or more trustees, co-trustees, collateral co-agents, collateral subagents or attorneys-in-fact (each, a “ Subagent ”) with respect to all or any part of the Collateral; provided, that no such Subagent shall be authorized to take any action with respect to any Collateral unless and except to the extent expressly authorized in writing by the Administrative Agent. Should any instrument in writing from the Borrower or any other Loan Party be required by any Subagent so appointed by the Administrative Agent to more fully or certainly vest in and confirm to such Subagent such rights, powers, privileges and duties, the Borrower shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by the Administrative Agent. If any Subagent, or successor thereto, shall die, become incapable of acting, resign or be removed, all rights, powers, privileges and duties of such Subagent, to the extent permitted by law, shall automatically vest in and be exercised by the Administrative Agent until the appointment of a new Subagent. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent, attorney-in-fact or Subagent that it selects in accordance with the foregoing provisions of this Section 9.02 in the absence of the Administrative Agent’s gross negligence or willful misconduct.

SECTION 9.03. Exculpatory Provisions . Neither any Agent or its Affiliates nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall

 

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be (a) liable for any action lawfully taken or omitted to be taken by it or such person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents 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 contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, and (b) the Administrative Agent shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the person serving as the Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to the Administrative Agent in writing by the Borrower, a Lender or an Issuing Bank. The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

SECTION 9.04. Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) or conversation believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to any Credit Event, that by its terms must be fulfilled to the satisfaction of a Lender or any Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender

 

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or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to such Credit Event. The Administrative Agent may consult with legal counsel (including counsel to Holdings or the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may deem and treat the payee of any Promissory Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all or other Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all or other Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

SECTION 9.05. Notice of Default . The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received written notice from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all or other Lenders); provided, that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

SECTION 9.06. Non-Reliance on Agents and Other Lenders . Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent 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, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself

 

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as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

SECTION 9.07. Indemnification . Each Lender agrees to indemnify each Agent and each Issuing Bank, in each case in its capacity as such (to the extent not reimbursed by Holdings or the Borrower and without limiting the obligation of Holdings or the Borrower to do so), in the amount of its pro rata share (based on its aggregate Revolving Facility Exposure, outstanding Term Loans, Synthetic L/C Exposure and unused Commitments hereunder; provided, that the aggregate principal amount of Swingline Loans owing to the Swingline Lender and of L/C Disbursements owing to any Issuing Bank shall be considered to be owed to the Revolving Facility Lenders ratably in accordance with their respective Revolving Facility Exposure) (determined at the time such indemnity is sought), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent or such Issuing Bank in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent or such Issuing Bank under or in connection with any of the foregoing; provided, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s or such Issuing Bank’s gross negligence or willful misconduct. The failure of any Lender to reimburse any Agent or any Issuing Bank, as the case may be, promptly upon demand for its ratable share of any amount required to be paid by the Lenders to such Agent or such Issuing Bank, as the case may be, as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse such Agent or such Issuing Bank, as the case may be, for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse such Agent or such Issuing Bank, as the case may be, for such other Lender’s ratable share of such amount. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

SECTION 9.08. Agent in Its Individual Capacity . Each Agent and its affiliates may make loans to, accept deposits from, and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued, or Letter of Credit or Swingline Loan participated in, by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

 

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SECTION 9.09. Successor Administrative Agent . The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8.01(b), (c), (h) or (i) shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 9.09 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

SECTION 9.10. Agents and Arrangers . Neither the Syndication Agent, the Documentation Agents nor any of the Arrangers shall have any duties or responsibilities hereunder in its capacity as such.

ARTICLE X

Miscellaneous

SECTION 10.01. Notices; Communications . (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 10.01(b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to any Loan Party, the Administrative Agent, the Issuing Bank or the Swingline Lender, to the address, telecopier number, electronic mail address or telephone number specified for such person on Schedule 10.01 ; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail

 

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and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Article II if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

(c) Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received. Notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in Section 10.01(b) above shall be effective as provided in such Section 10.01(b).

(d) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.

(e) Documents required to be delivered pursuant to Section 5.04 (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically (including as set forth in Section 10.17) and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.01 , or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided , that (A) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender, and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the certificates required by Section 5.04(c) to the Administrative Agent. Except for such certificates required by Section 5.04(c), the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

SECTION 10.02. Survival of Agreement . All covenants, agreements, representations and warranties made by the Loan Parties herein, in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant

 

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to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and each Issuing Bank and shall survive the making by the Lenders of the Loans, the execution and delivery of the Loan Documents and the issuance of the Letters of Credit, regardless of any investigation made by such persons or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or L/C Disbursement or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. Without prejudice to the survival of any other agreements contained herein, indemnification and reimbursement obligations contained herein (including pursuant to Sections 2.15, 2.17 and 10.05) shall survive the payment in full of the principal and interest hereunder, the expiration of the Letters of Credit and the termination of the Commitments or this Agreement.

SECTION 10.03. Binding Effect . This Agreement shall become effective when it shall have been executed by Holdings, the Borrower and the Administrative Agent and when the Administrative Agent shall have received copies hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of Holdings, the Borrower, each Issuing Bank, the Administrative Agent and each Lender and their respective permitted successors and assigns.

SECTION 10.04. Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of an Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) except pursuant to the Merger, and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 10.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section 10.04), and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, each Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement or the other Loan Documents.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “ Assignee ”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Credit-Linked Deposits, its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

(A) the Borrower; provided , that no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default under Sections 8.01(b), (c), (h) or (i) has occurred and is continuing, any other person; and

 

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(B) the Administrative Agent; provided , that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan or such Lender’s Credit-Linked Deposits to a Lender, an Affiliate of a Lender or an Approved Fund.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Credit-Linked-Deposits, Commitments or Loans under any Facility, the amount of the Credit-Linked-Deposits, Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than (x) $1.0 million in the case of Credit-Linked Deposits or Term Loans and (y) $5.0 million in the case of Revolving Facility Loans or Revolving Facility Commitments, unless each of the Borrower and the Administrative Agent otherwise consent; provided that contemporaneous assignments by a Lender to two or more of its Approved Funds shall be treated as a single assignment for purposes of determining whether such minimum amount has been met; provided , further , that no such consent of the Borrower shall be required if an Event of Default under Sections 8.01(b), (c), (h) or (i) has occurred and is continuing;

(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent (or, if previously agreed with the Administrative Agent, manually), and shall pay to the Administrative Agent a processing and recordation fee of $3,500;

(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent (1) an Administrative Questionnaire in which the assignee designates one or more Credit Contacts (as defined in the Administrative Questionnaire) to whom all syndicate-level information (which may contain material non-public information about the Borrower, the other Loan Parties and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws, and (2) all applicable tax forms required to be delivered under Section 2.17; and

(D) the Assignee shall not be the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

For the purposes of this Section 10.04, “ Approved Fund ” means any person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.

 

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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) below, from and after the effective date specified in each Assignment and Acceptance the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 10.05). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section 10.04.

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Credit-Linked Deposits, Loans and L/C Exposures owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, each Issuing Bank and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an Assignee, the Assignee’s completed Administrative Questionnaire (unless the Assignee shall already be a Lender hereunder), all tax forms required to be delivered under Section 2.17, the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent promptly shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment, whether or not evidenced by a promissory note, shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph (b)(v).

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Term Loan B Commitment and Revolving Facility Commitment, and the outstanding balances of its Credit-Linked Deposits, Term Loans and Revolving Facility Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability,

 

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genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of Holdings, the Borrower or any Subsidiary or the performance or observance by Holdings, the Borrower or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) the Assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) the Assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05 (or delivered pursuant to Section 5.04), and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) the Assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) the Assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms of this Agreement, together with such powers as are reasonably incidental thereto; and (vii) the Assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided , that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, each Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and the other Loan Documents; provided , that (x) such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to Section 10.04(a)(i) or clauses (i), (ii), (iii), (iv), (v) or (vi) of the first proviso to Section 10.08(b) and (2) directly affects such Participant and (y) no other agreement with respect to amendment, modification or waiver may exist between such Lender and such Participant. Subject to paragraph (c)(ii) of this Section 10.04, the Borrower agrees that each Participant shall be entitled to the benefits and subject to the requirements of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 10.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.06 as though it were a Lender, provided such Participant shall be subject to Section 2.18(c) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such

 

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Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 to the extent such Participant fails to comply with Section 2.17(e) and (f) as though it were a Lender.

(e) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank and in the case of any Lender that is an Approved Fund, any pledge or assignment to any holders of obligations owed, or securities issued, by such Lender, including to any trustee for, or any other representative of, such holders, and this Section 10.04 shall not apply to any such pledge or assignment of a security interest; provided , that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

(f) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue promissory notes (each a “ Promissory Note ”) to any Lender requiring Promissory Notes to facilitate transactions of the type described in paragraph (e) above.

(g) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it may have funded hereunder to its designating Lender without the consent of the Borrower or the Administrative Agent. Each of Holdings, the Borrower, each Lender and the Administrative Agent hereby confirms that it will not institute against a Conduit Lender or join any other person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided , however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto and each Loan Party for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance.

(h) If the Borrower wishes to replace the Loans, Credit-Linked Deposits or Commitments under any Facility with ones having different terms, it shall have the option, with the consent of the Administrative Agent and subject to at least three Business Days’ advance notice to the Lenders under such Facility, instead of prepaying the Loans or reducing or terminating the Commitments or Credit-Linked Deposits to be replaced, to (i) require the Lenders under such Facility to assign such Loans, Commitments or Credit-Linked Deposits to the Administrative Agent or its designees and (ii) amend the terms thereof in accordance with Section 10.08 (with such replacement, if applicable, being deemed to have been made pursuant to Section 10.08(d)). Pursuant to any such assignment, all Loans, Commitments and Credit-Linked Deposits to be replaced shall be purchased at par (allocated among the Lenders under such Facility in the same manner as would be required if such Loans were being optionally prepaid or such Commitments or Credit-Linked Deposits were being optionally reduced or terminated by the Borrower), accompanied by payment of any accrued interest and fees thereon and any amounts owing pursuant to Section 10.05(b). By receiving such purchase price, the Lenders under such Facility shall automatically be deemed to have assigned the Loans, Commitments or Credit-Linked Deposits under such Facility pursuant to the terms of the form of Assignment and Acceptance attached hereto as Exhibit A , and accordingly no other action by

 

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such Lenders shall be required in connection therewith. The provisions of this paragraph (g) are intended to facilitate the maintenance of the perfection and priority of existing security interests in the Collateral during any such replacement.

(i) Notwithstanding the foregoing, no assignment may be made or participation sold to an Ineligible Institution.

SECTION 10.05. Expenses; Indemnity . (a) The Borrower agrees to pay (i) all reasonable out-of-pocket expenses (including Other Taxes) incurred by the Administrative Agent in connection with the preparation of this Agreement and the other Loan Documents, or by the Administrative Agent in connection with the syndication of the Commitments or the administration of this Agreement (including expenses incurred in connection with due diligence and initial and ongoing Collateral examination to the extent incurred with the reasonable prior approval of the Borrower and the reasonable fees, disbursements and charges for no more than one counsel in each jurisdiction where Collateral is located) or in connection with the administration of this Agreement and any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the Transactions hereby contemplated shall be consummated), including the reasonable fees, charges and disbursements of Simpson Thacher & Bartlett LLP, counsel for the Administrative Agent and the Arrangers, and, if necessary, the reasonable fees, charges and disbursements of one local counsel per jurisdiction, and (ii) all out-of-pocket expenses (including Other Taxes) incurred by the Administrative Agent or any Lender in connection with the enforcement or protection of their rights in connection with this Agreement and the other Loan Documents, in connection with the Loans made or the Letters of Credit issued hereunder, including the fees, charges and disbursements of counsel for the Administrative Agent (including any special and local counsel).

(b) The Borrower agrees to indemnify the Administrative Agent, the Agents, the Arrangers, each Issuing Bank, each Lender, each of their respective Affiliates and each of their respective directors, trustees, officers, employees, agents, trustees and advisors (each such person being called an “ Indemnitee ”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements (except the allocated costs of in-house counsel), incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto and thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated hereby, (ii) the use of the proceeds of the Loans or the use of any Letter of Credit or (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto and regardless of whether such matter is initiated by a third party or by Holdings, the Borrower or any of their subsidiaries or Affiliates; provided , that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee (for purposes of this proviso only, each of the Administrative Agent, any Arranger, any Issuing Bank or any Lender shall be treated as several and separate Indemnitees, but each of them together with its respective Related Parties, shall be treated as a single Indemnitee). Subject to and without limiting the

 

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generality of the foregoing sentence, the Borrower agrees to indemnify each Indemnitee against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel or consultant fees, charges and disbursements (limited to not more than one counsel, plus, if necessary, one local counsel per jurisdiction) (except the allocated costs of in-house counsel), incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (A) any claim related in any way to Environmental Laws and Holdings, the Borrower or any of their Subsidiaries, or (B) any actual or alleged presence, Release or threatened Release of Hazardous Materials at, under, on, from or to any property currently or formerly owned or operated by Holdings, the Borrower or any of the Subsidiaries; provided , that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or any of its Related Parties. None of the Indemnitees (or any of their respective affiliates) shall be responsible or liable to the Fund, Holdings, the Borrower or any of their respective subsidiaries, Affiliates or stockholders or any other person or entity for any special, indirect, consequential or punitive damages, which may be alleged as a result of the Facilities or the Transactions. The provisions of this Section 10.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, any Issuing Bank or any Lender. All amounts due under this Section 10.05 shall be payable on written demand therefor accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested.

(c) Except as expressly provided in Section 10.05(a) with respect to Other Taxes, which shall not be duplicative with any amounts paid pursuant to Section 2.17, this Section 10.05 shall not apply to Taxes.

(d) To the fullest extent permitted by applicable law, Holdings and the Borrower shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(e) The agreements in this Section 10.05 shall survive the resignation of the Administrative Agent, any Issuing Bank, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations and the termination of this Agreement.

 

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SECTION 10.06. Right of Set-off . If an Event of Default shall have occurred and be continuing, each Lender and each Issuing Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Issuing Bank to or for the credit or the account of Holdings (prior to a Borrower Qualified IPO), the Borrower or any Subsidiary against any of and all the obligations of Holdings (prior to a Borrower Qualified IPO) or the Borrower now or hereafter existing under this Agreement or any other Loan Document held by such Lender or such Issuing Bank, irrespective of whether or not such Lender or such Issuing Bank shall have made any demand under this Agreement or such other Loan Document and although the obligations may be unmatured. The rights of each Lender and each Issuing Bank under this Section 10.06 are in addition to other rights and remedies (including other rights of set-off) that such Lender or such Issuing Bank may have.

SECTION 10.07. Applicable Law . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 10.08. Waivers ; Amendment . (a) No failure or delay of the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, each Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by Holdings (prior to a Borrower Qualified IPO), the Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on Holdings, the Borrower or any other Loan Party in any case shall entitle such person to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except (x) as provided in Section 2.20, (y) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Holdings, the Borrower and the Required Lenders, and (z) in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by each party thereto and the Administrative Agent and consented to by the Required Lenders; provided , however , that no such agreement shall

(i) decrease or forgive the principal amount of, or extend the final maturity of, or decrease the rate of interest on, any Loan or any L/C Disbursement, or extend the stated expiration of any Letter of Credit beyond the Revolving Facility Maturity Date, or extend the date on which the Credit-Linked Deposits are required to be returned in full to the Synthetic L/C Lenders, without the prior written consent of each Lender directly

 

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affected thereby, except as provided in Section 2.05(c); provided , that any amendment to the financial covenant definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (i),

(ii) increase or extend the Commitment of any Lender or decrease the Commitment Fees or L/C Participation Fees or other fees of any Lender without the prior written consent of such Lender (it being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default or of a mandatory reduction in the aggregate Commitments shall not constitute an increase of the Commitments of any Lender),

(iii) extend or waive any Term Loan Installment Date or Synthetic L/C Installment Date or reduce the amount due on any Term Loan Installment Date or Synthetic L/C Installment Date or extend any date on which payment of interest on any Loan or any L/C Disbursement or any Fees is due, without the prior written consent of each Lender adversely affected thereby,

(iv) amend the provisions of Section 5.02 of the Collateral Agreement, or any analogous provision of any other Loan Document, in a manner that would by its terms alter the pro rata sharing among Facilities of payments required thereby, without the prior written consent of a majority of the class of Lenders adversely affected thereby,

(v) amend or modify the provisions of this Section 10.08 or the definition of the terms “Required Lenders,” “Majority Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the prior written consent of each Lender adversely affected thereby (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Loans and Commitments are included on the Closing Date),

(vi) release all or substantially all the Collateral or release any of Holdings (prior to a Borrower Qualified IPO), the Borrower or all or substantially all of the Subsidiary Loan Parties from their respective Guarantees under the Collateral Agreement, unless, in the case of a Subsidiary Loan Party, all or substantially all the Equity Interests of such Subsidiary Loan Party is sold or otherwise disposed of in a transaction permitted by this Agreement, without the prior written consent of each Lender;

(vii) effect any waiver, amendment or modification that by its terms adversely affects the rights in respect of payments or collateral of Lenders participating in any Facility differently from those of Lender participating in another Facility, without the consent of the Majority Lenders participating in the adversely affected Facility (it being agreed that the Required Lenders may waive, in whole or in part, any prepayment or Commitment reduction required by Section 2.11 so long as the application of any prepayment or Commitment reduction still required to be made is not changed);

 

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provided , further , that any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Facility (or Facilities) or Tranche (or Tranches) may be effected by an agreement or agreements in writing entered into by Holdings, the Borrowers and the requisite percentage in interest of the Lenders of the affected Facility (or Facilities) or Tranche (or Tranches), as the case may be (and without the consent of the Required Lenders), that would be required to consent thereto if such Facility or Tranche were the only Facility or Tranche, as the case may be, hereunder at the time; and provided further , that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or an Issuing Bank hereunder without the prior written consent of the Administrative Agent or such Issuing Bank, as the case may be, acting as such at the effective date of such agreement, as applicable. Each Lender shall be bound by any waiver, amendment or modification authorized by this Section 10.08 and any consent by any Lender pursuant to this Section 10.08 shall bind any assignee of such Lender.

(c) Without the consent of any Lender or Issuing Bank, the Loan Parties and the Administrative Agent may (in their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment, modification or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the applicable Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the applicable Secured Parties, in any property or so that the security interests therein comply with applicable law.

(d) Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent, Holdings and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents (including in respect of prepayments) with the Term Loans, the Revolving Facility Loans, the Synthetic L/C Facility and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders.

(e) Notwithstanding the foregoing, technical and conforming modifications to the Loan Documents may be made with the consent of the Borrower and the Administrative Agent to the extent necessary to integrate any Incremental Term Loan Commitments or Incremental Revolving Facility Commitments on substantially the same basis as the Term Loans or Revolving Facility Loans, as applicable.

SECTION 10.09. Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges that are treated as interest under applicable law (collectively, the “ Charges ”), as provided for herein or in any other document executed in connection herewith, or otherwise contracted for, charged, received, taken or reserved by any Lender or any Issuing Bank, shall exceed the maximum lawful rate (the “ Maximum Rate ”) that may be contracted for, charged, taken, received or

 

157


reserved by such Lender in accordance with applicable law, the rate of interest payable hereunder, together with all Charges payable to such Lender or such Issuing Bank, shall be limited to the Maximum Rate; provided, that such excess amount shall be paid to such Lender or such Issuing Bank on subsequent payment dates to the extent not exceeding the legal limitation.

SECTION 10.10. Entire Agreement . This Agreement, the other Loan Documents and the agreements regarding certain Fees referred to herein constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among or representations from the parties or their Affiliates with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Notwithstanding the foregoing, the Fee Letter shall survive the execution and delivery of this Agreement and remain in full force and effect. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

SECTION 10.11. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.

SECTION 10.12. Severability . In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 10.13. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 10.03. Delivery of an executed counterpart to this Agreement by facsimile transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be as effective as delivery of a manually signed original.

SECTION 10.14. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

158


SECTION 10.15. Jurisdiction; Consent to Service of Process . (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof (collectively, “New York Courts”), in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction, except that each of the Loan Parties agrees that (a) it will not bring any such action or proceeding in any court other than New York Courts (it being acknowledged and agreed by the parties hereto that any other forum would be inconvenient and inappropriate in view of the fact that more of the Lenders who would be affected by any such action or proceeding have contacts with the State of New York than any other jurisdiction), and (b) in any such action or proceeding brought against any Loan Party in any other court, it will not assert any cross-claim, counterclaim or setoff, or seek any other affirmative relief, except to the extent that the failure to assert the same will preclude such Loan Party from asserting or seeking the same in the New York Courts.

(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 10.16. Confidentiality . Each of the Lenders, each Issuing Bank and each of the Agents agrees that it shall maintain in confidence any information (the “ Information ”) relating to Holdings, the Borrower and any Subsidiary furnished to it by or on behalf of Holdings, the Borrower or any Subsidiary (other than information that (a) has become generally available to the public other than as a result of a disclosure by such party, (b) has been independently developed by such Lender, such Issuing Bank or such Agent without violating this Section 10.16 or (c) was available to such Lender, such Issuing Bank or such Agent from a third party having, to such person’s knowledge, no obligations of confidentiality to Holdings, the Borrower or any other Loan Party) and shall not reveal the same other than to its directors, trustees, officers, employees and advisors with a need to know or to any person that approves or administers the Loans on behalf of such Lender (so long as each such person shall have been instructed to keep the same confidential in accordance with this Section 10.16), except: (A) to the extent necessary to comply with law or any legal process or the requirements of any Governmental Authority, the National Association of Insurance Commissioners or of any securities exchange on which securities of the disclosing party or any Affiliate of the disclosing party are listed or traded, (B) as part of normal reporting or review procedures to, or examinations by, Governmental Authorities or self-regulatory authorities, including the National

 

159


Association of Insurance Commissioners or the National Association of Securities Dealers, Inc., (C) to its parent companies, Affiliates or auditors (so long as each such person shall have been instructed to keep the same confidential in accordance with this Section 10.16), (D) in order to enforce its rights under any Loan Document in a legal proceeding, (E) to any pledgee under Section 10.04(d) or any other prospective assignee of, or prospective Participant in, any of its rights under this Agreement (so long as such person shall have been instructed to keep the same confidential in accordance with this Section 10.16) and (F) to any direct or indirect contractual counterparty in Swap Agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section 10.16).

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 10.16 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING HOLDINGS, THE BORROWER AND THEIR AFFILIATES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING WAIVERS AND AMENDMENTS, FURNISHED BY HOLDINGS, THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT HOLDINGS, THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO HOLDINGS, THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

SECTION 10.17. Platform; Borrower Materials . The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders and the Issuing Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”), and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to Holdings, the Borrower or their respective securities) (each, a “ Public Lender ”). The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers, the Issuing Banks and the Lenders to

 

160


treat such Borrower Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to Holdings, the Borrower or their respective securities for purposes of United States Federal and state securities laws, (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor,” (iv) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor,” and (v) notwithstanding any other provision of this Section 10.17, the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials consisting of draft or final Loan Documents and any other materials, in each case that are or have become generally available to the public other than as a result of disclosure in violation of Section 10.16, as having been marked “PUBLIC”.

SECTION 10.18. Release of Liens and Guarantees . In the event that any Loan Party conveys, sells, leases, assigns, transfers or otherwise disposes of all or any portion of any of the Equity Interests or assets of any Subsidiary Loan Party to a person that is not (and is not required to become) a Loan Party in a transaction not prohibited by Section 6.05, the Administrative Agent shall promptly (and the Lenders hereby authorize the Administrative Agent to) take such action and execute any such documents as may be reasonably requested by Holdings or the Borrower and at the Borrower’s expense in connection with the release of any Liens created by any Loan Document in respect of such Equity Interests or assets, and, in the case of a disposition of the Equity Interests of any Subsidiary Loan Party in a transaction permitted by Section 6.05 (including through merger, consolidation, amalgamation or otherwise) and as a result of which such Subsidiary Loan Party would cease to be a Subsidiary, such Subsidiary Loan Party’s obligations under its Guarantee of the Obligations shall be automatically terminated and the Administrative Agent shall promptly (and the Lenders hereby authorize the Administrative Agent to) take such action and execute any such documents as may be reasonably requested by Holdings or the Borrower to terminate such Subsidiary Loan Party’s obligations under its Guarantee of the Obligations. In addition, the Administrative Agent agrees to take such actions as are reasonably requested by Holdings or the Borrower and at the Borrower’s expense to terminate the Liens and security interests created by the Loan Documents when all the Obligations (other than contingent indemnification Obligations and expense reimbursement claims to the extent no claim therefor has been made) are paid in full and all Letters of Credit and Commitments are terminated. Without limiting the foregoing, upon the consummation of a Borrower Qualified IPO, Holdings shall be released from its Guarantee of the Obligations, shall cease to be a Loan party, and any Liens created by any Loan Documents on any assets or Equity Interests owned by Holdings shall be released. Any representation, warranty or covenant contained in any Loan Document relating to such Equity Interests, asset or subsidiary of Holdings shall no longer be deemed made once such Equity Interest or asset is so conveyed, sold, leased, assigned, transferred or disposed of.

SECTION 10.19. Judgment Currency . If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower in respect of any such sum due from it to the Administrative Agent or

 

161


the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the Borrower in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to the Borrower (or to any other person who may be entitled thereto under applicable Law).

SECTION 10.20. USA PATRIOT Act Notice . Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.

SECTION 10.21. No Liability of the Issuing Banks . The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither any Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by (i) such Issuing Bank’s willful misconduct or gross negligence as determined in a final, non-appealable judgment by a court of competent jurisdiction in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank’s willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

 

162


SECTION 10.22. Securitization Acknowledgement . Each Agent, Lender and Issuing Bank hereby acknowledges and agrees to the terms of Section 7.20 of the Collateral Agreement.

[Signature Pages Follow]

 

163


IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

DOMUS INTERMEDIATE HOLDINGS CORP.,
By:  

/s/ Richard A. Smith

Name:   Richard A. Smith
Title:   President
REALOGY CORPORATION,
By:  

/s/ Richard A. Smith

Name:   Richard A. Smith
Title:   President

[Signature Page to the Credit Agreement]


JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and as a Lender
By:  

/s/ Marian N. Schulman

Name:   Marian N. Schulman
Title:   Managing Director

[Signature Page to the Credit Agreement]


Signature page to

Domus Intermediate Holdings Corp. &

Realogy Corporation 2007 Credit Agreement

 

CREDIT SUISSE, CAYMAN ISLANDS
BRANCH                                              
By:  

/s/ Ian Nalitt

Name:   Ian Nalitt
Title:   Vice President
By:  

/s/ James Neira

Name:   James Neira
Title:   Associate

[Signature Page to the Credit Agreement]


Signature page to

Domus Intermediate Holdings Corp. &

Realogy Corporation 2007 Credit Agreement

 

BEAR STEARNS CORPORATE LENDING INC.,
as Lender
By:  

/s/ Victor Bulzachelli

Name:   Victor Bulzachelli
Title:   Vice President

[Signature Page to the Credit Agreement]


Signature page to

Domus Intermediate Holdings Corp. &

Realogy Corporation 2007 Credit Agreement

 

CITICORP NORTH AMERICA, INC.
as a Documentation Agent and as a Lender
By:  

/s/ Aaron Dannenberg

Name:   Aaron Dannenberg
Title:   Vice President

[Signature Page to the Credit Agreement]


Signature page to

Domus Intermediate Holdings Corp. &

Realogy Corporation 2007 Credit Agreement

 

BARCLAYS BANK PLC
By:  

/s/ Phil Capparis

Name:   Phil Capparis
Title:   Director

[Signature Page to the Credit Agreement]


Signature page to

Domus Intermediate Holdings Corp. &

Realogy Corporation 2007 Credit Agreement

 

CALYON NEW YORK BRANCH
By:  

/s/ Rod Hurst

Name:   Rod Hurst
Title:   Managing Director
By:  

/s/ Yuri Muzichenko

Name:   Yuri Muzichenko
Title:   Director

[Signature Page to the Credit Agreement]


Signature page to

Domus Intermediate Holdings Corp. &

Realogy Corporation 2007 Credit Agreement

 

Sumitomo Mitsui Banking Corporation
By:  

/s/ Natsuhiro Samejima

Name:   Natsuhiro Samejima
Title:   Senior Vice President

[Signature Page to the Credit Agreement]


Signature page to

Domus Intermediate Holdings Corp. &

Realogy Corporation 2007 Credit Agreement

 

Mizuho Corporate Bank, Ltd.
By:  

/s/ James R. Fayen

Name:   James R. Fayen
Title:   Deputy General Manager

[Signature Page to the Credit Agreement]


EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE

Reference is made to the Credit Agreement dated as of April 10, 2007 (as the same may be amended, restated or otherwise modified from time to time, the “ Credit Agreement ”), among DOMUS INTERMEDIATE HOLDINGS CORP., a Delaware corporation (“ Holdings ”), REALOGY CORPORATION, a Delaware corporation (the “ Borrower ”), the LENDERS party thereto from time to time, JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (“ Administrative Agent ”), CREDIT SUISSE, as syndication agent, and the other parties thereto. Terms defined in the Credit Agreement are used herein with the same meanings.

1. The Assignor hereby irrevocably sells and assigns, without recourse, to the Assignee, and the Assignee hereby irrevocably purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth below (the “ Effective Date ”) (but not prior to the registration of the information contained herein in the Register pursuant to Section 10.04(b)(iv) of the Credit Agreement), the interests set forth below (the “ Assigned Interest ”) in the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, including, without limitation, the amounts and percentages set forth below of (i) the Commitments of the Assignor on the Effective Date set forth below, (ii) the Loans owing to the Assignor which are outstanding on the Effective Date. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts that have accrued to but excluding the Effective Date and to the Assignee for amounts that have accrued from and after the Effective Date and (iii) the Credit-Linked Deposits held by the Administrative Agent on the Assignor’s behalf on the Effective Date.

2. By executing and delivering this Assignment and Acceptance, the assigning Lender hereunder and the Assignee hereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows:

(i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim and that its Term Loan B Commitment and Revolving Facility Commitment, and the outstanding balances of its Credit-Linked Deposits, Term Loans and Revolving Facility Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in this Assignment and Acceptance; (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto, or the financial condition of Holdings, the Borrower or any Subsidiary or the performance or observance by Holdings, the Borrower or any Subsidiary of any of its obligations under the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto; (iii) the Assignee represents and warrants that (a) it is legally authorized and has taken all action necessary to enter into this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (b) it satisfies the


requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender; (iv) the Assignee confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Section 3.05 of the Credit Agreement (or delivered pursuant to Section 5.04 of the Credit Agreement), and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (v) the Assignee will independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (vi) the Assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and each other Loan Document as are delegated to the Administrative Agent by the terms of the Credit Agreement and the other Loan Documents, together with such powers as are reasonably incidental thereto; and (vii) the Assignee hereby agrees that it will perform in accordance with their terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. From and after the Effective Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and the other Loan Documents and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

3. Pursuant to Section 10.04(b)(ii) of the Credit Agreement, this Assignment and Acceptance is being delivered to the Administrative Agent together with (i) a processing and recordation fee of $3,500, (ii) any forms referred to in Section 2.17 of the Credit Agreement, duly completed and executed by such Assignee and (iii) if the Assignee is not already a Lender under the Credit Agreement, a completed Administrative Questionnaire.

4. This Assignment and Assumption shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York.

Legal Name of Assignor (“ Assignor ”):                                                                                                                                        

Legal Name of Assignee (“ Assignee ”):                                                                                                                                        

[and is a Lender or an Affiliate/Approved Fund of [ identify Lender ] 1 ]

 

1 Select as applicable.

 

2


Assignee’s Address for Notices:      
  
      
  
Effective Date of Assignment:     

[TO BE INSERTED BY ADMINISTRATIVE AGENT AND

WHICH SHALL BE THE EFFECTIVE DATE OF

RECORDATION OF TRANSFER IN THE REGISTER

THEREFORE.]

 

Facility Assigned

  

Aggregate Principal

Amount of

Commitments/Loans/

Credit-Linked

Deposits for all

Lenders 2

   Principal of
Commitments/
Loans/Credit-
Linked Deposits
Assigned
   Percentage Assigned of
Commitments/Loans/ Credit-
Linked Deposits

Revolving Facility

Commitments/Loans

   $    $    %

Delayed Draw Term B

Commitments

   $    $    %

Term B Loans

   $    $    %

Credit-Linked

Deposits

   $    $    %

Swingline Loans

   $    $    %

The Assignee shall deliver to the Administrative Agent an Administrative Questionnaire in a form approved by the Administrative Agent in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the Assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

[Remainder of page intentionally left blank]

 

 

2 Amount of Commitments, Loans and/or Credit-Linked Deposits assigned is governed by Section 10.04 of the Credit Agreement.

 

3


The terms set forth above are hereby agreed to:

 

                                          , as Assignor

   

Accepted * /3

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

by:           By:    
   

Name:

Title:

     

Name:

Title:

 

                                          , as Assignee     [REALOGY CORPORATION, as Borrower] 4
by:         By:    
 

Name:

Title:

     

Name:

Title:

 

* / To be completed to the extent consents are required under Section 10.04(b)(i) of the Credit Agreement.

 

3 Consent of the Administrative Agent shall not be required for an assignment of all or any portion of a Term Loan or Credit-Linked Deposit to a Lender, an Affiliate of a Lender or an Approved Fund.

 

4 Consent of the Borrower shall not be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default under Sections 8.01(b), (c), (h) or (i) has occurred and is continuing, any other person.


EXHIBIT B-1

FORM OF BORROWING REQUEST

Date: 5                     ,             

 

To: JPMorgan Chase Bank, N.A.

[Address]

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of April 10, 2007 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “ Credit Agreement ”), among Realogy Corporation (the “ Borrower ”), Domus Intermediate Holdings Corp., (“ Holdings ”), the Lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, the “ Administrative Agent ”), and the other financial institutions party thereto. Terms defined in the Credit Agreement, wherever used herein, unless otherwise defined herein, shall have the same meanings herein as are prescribed by the Credit Agreement. This notice constitutes a Borrowing Request, and the Borrower hereby requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to such Borrowing requested hereby:

 

  1. The Borrowing will be a Borrowing of                      Loans. 6

 

  2. The Business Day of the proposed Borrowing is:                     .

 

  3. The aggregate amount of the proposed Borrowing is: $            .

 

  4. The Borrowing is comprised of $             of ABR Loans and $             of the Eurocurrency Loans.

 

  5. The duration of the Interest Period for the Eurocurrency Loans, if any, included in the Borrowing shall be                      months.

 

  6. The location and number of Borrower’s account to which the proceeds of such Borrowing are to be disbursed is                     .

 

 

5 Notice must be received by the Administrative Agent by telephone (confirmed promptly by delivery of a Borrowing Request by hand or by telecopy) no later than (a) 12:00 p.m., Local Time, three Business Days prior to the proposed Borrowing in the case of a Eurocurrency Borrowing and (b) 11:00 a.m., Local Time, on the date of the proposed Borrowing (which shall be a Business Day), in the case of an ABR Borrowing; provided, that any such notice of an ABR Revolving Facility Borrowing to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., Local Time, on the date of the proposed Borrowing.
6 Revolving Facility Loans, Initial Term B Loans, Delayed Draw Term B Loans or Incremental Term Loans. Indicate whether Incremental Term Loans are to be Term B Loans or Other Term Loans.


This Borrowing Request is issued pursuant to and is subject to the Credit Agreement executed as of the date set forth above. [The Borrower named below hereby represents and warrants that the conditions specified in paragraphs (b) and (c) of Section 4.01 of the Credit Agreement are satisfied.] 7 8

[Signature Pages Follow]

 

 

7 To be deleted in respect of any Borrowing Request for Delayed Draw Term B Loans.
8 For any Borrowing Request delivered prior to the Closing Date, insert the following new paragraph: “The term “Credit Agreement” as used herein shall be deemed to refer to the draft credit agreement dated [                    ] [    ], 2007, and this Borrowing Request shall be deemed submitted as if the Credit Agreement were effective. In such case, to induce each of the Lenders to make Eurocurrency Loans under the Credit Agreement notwithstanding that the Credit Agreement has not yet become effective, we hereby agree to compensate each Lender for any loss, cost and expense attributable to the failure of such Eurocurrency Loans to be borrowed on the Closing Date for any reason, such compensation to be in the amount, and determined in the manner, contemplated by Section 2.16 of the Credit Agreement.”

 

2


Very truly yours,
REALOGY CORPORATION,
By:    
  Name:
  Title:

 

 

[Signature Page to Form of Borrowing Request]


EXHIBIT B-2

FORM OF SWINGLINE BORROWING REQUEST

Date: 9                     ,             

To: JPMorgan Chase Bank, N.A.

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of April 10, 2007 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among Realogy Corporation (the “ Borrower ”), Domus Intermediate Holdings Corp., (“ Holdings ”), the Lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, the “ Administrative Agent ”), Credit Suisse, as syndication agent, and the other financial institutions parties thereto. Terms defined in the Credit Agreement, wherever used herein, unless otherwise defined herein, shall have the same meanings herein as are prescribed by the Credit Agreement. This notice constitutes a Swingline Borrowing Request, and the Borrower hereby requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to such Borrowing requested hereby:

The Business Day of the proposed Swingline Borrowing is:                     .

The aggregate amount of the proposed Swingline Borrowing is: $            .

The location and number of the account to which the proceeds of such Swingline Borrowing are to be deposited is                     .

This Swingline Borrowing Request is issued pursuant to and is subject to the Credit Agreement executed as of the date set forth above. The Borrower named below hereby represents and warrants that the conditions specified in paragraphs (b) and (c) of Section 4.01 of the Credit Agreement are satisfied.

[Signature Page Follows]

 

9 Notification must be received by the Administrative Agent and the Swingline Lender by telephone (confirmed by a Swingline Borrowing Request by telecopy), not later than 1:00 p.m., Local Time, on the day of the proposed Swingline Borrowing.


Very truly yours,

REALOGY CORPORATION,

By:

 

 

  Name:
  Title:

[Signature Page to Form of Swingline Borrowing Request]


EXHIBIT C

FORM OF INTEREST ELECTION REQUEST

Date:                     ,             

 

To: JPMorgan Chase Bank, N.A.

 

     [Address]

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of April 10, 2007 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “ Credit Agreement ”), among Realogy Corporation (the “ Borrower ”), Domus Intermediate Holdings Corp., (“ Holdings ”), the Lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders (in such capacity, the “ Administrative Agent ”), and the other financial institutions party thereto. Terms defined in the Credit Agreement, wherever used herein, unless otherwise defined herein, shall have the same meanings herein as are prescribed by the Credit Agreement.

This notice constitutes an Interest Election Request, and the Borrower hereby irrevocably requests that effective on                      10 :

$[            ] of the presently outstanding principal amount of the [INDENTIFY APPLICABLE BORROWING(S)] 11 , and all presently being maintained as [ABR / Eurocurrency] [Term / Revolving] Loans,

be [converted into] [continued as] [Eurocurrency Loans having an Interest Period of [one/two/three/six[/nine/twelve] 12 months] [ABR Loans].

This Interest Election Request is issued pursuant to and is subject to the Credit Agreement executed as of the date set forth above.

[Signature Page Follows]

 

10 Notice must be received by the Administrative Agent by telephone (confirmed promptly by delivery of an Interest Election Request by hand or by telecopy) no later than (a) 12:00 p.m., Local Time, three Business Days prior to the proposed continuance/conversion to a Eurocurrency Loan and (b) 11:00 a.m., Local Time, on the date of the proposed conversion to an ABR Loan (which must be a Business Day).
11 Applies to Revolving Facility Loans, Initial Term B Loans, Delayed Draw Term B Loans, Incremental Term Loans or Other Term Loans. This request does not apply to Swingline Loans.
12 Nine and twelve month Interest Periods permitted only if all Lenders consent thereto.

 

6


Very truly yours,

REALOGY CORPORATION,

By:

 

 

  Name:
  Title:

[Signature Page to Form of Interest Election Request]


SCHEDULE 1.01A

CERTAIN SUBSIDIARIES

Cartus Pty Ltd. (Australia)

Cendant Global Services East B.V. (The Netherlands)

Cendant Global Services, B.V. (The Netherlands)

HFS Mobility Services Inc. (Ontario)

PHH Network Services S.A. de C.V. (Mexico)

Cartus Puerto Rico Corporation (Puerto Rico)

Burrow Escrow Services, Inc. (California) *

West Coast Escrow Company (California) *

The NRT Foundation, Inc. (Delaware; not for profit)

Henry S. Miller Real Estate Institute, Inc. (Texas)

Providence Title Company (Texas)

 

 

 

* See Schedule 6.02(A)
* See Schedule 6.02(A)

 

1


SCHEDULE 1.1AA

CERTAIN DOMESTIC SUBSIDIARIES

APEX Real Estate Information Services Alabama, L.L.C.

Prime Commercial, Inc.

Realty Stars, Ltd.

 

2


SCHEDULE 1.01B

MORTGAGED PROPERTIES

None.

 

3


SCHEDULE 1.01C

EXISTING LETTERS OF CREDIT

 

Issue Date

   Expiry Date    LC Number    Bank    Amount   

Beneficiary

9/20/2000    9/20/2007    P-205816    JPMorgan Chase    $ 1,000,000.00   

Cornhill Insurance PLC T/A

Allianz Cornhill International

c/o Mr. Alex Campbell

Manager- Global Risks

27 Leadenhall Street

London EC3A 1AA

9/5/2001    12/31/2007    P-217344    JPMorgan Chase    $ 500,000.00   

Virginia Surety Company, Inc.

1000 North Milwaukee Avenue

Glenview, IL 60025

4/17/2002    4/17/2008    P-224510    JPMorgan Chase    $ 342,000.00   

Lumbermans Mutual Casualty Company

American Motorists Insurance Company

American Manufacturers Mutual Insurance Company

American Protection Insurance Company

Att: Cash Management, 12 NWC

One Kemper Drive

Long Grove, IL 60049

4/17/2002    4/17/2008    P-224511    JPMorgan Chase    $ 800,000.00   

Liberty Mutual Insurance Company

H.O. Financial - Credit

175 Berkeley Street

Boston, MA 02117

Attn: S.J. Whalen - Securities Analyst

4/17/2002    4/17/2008    P-224517    JPMorgan Chase    $ 646,748.67   

Broadway 660 Madison Fee LLC

c/o Broadway Partners

375 Park Ave, Suite 2107

New York, NY. 10152

4/17/2002    4/17/2008    P-224518    JPMorgan Chase    $ 186,000.00   

Broadway Landmark Corporation

490 Broadway

New York, NY 10012

9/30/2003    9/28/2007    P-241627    JPMorgan Chase    $ 280,000.00   

Sterling Bank

P.O. Box 569787

Dallas, TX 75356-9787

Attn: J. Brigham North, CEO

Mailed to: 1250 W. Mockingbird, Suite100

Dallas, TX 75247

 

4


Issue Date

   Expiry Date    LC Number    Bank    Amount   

Beneficiary

5/17/2004    5/17/2007    P-248159    JPMorgan Chase    $ 1,600,000.00   

38 East 61st Street, LLC C/O

Mosbacher Properties

545 Madison Avenue, 12th Floor

New York, NY 10022

Attn: Arline Vogel

9/19/2006    10/10/2007    TPTS-282619    JPMorgan Chase    $ 3,662,100.00   

American Casualty Insurance Company of Reading PA

333 S. Wabash

Chicago, IL 60604

10/16/2006    10/10/2007    TPTS-287149    JPMorgan Chase    $ 100,000.00   

Jordon Common Fundings, LLC

Operations Manager

9350 South 150 East, Suite 1000

Sandy, Utah 84070

2/1/2007    12/31/2007    TPTS-308585    JPMorgan Chase    $ 450,000.00   

Levi Strauss and Co.

A Delaware Corporation

Attn: Real Estate Manager

1155 Battery Street

San Francisco, CA 94111

2/9/1999    2/9/2008    TPTS-394398    JPMorgan Chase    $ 13,201,178.00   

Swiss Reinsurance America Corporation

237 Park Avenue

New York, NY 10017

Attn: Vicki Mace, Senior Credit Officer

12/17/2004    12/14/2007    P-617261    JPMorgan Chase    $ 692,545.00   

888 Seventh Avenue LLC

c/o Vornado Office Management LLC

210 Route 4 East

Paramus, NJ 07652

Attn: Senior Financial Officer - Office Division

         Total JPMorgan

US Outstanding

   $ 23,460,571.67   
11/29/2006    7/15/2008    TPTS-296698    JPMorgan Chase    $ 4,985,914.55   

Citibank, N.A. India Branches

Jeevan Vihar, 3, Sansad Marg

New Delhi 110001

India

 

5


Issue Date

   Expiry Date    LC Number    Bank    Amount   

Beneficiary

1/4/2007    7/15/2008    TPTS-299315    JPMorgan Chase    $ 5,911,434.72   

Citibank, N.A. Indian Branches

Jeevan Vihar, 3, Sansad Marg

New Delhi 110001

India

         Total JPMorgan
International
   $ 10,897,349.27   
         Total
Outstanding
   $ 34,357,920.94   

 

6


SCHEDULE 1.01D

IMMATERIAL SUBSIDIARIES

APEX Real Estate Information Services Alabama, L.L.C.

Prime Commercial, Inc.

Realty Stars, Ltd.

 

7


SCHEDULE 1.01E

REFINANCED INDEBTEDNESS

Indebtedness in the outstanding principal amount of approximately $600 million under the Credit Agreement, dated as of May 25, 2006, by and among Realogy Corporation, as borrower, the lenders referred to therein, JPMorgan Chase Bank, N.A., as administrative agent, Calyon New York Branch, as syndication agent, The Bank of Nova Scotia, Barclays Bank Plc and The Bank of Tokyo-Mitsubishi UFJ, Ltd, New York Branch, as documentation agents and Citicorp USA, Inc., as co-documentation agent.

Existing Senior Notes

 

8


SCHEDULE 1.01F

SUBSIDIARY LOAN PARTY

 

Kendall, Potter and Mann, Realtors, Inc.

Burrow Escrow Services, Inc.

Cosby-Tipton Real Estate, Inc.

Associates Realty, Inc.

Fred Sands School of Real Estate

Mid-Exchange, Inc.

West Coast Escrow Company

C21 TM Corp.

Valley of California, Inc.

AFS Mortgage

R.J. Young Co.

Guardian Title Company

Coldwell Banker Residential Brokerage Company

Associates Realty Network

CB TM Corp.

Coldwell Banker Residential Referral Network (a California corporation)

West Coast Escrow Closing Co.

Coldwell Banker Residential Real Estate, Inc.

National Coordination Alliance, Inc.

Coldwell Banker Real Estate Corporation

Summit Escrow

A Market Place, Inc.

Equity Title Company

Realogy Operations, Inc.

ERA TM Corp.

Associates Investments

Realogy Franchise Group, Inc.

Cartus Partner Corporation

Title Resources Incorporated

ERA Franchise Systems, Inc.

Guardian Holding Company

Title Resource Group Affiliates Holdings, Inc.

NRT Settlement Services of Missouri, Inc.

LMS (Delaware) Corp.

Hickory Title, LLC

 

9


Keystone Closing Services LLC

NRT The Condo Store Incorporated

Realogy Services Venture Partner, Inc.

St. Joe Title Services, LLC

Realogy Global Services, Inc.

Real Estate Services, Inc.

Realogy Services Group LLC

Charter Title, LLC

Sotheby’s International Realty Referral Company, LLC

Realogy Franchise Finance, Inc.

Equity Title Messenger Service Holding Company

Realogy Licensing, Inc.

CGRN, Inc.

Sotheby’s International Realty Affiliates, Inc.

Sotheby’s International Realty Licensee Corporation

Title Resource Group Services Corporation

Realogy Intellectual Property Holdings I, Inc.

Realogy Intellectual Property Holdings II, Inc.

Coldwell Banker King Thompson Auction Services, Inc.

First California Escrow Corporation

The Sunshine Group Limited Partnership

Patriot Settlement Services, LLC

Cartus Corporation

Coldwell Banker Residential Brokerage Pardoe, Inc.

Franchise Settlement Services, Inc.

FedState Strategic Consulting, Incorporated

Gulf South Settlement Services, LLC

Mid-State Escrow Corporation

Grand Title, LLC

NRT Settlement Services of Texas, Inc.

FSA Membership Services, LLC

NRT Commercial, Inc.

Coldwell Banker Corporation

NRT Relocation LLC

Coldwell Banker Residential Brokerage, Inc.

Pacific Access Holding Company, LLC

Coldwell Banker Residential Brokerage Corporation

Texas American Title Company of Corpus Christi

 

10


Scranton Abstract, LLC

NRT Sunshine Inc.

NRT Utah, Inc.

NRT Chicago LLC

CDRE TM Corp.

Advantage Title & Insurance, LLC

Rocky Mountain Settlement Services, LLC

NRT Arizona, Inc.

Corcoran MLS Holdings, LLC

NRT Commercial Utah, Inc.

Premier Settlement Services, LLC

NRT Incorporated

Lincoln Settlement Services, LLC

NRT Columbus, Inc.

Title Resource Group Holdings, Inc.

NRT New York, Inc.

Oncor International LLC

NRT Arizona Commercial, Inc.

NRT Arizona Exito, Inc.

NRT Arizona Referral, Inc.

Title Resource Group LLC

Century 21 Real Estate LLC

NRT New England Incorporated

NRT Hawaii Referral, LLC

Career Development Center, LLC

TBR Settlement Services, LLC

Batjac Real Estate Corp.

The Sunshine Group, Ltd.

Cook-Pony Farm Real Estate, Inc.

Corcoran Group—Brooklyn Landmark, LLC

The Corcoran Group Eastside, Inc.

Alpha Referral Network, Inc.

TAW Holding Inc.

NRT Texas, Inc.

Texas American Title Company of Austin

South Land Title Co., Inc.

ATCOH Holding Company

Referral Network Inc.

 

11


Processing Solutions, Incorporated

South-Land Title of Montgomery County, Inc.

Texas American Title Company

NRT Texas Real Estate Services, Inc.

American Title Company of Houston

Colorado Commercial, LLC

Guardian Title Agency, LLC

Referral Network, LLC

NRT Colorado, Inc.

Bob Tendler Real Estate, Inc.

William Orange Realty, Inc.

Real Estate Referral, Inc.

Hillshire House, Incorporated

The Four Star Corp.

Signature Properties, Inc.

Soleil Florida Corp.

Central Florida Title Company

Terramar Guaranty Title & Trust, Inc.

Florida’s Preferred School of Real Estate, Inc.

Referral Network, Inc. (a Florida corporation)

St. Joe Title Services, Inc.

St Joe Real Estate Services, Inc.

Referral Associates of Florida, Inc.

Allmon, Tiernan & Ely, Inc.

Pacific Properties Referrals, Inc.

Coldwell Banker Pacific Properties, Ltd.

Coldwell Banker Commercial Pacific Properties, Ltd.

Coldwell Banker Residential Brokerage Insurance Agency of Maine, Inc.

Dewolfe Realty Affiliates

The Miller Group, Inc.

NRT Mid-Atlantic, Inc.

Real Estate Referrals, Inc.

NRT Mid-Atlantic Title Services, LLC

NRT Insurance Agency, Inc.

Trust of New England, Inc.

Referral Associates of New England, Inc.

DeWolfe Relocation Services, Inc.

Cotton Real Estate, Inc.

 

12


The DeWolfe Company, Inc.

The DeWolfe Companies, Inc.

Sotheby’s International Realty, Inc.

Burnet Title, Inc.

Burnet Realty Inc. (a Minnesota corporation)

Home Referral Network, Inc.

Burnet Title, LLC

NRT Missouri, Inc.

ERA General Agency Corporation

NRT Missouri Referral Network, Inc.

Pacesetter Nevada, Inc.

Market Street Settlement Group, Inc.

ERA General Agency of New Jersey, Inc.

Coldwell Banker Real Estate Services, Inc.

Burgdorff Referral Associates, Inc.

Douglas and Jean Burgdorff, Inc.

Burnet Title of Ohio, LLC

NRT Commercial Ohio Incorporated

Secured Land Transfers, Inc.

Jack Gaughen, Inc.

Associated Client Referral Corp.

APEX Real Estate Information Services, LLC

APEX Real Estate Information Services, LLP

Coldwell Banker Real Estate, Inc.

Coldwell Banker Residential Referral Network, Inc. (a Pennsylvania corporation)

J.W. Riker - Northern R.I., Inc.

Burnet Realty, Inc. (a Wisconsin corporation)

Coldwell Banker Residential Real Estate Services of Wisconsin, Inc.

 

13


SCHEDULE 1.01G

UNRESTRICTED SUBSIDIARIES

None.

 

14


SCHEDULE 1.01H

EXISTING JOINT VENTURES

Majority-owned Joint Ventures

 

Atlantic Title & Trust, LLC

Associate Title, LLC

Baldwin County Settlement Services, LLC

Burnet Title of Indiana, LLC

Cambridge Settlement Services.Com, LLC

First Advantage Title, LLC

First Place Title, LLC

Island Settlement Services, LLC

Keystone Title, LLC

King Title Services, LLC

Lehigh Title, LLC

Lincoln Title, LLC

Mercury Settlement Services, LLC

Metro Title, LLC

NRT Title Agency, LLC

NRT Title Services of Maryland, LLC

Platinum Title & Settlement Services, LLC

Professionals’ Title Company, LLC

Quality Title, LLC

Residential Title Agency, LLC

Riverbend Title, LLC

Security Settlement Services, LLC

Skyline Title, LLC

St. Mary’s Title Services, LLC

Sunland Title, LLC

Susquehanna Land Transfers, LLC

 

15


The Masiello Group Closing Services, LLC

The Sunshine Group (Florida) Ltd. Corp.

The Sunshine Group (Florida) Limited Partnership

West Coast Valencia Escrow Company, Inc.

Minority-owned Joint Ventures

Catalina Title LLC

Censtar Title Insurance Company

Cornerstone Title Company

Equity Title Agency, Inc.

NEWMLS LLC

NRT Titles Services of Virginia, LLC

Pacific Escrow Group, Inc.

PHH Home Loans, LLC

Progressive Holding Company

Property I.D. Associates, LLC

Regency Title Company, L.L.C.

Title Info Now, LLC

 

16


SCHEDULE 2.01

COMMITMENTS

 

Lender

   Loan and Commitment
     Initial Term B
Loan
   Delayed Draw
Term B Loan
   Revolving
Facility
   Synthetic L/C
Credit Linked
Deposit

JPMorgan Chase Bank, N.A.

   $ 581,969,200    $ 453,840,000    $ 184,000,000    $ 174,678,800

Credit Suisse, Cayman Islands

   $ 581,969,200    $ 453,840,000    $ 184,000,000    $ 174,678,800

Bear Stearns Corporate Lending Inc.

   $ 204,940,767    $ 159,820,000    $ 98,250,000    $ 61,513,233

Citicorp North America, Inc.

   $ 195,554,166    $ 152,500,000    $ 93,750,000    $ 58,695,834

Barclays Bank PLC

   $ 138,666,667    $ 0    $ 100,000,000    $ 37,333,333

Calyon New York Branch

   $ 130,000,000    $ 0    $ 50,000,000    $ 0

Sumitomo Mitsui Banking Corporation

   $ 56,900,000    $ 0    $ 25,000,000    $ 18,100,000

Mizuho Corporate Bank, Ltd.

   $ 60,000,000    $ 0    $ 15,000,000    $ 0

Totals

   $ 1,950,000,000    $ 1,220,000,000    $ 750,000,000    $ 525,000,000

 

17


SCHEDULE 3.01

ORGANIZATION AND GOOD STANDING

None.

 

18


SCHEDULE 3.04

GOVERNMENTAL APPROVALS

None.

 

19


SCHEDULE 3.07(B)

INTELLECTUAL PROPERTY

None.

 

20


SCHEDULE 3.08

SUBSIDIARIES

Wholly-owned U.S. Subsidiaries

 

Name of Entity

   Jurisdiction of
Organization
  

Ownership

APEX Real Estate Information Services Alabama, L.L.C.

   Alabama    APEX Real Estate Information Services, LLP - 100%

Kendall, Potter and Mann, Realtors, Inc.

   California    Valley of California, Inc. - 100%

Burrow Escrow Services, Inc.

   California    Title Resource Group LLC - 100%

Cosby-Tipton Real Estate, Inc.

   California    Coldwell Banker Residential Brokerage Company - 100%

Associates Realty, Inc.

   California    Associates Investments - 100%

Fred Sands School of Real Estate

   California    Coldwell Banker Residential Brokerage Corporation - 100%

Mid-Exchange, Inc.

   California    Title Resource Group LLC - 100%

West Coast Escrow Company

   California    NRT Incorporated - 100%

C21 TM Corp.

   California    Realogy Intellectual Property Holdings I, Inc. - 50% Realogy Intellectual Property Holdings II, Inc. - 50%

Valley of California, Inc.

   California    Coldwell Banker Residential Brokerage Corporation - 100%

AFS Mortgage

   California    Realogy Operations, Inc. - 100%

R.J. Young Co.

   California    Sotheby’s International Realty, Inc. - 100%

Guardian Title Company

   California    Guardian Holding Company - 100%

Coldwell Banker Residential Brokerage Company

   California    Coldwell Banker Residential Brokerage Corporation - 100%

Associates Realty Network

   California    Associates Realty, Inc. - 100%

CB TM Corp.

   California    Realogy Intellectual Property Holdings I, Inc. - 50% Realogy Intellectual Property Holdings II, Inc. - 50%

Coldwell Banker Residential Referral Network

   California    Coldwell Banker Residential Brokerage Corporation - 100%

West Coast Escrow Closing Co.

   California    Title Resource Group Affiliates Holdings, Inc. - 100%

 

21


Name of Entity

   Jurisdiction of
Organization
  

Ownership

Coldwell Banker Residential Real Estate, Inc.

   California    Coldwell Banker Residential Brokerage Corporation - 100%

National Coordination Alliance, Inc.

   California    Title Resource Group LLC - 100%

Coldwell Banker Real Estate Corporation

   California    Coldwell Banker Corporation - 100%

Summit Escrow

   California    Associates Investments - 100%

A Market Place, Inc.

   California    Coldwell Banker Residential Brokerage Company - 100%

Equity Title Company

   California    NRT Incorporated - 100%

Realogy Operations, Inc.

   California    Realogy Services Group LLC - 100%

ERA TM Corp.

   California    Realogy Intellectual Property Holdings I, Inc. - 50% Realogy Intellectual Property Holdings II, Inc. - 50%

Associates Investments

   California    Realogy Services Group LLC - 100%

Realogy Franchise Group, Inc.

   Delaware    Realogy Services Group LLC

Cartus Partner Corporation

   Delaware    Cartus Corporation - 100%

Title Resources Incorporated

   Delaware    TAW Holding Inc. - 100%

ERA Franchise Systems, Inc.

   Delaware    Realogy Services Group LLC - 100%

Guardian Holding Company

   Delaware    Title Resource Group LLC - 100%

Title Resource Group Affiliates Holdings, Inc.

   Delaware    Title Resource Group Holdings, Inc. - 100%

NRT Settlement Services of Missouri, Inc.

   Delaware    Title Resource Group LLC - 100%

LMS (Delaware) Corp.

   Delaware    NRT Sunshine Inc. - 100%

Hickory Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

Keystone Closing Services LLC

   Delaware    Title Resource Group LLC - 100%

NRT The Condo Store Incorporated

   Delaware    NRT Incorporated - 100%

Realogy Services Venture Partner, Inc.

   Delaware    Realogy Services Group LLC - 100%

St. Joe Title Services, LLC

   Delaware    Title Resource Group LLC - 100%

Realogy Global Services, Inc.

   Delaware    Realogy Services Group LLC - 100%

Real Estate Services, Inc.

   Delaware    NRT Incorporated - 100%

Realogy Services Group LLC

   Delaware    Realogy Corporation - 100%

 

22


Name of Entity

   Jurisdiction of
Organization
  

Ownership

Charter Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

Sotheby’s International Realty Referral Company, LLC

   Delaware    Sotheby’s International Realty, Inc. - 100%

Realogy Franchise Finance, Inc.

   Delaware    Realogy Services Group LLC - 100%

Equity Title Messenger Service Holding Company

   Delaware    Title Resource Group LLC - 100%

Realogy Licensing, Inc.

   Delaware    Realogy Services Group LLC - 100%

CGRN, Inc.

   Delaware    Realogy Services Group LLC - 100%

Sotheby’s International Realty Affiliates, Inc.

   Delaware    Realogy Services Group LLC - 100%

Sotheby’s International Realty Licensee Corporation

   Delaware    Realogy Services Group LLC - 100%

Title Resource Group Services Corporation

   Delaware    St. Joe Title Services, Inc. - 100%

Realogy Intellectual Property Holdings I, Inc.

   Delaware    Realogy Services Group LLC - 100%

Realogy Intellectual Property Holdings II, Inc.

   Delaware    Realogy Services Group LLC - 100%

Coldwell Banker King Thompson Auction Services, Inc.

   Delaware    Coldwell Banker Residential Real Estate, Inc. - 100%

First California Escrow Corporation

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

The Sunshine Group Limited Partnership

   Delaware   

The Sunshine Group, Ltd. - 1%

LMS (Delaware) Corp. - 99%

Patriot Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

Cartus Corporation

   Delaware    Realogy Services Group LLC - 100%

Coldwell Banker Residential Brokerage Pardoe, Inc.

   Delaware    NRT Incorporated - 100%

Franchise Settlement Services, Inc.

   Delaware    Title Resource Group LLC - 100%

FedState Strategic Consulting, Incorporated

   Delaware    Realogy Operations, Inc. - 100%

Gulf South Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

Mid-State Escrow Corporation

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

 

23


Name of Entity

   Jurisdiction of
Organization
  

Ownership

Grand Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

NRT Settlement Services of Texas, Inc.

   Delaware    Title Resource Group LLC - 100%

FSA Membership Services, LLC

   Delaware    Realogy Services Group LLC - 100%

NRT Commercial, Inc.

   Delaware    NRT Incorporated - 100%

Coldwell Banker Corporation

   Delaware    Realogy Services Group LLC - 100%

NRT Relocation LLC

   Delaware    Realogy Operations, Inc. - 100%

Coldwell Banker Residential Brokerage, Inc.

   Delaware    NRT Incorporated - 100%

Pacific Access Holding Company, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

Coldwell Banker Residential Brokerage Corporation

   Delaware    NRT Incorporated - 100%

Texas American Title Company of Corpus Christi

   Delaware    Texas American Title Company - 100%

Scranton Abstract, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

NRT Sunshine Inc.

   Delaware    NRT Incorporated - 100%

NRT Utah, Inc.

   Delaware    NRT Incorporated - 100%

NRT Chicago LLC

   Delaware    NRT Incorporated - 100%

CDRE TM Corp.

   Delaware    NRT Incorporated - 100%

Advantage Title & Insurance, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

Rocky Mountain Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

NRT Arizona, Inc.

   Delaware    NRT Incorporated - 100%

Corcoran MLS Holdings, LLC

   Delaware    NRT New York, Inc. - 100%

NRT Commercial Utah, Inc.

   Delaware    NRT Incorporated - 100%

Premier Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

NRT Incorporated

   Delaware    Realogy Services Group LLC - 100%

Lincoln Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

NRT Columbus, Inc.

   Delaware    Coldwell Banker Residential Real Estate, Inc. - 100%

Title Resource Group Holdings, Inc.

   Delaware    Title Resource Group LLC - 100%

 

24


Name of Entity

   Jurisdiction of
Organization
  

Ownership

NRT New York, Inc.

   Delaware    NRT Incorporated - 100%

Oncor International LLC

   Delaware    Realogy Franchise Group, Inc. - 100%

NRT Arizona Commercial, Inc.

   Delaware    NRT Arizona, Inc. - 100%

NRT Arizona Exito, Inc.

   Delaware    NRT Arizona, Inc. - 100%

NRT Arizona Referral, Inc.

   Delaware    NRT Arizona, Inc. - 100%

Title Resource Group LLC

   Delaware    Realogy Services Group LLC - 100%

Century 21 Real Estate LLC

   Delaware    Realogy Services Group LLC - 100%

NRT New England Incorporated

   Delaware    NRT Incorporated - 100%

NRT Hawaii Referral, LLC

   Delaware    NRT Incorporated - 100%

Career Development Center, LLC

   Delaware    NRT Arizona, Inc. - 100%

TBR Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 100%

Realogy Cavalier Holdco, LLC 1

   Delaware    Cartus Corporation - 100%

Cartus Relocation Corporation 2

   Delaware    Cartus Corporation - 100%

Kenosia Funding, LLC 3

   Delaware    Cartus Relocation Corporation - 100%

Cartus Financial Corporation 4

   Delaware    Cartus Corporation - 100%

Apple Ridge Funding LLC 5

   Delaware    Apple Ridge Services Corporation - 100%

Apple Ridge Services Corporation 6

   Delaware    Cartus Financial Corporation - 100%

The NRT Foundation, Inc.

   Delaware    NRT Incorporated - 100%

Batjac Real Estate Corp.

   New York    Coldwell Banker Real Estate Services, Inc. - 100%

The Sunshine Group, Ltd.

   New York    NRT Sunshine Inc. - 100%

Cook-Pony Farm Real Estate, Inc.

   New York    NRT New York, Inc. - 100%

Corcoran Group—Brooklyn Landmark, LLC

   New York    NRT New York, Inc. - 100%

The Corcoran Group Eastside, Inc.

   New York    NRT New York, Inc. - 100%

Alpha Referral Network, Inc.

   Texas    Coldwell Banker Residential Referral Network, Inc. (CA) - 100%

 

1

Qualified CFC Holding Company.

 

2

Special Purpose Securitization Subsidiary

 

3

Special Purpose Securitization Subsidiary

 

4

Special Purpose Securitization Subsidiary

 

5

Special Purpose Securitization Subsidiary

 

6

Special Purpose Securitization Subsidiary

 

25


Name of Entity

   Jurisdiction of
Organization
  

Ownership

TAW Holding Inc.

   Texas    ATCOH Holding Company - 100%

NRT Texas, Inc.

   Texas    NRT Incorporated - 100%

Texas American Title Company of Austin

   Texas    Texas American Title Company - 100%

South Land Title Co., Inc.

   Texas    ATCOH Holding Company - 100%

ATCOH Holding Company

   Texas    Texas American Title Company - 100%

Referral Network Inc.

   Texas    NRT Incorporated - 100%

Processing Solutions, Incorporated

   Texas    Title Resource Group LLC - 100%

South-Land Title of Montgomery County, Inc.

   Texas    ATCOH Holding Company - 100%

Texas American Title Company

   Texas    Title Resource Group LLC - 100%

NRT Texas Real Estate Services, Inc.

   Texas    NRT Texas, Inc. - 100%

Henry S. Miller Real Estate Institute, Inc.

   Texas    Realogy Services Group, LLC - 100%

American Title Company of Houston

   Texas    ATCOH Holding Company - 100%

Providence Title Company

   Texas    Realogy Services Group, LLC - 100%

Title Resources Guaranty Company 7

   Texas    Title Resources Incorporated - 100%

Colorado Commercial, LLC

   Colorado    NRT Colorado, Inc. - 100%

Guardian Title Agency, LLC

   Colorado    Title Resource Group LLC - 100%

Referral Network, LLC

   Colorado    NRT Colorado, Inc. - 100%

NRT Colorado, Inc.

   Colorado    NRT Incorporated - 100%

Bob Tendler Real Estate, Inc.

   Connecticut    Coldwell Banker Residential Real Estate, Inc. - 100%

William Orange Realty, Inc.

   Connecticut    Coldwell Banker Real Estate Services, Inc. - 100%

Real Estate Referral, Inc.

   Connecticut    Hillshire House, Incorporated - 100%

Hillshire House, Incorporated

   Connecticut    The DeWolfe Company, Inc. - 100%

The Four Star Corp.

   Connecticut    Coldwell Banker Real Estate Services, Inc. - 100%

Signature Properties, Inc.

   Florida    St. Joe Real Estate Services, Inc. - 100%

Soleil Florida Corp.

   Florida    NRT Sunshine Inc. - 100%

 

7

Insurance Company.

 

26


Name of Entity

   Jurisdiction of
Organization
  

Ownership

Central Florida Title Company

   Florida    Terramar Guaranty Title & Trust, Inc. - 100%

Terramar Guaranty Title & Trust, Inc.

   Florida    Title Resource Group LLC - 100%

Florida’s Preferred School of Real Estate, Inc.

   Florida    St. Joe Real Estate Services, Inc. - 100%

Referral Network, Inc. (a Florida corporation)

   Florida    Coldwell Banker Residential Referral Network, Inc. (CA) - 100%

St. Joe Title Services, Inc.

   Florida    Title Resource Group LLC - 100%

St Joe Real Estate Services, Inc.

   Florida    NRT Incorporated - 100%

Referral Associates of Florida, Inc.

   Florida    St. Joe Real Estate Services, Inc. - 100%

Allmon, Tiernan & Ely, Inc.

   Florida    NRT New York, Inc. - 100%

Pacific Properties Referrals, Inc.

   Hawaii    Coldwell Banker Real Estate Services, Inc. - 100%

Coldwell Banker Pacific Properties, Ltd.

   Hawaii    Coldwell Banker Real Estate Services, Inc. - 100%

Coldwell Banker Commercial Pacific Properties, Ltd.

   Hawaii    NRT Incorporated - 100%

Realty Stars, Ltd.

   Illinois    Coldwell Banker Residential Real Estate, Inc. - 100%

Coldwell Banker Residential Brokerage Insurance Agency of Maine, Inc.

   Maine    NRT Insurance Agency, Inc. - 100%

Dewolfe Realty Affiliates

   Maine    The DeWolfe Company, Inc. - 100%

The Miller Group, Inc.

   Maryland    NRT Commercial, Inc. - 100%

NRT Mid-Atlantic, Inc.

   Maryland    NRT Incorporated - 100%

Real Estate Referrals, Inc.

   Maryland    NRT Mid-Atlantic, Inc. - 100%

NRT Mid-Atlantic Title Services, LLC

   Maryland    Title Resource Group LLC - 100%

NRT Insurance Agency, Inc.

   Massachusetts    The DeWolfe Companies, Inc. - 100%

Trust of New England, Inc.

   Massachusetts    NRT New England Incorporated - 100%

Referral Associates of New England, Inc.

   Massachusetts    DeWolfe Relocation Services, Inc. - 100%

DeWolfe Relocation Services, Inc.

   Massachusetts    The DeWolfe Companies, Inc. - 100%

Cotton Real Estate, Inc.

   Massachusetts    Sotheby’s International Realty, Inc. - 100%

The DeWolfe Company, Inc.

   Massachusetts    The DeWolfe Companies, Inc. - 100%

 

27


Name of Entity

  

Jurisdiction of
Organization

  

Ownership

The DeWolfe Companies, Inc.

   Massachusetts    NRT Incorporated - 100%

Sotheby’s International Realty, Inc.

   Michigan    NRT Incorporated - 100%

Burnet Title, Inc.

   Minnesota    Title Resource Group LLC - 100%

Burnet Realty Inc. (a Minnesota corporation)

   Minnesota    NRT Incorporated - 100%

Home Referral Network, Inc.

   Minnesota    NRT Incorporated - 100%

Burnet Title, LLC

   Minnesota    Title Resource Group LLC - 100%

NRT Missouri, Inc.

   Missouri    Coldwell Banker Residential Brokerage Corporation - 100%

ERA General Agency Corporation

   Missouri    ERA Franchise Systems, Inc. - 100%

NRT Missouri Referral Network, Inc.

   Missouri    Coldwell Banker Residential Referral Network, Inc. (CA) - 100%

Pacesetter Nevada, Inc.

   Nevada    Valley of California, Inc. - 100%

Market Street Settlement Group, Inc.

   New Hampshire    Title Resource Group Holdings, Inc. - 100%

ERA General Agency of New Jersey, Inc.

   New Jersey    ERA General Agency Corporation - 100%

Coldwell Banker Real Estate Services, Inc.

   New Jersey    Coldwell Banker Residential Real Estate, Inc. - 100%

Burgdorff Referral Associates, Inc.

   New Jersey    NRT Incorporated - 100%

Douglas and Jean Burgdorff, Inc.

   New Jersey    NRT Incorporated - 100%

Burnet Title of Ohio, LLC

   Ohio    Burnet Title, LLC - 100%

NRT Commercial Ohio Incorporated

   Ohio    NRT Incorporated - 100%

Secured Land Transfers, Inc.

   Pennsylvania    Title Resource Group LLC - 100%

Jack Gaughen, Inc.

   Pennsylvania    NRT Mid-Atlantic, Inc. - 100%

Associated Client Referral Corp.

   Pennsylvania    NRT Mid-Atlantic, Inc. - 100%

APEX Real Estate Information Services, LLC

   Pennsylvania    APEX Real Estate Information Services, LLP - 100%

APEX Real Estate Information Services, LLP

   Pennsylvania   

Title Resource Group LLC - 1%

 

Title Resource Group Services Corporation - 99%

Coldwell Banker Real Estate, Inc.

   Pennsylvania    Coldwell Banker Residential Real Estate, Inc. - 100%

 

28


Name of Entity

  

Jurisdiction of
Organization

  

Ownership

Coldwell Banker Residential Referral Network, Inc. (a Pennsylvania corporation)

   Pennsylvania    Coldwell Banker Real Estate, Inc. - 100%

J.W. Riker—Northern R.I., Inc.

   Rhode Island    The DeWolfe Company, Inc. - 100%

Prime Commercial, Inc.

   Utah    NRT Commercial Utah, Inc. - 100%

Burnet Realty, Inc. (a Wisconsin corporation)

   Wisconsin    NRT Incorporated - 100%

Coldwell Banker Residential Real Estate Services of Wisconsin, Inc.

   Wisconsin    Coldwell Banker Residential Real Estate, Inc. - 100%

Foreign Subsidiaries

 

Name of Entity

  

Jurisdiction of
Organization

  

Ownership

Cartus Corporation (Canada)

   New Brunswick    Cartus Corporation - 100%

Cartus Holdings Limited

   United Kingdom    Cartus Corporation - 100%

Sotheby’s International Realty Limited

   United Kingdom    Sotheby’s International Realty, Inc. - 100%

Cartus Corporation Limited (HK)

   Hong Kong   

Realogy Cavalier Holdco, LLC - 99%

 

Realogy Services Group LLC - 1%

CARTUS CORPORATION PTE LTD.

   Singapore    Realogy Cavalier Holdco, LLC - 100%

Cartus Global Holdings Limited

   Hong Kong    Realogy Cavalier Holdco, LLC - 100%

Fairtide Insurance Ltd.

   Bermuda    Cartus Corporation - 100%

Cartus Pty Ltd.

   Australia    Cartus Corporation - 100%

Cartus Puerto Rico Corporation

   Puerto Rico    Cartus Corporation – 100%

Cendant Global Services East B.V.

   Netherlands    Realogy Global Services, Inc. - 100%

Cendant Global Services, B.V.

   Netherlands    Realogy Global Services, Inc. - 100%

HFS Mobility Services Inc.

   Ontario    Cartus Corporation - 100%

PHH Network Services S.A. de C.V.

   Mexico    Cartus Corporation - 100%

 

29


Name of Entity

  

Jurisdiction of
Organization

  

Ownership

Cartus Business Answers No. 2 Plc

   United Kingdom    Cartus Limited - 100%

Cartus Funding Limited

   United Kingdom    Cartus Limited - 100%

Cartus II Limited

   United Kingdom    Cartus Limited - 100%

Cartus Limited

   United Kingdom    Cartus Holdings Limited - 100%

Cartus Property Services Limited

   United Kingdom    Cartus Holdings Limited - 100%

Cartus Services II Limited

   United Kingdom    Cartus Holdings Limited - 100%

Cartus Services Limited

   United Kingdom    Cartus II Limited - 100%

Cartus UK Plc

   United Kingdom    Cartus Limited - 100%

Cartus Management Consulting (Shanghai) Co., Ltd.

   China    Cartus Global Holdings Limited

Majority-owned Joint Ventures

 

Name of Entity

  

Jurisdiction of
Organization

  

Ownership

Atlantic Title & Trust, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

Associates Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 73%

Baldwin County Settlement Services, LLC

   Alabama    Titles Resource Group Affiliates Holdings, Inc. - 55%

Burnet Title of Indiana, LLC

   Indiana    Burnet Title L.L.C. - 75%

Cambridge Settlement Services.Com, LLC

   Alabama    Title Resource Group Affiliates Holdings, Inc. - 51%

First Advantage Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

First Place Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 51%

 

30


Name of Entity

  

Jurisdiction of
Organization

  

Ownership

Island Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 60%

Keystone Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 51%

King Title Services, LLC

   Alabama    Title Resource Group Affiliates Holdings, Inc. - 51%

Lehigh Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 51%

Lincoln Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

Mercury Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

Metro Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

NRT Title Agency, LLC

   Delaware    Title Resource Group LLC - 60%

NRT Title Services of Maryland, LLC

   Delaware    NRT Mid-Atlantic Title Services, LLC - 51%

Platinum Title & Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 51%

Professionals’ Title Company, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

Quality Title, LLC

   Ohio    Title Resource Group Holdings, Inc. - 51%

Residential Title Agency, LLC

   Ohio    Burnet Title of Ohio, LLC - 51%

Riverbend Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 51%

Security Settlement Services, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 51%

 

31


Name of Entity

  

Jurisdiction of
Organization

  

Ownership

Skyline Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 60%

St. Mary’s Title Services, LLC

   New Hampshire    Market Street Settlement Group, Inc. - 55%

Sunland Title, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 51%

Susquehanna Land Transfers, LLC

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

The Masiello Group Closing Services, LLC

   New Hampshire    Market Street Settlement Group, Inc. - 55%

The Sunshine Group (Florida) Ltd. Corp.

   Florida    NRT Sunshine Inc. - 90%

The Sunshine Group (Florida) Limited Partnership

   Delaware   

The Sunshine Group (Florida) Ltd. Corp. – 75%

Soleil Florida Corp. – 25%

West Coast Valencia Escrow Company, Inc.

   Delaware    Title Resource Group Affiliates Holdings, Inc. - 55%

 

32


SCHEDULE 3.13

TAXES

None.

 

33


SCHEDULE 3.16

ENVIRONMENTAL MATTERS

None.

 

34


SCHEDULE 3.20(d)

EXCLUSIVE LICENSING

None.

 

35


SCHEDULE 4.02(B)

LOCAL COUNSEL

 

Jurisdiction

  

Local Counsel

Colorado

   Armstrong, Teasdale, Schlafly & Davis

Connecticut

   Wiggin & Dana

Florida

   Buchanan Ingersoll Professional Corporation

Hawaii

   Case Lombardi & Pettit A Law Corporation

Maine

   Verrill Dana, LLP

Maryland

   Cohen Mohr LLP

Massachusetts

   Nixon Peabody LLP

Michigan

   Dickinson Wright PLLC

Minnesota

   Faegre & Benson LLP

Missouri

   Armstrong, Teasdale, Schlafly & Davis

Nevada

   Fennemore Craig

New Hampshire

   Wiggin & Dana

New Jersey

   Connell Foley LLP

Ohio

   Hahn, Loeser & Parks LLP

Pennsylvania

   Fox Rothschild LLP

Rhode Island

   Duffy, Sweeney & Scott Ltd.

Wisconsin

   von Briesen & Roper, S.C.

United Kingdom

   Simpson Thacher & Bartlett LLP

 

36


SCHEDULE 4.02D

CERTAIN COLLATERAL MATTERS

See Schedule 5.12

 

37


SCHEDULE 5.12

POST-CLOSING MATTERS

Borrower shall use commercially reasonable efforts to cause (i) Cartus Corporation and Fairtide Insurance Ltd. to obtain any and all consents necessary to permit Cartus Corporation to pledge 65% of the issued and outstanding stock of Fairtide Insurance Ltd. to the Collateral Agent for the benefit of the applicable Secured Parties, and (ii) Cartus Corporation to so pledge such stock in accordance with the requirements of the Security Documents, within 90 calendar days of the Closing Date.

Borrower shall cause each of Alpha Referral Network, Inc., The Miller Group, Inc., Market Street Settlement Group, Inc. and AFS Mortgage to take all action necessary to be in good standing in their respective jurisdictions of organization, and shall deliver certificates certified by their respective Secretary of State (or other similar official) evidencing such good standing to the Administrative Agent, within 30 calendar days of the Closing Date.

Borrower shall, and shall cause each of its Subsidiaries to, execute and deliver to the Collateral Agent one or more notarized Intellectual Property Security Agreements and the schedules thereto to the extent required by the Guarantee and Collateral Agreement within 15 calendar days of the Closing Date.

Borrower shall, and shall cause each of its Subsidiaries to, take all actions with respect to trademarks as set forth in the notes to Schedule II to the Guarantee and Collateral Agreement.

 

38


SCHEDULE 6.01

INDEBTEDNESS

1. $91,000 owed by NRT New England Incorporated to Shaines McEachern Company Portsmouth, LLC pursuant to the Lease Agreement dated 9/16/2005.

2. $1,324,000 owed by Sotheby’s International Realty to Real Estate Services, Inc. pursuant to the Pines-Aspen Sublease and Option agreement dated 10/28/2003.

3. $129,000 owed by Coldwell Banker Ira E. Berry, Inc. and Frank Laiben Realty Co. Inc pursuant to the Asset Purchase Agreement dated 7/8/1999.

4. $9,737,000 owed by Realogy Services Group, LLC to Herb Williams pursuant to the Promissory Note dated 1/6/2006.

5. Capital Lease Obligations existing on the Closing Date set forth in the chart below:

 

Business Unit

  

Activity

   Amount   

Comments

NRT

   Short-term    $ 9,322,000    Equipment Leases copies, printers

NRT

   Long-term    $ 9,369,000    Equipment Leases excluding NRT Arizona

RFG

   Short-term    $ 455,000    Microsoft License Agreement

RFG

   Long-term    $ 910,000    Microsoft License Agreement

CRT

   Short-term    $ 224,000    IBM contracts expiring end of 2007

TRG

   Short-term    $ 71,000    Computer equipment lease - expires 12/2007

Sub-total Leases

      $ 20,351,000   

Notes

NRT = NRT

RFG = Real Estate Franchise Group

TRG = Title Resources Group

 

39


SCHEDULE 6.02(A)

LIENS

Lien securing the existing Capital Lease Obligations set forth on Schedule 6.01.

Liens by the California regulatory authority on the equity stock in Burrow Escrow Services, Inc., West Coast Escrow Company and West Coast Valencia Escrow Company, Inc. (including possession by the California regulatory authority of stock certificates issued by these escrow companies).

Judgment lien against Coldwell Banker Real Estate Corporation (Case No. 0229060327) for a monetary judgment in amount of $18,570 plus interest from 2002 in favor of John W. Richardson, trustee in bankruptcy of the estate of Skyway Freigh Systems, Inc.

Judgment lien against Coldwell Banker Real Estate Services, Inc. (Case No. DJ-335438-2006) for a judgment in the amount of $44,095.54 in favor of Division of Employer Accounts; mercer.

Liens on trademark ANSWERS (owned by ERA TM Corp.) granted to Heller Financials.

Liens on trademark DISTINCTIVE HOMES (owned by Burnet Realty Inc.) granted to Norwest Bank of Minnesota.

 

40


SCHEDULE 6.04

INVESTMENT

Existing Investments as of the Closing Date in the minority-owned joint ventures listed on Schedule 1.01H.

 

41


SCHEDULE 6.07

TRANSACTIONS WITH AFFILIATES

None.

 

42


SCHEDULE 10.01

NOTICE INFORMATION

To Holdings:

c/o Apollo Management, L.P.

9 West 57 th Street, 43 rd Floor

New York, NY 10019

Attention: Marc E. Becker

Facsimile: 212-515-3267

With a copy to

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, NY 10022

Attention: Stewart Kagan

Telephone: 212-872-8114

Facsimile: 212-872-1002

To other Loan Parties:

Realogy Corporation

One Campus Drive

Parsippany, New Jersey 07054

Attention: Anthony Hull

Facsimile: (973) 407-6651

Email: tony.hull@realogy.com

With a copy to

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, NY 10022

Attention: Stewart Kagan

Telephone: 212-872-8114

Facsimile: 212-872-1002

To Administrative Agent or Swingline Lender:

Attention:    Sylvia Trevino

                    JPMorgan Chase Bank, N.A.

                    AIBLO

                    1111 Fannin Street, 10 th Floor

                    Houston, Texas 77002

 

43


                    Fax:    713-750-2932

                    Tel:    713-750-3536

To Issuing Bank:

Attention:    Elsa Griffith

                    JPMorgan Chase Bank, N.A.

                    270 Park Avenue, 15 th Floor

                    New York, New York 10017

                    Fax: 212-972-0009

                    Tel:    212-270-9811

 

44

Exhibit 10.3

EXECUTION COPY

 

 

GUARANTEE AND COLLATERAL AGREEMENT

dated and effective as of

April 10, 2007

among

DOMUS INTERMEDIATE HOLDINGS CORP.,

as Guarantor

REALOGY CORPORATION,

as Borrower

each Grantor

party hereto

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

 


    Table of Contents    
        Page
 

ARTICLE I

Definitions

 

 
SECTION 1.01.   Credit Agreement   1
SECTION 1.02.   Other Defined Terms   1
 

ARTICLE II

Guarantee

 

 
SECTION 2.01.   Guarantee   8
SECTION 2.02.   Guarantee of Payment   8
SECTION 2.03.   Reinstatement   9
SECTION 2.04.   Agreement To Pay; Contribution; Subrogation   9
SECTION 2.05.   Information   9
SECTION 2.06.   Maximum Liability   9
SECTION 2.07.   Payment Free and Clear of Taxes   10
SECTION 2.08.   Additional Borrowers or Subsidiary Parties   10
 

ARTICLE III

Pledge of Securities

 

 
SECTION 3.01.   Pledge   10
SECTION 3.02.   Delivery of the Pledged Collateral   12
SECTION 3.03.   Representations, Warranties and Covenants   13
SECTION 3.04.   Registration in Nominee Name; Denominations   14
SECTION 3.05.   Voting Rights; Dividends and Interest, Etc   14
 

ARTICLE IV

Security Interests in Other Personal Property

 

 
SECTION 4.01.   Security Interest   17
SECTION 4.02.   Representations and Warranties   20
SECTION 4.03.   Covenants   23
SECTION 4.04.   Other Actions   26
SECTION 4.05.   Covenants Regarding Patent, Trademark and Copyright Collateral   26
 

ARTICLE V

Remedies

 

 
SECTION 5.01.   Remedies Upon Default   28

 

i


SECTION 5.02.   Application of Proceeds   30
SECTION 5.03.   Securities Act, Etc   32
 

ARTICLE VI

Indemnity, Subrogation and Subordination

 
SECTION 6.01.   Indemnity   33
SECTION 6.02.   Contribution and Subrogation   33
SECTION 6.03.   Subordination; Subrogation   33
 

ARTICLE VII

Miscellaneous

 
SECTION 7.01.   Notices   35
SECTION 7.02.   [RESERVED]   35
SECTION 7.03.   Limitation By Law   35
SECTION 7.04.   Binding Effect; Several Agreement   36
SECTION 7.05.   Successors and Assigns   36
SECTION 7.06.   Administrative Agent’s Fees and Expenses; Indemnification   36
SECTION 7.07.   Administrative Agent Appointed Attorney-in-Fact   37
SECTION 7.08.   Governing Law   37
SECTION 7.09.   Waivers; Amendment   38
SECTION 7.10.   WAIVER OF JURY TRIAL   38
SECTION 7.11.   Severability   38
SECTION 7.12.   Counterparts   39
SECTION 7.13.   Headings   39
SECTION 7.14.   Jurisdiction; Consent to Service of Process   39
SECTION 7.15.   Termination or Release   39
SECTION 7.16.   Additional Subsidiaries   40
SECTION 7.17.   No Limitations, Etc.   40
SECTION 7.18.   Secured Party Authorizations and Indemnifications   42
SECTION 7.19.   Limitation on Administrative Agent’s Responsibilities with Respect to Existing Notes Holders   43
SECTION 7.20.   Securitization Acknowledgements   44
SECTION 7.21.   Relative Rights   48
SECTION 7.22.   Successor Collateral Agent   49

 

ii


Schedules

 

 
Schedule I   Pledged Stock; Debt Securities
Schedule II   Intellectual Property
Schedule III   Commercial Tort Claims
Schedule IV   Filing Offices
Schedule V   Excluded Pledges
Schedule VI   Significant Subsidiaries

Exhibits

 

 
Exhibit I   Form of Supplement to the Guarantee and Collateral Agreement
Exhibit II   Apple Ridge Securitization Documents
Exhibit III   Kenosia Securitization Documents

 

i


GUARANTEE AND COLLATERAL AGREEMENT, dated and effective as of April 10, 2007 (this “ Agreement ”), among DOMUS INTERMEDIATE HOLDINGS CORP. (“ Holdings ”), REALOGY CORPORATION, (the “ Borrower ”), each Subsidiary Loan Party identified herein and party hereto (together with Holdings, the Borrower and any other entity that may become a party hereto as provided herein, the “ Grantors ”) and JPMORGAN CHASE BANK, N.A., as administrative agent and collateral agent (in such capacities, the “ Administrative Agent ”) for the Secured Parties (as defined below).

PRELIMINARY STATEMENT

Reference is made to the Credit Agreement dated as of April 10, 2007 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “ Credit Agreement ”), among Holdings, the Borrower, the Lenders party thereto from time to time, the Administrative Agent, and the other parties thereto.

The Lenders and the Issuing Banks have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders and the Issuing Banks to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. Holdings and the other Guarantors are affiliates of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders and the Issuing Banks to extend such credit. In connection with the granting of a security interest in the Shared Collateral to secure the Loan Obligations, the Note Grantors are required by Section 4.07 of the Existing Senior Notes Indenture to grant an equal and ratable security interest in the Shared Collateral to secure the Note Obligations.

Now therefore, in consideration of the mutual covenants and agreements of the parties and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.0 1. Credit Agreement. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the respective meanings assigned thereto in the Credit Agreement. All terms defined in the New York UCC (as defined herein) and not defined in this Agreement have the meanings specified therein. The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.

(b) The rules of construction specified in Section 1.02 of the Credit Agreement also apply to this Agreement.

SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

Acceleration Event ” means after, or concurrently with, the occurrence of an Event of Default, the maturity of any of the Loan Obligations shall have been accelerated.


Account Debtor ” means any person who is or who may become obligated to any Grantor under, with respect to or on account of an Account, Chattel Paper, General Intangibles, Instruments or Investment Property.

Additional Secured Loan Party ” means (a) with respect to any obligation referred to in clause (c) of the definition of the term “Borrower Obligations”, any Affiliate of a Lender or any Affiliate of the Administrative Agent, in each case that is a party to a Swap Agreement with a Loan Party or a Subsidiary and to which any such obligation is owed, (b) with respect to any obligation referred to in clause (d) of the definition of the term “Borrower Obligations”, any person to which any such obligation (to the extent that such obligation may be guaranteed and/or secured hereunder) is owed, or (c) with respect to any obligation referred to in clause (e) of the definition of the term “Borrower Obligations”, any person to which such obligation (to the extent such obligation may be guaranteed and/or secured hereunder) is owed.

Administrative Agent ” has the meaning assigned to such term in the introductory paragraph of this Agreement.

Article 9 Collateral ” means the Loan Party Article 9 Collateral and the Shared Article 9 Collateral.

Borrower ” has the meaning assigned to such term in the introductory paragraph of this Agreement.

Borrower Obligations ” means (a) the due and punctual payment by the Borrower of (i) the unpaid principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans made to the Borrower, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and obligations to provide cash collateral and (iii) all other monetary obligations of the Borrower to any of the Secured Parties under the Credit Agreement and each of the other Loan Documents, including obligations to pay fees, expenses and reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual payment of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents, (c) the due and punctual payment of all obligations of each Loan Party and each other Subsidiary under each Swap Agreement owed to a person that is an Agent, a Lender, an Affiliate of the Administrative Agent or an Affiliate of a Lender on the Closing Date (for Swap Agreements in existence on the Closing Date) or at the time of entry into such Swap Agreement, (d) the due and punctual

 

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payment of all obligations of each Loan Party and each other Subsidiary under the Cash Management Line (provided that in no event shall the holders of any obligations under the Cash Management Line in the aggregate (other than any Agent, Lender, an Affiliate of the Administrative Agent or an Affiliate of a Lender) have the right to receive proceeds from any realization upon the Collateral or payments from the Guarantors in respect of claims in excess of $25.0 million in the aggregate (plus (A) any accrued and unpaid interest in respect of Indebtedness incurred by the Borrower or any Subsidiary under the Cash Management Line and (B) any accrued and unpaid fees and expenses owing by the Borrower or any Subsidiary under the Cash Management Line) from the enforcement of any remedies available to the Secured Parties under all of the Loan Documents), and (e) the due and punctual payment of all obligations of each Loan Party and each other Subsidiary under other Indebtedness incurred in the ordinary course of business of the Borrower or any Subsidiary and permitted under Section 6.01 of the Credit Agreement (provided that in no event shall the holders of such other Indebtedness in the aggregate have the right to receive proceeds from any realization upon the Collateral or payments from the Guarantors in respect of claims in excess of $25.0 million in the aggregate from the enforcement of any remedies available to the Secured Parties under all of the Loan Documents except with respect to any such holder that has executed an intercreditor agreement with the Administrative Agent in form and substance satisfactory to the Administrative Agent).

Collateral ” means the Article 9 Collateral and the Pledged Collateral.

Copyright License ” means any written agreement, now or hereafter in effect, granting any right to any Grantor under any Copyright now or hereafter owned by any third party, and all rights of any Grantor under any such agreement (including, without limitation, any such rights that such Grantor has the right to license).

Copyrights ” means all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise; (b) all registrations and applications for registration of any such Copyright in the United States or any other country, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office and the right to obtain all renewals thereof, including those listed on Schedule II ; (c) all claims for, and rights to sue for, past or future infringements of any of the foregoing; and (d) all income, royalties, damages and payments now or hereafter due and payable with respect to any of the foregoing, including damages and payments for past or future infringement thereof.

Credit Agreement ” has the meaning assigned to such term in the preliminary statement of this Agreement.

Existing Notes Holder ” means each “Holder” (as defined in the Existing Senior Notes Indenture).

 

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Existing Notes Trustee ” means Wells Fargo Bank, National Association, in its capacity as trustee under the Existing Senior Notes Indenture, and its successors and assigns.

Federal Securities Laws ” has the meaning assigned to such term in Section 4.03.

General Intangibles ” means all “General Intangibles” as defined in the New York UCC, including all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor, including corporate or other business records, indemnification claims, contract rights (including rights under IP Agreements, leases, whether entered into as lessor or lessee, Swap Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts.

Grantor ” has the meaning assigned to such term in the introductory paragraph of this Agreement.

Guarantor Obligations ” means (a) with respect to any Guarantor other than the Borrower, all obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement (including, without limitation, Article II), any other Loan Document, and any Swap Agreement entered into by such Guarantor with any person that is a Lender or an Affiliate of a Lender on the Closing Date (for Swap Agreements in existence on the Closing Date) or at the time of entry into such Swap Agreement, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Loan Document), and (b) with respect to the Borrower, (i) the due and punctual payment of all obligations of each other Loan Party and each other Subsidiary under each Swap Agreement owed to a person that is an Agent, a Lender, an Affiliate of the Administrative Agent or an Affiliate of a Lender on the Closing Date (for Swap Agreements in existence on the Closing Date) or at the time of entry into such Swap Agreement, (ii) the due and punctual payment of all obligations of each other Loan Party and each other Subsidiary under the Cash Management Line (provided that in no event shall the holders of any obligations under the Cash Management Line in the aggregate (other than any Agent, Lender, an Affiliate of the Administrative Agent or an Affiliate of a Lender) have the right to receive proceeds from any realization upon the Collateral or payments from the Guarantors in respect of claims in excess of $25.0 million in the aggregate (plus (A) any accrued and unpaid interest in respect of Indebtedness incurred by the Borrower or any Subsidiary under the Cash Management Line and (B) any accrued and unpaid fees and expenses owing by the Borrower or any Subsidiary under the Cash Management Line) from the enforcement of any remedies available to the Secured Parties under all of the Loan Documents), and (iii) the due and punctual payment of all obligations of each other Loan Party and each other Subsidiary under other Indebtedness incurred in the ordinary course of business of such Loan Party or Subsidiary and permitted under Section 6.01 of

 

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the Credit Agreement (provided that in no event shall the holders of such other Indebtedness in the aggregate have the right to receive proceeds from any realization upon the Collateral or payments from the Guarantors in respect of claims in excess of $25.0 million in the aggregate from the enforcement of any remedies available to the Secured Parties under all of the Loan Documents except with respect to any such holder that has executed an intercreditor agreement with the Administrative Agent in form and substance satisfactory to the Administrative Agent).

Guarantors ” means the collective reference to each Grantor other than the Borrower; provided that the term “Guarantors” shall include the Borrower in the case of the obligations of the other Loan Parties and the other Subsidiaries described in clause (b) of the definition of the term “Guarantor Obligations”.

Holdings ” has the meaning assigned to such term in the introductory paragraph of this Agreement.

Intellectual Property ” means all intellectual property of every kind and nature now owned or hereafter acquired by any Grantor, including, inventions, designs, Patents, Copyrights, Trademarks, Patent Licenses, Copyright Licenses, Trademark Licenses, trade secrets, domain names, confidential or proprietary technical and business information, know-how, show-how or other data or information and all related documentation.

Intellectual Property Security Agreement ” means a security agreement in the form hereof or a short form hereof, in each case, which form shall be reasonably acceptable to the Administrative Agent.

IP Agreements ” means all Copyright Licenses, Patent Licenses, Trademark Licenses, and all other agreements, permits, consents, orders and franchises relating to the license, development, use or disclosure of any Intellectual Property to which a Grantor, now or hereafter, is a party or a beneficiary, including, without limitation, the agreements set forth on Schedule II hereto.

Loan Obligations ” means (a) in the case of the Borrower, the Borrower Obligations, and (b) in the case of each Guarantor, its Guarantor Obligations.

Loan Party Article 9 Collateral ” has the meaning assigned to such term in Section 4.01(a).

Loan Party Collateral ” means the Loan Party Article 9 Collateral and the Loan Party Pledged Collateral.

Loan Party Pledged Collateral ” has the meaning assigned to such term in Section 3.01(a).

Loan Party Pledged Debt ” has the meaning assigned to such term in Section 3.01(a).

 

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Loan Party Pledged Debt Securities ” has the meaning assigned to such term in Section 3.01(a).

Loan Party Pledged Stock ” has the meaning assigned to such term in Section 3.01(a).

Loan Party Security Interest ” has the meaning assigned to such term in Section 4.01(a).

New York UCC ” means the Uniform Commercial Code as from time to time in effect in the State of New York.

Note Grantors ” means the Borrower and the Significant Subsidiaries. In accordance with Sections 4.02(g) and 4.03(i), the Borrower lists on Schedule VI , to its knowledge, the Significant Subsidiaries as of the Closing Date and from time to time thereafter; provided that neither the inaccuracy of the representation in Section 4.02(g) nor the Borrower’s failure to comply with Section 4.03(i) shall impair the validity of the security interest granted hereby.

Note Obligations ” means, in the case of each Note Grantor, the due and punctual payment by the Borrower of the principal of, interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on and other amounts owing from time to time under or on the Existing Senior Notes, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise.

Patent License ” means any written agreement, now or hereafter in effect, granting to any Grantor any right to make, use or sell any invention covered by a Patent, now or hereafter owned by any third party and all rights of any Grantor under any such agreement (including, without limitation, any such rights that such Grantor has the right to license).

Patents ” means all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country or jurisdiction, including those listed on Schedule II , and all applications for letters patent of the United States or the equivalent thereof in any other country or jurisdiction, including those listed on Schedule II , (b) all provisionals, reissues, extensions, continuations, divisions, continuations-in-part, reexaminations or revisions thereof, and the inventions disclosed or claimed therein, including the right to make, use, import and/or sell the inventions disclosed or claimed therein, (c) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (d) all income, royalties, damages and payments now or hereafter due and payable with respect to any of the foregoing, including damages and payments for past or future infringement thereof.

Permitted Liens ” means any Lien permitted by Section 6.02 of the Credit Agreement.

 

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Pledged Collateral ” means the Loan Party Pledged Collateral and the Shared Pledged Collateral.

Pledged Debt Securities ” means the Loan Party Pledged Debt Securities and the Shared Pledged Debt Securities.

Pledged Securities ” means any promissory notes, stock certificates or other certificated securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

Pledged Stock ” means the Loan Party Pledged Stock and the Shared Pledged Stock.

Secured Loan Parties ” means (a) the Lenders, the Agents and the Additional Secured Loan Parties, (b) each Issuing Bank, (c) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (d) the successors and permitted assigns of each of the foregoing.

Secured Note Parties ” means the Existing Notes Holders and the Existing Notes Trustee.

Secured Obligations ” means the Loan Obligations and the Note Obligations.

Secured Parties ” means the Secured Loan Parties and the Secured Note Parties.

Security Interest ” means the Loan Party Security Interest and the Shared Security Interest.

Shared Article 9 Collateral ” has the meaning assigned to such term in Section 4.01(b).

Shared Collateral ” means the Shared Article 9 Collateral and the Shared Pledged Collateral.

Shared Pledged Collateral ” has the meaning assigned to such term in Section 3.01(b).

Shared Pledged Debt ” has the meaning assigned to such term in Section 3.01(b).

Shared Pledged Debt Securities ” has the meaning assigned to such term in Section 3.01(b).

Shared Pledged Stock ” has the meaning assigned to such term in Section 3.01(b).

Shared Security Interest ” has the meaning assigned to such term in Section 4.01(b).

 

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Significant Subsidiary ” means any Grantor that is a “Significant Subsidiary” under the Existing Senior Notes Indenture.

Supplement ” has the meaning assigned to such term in Section 7.16.

Trademark License ” means any written agreement, now or hereafter in effect, granting to any Grantor any right to use any Trademark now or hereafter owned by any third party and all rights of any Grantor under any such agreement (including, without limitation, any such rights that such Grantor has the right to license).

Trademarks ” means all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, corporate names, company names, business names, fictitious business names, domain names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations thereof (if any), and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any similar offices in any State of the United States or any other country or any political subdivision thereof (except for “intent-to-use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of Lanham Act has been filed, such exception to exist solely to the extent and for the duration, if any, that the pledge under Section 3.01 of an “intent-to-use” application prior to such filing would violate the Lanham Act), and all renewals thereof, including those listed on Schedule II , (b) all goodwill associated therewith or symbolized thereby, (c) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (d) all income, royalties, damages and payments now or hereafter due and payable with respect to any of the foregoing, including damages and payments for past or future infringement thereof.

ARTICLE II

Guarantee

SECTION 2.01.  Guarantee . Each Guarantor unconditionally and irrevocably guarantees, jointly with the other Guarantors and severally, to the Administrative Agent, for the ratable benefit of the Secured Loan Parties, as a primary obligor and not merely as a surety, the due and punctual payment of the Borrower Obligations. Each Guarantor further agrees that the Borrower Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Borrower Obligations. Each Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any of the Borrower Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

SECTION 2.02.  Guarantee of Payment . Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether at the stated

 

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maturity, by acceleration or otherwise) and not of collection, and waives any right to require that any resort be had by the Administrative Agent or any other Secured Loan Party to any security held for the payment of the Borrower Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Loan Party in favor of the Borrower or any other person.

SECTION 2.03.  Reinstatement. Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Borrower Obligation is rescinded or must otherwise be restored by the Administrative Agent or any other Secured Loan Party upon the bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise.

SECTION 2.04.  Agreement To Pay; Contribution; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Loan Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Borrower Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Loan Parties in cash the amount of such unpaid Guarantor Obligation. Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Loan Party under this guarantee, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor so as to maximize the aggregate amount paid to the Secured Loan Parties under or in respect of the Loan Documents. Upon payment by any Guarantor of any sums to the Administrative Agent as provided above, all rights of such Guarantor against the Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI.

SECTION 2.05.  Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the financial condition and assets of the Borrower and each other Loan Party, and of all other circumstances bearing upon the risk of nonpayment of the Borrower Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Administrative Agent or the other Secured Loan Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

SECTION 2.06.  Maximum Liability. Each Guarantor, and by its acceptance of this guarantee, the Administrative Agent and each Lender hereby confirms that it is the intention of all such Persons that this guarantee and the Guarantor Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the U.S. Bankruptcy Code or any other federal, state bankruptcy, insolvency, receivership or similar law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state law to the extent applicable to this guarantee and the Guarantor Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Administrative Agent, the Lenders and the Guarantors hereby irrevocably agree that the Guarantor Obligations of each Guarantor under this guarantee at any time shall be limited to the maximum amount as will result in the Guarantor Obligations of such Guarantor under this guarantee not constituting a fraudulent transfer or conveyance.

 

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SECTION 2.07. Payment Free and Clear of Taxes. Any and all payments by or on account of any obligation of any Guarantor hereunder or under any other Loan Document shall be made free and clear of, and without deduction for, any Indemnified Taxes or Other Taxes on the same terms and to the same extent that payments by the Borrower is required to be made pursuant to the terms of Section 2.17 of the Credit Agreement. The provisions of Section 2.17 of the Credit Agreement shall apply to each Guarantor mutatis mutandis .

SECTION 2.08. Additional Borrowers or Subsidiary Parties. The guarantee of any Guarantor that becomes a party hereto pursuant to Section 7.16 shall be subject to the limitations (if any) set forth in the applicable Supplement relating to such guarantee.

ARTICLE III

Pledge of Securities

SECTION 3.01. Pledge. (a) Subject to the last paragraph of Section 4.01(a), as security for the payment or performance, as the case may be, in full of its Loan Obligations, each Grantor hereby assigns and pledges to the Administrative Agent, its successors and permitted assigns, for the ratable benefit of the Secured Loan Parties, and hereby grants to the Administrative Agent, its successors and permitted assigns, for the ratable benefit of the Secured Loan Parties, a security interest in all of such Grantor’s right, title and interest in, to and under (i) the Equity Interests directly owned by it (including those listed on Schedule I ) and any other Equity Interests obtained in the future by such Grantor and any certificates representing all such Equity Interests (the “ Loan Party Pledged Stock ”); provided that the Loan Party Pledged Stock shall not include (A) (I) more than 65% of the issued and outstanding voting Equity Interests in any “first tier” Wholly-Owned Foreign Subsidiary directly owned by such Grantor, (II) more than 65% of the issued and outstanding voting Equity Interests in any “first tier” Qualified CFC Holding Company directly owned by such Grantor, (III) any issued and outstanding Equity Interest in any Foreign Subsidiary that is not a “first tier” Foreign Subsidiary, or (IV) any issued and outstanding Equity Interests in any Qualified CFC Holding Company that is not a “first tier” Qualified CFC Holding Company, (B) to the extent applicable law requires that a subsidiary of such Grantor issue directors’ qualifying shares, such shares or nominee or other similar shares, (C) any Equity Interests with respect to which the Collateral and Guarantee Requirement or the other paragraphs of Section 5.09 of the Credit Agreement need not be satisfied by reason of Section 5.09(g) of the Credit Agreement, (D) any Equity Interests in a person that is not directly or indirectly a Subsidiary or is listed on Schedule V hereto or (E) any Equity Interests in any Insurance Subsidiary or any entity listed on Schedule 1.01A to the Credit Agreement; (ii) (A) the debt obligations listed opposite the name of such Grantor on Schedule I , (B) any debt obligations in the future issued to such Grantor having, in the case of each instance of debt securities, an aggregate principal amount in excess of $5.0 million, and (C) the certificates, promissory notes and any other instruments, if any, evidencing such debt obligations (the “ Loan Party Pledged Debt Securities ” and, together with the property described in clauses (ii)(A) and (B) above, the “ Loan Party Pledged Debt ”); (iii) subject to Section 3.05 hereof, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable

 

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or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other proceeds received in respect of the Loan Party Pledged Stock and the Loan Party Pledged Debt; (iv) subject to Section 3.05 hereof, all rights and privileges of such Grantor with respect to the Loan Party Pledged Stock, Loan Party Pledged Debt and other property referred to in clause (iii) above; and (v) all proceeds of any of the foregoing (the Loan Party Pledged Stock, Loan Party Pledged Debt and other property referred to in clauses (iii) through (v) above being collectively referred to as the “ Loan Party Pledged Collateral ”). The Administrative Agent agrees to execute an amendment to this Section 3.01(a) (if necessary) to exclude from the Loan Party Pledged Stock any Equity Interest which would be so excluded by the operation of clause (vii) or (viii) of Section 5.09(g) of the Credit Agreement.

(b) Subject to the last paragraph of Section 4.01(b), as security for the payment or performance, as the case may be, in full of its Secured Obligations, each Note Grantor hereby assigns and pledges to the Administrative Agent, its successors and permitted assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Administrative Agent, its successors and permitted assigns, for the ratable benefit of the Secured Parties, a security interest in all of such Note Grantor’s right, title and interest in, to and under (i) the Equity Interests directly owned by it (including those listed on Schedule I ) and any other Equity Interests obtained in the future by such Note Grantor and any certificates representing all such Equity Interests (the “ Shared Pledged Stock ”); provided that the Shared Pledged Stock shall not include (A) (I) more than 65% of the issued and outstanding voting Equity Interests in any “first tier” Wholly-Owned Foreign Subsidiary directly owned by such Note Grantor, (II) more than 65% of the issued and outstanding voting Equity Interests in any “first tier” Qualified CFC Holding Company directly owned by such Note Grantor, (III) any issued and outstanding Equity Interest in any Foreign Subsidiary that is not a “first tier” Foreign Subsidiary of such Note Grantor, or (IV) any issued and outstanding Equity Interests in any Qualified CFC Holding Company that is not a “first tier” Qualified CFC Holding Company of such Note Grantor, (B) to the extent applicable law requires that a subsidiary of such Note Grantor issue directors’ qualifying shares, such shares or nominee or other similar shares, (C) any Equity Interests with respect to which the Collateral and Guarantee Requirement or the other paragraphs of Section 5.09 of the Credit Agreement need not be satisfied by reason of Section 5.09(g) of the Credit Agreement, (D) any Equity Interests in a person that is not directly or indirectly a Subsidiary of such Note Grantor or is listed on Schedule V hereto or (E) any Equity Interests in any Insurance Subsidiary or any entity listed on Schedule 1.01A to the Credit Agreement; (ii) (A) the debt obligations listed opposite the name of such Note Grantor on Schedule I , (B) any debt obligations in the future issued to such Note Grantor having, in the case of each instance of debt securities, an aggregate principal amount in excess of $5.0 million, and (C) the certificates, promissory notes and any other instruments, if any, evidencing such debt obligations (the “ Shared Pledged Debt Securities ” and, together with the property described in clauses (ii)(A) and (B) above, the “ Shared Pledged Debt ”); (iii) subject to Section 3.05 hereof, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other proceeds received in respect of the Shared Pledged Stock and the Shared Pledged Debt; (iv) subject to Section 3.05 hereof, all rights and privileges of such Note Grantor with respect to the Shared Pledged Stock, Shared Pledged Debt and other property referred to in clause (iii) above; and (v) all proceeds of any of the foregoing (the Shared Pledged Stock, Shared Pledged Debt and other property referred to in clauses (iii) through (v) above being collectively referred to as the

 

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Shared Pledged Collateral ”). The Administrative Agent agrees to execute an amendment to this Section 3.01(b) (if necessary) to exclude from the Shared Pledged Stock any Equity Interest which would be so excluded by the operation of clause (vii) or (viii) of Section 5.09(g) of the Credit Agreement.

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Administrative Agent, its successors and permitted assigns, for the benefit of the applicable Secured Parties, forever; subject , however , to the terms, covenants and conditions hereinafter set forth.

SECTION 3.02.  Delivery of the Pledged Collateral. (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Administrative Agent, for the benefit of the applicable Secured Parties, any and all Pledged Securities to the extent such Pledged Securities (i) are Equity Interests in the Borrower or in Subsidiaries or (ii) in the case of promissory notes or other instruments evidencing Indebtedness, are required to be delivered pursuant to paragraph (b) of this Section 3.02. If any Pledged Stock that is uncertificated on the date hereof shall hereinafter become certificated, or if any Grantor shall at any time hold or acquire any certificated securities included in the Pledged Collateral, the applicable Grantor shall promptly cause the certificate or certificates representing such Pledged Stock to be delivered to the Administrative Agent for the benefit of the applicable Secured Parties together with accompanying stock powers or other documentation required by Section 3.02(c). None of the Grantors shall permit any third party to “control” (for purposes of Section 8-106 of the New York UCC (or any analogous provision of the Uniform Commercial Code in effect in the jurisdiction whose law applies)) any uncertificated securities that constitute Pledged Collateral other than the Administrative Agent.

(b) To the extent any Indebtedness for borrowed money constitutes Pledged Collateral (other than (i) intercompany current liabilities in connection with the cash management operations of Holdings and its Subsidiaries or (ii) to the extent that a pledge of such promissory note or instrument would violate applicable law) owed to any Grantor is evidenced by a promissory note or an instrument, such Grantor shall cause such promissory note, if evidencing Indebtedness in excess of $5.0 million, to be pledged and delivered to the Administrative Agent, for the benefit of the applicable Secured Parties, pursuant to the terms hereof.

(c) Upon delivery to the Administrative Agent, (i) any Pledged Securities required to be delivered pursuant to the foregoing paragraphs (a) and (b) of this Section 3.02 shall be accompanied by stock powers or note powers, as applicable, duly executed in blank or other instruments of transfer reasonably satisfactory to the Administrative Agent and by such other instruments and documents as the Administrative Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral delivered pursuant to the terms of this Agreement shall be accompanied to the extent necessary to perfect the security interest in or allow realization on the Pledged Collateral by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Administrative Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities, which schedule shall be attached hereto as Schedule I (or a

 

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supplement to Schedule I , as applicable) and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

SECTION 3.03.  Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant to and with the Administrative Agent, for the benefit of the Secured Loan Parties, that:

(a)  Schedule I correctly sets forth the percentage of the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Stock and includes all Equity Interests, debt securities and promissory notes or instruments evidencing Indebtedness required to be (i) pledged in order to satisfy the Collateral and Guarantee Requirement, or (ii) delivered pursuant to Section 3.02;

(b) the Pledged Stock and Pledged Debt Securities (solely with respect to Pledged Debt Securities issued by a person that is not a subsidiary of Holdings or an Affiliate of any such subsidiary, to the best of each Grantor’s knowledge) have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged Debt Securities (solely with respect to Pledged Debt Securities issued by a person that is not a subsidiary of Holdings or an Affiliate of any such subsidiary, to the best of each Grantor’s knowledge) are legal, valid and binding obligations of the issuers thereof, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding at law or in equity) and an implied covenant of good faith and fair dealing;

(c) except for the security interests granted hereunder, each Grantor (i) is and, subject to any transfers made in compliance with the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule I as owned by such Grantor, (ii) holds the same free and clear of all Liens, other than Permitted Liens, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than pursuant to a transaction permitted by the Credit Agreement and other than Permitted Liens and (iv) subject to the rights of such Grantor under the Loan Documents to dispose of Pledged Collateral, will use commercially reasonable efforts to defend its title or interest hereto or therein against any and all Liens (other than Permitted Liens), however arising, of all persons;

(d) other than as set forth in the Credit Agreement or the schedules thereto, and except for restrictions and limitations imposed by the Loan Documents or securities laws generally, or otherwise permitted to exist pursuant to the terms of the Credit Agreement, the Pledged Stock (other than partnership interests) is and will continue to be freely transferable and assignable, and none of the Pledged Stock is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Stock hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Administrative Agent of rights and remedies hereunder;

 

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(e) each Grantor has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;

(f) other than as set forth in the Credit Agreement or the schedules thereto, no consent or approval of any Governmental Authority, any securities exchange or any other person was or is necessary to the validity of the pledge effected hereby (or the transfer of the Pledged Securities upon a foreclosure thereof (other than compliance with any securities law applicable to the transfer of securities)), in each case other than such as have been obtained and are in full force and effect;

(g) by virtue of the execution and delivery by the Grantors of this Agreement, when any Pledged Securities (including Pledged Stock of any Domestic Subsidiary or any Qualified CFC Holding Company) are delivered to the Administrative Agent, for the benefit of the applicable Secured Parties, in accordance with this Agreement and a financing statement covering such Pledged Securities is filed in the appropriate filing office, the Administrative Agent will obtain, for the benefit of the applicable Secured Parties, a legal, valid and perfected lien upon and security interest in such Pledged Securities under the New York UCC, subject only to Permitted Liens permitted under the Credit Agreement, as security for the payment and performance of the Loan Obligations and/or the Note Obligations, as the case may be; and

(h) each Grantor that is an issuer of the Pledged Collateral confirms that it has received notice of the security interest granted hereunder and consents to such security interest and, upon the occurrence and during the continuation of an Event of Default, agrees to transfer record ownership of the securities issued by it in connection with any request by the Administrative Agent.

SECTION 3.04.  Registration in Nominee Name; Denominations. The Administrative Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Administrative Agent or, if an Event of Default shall have occurred and be continuing, in its own name as pledgee or the name of its nominee (as pledgee or as sub-agent). Each Grantor will promptly give to the Administrative Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor. If an Event of Default shall have occurred and be continuing, the Administrative Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement. Each Grantor shall use its commercially reasonable efforts to cause any Loan Party that is not a party to this Agreement to comply with a request by the Administrative Agent, pursuant to this Section 3.04, to exchange certificates representing Pledged Securities of such Loan Party for certificates of smaller or larger denominations.

SECTION 3.05. Voting Rights; Dividends and Interest, Etc. Unless and until an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantors of the Administrative Agent’s intention to exercise its rights hereunder:

(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Collateral or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided that, except as permitted under the Credit Agreement, such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Collateral, the rights and remedies of any of the Administrative Agent or the other Secured Parties under this Agreement, the Credit Agreement, any other Loan Document or the Existing Senior Notes Indenture or the ability of the Secured Parties to exercise the same.

 

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(ii) The Administrative Agent shall promptly execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above.

(iii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Collateral to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws; provided , that (A) any noncash dividends, interest, principal or other distributions, payments or other consideration in respect thereof, including any rights to receive the same to the extent not so distributed or paid, that would constitute Pledged Securities to the extent such Grantor has the rights to receive such Pledged Securities if they were declared, distributed and paid on the date of this Agreement, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities, received in exchange for Pledged Securities or any part thereof, or in redemption thereof, as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise or (B) any non-cash dividends and other distributions paid or payable in respect of any Pledged Securities that would constitute Pledged Securities to the extent such Grantor has the rights to receive such Pledged Securities if they were declared, distributed and paid on the date of this Agreement, in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid in surplus, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent, for the benefit of the applicable Secured Parties, and shall be forthwith delivered to the Administrative Agent, for the benefit of the applicable Secured Parties, in the same form as so received (endorsed in a manner reasonably satisfactory to the Administrative Agent). This clause (iii) shall not apply to dividends between or among the Borrower, the Grantors and the Subsidiaries only of property which is subject to a perfected security interest under this Agreement; provided that the Borrower notifies

 

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the Administrative Agent in writing, specifically referring to this Section 3.06, at the time of such dividend and takes any actions the Administrative Agent specifies to ensure the continuance of its perfected security interest in such property under this Agreement.

(b) Upon the occurrence and during the continuance of an Event of Default and after notice by the Administrative Agent to the Borrower of the Administrative Agent’s intention to exercise its rights hereunder, all rights of any Grantor to receive dividends, interest, principal or other distributions with respect to Pledged Securities that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 3.05 shall cease, and all such rights shall thereupon become vested, for the benefit of the applicable Secured Parties, in the Administrative Agent which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions; provided , however , that until the occurrence of an Acceleration Event, any Grantor may continue to exercise dividend and distribution rights solely to the extent permitted under clause (x) (other than clause (iv) thereof) and clause (y) of Section 6.06(b) of the Credit Agreement and solely to the extent that such amounts are required by Holdings for the stated purposes thereof. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.05 shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent, for the benefit of the applicable Secured Parties, and shall be forthwith delivered to the Administrative Agent, for the benefit of the applicable Secured Parties, in the same form as so received (endorsed in a manner reasonably satisfactory to the Administrative Agent). Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this paragraph (b) shall be retained by the Administrative Agent in an account to be established by the Administrative Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02 hereof. After all Events of Default have been cured or waived and a Responsible Officer has delivered to the Administrative Agent a certificate to that effect, the Administrative Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.05 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default and after notice by the Administrative Agent to the Borrower of the Administrative Agent’s intention to exercise its rights hereunder, all rights of any Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.05 with respect to Pledged Securities, and the obligations of the Administrative Agent under paragraph (a)(ii) of this Section 3.05, shall cease, and all such rights shall thereupon become vested in the Administrative Agent, for the benefit of the applicable Secured Parties, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived and a Responsible Officer has delivered to the Administrative Agent a certificate to that effect, each Grantor shall have the right to exercise the voting and/or consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above and the obligations of the Administrative Agent under paragraph (a)(ii) shall be in effect.

 

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ARTICLE IV

Security Interests in Other Personal Property

SECTION 4.01.  Security Interest. (a) As security for the payment or performance when due (whether at the stated maturity, by acceleration or otherwise), as the case may be, in full of its Loan Obligations, each Grantor hereby assigns and pledges to the Administrative Agent, its successors and permitted assigns, for the benefit of the Secured Loan Parties, and hereby grants to the Administrative Agent, its successors and permitted assigns, for the benefit of the Secured Loan Parties, a security interest (the “ Loan Party Security Interest ”) in all right, title and interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Loan Party Article 9 Collateral ”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all Deposit Accounts;

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles;

(vii) all Instruments;

(viii) all Inventory and all other Goods not otherwise described above;

(ix) all Investment Property;

(x) all Commercial Tort Claims with respect to the matters described on Schedule III ;

(xi) all other personal property not otherwise described above (except for property specifically excluded from any defined term used in any of the foregoing clauses);

(xii) all books and records pertaining to the Loan Party Article 9 Collateral; and

(xiii) to the extent not otherwise included, all proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing.

 

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Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in (u) any vehicle covered by a certificate of title or ownership, whether now owned or hereafter acquired, (v) any assets (including Equity Interests), whether now owned or hereafter acquired, with respect to which the Collateral and Guarantee Requirement or the other paragraphs of Section 5.09 of the Credit Agreement would not be required to be satisfied by reason of Section 5.09(g) of the Credit Agreement if hereafter acquired, (w) any property excluded from the definition of Loan Party Pledged Collateral pursuant to Section 3.01(a) hereof (other than clause (i)(D) thereof), (x) any Letter of Credit Rights to the extent any Grantor is required by applicable law to apply the proceeds of a drawing of such Letter of Credit for a specified purpose, (y) any Grantor’s right, title or interest in any license, contract or agreement to which such Grantor is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the terms of such license, contract or agreement, result in a breach of the terms of, or constitute a default under, or result in the abandonment, invalidation or unenforceability of, any license, contract or agreement to which such Grantor is a party (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the New York UCC or any other applicable law (including, without limitation, Title 11 of the United States Code) or principles of equity); provided , that immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and such Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect, or (z) any Equipment owned by any Grantor that is subject to a purchase money lien or a Capital Lease Obligation if the contract or other agreement in which such Lien is granted (or the documentation providing for such Capital Lease Obligation) prohibits or requires the consent of any person other than the Grantors as a condition to the creation of any other security interest on such Equipment. The Administrative Agent agrees to execute an amendment to this Section 4.01(a) (if necessary) to exclude from the Loan Party Article 9 Collateral any asset which would be so excluded by the operation of clause (vii) or (viii) of Section 5.09(g) of the Credit Agreement.

(b) As security for the payment or performance when due (whether at the stated maturity, by acceleration or otherwise), as the case may be, in full of its Secured Obligations, each Note Grantor hereby assigns and pledges to the Administrative Agent, its successors and permitted assigns, for the benefit of the Secured Parties, and hereby grants to the Administrative Agent, its successors and permitted assigns, for the benefit of the Secured Parties, a security interest (the “ Shared Security Interest ”) in all right, title and interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Note Grantor or in which such Note Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Shared Article 9 Collateral ”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all Deposit Accounts;

(iv) all Documents;

 

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(v) all Equipment;

(vi) all General Intangibles;

(vii) all Instruments;

(viii) all Inventory and all other Goods not otherwise described above;

(ix) all Investment Property;

(x) all Commercial Tort Claims with respect to the matters described on Schedule III ;

(xi) all other personal property not otherwise described above (except for property specifically excluded from any defined term used in any of the foregoing clauses);

(xii) all books and records pertaining to the Shared Article 9 Collateral; and

(xiii) to the extent not otherwise included, all proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing;

Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in (u) any vehicle covered by a certificate of title or ownership, whether now owned or hereafter acquired, (v) any assets (including Equity Interests), whether now owned or hereafter acquired, with respect to which the Collateral and Guarantee Requirement or the other paragraphs of Section 5.09 of the Credit Agreement would not be required to be satisfied by reason of Section 5.09(g) of the Credit Agreement if hereafter acquired, (w) any property excluded from the definition of Shared Pledged Collateral pursuant to Section 3.01(b) hereof (other than clause (i)(D) thereof), (x) any Letter of Credit Rights to the extent any Note Grantor is required by applicable law to apply the proceeds of a drawing of such Letter of Credit for a specified purpose, (y) any Note Grantor’s right, title or interest in any license, contract or agreement to which such Note Grantor is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the terms of such license, contract or agreement, result in a breach of the terms of, or constitute a default under, or result in the abandonment, invalidation or unenforceability of, any license, contract or agreement to which such Note Grantor is a party (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the New York UCC or any other applicable law (including, without limitation, Title 11 of the United States Code) or principles of equity); provided , that immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and such Note Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect, or (z) any Equipment owned by any Note Grantor that is subject to a purchase money lien or a Capital Lease Obligation if the contract or other agreement in which such Lien is granted (or the documentation providing for such Capital Lease Obligation) prohibits or requires the consent of any person other than the Note Grantors as a condition to the creation of any other security interest on such Equipment. The Administrative Agent agrees to

 

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execute an amendment to this Section 4.01(b) (if necessary) to exclude from the Shared Article 9 Collateral any asset which would be so excluded by the operation of clause (vii) or (viii) of Section 5.09(g) of the Credit Agreement.

(c) Each Grantor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (i) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor, (ii) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates and (iii) a description of collateral that describes such property in any other manner as the Administrative Agent may reasonably determine is necessary or advisable to ensure the perfection of the security interest in the Article 9 Collateral granted under this Agreement, including describing such property as “all assets” or “all property”. Each Grantor agrees to provide such information to the Administrative Agent promptly upon request.

The Administrative Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office such documents as may be reasonably necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of such Grantor, and naming such Grantor or the Grantors as debtors and the Administrative Agent as secured party.

(d) The Security Interest is granted as security only and shall not subject the Administrative Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral.

(e) Notwithstanding anything to the contrary in this Agreement or in the Credit Agreement, no Grantor shall be required to enter into any deposit account control agreement or securities account control agreement with respect to any cash, deposit account or securities account.

SECTION 4.02.  Representations and Warranties. The Grantors jointly and severally represent and warrant to the Administrative Agent and the Secured Parties that:

(a) Each Grantor has good and valid rights in and title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Administrative Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than any consent or approval that has been obtained and is in full force and effect or has otherwise been disclosed herein or in the Credit Agreement.

(b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name of each Grantor, is

 

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correct and complete, in all material respects, as of the Closing Date. The Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations containing a description of the Article 9 Collateral that have been prepared by the Administrative Agent based upon the information provided to the Administrative Agent in the Perfection Certificate for filing in each governmental, municipal or other office specified in Schedule IV (or specified by notice from the Borrower to the Administrative Agent after the Closing Date in the case of filings, recordings or registrations required by Section 5.09 of the Credit Agreement or the definition of Collateral and Guarantee Requirement) constitute all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in Article 9 Collateral consisting of United States issued patents and patent applications, United States registered Trademarks and United States registered Copyrights) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Administrative Agent (for the benefit of the applicable Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof), and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements or amendments. Each Grantor represents and warrants that a fully executed Intellectual Property Security Agreement containing a description of all Article 9 Collateral including all material Intellectual Property with respect to United States issued patents (and Patents for which United States applications are pending), United States registered Trademarks (and Trademarks for which United States registration applications are pending) and United States registered Copyrights has been delivered to the Administrative Agent for recording with the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable, and reasonably requested by the Administrative Agent, to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Administrative Agent, for the benefit of the applicable Secured Parties, in respect of all Article 9 Collateral consisting of such material Intellectual Property in which a security interest may be perfected by recording with the United States Patent and Trademark Office and the United States Copyright Office, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of registrations or applications for Patents, Trademarks and Copyrights acquired or obtained after the date hereof).

(c) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in Section 4.02(b), a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and (iii) subject to the filings described in Section

 

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4.02(b), a security interest that shall be perfected in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of the Intellectual Property Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office upon the making of such filings with such office, in each case, as applicable, with respect to material Intellectual Property Collateral. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral other than Permitted Liens.

(d) The Article 9 Collateral is owned by the Grantors free and clear of any Lien, other than Permitted Liens. None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Article 9 Collateral, (ii) any agreement in which any Grantor grants any interest in any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office or (iii) any agreement in which any Grantor grants any interest in any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Permitted Liens.

(e) None of the Grantors holds any Commercial Tort Claim individually in excess of $5.0 million as of the Closing Date except as indicated on the Perfection Certificate.

(f) As to itself and its Article 9 Collateral consisting of Intellectual Property (the “ Intellectual Property Collateral ”):

(i) The Intellectual Property Collateral set forth on Schedule II includes all of the material registrations and material applications for Patents, Trademarks and Copyrights owned or exclusively licensed by and all material IP Agreements (other than Trademark licenses granted by a Grantor to a franchisee or master franchisor in the ordinary course of business) binding upon such Grantor as of the date hereof. The Intellectual Property Collateral set forth on Schedule II includes all of the material registrations and material applications for Patents, Trademarks and Copyrights owned or exclusively licensed by the Borrower and its subsidiaries.

(ii) The Intellectual Property Collateral is subsisting and has not been adjudged invalid or unenforceable in whole or part, and, to such Grantor’s knowledge, is valid and enforceable, except as would not reasonably be expected to have a Material Adverse Effect. Such Grantor has no knowledge of any uses of any item of Intellectual Property Collateral that would be expected to lead to such item becoming invalid or unenforceable, except as would not reasonably be expected to have a Material Adverse Effect.

(iii) Such Grantor has made or performed all commercially reasonable acts, including without limitation filings, recordings and payment of all required fees and taxes, required to maintain and protect its interest in the Intellectual Property Collateral

 

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that is reasonably necessary for the operation of its business in full force and effect in the United States and such Grantor has used proper statutory notice in connection with its use of each Patent, Trademark and Copyright in the Intellectual Property Collateral, except to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(iv) With respect to each IP Agreement, the absence, termination or violation of which would reasonably be expected to have a Material Adverse Effect: (A) such Grantor has not received any notice of termination or cancellation under such IP Agreement; (B) such Grantor has not received any notice of a breach or default under such IP Agreement, which breach or default has not been cured or waived; and (C) neither such Grantor nor any other party to such IP Agreement is in breach or default thereof in any material respect, and no event has occurred that, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such IP Agreement.

(v) Except as would not reasonably be expected to have a Material Adverse Effect, no Grantor or Intellectual Property Collateral is subject to any outstanding consent, settlement, decree, order, injunction, judgment or ruling restricting the use of any Intellectual Property Collateral or that would impair the validity or enforceability of such Intellectual Property Collateral.

(g) To the Borrower’s knowledge, Schedule VI sets forth, as of the Closing Date, all of the Significant Subsidiaries of the Borrower which are Grantors under this Agreement; provided that any inaccuracy of this representation shall not impair the validity of the security interest hereby granted.

SECTION 4.03.  Covenants. (a) The Borrower agrees promptly to notify the Administrative Agent in writing of any change (i) in the corporate or organization name of any Grantor, (ii) in the identity or type of organization or corporate structure of any Grantor, (iii) in the Federal Taxpayer Identification Number or organizational identification number of any Grantor or (iv) in the jurisdiction of organization of any Grantor. The Borrower agrees promptly to provide the Administrative Agent with certified organizational documents reflecting any of the changes described in the immediately preceding sentence. The Borrower agrees not to effect or permit any change referred to in the first sentence of this paragraph (a) unless all filings have been made, or will have been made within any applicable statutory period, under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Article 9 Collateral in which a security interest may be perfected by filing, for the benefit of the applicable Secured Parties. The Borrower agrees promptly to notify the Administrative Agent if any material portion of the Article 9 Collateral owned or held by any Grantor is damaged or destroyed.

(b) Subject to the rights of such Grantor under the Loan Documents to dispose of Collateral, each Grantor shall, at its own expense, use commercially reasonable efforts to defend title to the Article 9 Collateral against all persons and to defend the Security Interest of the Administrative Agent, for the benefit of the applicable Secured Parties, in the Article 9 Collateral and the priority thereof against any Lien that is not a Permitted Lien.

 

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(c) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Administrative Agent may from time to time reasonably request to better assure, preserve, protect, defend and perfect the Security Interest and the rights and remedies created hereby, including, without limitation, (i) the payment of any fees and taxes required in connection with the execution and delivery of this Agreement and the granting of the Security Interest, and (ii) the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith, all in accordance with the terms hereof and of Section 5.09(g) of the Credit Agreement. If any Indebtedness payable under or in connection with any of the Article 9 Collateral that is in excess of $5.0 million shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be promptly pledged and delivered to the Administrative Agent, for the benefit of the applicable Secured Parties, duly endorsed in a manner reasonably satisfactory to the Administrative Agent. The Administrative Agent agrees to execute an amendment to this Section 4.03(c) (if necessary) to exclude from the requirements of this clause any asset which would be so excluded by the operation of clause (vii) or (viii) of Section 5.09(g) of the Credit Agreement.

Without limiting the generality of the foregoing, each Grantor hereby authorizes the Administrative Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule II or adding additional schedules hereto to specifically identify any asset or item that may constitute material Copyrights, Patents, Trademarks, Copyright Licenses, Patent Licenses or Trademark Licenses; provided that any Grantor shall have the right, exercisable within 30 days after the Borrower has been notified by the Administrative Agent of the specific identification of such Article 9 Collateral, to advise the Administrative Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Article 9 Collateral. Each Grantor agrees that it will use its commercially reasonable efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Article 9 Collateral within 30 days after the date it has been notified by the Administrative Agent of the specific identification of such Article 9 Collateral.

(d) After the occurrence of an Event of Default and during the continuance thereof, the Administrative Agent shall have the right to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Article 9 Collateral, including, in the case of Accounts or Article 9 Collateral in the possession of any third person, by contacting Account Debtors or the third person possessing such Article 9 Collateral for the purpose of making such a verification. The Administrative Agent shall have the right to share any information it gains from such inspection or verification with any Secured Party.

(e) At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not a Permitted Lien, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the

 

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Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Administrative Agent on demand for any reasonable payment made or any reasonable expense incurred by the Administrative Agent pursuant to the foregoing authorization; provided , however , that nothing in this Section 4.03(f) shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein, in the other Loan Documents or in the Existing Senior Notes Indenture.

(f) Each Grantor (rather than the Administrative Agent or any Secured Party) shall remain liable for the observance and performance of all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral and each Grantor jointly and severally agrees to indemnify and hold harmless the Administrative Agent and the Secured Parties from and against any and all liability for such performance.

(g) None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9 Collateral, except as permitted by the Credit Agreement. None of the Grantors shall make or permit to be made any transfer of the Article 9 Collateral and each Grantor shall remain at all times in possession or otherwise in control of the Article 9 Collateral owned by it, except as permitted by the Credit Agreement.

(h) Each Grantor irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or part relating thereto, the Administrative Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Administrative Agent reasonably deems advisable. All sums disbursed by the Administrative Agent in connection with this Section 4.03(i), including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Administrative Agent and shall be additional Secured Obligations secured hereby.

(i) The Borrower agrees to use its commercially reasonable efforts to supplement or amend Schedule VI from time to time as may be appropriate, by delivering a revised schedule to the Administrative Agent; provided that the failure to update such schedule shall not impair the validity of the security interests hereby granted.

(j) The Borrower agrees to use its commercially reasonable efforts to identify to the Administrative Agent the Additional Secured Loan Parties described in clause (b) or (c) of

 

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the definition thereof from time to time and which are entitled to the benefits of this Agreement; provided that the failure by the Borrower to so notify the Administrative Agent shall not impair the validity of the guarantee or the security interests hereby granted.

SECTION 4.04.  Other Actions. In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, for the benefit of the applicable Secured Parties, the Administrative Agent’s security interest in the Article 9 Collateral, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a)  Instruments and Tangible Chattel Paper. If any Grantor shall at any time hold or acquire any Instruments (other than checks received and processed in the ordinary course of business) or tangible Chattel Paper evidencing an amount in excess of $5.0 million, such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent for the benefit of the applicable Secured Parties, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.

(b)  Commercial Tort Claims. If any Grantor shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated to exceed $5.0 million, such Grantor shall promptly notify the Administrative Agent thereof in a writing signed by such Grantor, including a summary description of such claim, and grant to the Administrative Agent in writing a security interest therein and in the proceeds thereof, all under the terms and provisions of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Administrative Agent.

SECTION 4.05.  Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Except as permitted under the Credit Agreement, each Grantor agrees that it will not knowingly do any act or omit to do any act (and will exercise commercially reasonable efforts to prevent its licensees or sublicensees from doing any act or omitting to do any act) whereby any Patent that is material to the normal conduct of such Grantor’s business may become prematurely invalidated, abandoned, lapsed or dedicated to the public, and agrees that it shall take commercially reasonable steps with respect to any material products covered by any such Patent as necessary and sufficient to establish and preserve such Grantor’s rights under applicable patent laws.

(b) Each Grantor will, and will use its commercially reasonable efforts to cause its licensees or its sublicensees to, for each Trademark material to the normal conduct of such Grantor’s business, (i) maintain such Trademark in full force free from any adjudication of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) consistent with its prior practice, display such Trademark with notice of federal or foreign registration or claim of trademark or service mark as permitted under applicable law and (iv) not knowingly use or knowingly permit its licensees’ or sublicensees’ use of such Trademark in violation of any third-party rights.

(c) Each Grantor will, and will use its commercially reasonable efforts to cause its licensees or its sublicensees to, for each work covered by a Copyright material to the normal conduct of such Grantor’s business that it publishes, displays and distributes, and, consistent with its prior practice, use copyright notice as permitted under applicable copyright laws.

 

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(d) Each Grantor shall notify the Administrative Agent promptly if it knows that any Patent, Trademark or Copyright material to the normal conduct of such Grantor’s business has permanently become abandoned, lapsed or dedicated to the public, or of any materially adverse determination, excluding non-material office actions and similar determinations or developments in the United States Patent and Trademark Office, United States Copyright Office, any court or any similar office of any country, regarding such Grantor’s ownership of any such Patent, Trademark or Copyright or its right to register or to maintain the same.

(e) Each Grantor, either itself or through any agent, employee, licensee or designee, shall (i) inform the Administrative Agent on a quarterly basis of each registration or application made by itself, or through any agent, employee, licensee or designee at such Grantor’s request, for any Patent or Trademark with the United States Patent and Trademark Office or, on a monthly basis, of each registration made by itself, or through any agent, employee, licensee or designee at such Grantor’s request, for any Copyright with the United States Copyright Office, respectively, or any comparable office or agency in any other country filed during the preceding period, (ii) promptly execute and deliver any and all agreements, instruments, documents and papers necessary or as the Administrative Agent may otherwise reasonably request to evidence the Administrative Agent’s security interest in such U.S. Patent, Trademark or Copyright and the perfection thereof, and (iii) upon the Administrative Agent’s request, promptly execute and deliver any and all agreements, instruments, documents and papers necessary or as the Administrative Agent may otherwise reasonably request to evidence the Administrative Agent’s security interest in such non-U.S. Patent, Trademark or Copyright and the perfection thereof.

(f) Each Grantor shall exercise its reasonable business judgment consistent with the practice in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any comparable office or agency in any other country with respect to maintaining and pursuing each application relating to any Patent, Trademark and/or Copyright (and obtaining the relevant grant or registration) material to the normal conduct of such Grantor’s business and to maintain (i) each issued Patent and (ii) the registrations of each Trademark and each Copyright that is material to the normal conduct of such Grantor’s business, including, when applicable and necessary in such Grantor’s reasonable business judgment, timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if any Grantor believes necessary in its reasonable business judgment, to initiate opposition, interference and cancellation proceedings against third parties.

(g) In the event that any Grantor knows or has reason to know that any Article 9 Collateral consisting of a Patent, Trademark or Copyright material to the normal conduct of its business has been or is about to be materially infringed, misappropriated or diluted by a third party, such Grantor shall promptly notify the Administrative Agent (other than infringements, misappropriations or dilutions by franchisees or former franchisees unless and until such franchisee or former franchisee challenges the validity of any such Patent, Trademark or Copyright) and shall, if such Grantor deems it necessary in its reasonable business judgment, take such actions as are reasonably appropriate under the circumstances, which may include suing and recovering damages.

 

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(h) The Borrower agrees that it will, and will cause each of its Subsidiaries to, assign any material (i) registrations and applications for Trademarks (together with the goodwill of the business symbolized thereby), (ii) issued Patents and applications therefor, and (iii) registrations and applications for Copyrights to a Guarantor, in each case, on or before the Closing Date. The Borrower shall promptly record such assignments with the United States Patent and Trademark Office, United States Copyright Office, and any other similar office or agency in any other jurisdiction, as applicable, within five days after execution of such assignments and shall promptly provide the Administrative Agent with copies of such assignments and, if available, confirmation of recordation thereof.

ARTICLE V

Remedies

SECTION 5.01.  Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Administrative Agent on demand, and it is agreed that the Administrative Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantors to the Administrative Agent or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or a nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Administrative Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers thereunder cannot be obtained with the use of commercially reasonable efforts, which each Grantor hereby agrees to use) and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and without liability for trespass to the applicable Grantor to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party with respect to the Loan Obligations or the Note Obligations, as applicable, under the applicable Uniform Commercial Code or other applicable law or in equity. Without limiting the generality of the foregoing, each Grantor agrees that the Administrative Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral securing the Loan Obligations or the Note Obligations, as applicable, at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate. The Administrative Agent shall be authorized in connection with any sale of a security (if it deems it advisable to do so) pursuant to the foregoing to restrict the prospective bidders or purchasers to persons who represent and agree that they are purchasing such security for their own account, for investment, and not with a view to the distribution or sale thereof. Upon consummation of any such sale of Collateral pursuant to this Section 5.01 the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the

 

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property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives and releases (to the extent permitted by law) all rights of redemption, stay, valuation and appraisal that such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

To the extent any notice is required by applicable law, the Administrative Agent shall give the applicable Grantors 10 Business Days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Administrative Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or the portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion) determine. The Administrative Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In the case of any sale of all or any part of the Collateral made on credit or for future delivery, the Collateral so sold may be retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in the event that any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in the case of any such failure, such Collateral may be sold again upon notice given in accordance with provisions above. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section 5.01, any Secured Party may bid for or purchase for cash, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all such rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property in accordance with Section 5.02 hereof without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Administrative Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Administrative Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.

 

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SECTION 5.02.  Application of Proceeds. (a) The Administrative Agent shall promptly apply the proceeds, moneys or balances of any collection or sale of Loan Party Collateral not constituting Shared Collateral, including any such Loan Party Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Administrative Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Loan Obligations secured by such Collateral, including without limitation all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent hereunder or under any other Loan Document on behalf of any Grantor, any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document, and all other fees, indemnities and other amounts owing or reimbursable to the Administrative Agent under any Loan Document in its capacity as such;

SECOND, to the payment in full of the Loan Obligations secured by such Collateral (the amounts so applied to be distributed among the Secured Loan Parties pro rata in accordance with the respective amounts of such Loan Obligations owed to them on the date of any such distribution, which in the case of Letters of Credit, shall be paid by deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of each Issuing Bank and the Lenders, an amount in cash in Dollars equal to the aggregate Revolving L/C Exposure and Synthetic L/C Exposure as of such date plus any accrued and unpaid interest thereon), subject to Section 7.18; and

THIRD, to the applicable Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Administrative Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Administrative Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the purchase money by the Administrative Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Administrative Agent or such officer or be answerable in any way for the misapplication thereof.

(b) The Administrative Agent shall promptly apply the proceeds, moneys or balances of any collection or sale of Shared Collateral, including any Shared Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Administrative Agent in connection with such collection or sale or otherwise in connection with this Agreement or any of the Secured Obligations secured by such Collateral, including without limitation all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent hereunder on behalf of any Note Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy in respect of the Shared Collateral;

 

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SECOND, to the payment in full of the Secured Obligations secured by such Collateral (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the respective amounts of the Secured Obligations owed to them on the date of any such distribution, which in the case of Letters of Credit, shall be paid by deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of each Issuing Bank and the Lenders, an amount in cash in Dollars equal to the aggregate Revolving L/C Exposure and Synthetic L/C Exposure as of such date plus any accrued and unpaid interest thereon), subject to Section 7.18; and

THIRD, to the applicable Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Administrative Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Administrative Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the purchase money by the Administrative Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Administrative Agent or such officer or be answerable in any way for the misapplication thereof.

(c) Notwithstanding the foregoing, any proceeds of Collateral to be distributed for application to a Secured Party’s liabilities with respect to any issued but undrawn (or unpaid) Revolving Letter of Credit shall be held by the Administrative Agent in an account pursuant to Section 2.05(j) of the Credit Agreement as collateral security for any such liabilities until a drawing on such Revolving Letter of Credit, at which time such amounts, together with interest accrued thereon, shall be released by the Administrative Agent and applied to such liabilities. If any such Revolving Letter of Credit shall expire without having been drawn upon (or paid) in full, the amounts held in such account with respect to the undrawn (or unpaid) portion of such Revolving Letter of Credit, together with interest accrued thereon, shall be applied by the Administrative Agent in accordance with clause (a) and/or (b) above.

(d) If at any time any moneys collected or received by the Administrative Agent pursuant to this Agreement are distributable pursuant to paragraph (b) above to the Existing Notes Trustee, and if the Existing Notes Trustee shall notify the Administrative Agent in writing that no provision is made under the Existing Senior Notes Indenture for the application by the Existing Notes Trustee of such moneys (whether because the Existing Senior Notes have not become due and payable or otherwise) and that the Existing Senior Notes Indenture does not effectively provide for the receipt and the holding by the Existing Notes Trustee of such moneys pending the application thereof, then the Administrative Agent, after receipt of such moneys pending the application thereof and the receipt of such notification, shall at the direction of the Existing Notes Trustee, invest such amounts in Permitted Investments maturing within 90 days after they are acquired by the Administrative Agent or, in the absence of such direction, hold such moneys uninvested and shall hold all such amounts so distributable and all such

 

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investments and the net proceeds thereof in trust solely for the Existing Notes Trustee (in its capacity as trustee) and for no other purpose until such time as the Existing Notes Trustee shall request in writing the delivery thereof by the Administrative Agent for application pursuant to the Existing Senior Notes Indenture. The Administrative Agent shall not be responsible for any diminution in funds resulting from any such investment or any liquidation or any liquidation thereof prior to maturity.

(e) In making the determination and allocations required by this Section 5.02, the Administrative Agent may conclusively rely upon information supplied by the Existing Notes Trustees as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Note Obligations, and the Administrative Agent shall have no liability to any of the Secured Parties for actions taken in reliance on such information, provided that nothing in this sentence shall prevent any Grantor from contesting any amounts claimed by any Secured Party in any information so supplied. All distributions made by the Administrative Agent pursuant to this Section 5.02 shall be (subject to any decree of any court of competent jurisdiction) final (absent manifest error), and the Administrative Agent shall have no duty to inquire as to the application by the Existing Notes Trustee of any amounts distributed to it.

SECTION 5.03.  Securities Act, Etc. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar federal statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “ Federal Securities Laws ”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Administrative Agent if the Administrative Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Administrative Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Administrative Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws or, to the extent applicable, Blue Sky or other state securities laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Administrative Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Administrative Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 5.03 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Administrative Agent sells.

 

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ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01.  Indemnity. In addition to all such rights of indemnity and subrogation as the Grantors may have under applicable law (but subject to Section 6.03 hereof), the Borrower agrees that (a) in the event a payment shall be made by any Subsidiary Loan Party under this Agreement in respect of any Guarantor Obligation of the Borrower, the Borrower shall indemnify such Subsidiary Loan Party for the full amount of such payment and such Subsidiary Loan Party shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Subsidiary Loan Party shall be sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part an obligation owed to any Secured Party by the Borrower, the Borrower shall indemnify such Subsidiary Loan Party in an amount equal to the greater of the book value or the fair market value of the assets so sold.

SECTION 6.02.  Contribution and Subrogation. Each Subsidiary Loan Party (a “ Contributing Party ”) agrees (subject to Section 6.03 hereof) that, in the event a payment shall be made by any other Subsidiary Loan Party hereunder in respect of any Guarantor Obligation, or assets of any other Subsidiary Loan Party shall be sold pursuant to any Security Document to satisfy any Secured Obligation owed to any Secured Party and such other Subsidiary Loan Party (the “ Claiming Party ”) shall not have been fully indemnified by the Borrower as provided in Section 6.01 hereof, the Contributing Party shall indemnify the Claiming Party in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as applicable, in each case multiplied by a fraction of which the numerator shall be the net worth of such Contributing Party on the date hereof and the denominator shall be the aggregate net worth of all the Contributing Parties on the date hereof (or, in the case of any Subsidiary Loan Party becoming a party hereto pursuant to Section 7.16 hereof, the date of the supplement hereto executed and delivered by such Subsidiary Loan Party). Any Contributing Party making any payment to a Claiming Party pursuant to this Section 6.02 shall be subrogated to the rights of such Claiming Party to the extent of such payment.

SECTION 6.03.  Subordination; Subrogation. (a) Subject to the limitations set forth in Section 2.06, to the extent permitted by law and to the extent to do so would not constitute unlawful financial assistance, each Guarantor and Grantor hereby subordinates any and all debts, liabilities and other obligations owed to such Guarantor or Grantor by each other Loan Party (the “ Subordinated Obligations ”) to the Secured Obligations (other than contingent or unliquidated obligations or liabilities) owed by it to the extent and in the manner hereinafter set forth in this Section 6.03:

(i)  Prohibited Payments, Etc . Each Guarantor and Grantor may receive payments from any other Loan Party on account of the Subordinated Obligations. After the occurrence and during the continuance of any Event of Default, if requested by the Administrative Agent or required by the Required Lenders, no Guarantor or Grantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations until the Secured Obligations (other than contingent or unliquidated obligations or liabilities) have been paid in full in cash.

 

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(ii)  Prior Payment of Secured Obligations . In any proceeding under the U.S. Bankruptcy Code or any other U.S. federal, U.S. state or non-U.S. bankruptcy, insolvency, receivership or similar law in any jurisdiction relating to any other Loan Party, each Guarantor and Grantor agrees that the Secured Parties shall be entitled to receive payment in full in cash of all Secured Obligations (including all interest and expenses accruing after the commencement of a proceeding under any U.S. Bankruptcy Code or any other U.S. federal, state bankruptcy, insolvency, receivership or similar law in any jurisdiction, whether or not constituting an allowed claim in such proceeding (“ Post-Petition Interest ”)) (other than contingent or unliquidated obligations or liabilities) before such Guarantor or Grantor receives payment of any Subordinated Obligations.

(iii)  Turn-Over . After the occurrence and during the continuance of any Event of Default, each Guarantor and Grantor shall, if the Administrative Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for (or, in any jurisdiction whose law does not include the concept of trusts, for the account of) the Secured Parties and deliver such payments to the Administrative Agent on account of the Secured Obligations (including all Post-Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Guarantor or Grantor under the other provisions of this Agreement.

(iv)  Administrative Agent Authorization . After the occurrence and during the continuance of any Event of Default, the Administrative Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor and Grantor, to collect and enforce, and to submit claims in respect of, the Subordinated Obligations and to apply any amounts received thereon to the Secured Obligations (including any and all Post-Petition Interest), and (ii) to require each Guarantor and Grantor (A) to collect and enforce, and to submit claims in respect of, the Subordinated Obligations and (B) to pay any amounts received on such obligations to the Administrative Agent for application to the Secured Obligations (including any and all Post-Petition Interest).

(b) Subject to the limitations set forth in Section 2.06, each Guarantor and Grantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower, any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s or Grantor’s obligations under or in respect of this Agreement or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower, any other Loan Party or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, any other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Secured Obligations (other than contingent or unliquidated obligations or liabilities) and all other amounts payable under this Agreement shall have been paid in full in

 

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cash, all Letters of Credit and all Swap Agreements secured hereunder shall have expired or been terminated or cash collateralized and the Commitments shall have expired or been terminated and each Guarantor and Grantor agrees that it will not be entitled to bring any action, claim, suit or other proceeding in respect of any right it may have in respect of any payment on its Guarantee or other obligation hereunder until such time. If any amount shall be paid to any Guarantor or Grantor in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of the Secured Obligations (other than contingent or unliquidated obligations or liabilities) and all other amounts payable under this Agreement and (b) the latest date of expiration, termination or cash collateralization of all Letters of Credit and all Swap Agreements secured hereunder, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of such Guarantor or Grantor and shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Secured Obligations and all other amounts payable under this Agreement, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Secured Obligations or other amounts payable under such guarantee thereafter arising. If (i) any Guarantor or Grantor shall make payment to any Secured Party of all or any part of the Secured Obligations, (ii) all of the Secured Obligations (other than contingent or unliquidated obligations or liabilities) and all other amounts payable under this Agreement shall have been paid in full in cash, (iii) the Revolving Facility Maturity Date, Term B Facility Maturity Date and Synthetic L/C Maturity Date shall have occurred and (iv) all Letters of Credit and all Swap Agreements secured hereunder shall have expired, terminated, or shall have been cash collateralized, the Administrative Agent will, at such Guarantor’s or Grantor’s request and expense, execute and deliver to such Guarantor or Grantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor or Grantor of an interest in the Secured Obligations resulting from such payment made by such Guarantor or Grantor pursuant to this Agreement.

ARTICLE VII

Miscellaneous

SECTION 7.01.  Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.01 of the Credit Agreement or Section 10.02 of the Existing Senior Notes Indenture, as applicable. All communications and notices hereunder to any Grantor shall be given to it in care of the Borrower, with such notice to be given as provided in Section 10.01 of the Credit Agreement.

SECTION 7.02.  [RESERVED].

SECTION 7.03.  Limitation By Law. All rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

 

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SECTION 7.04.  Binding Effect; Several Agreement. This Agreement shall become effective as to any party to this Agreement when a counterpart hereof executed on behalf of such party shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such party and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of such party, the Administrative Agent and the other Secured Parties and their respective permitted successors and assigns, except that no party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as contemplated or permitted by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each party and may be amended, modified, supplemented, waived or released with respect to any party without the approval of any other party and without affecting the obligations of any other party hereunder.

SECTION 7.05.  Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Guarantor or Grantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns; provided that no Guarantor or Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent (unless permitted under the Credit Agreement).

SECTION 7.06.  Administrative Agent’s Fees and Expenses; Indemnification. (a) The parties hereto agree that the Administrative Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in Section 10.05 of the Credit Agreement.

(b) Without limitation of its indemnification obligations under the other Loan Documents, each Grantor jointly and severally agrees to indemnify the Administrative Agent and the other Indemnitees (as defined in Section 10.05 of the Credit Agreement) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements (except the allocated cost of in-house counsel), incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution, delivery or performance of this Agreement or any other Loan Document to which such Grantor is a party or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto and thereto of their respective obligations thereunder or the consummation of the transactions contemplated hereby or (ii) any claim, litigation, investigation or proceeding relating to any of the foregoing, or to the Collateral, whether or not any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

 

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(c) Any such amounts payable as provided hereunder shall be additional Loan Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent or any other Secured Party. All amounts due under this Section 7.06 shall be payable on written demand therefor accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested.

SECTION 7.07.  Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Administrative Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. The Administrative Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Administrative Agent’s name or in the name of such Grantor, (a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof, (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement (in accordance with its terms), as fully and completely as though the Administrative Agent were the absolute owner of the Collateral for all purposes; provided , that nothing herein contained shall be construed as requiring or obligating the Administrative Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Administrative Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Administrative Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

SECTION 7.08.  Governing Law . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

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SECTION 7.09.  Waivers; Amendment. (a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right, power or remedy hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy, or any abandonment or discontinuance of steps to enforce such a right, power or remedy, preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights, powers and remedies of the Administrative Agent, any Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights, powers or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.09, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or the issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default or Event of Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 10.08 of the Credit Agreement; provided , however , that the requisite written consent of the Existing Notes Holders or the Existing Notes Trustee under the Existing Senior Notes Indenture shall be required with respect to any release, waiver, amendment or other modification of this Agreement that would materially and adversely affect the rights of the Existing Notes Holders to equally and ratably share in the security provided for herein with respect to the Shared Collateral. Except as set forth in this Section 7.09(b), neither the Existing Notes Holders nor the Existing Notes Trustee shall have any rights to approve any release, waiver, amendment, modification, change, discharge or termination with respect to this Agreement.

SECTION 7.10.  WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

SECTION 7.11.  Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or

 

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unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7.12.  Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 7.04 hereof. Delivery of an executed counterpart to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed original.

SECTION 7.13.  Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 7.14.  Jurisdiction; Consent to Service of Process. (a) Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Guarantor or Grantor, or its properties, in the courts of any jurisdiction.

(b) Each party to this Agreement hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 7.15 . Termination or Release . (a) This Agreement, the pledges made herein, the Security Interest and all other security interests granted hereby shall terminate with respect to all Secured Obligations when all the outstanding Loan Obligations (other than contingent or unliquidated obligations or liabilities) have been paid in full in cash or immediately available funds and the Lenders have no further commitment to lend under the Credit Agreement and the Revolving L/C Exposure and Synthetic L/C Exposure have each been reduced to zero (or cash-collateralized or supported by a back-to-back letters of credit in form and substance and from an issuing bank satisfactory to the Administrative Agent) and each Issuing Bank has no further obligations to issue Letters of Credit under the Credit Agreement.

 

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(b) If not earlier terminated pursuant to clause (a) above, this Agreement and the Shared Security Interest shall terminate with respect to the Existing Notes Trustee and the Existing Notes Holders when all Note Obligations have been paid in full in cash or immediately available funds.

(c) A Grantor shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Grantor shall be automatically released upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Grantor ceases to be a Subsidiary of the Borrower or otherwise ceases to be a Guarantor or a Grantor; provided that the Required Lenders shall have consented to such transaction (to the extent such consent is required by the Credit Agreement) and the terms of such consent did not provide otherwise.

(d) Upon any sale or other transfer by any Grantor of any Collateral that is permitted under the Credit Agreement to any person that is not a Grantor, or upon the effectiveness of any written consent to the release of the Security Interest granted hereby in any Collateral pursuant to Section 10.08 of the Credit Agreement, the Security Interest in such Collateral shall be automatically released.

(e) In connection with any termination or release pursuant to paragraph (a), (b), (c) or (d) of this Section 7.15, the Administrative Agent shall execute and deliver to any Grantor, at such Grantor’s expense all documents that such Grantor shall reasonably request to evidence such termination or release and will duly assign and transfer to such Grantor such of the Pledged Collateral so released that may be in the possession of the Administrative Agent that has not theretofore been sold or otherwise applied or released pursuant to this Agreement. Any execution and delivery of documents pursuant to this Section 7.15 shall be without recourse to or warranty by the Administrative Agent.

SECTION 7.16.  Additional Subsidiaries. Upon execution and delivery by the Administrative Agent and any Subsidiary that is required to become a party hereto by Section 5.09 of the Credit Agreement or the Collateral and Guarantee Requirement of an instrument in the form of Exhibit I hereto (with such additions to such form as the Administrative Agent and the Borrower may reasonably agree in the case of any such Subsidiary) (a “ Supplement ”), such entity shall become a Guarantor and a Grantor hereunder with the same force and effect as if originally named as a Guarantor and a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other party to this Agreement. The rights and obligations of each party to this Agreement shall remain in full force and effect notwithstanding the addition of any new party to this Agreement.

SECTION 7.17 No Limitations, Etc. (a) Except for termination of a Grantor’s obligations hereunder as expressly provided for in Section 7.15 and except for the limitations set forth in Section 2.06 or, with respect to any Subsidiary Loan Party that becomes a party hereto pursuant to Section 7.16 or otherwise, in any Supplement to this Agreement, the obligations of each Grantor hereunder and grant of security interests by such Grantor shall not be subject to any

 

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reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of, and all rights of the Administrative Agent hereunder, the Security Interest in the Article 9 Collateral, the security interest in the Pledged Collateral and all obligations of each Guarantor and Grantor hereunder shall be absolute and unconditional irrespective of, the invalidity, illegality or unenforceability of the Secured Obligations (including with respect to any guarantee under this Agreement) or otherwise (other than defense of payment or performance). Without limiting the generality of the foregoing, all rights of the Administrative Agent hereunder, the Security Interest in the Article 9 Collateral, the security interest in the Pledged Collateral and all obligations of each Guarantor and Grantor hereunder, to the fullest extent permitted by applicable law, shall not be discharged or impaired or otherwise affected by, and shall be absolute and unconditional irrespective of, and each Grantor hereby waives any defense to the enforcement hereof by reason of:

(i) the failure of the Administrative Agent or any other Secured Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Loan Document or otherwise;

(ii) any rescission, waiver, amendment or modification of, increase in the Secured Obligations with respect to, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any Guarantor under this Agreement;

(iii) the failure to perfect any security interest in, or the exchange, substitution, release or any impairment of, any security held by the Administrative Agent or any other Secured Party for the Secured Obligations, including with respect to any Guarantor under this Agreement;

(iv) any default, failure or delay, willful or otherwise, in the performance of the Secured Obligations, including with respect to any Guarantor under this Agreement;

(v) any other act or omission that may or might in any manner or to any extent vary the risk of the Borrower or any Grantor or otherwise operate as a discharge of the Borrower or any Grantor as a matter of law or equity (other than the payment in full in cash or immediately available funds of all the Secured Obligations);

(vi) any illegality, lack of validity or enforceability of any Secured Obligation, including with respect to any Guarantor under this Agreement;

(vii) any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting a Loan Party or its assets or any resulting release or discharge of any Secured Obligation, including with respect to any Guarantor under this Agreement;

(viii) the existence of any claim, set-off or other rights that the Grantor may have at any time against the Borrower, the Administrative Agent, or any other corporation or person, whether in connection herewith or any unrelated transactions, provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim;

 

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(ix) any action permitted or authorized hereunder; or

(x) any other circumstance (including without limitation, any statute of limitations) or any existence of or reliance on any representation by the Administrative Agent that might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower or the Grantor or any other guarantor or surety.

Each Grantor expressly authorizes the Secured Parties to take and hold security for the payment and performance of the Secured Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Secured Obligations, all without affecting the obligations of any Grantor hereunder.

(b) To the fullest extent permitted by applicable law, each Grantor waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Secured Obligations, including with respect to any Guarantor under this Agreement, or any part thereof from any cause, or the cessation from any cause of the liability of any other Loan Party, other than the payment in full in cash or immediately available funds of all the Secured Obligations (other than contingent or unliquidated obligations or liabilities). The Administrative Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with any other Loan Party or exercise any other right or remedy available to them against any other Loan Party, without affecting or impairing in any way the liability of any Grantor hereunder except to the extent the Secured Obligations (other than contingent or unliquidated obligations or liabilities) have been paid in full in cash or immediately available funds. To the fullest extent permitted by applicable law, each Grantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Grantor against any other Loan Party, as the case may be, or any security.

SECTION 7.18.  Secured Party Authorizations and Indemnifications. By acceptance of the benefits of this Agreement and any other Security Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably, to the maximum extent permitted by law, (a) to consent to the appointment of the Administrative Agent as its agent hereunder and under such other Security Documents, (b) to confirm that the Administrative Agent shall have the authority to act as the exclusive agent of such Secured Party for the enforcement of any provisions of this Agreement and such other Security Documents against any Guarantor or Grantor, the exercise of remedies hereunder or thereunder and the giving or withholding of any consent or approval hereunder or thereunder relating to any Collateral or any Guarantor’s or Grantor’s obligations with respect thereto, (c) to agree that it shall not take any action to enforce any provisions of this Agreement or any other Security Document against any

 

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Guarantor or Grantor, to exercise any remedy hereunder or thereunder or to give any consents or approvals hereunder or thereunder except as expressly provided in this Agreement or any other Security Document and (d) to agree to be bound by the terms of this Agreement and any other Security Documents. By acceptance of the benefits of this Agreement and any other Security Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably, to the maximum extent permitted by law (and by the Existing Senior Notes Indenture, in the case of the Secured Note Parties), to agree to indemnify the Administrative Agent (and authorize the Administrative Agent to deduct any such indemnification amount from the amounts to be paid to such Secured Party pursuant to Section 5.02(a) and/or (b)) to the extent not indemnified or reimbursed by the Grantors, pro rata in accordance with the amount of the Secured Obligations owed to it on the date of any such indemnification, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against the Administrative Agent in its capacity as collateral agent in any way relating to or arising out of this Agreement or any other Security Document or any action taken or omitted by the Administrative Agent with respect to this Agreement or any other Loan Document, provided that no Secured Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees) or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction.

SECTION 7.19 Limitation on Administrative Agent’s Responsibilities with Respect to Existing Notes Holders. (a) To the maximum extent permitted by law, the obligations of the Administrative Agent to the Existing Notes Holders and the Existing Notes Trustee hereunder shall be limited solely to (i) holding the Shared Collateral for the ratable benefit of the Existing Notes Holders and the Existing Notes Trustee for so long as (A) any Note Obligations remain outstanding and (B) any Note Obligations are secured by such Shared Collateral, (ii) subject to the instructions of the Required Lenders, enforcing the rights of the Existing Notes Holders in their capacities as Secured Parties in respect of Shared Collateral and (iii) distributing any proceeds received by the Administrative Agent from the sale, collection or realization of the Shared Collateral to the Existing Notes Holders and the Existing Notes Trustee in respect of the Note Obligations in accordance with the terms of this Agreement. To the maximum extent permitted by law, neither the Existing Notes Holders nor the Existing Notes Trustee shall be entitled to exercise (or direct the Administrative Agent to exercise) any rights or remedies hereunder with respect to the Note Obligations, including without limitation the right to receive any payments, enforce the Shared Security Interest, request any action, institute proceedings, give any instructions, make any election, notice Account Debtors, make collections, sell or otherwise foreclose on any portion of the Collateral or execute any amendment, supplement, or acknowledgment hereof (other than pursuant to Section 5.02(c)). To the maximum extent permitted by law, this Agreement shall not create any liability of the Administrative Agent or the Secured Loan Parties to the Existing Notes Holders or to the Existing Notes Trustee by reason of actions taken with respect to the creation, perfection or continuation of the Shared Security Interest or the Shared Collateral, actions with respect to the occurrence of an Event of Default, actions with respect to the foreclosure upon, sale, release, or depreciation of, or failure to realize upon, any of the Shared Collateral or action with respect to the collection of any claim for all or any part of the Note Obligations from any Account Debtor, guarantor or any other party or the valuation, use or protection of the Shared Collateral. Subject

 

43


to Section 7.21 and to the maximum extent permitted by law, by acceptance of the benefits under this Agreement and the other Security Documents, the Existing Notes Holders and the Existing Notes Trustee will be deemed to have acknowledged and agreed that the provisions of the preceding sentence are intended to induce the Lenders to permit such persons to be Secured Parties under this Agreement and certain of the other Security Documents and are being relied upon by the Lenders as consideration therefor.

(b) The Administrative Agent shall not be required to ascertain or inquire as to the performance by the Borrower of the Note Obligations.

(c) The Administrative Agent may execute any of the powers granted under this Agreement and perform any duty hereunder either directly or by or through agents or attorneys-in-fact, and shall not be responsible for the gross negligence or wilful misconduct of any agents or attorneys-in-fact selected by it with reasonable care and without gross negligence or wilful misconduct.

(d) The Administrative Agent shall not be deemed to have actual, constructive, direct or indirect notice or knowledge of the occurrence of any Event of Default unless and until the Administrative Agent shall have received a notice of Event of Default or a notice from a Grantor, the Existing Notes Trustee or the Secured Parties to the Administrative Agent in its capacity as Administrative Agent indicating that an Event of Default has occurred. The Administrative Agent shall have no obligation either prior to or after receiving such notice to inquire whether an Event of Default has, in fact, occurred and shall be entitled to rely conclusively, and shall be fully protected in so relying, on any notice so furnished to it.

(e) Notwithstanding anything to the contrary herein, nothing in this Agreement shall or shall be construed to (i) result in the Shared Security Interest not securing the Note Obligations less than equally and ratably with the Loan Obligations pursuant to Section 4.07 of the Existing Senior Notes Indenture to the extent required or (ii) modify or affect the rights of the Existing Notes Holders to receive the pro rata share specified in Section 5.02(b) of any proceeds of any collection or sale of Shared Collateral.

(f) The parties hereto agree that the Note Obligations and the Loan Obligations are, and will be, equally and ratably secured with each other by the Liens on the Shared Collateral, and that it is their intention to give full effect to the equal and ratable provision of Section 4.07 of the Existing Senior Notes Indenture, as in effect on the date hereof.

SECTION 7.20 Securitization Acknowledgements. (a) For purposes of this Section 7.20(a), capitalized terms used herein and not otherwise defined in this Agreement shall have the meanings assigned to such terms in the Transfer and Servicing Agreement, dated April 25, 2000 (the “ Transfer and Servicing Agreement ”), among Apple Ridge Services Corporation (“ ARSC ”), Cartus Corporation (“ Cartus ”), Cartus Financial Corporation (“ CFC ”), Apple Ridge Funding LLC (“ ARF ”) and The Bank of New York (the “ Indenture Trustee ”), or, if not defined therein, as assigned to such terms in the “ Purchase Agreement ” or the “ Receivables Purchase Agreement ” referred to therein, in each case as each such agreement has been amended by (I) that certain Amendment, Agreement and Consent, dated December 20, 2004, (II) that certain Second Omnibus Amendment, dated January 31, 2005, (III) that certain Amendment, Agreement

 

44


and Consent, dated January 30, 2006, (IV) that certain Third Omnibus Amendment, Agreement and Consent, dated May 12, 2006, (V) that certain Fourth Omnibus Amendment, dated November 29, 2006 and (VI) that certain Fifth Omnibus Amendment, dated April 10, 2007. The Transfer and Servicing Agreement, the Purchase Agreement and the Receivables Purchase Agreement, together with the respective amendments thereto described above, are collectively attached to this Agreement as Exhibit II. Subsequent references in this Section 7.20(a) to ARSC, Cartus and CFC below shall mean and be references to such corporations as they currently exist but shall also include references to any limited liability companies which succeed to the assets and liabilities of such companies in connection with a conversion of any such corporation into a limited liability company. The Administrative Agent acknowledges and agrees, and each Secured Party by its execution of the Credit Agreement (or its Assignment and Acceptance) and/or its acceptance of the benefits of this Agreement acknowledges and agrees, as follows, solely in its capacity as a Secured Party:

(i) Each Secured Party hereby acknowledges that (A) CFC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing Cartus Purchased Assets (originally referred to as CMSC Purchased Assets) from Cartus pursuant to the Purchase Agreement, making Equity Payments, Equity Loans, Mortgage Payoffs and Mortgage Payments to or on behalf of employees or otherwise purchasing Homes in connection with the Pool Relocation Management Agreements, funding such activities through the sale of CFC Receivables (originally referred to as CMF Receivables) to ARSC, and such other activities as it deems necessary or appropriate in connection therewith, (B) ARSC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing from CFC all CFC Receivables acquired by CFC from Cartus or otherwise originated by CFC, funding such acquisitions through the sale of the CFC Receivables to ARF and such other activities as it deems necessary or appropriate to carry out such activities, and (C) ARF is a limited purpose limited liability company whose activities are limited in its limited liability company agreement to purchasing the Pool Receivables from ARSC, funding such acquisitions through the issuance of the Notes, pledging such Pool Receivables to the Indenture Trustee and such other activities as it deems necessary or appropriate to carry out such activities.

(ii) Each Secured Party hereby acknowledges and agrees that (A) the foregoing transfers are intended to be true and absolute sales as a result of which Cartus has no right, title and interest in and to any of the Cartus Purchased Assets, any Homes acquired by CFC in connection therewith or any CFC Receivables, including any Related Property relating thereto, any proceeds thereof or earnings thereon (collectively, the “ Pool Assets ”), (B) none of CFC, ARSC or ARF is a Loan Party, (C) such Secured Party is not a creditor of, and has no recourse to, CFC, ARSC or ARF pursuant to the Credit Agreement or any other Loan Document, and (D) such Secured Party has no lien on or claim, contractual or otherwise, arising under the Credit Agreement or any other Loan Document to the Pool Assets (whether now existing or hereafter acquired and whether tangible or intangible); provided that nothing herein shall limit any rights the Secured Parties may have to any proceeds or earnings which are transferred from time to time to Cartus by CFC, ARSC or ARF.

 

45


(iii) No Secured Party will institute against or join any other person in instituting against CFC, ARSC or ARF any insolvency proceeding, or solicit, join in soliciting, cooperate with or encourage any motion in support of, any insolvency proceeding involving CFC, ARSC or ARF until one year and one day after the payment in full of all Notes; provided that the foregoing shall not limit the right of any Secured Party to file any claim in or otherwise take any action (not inconsistent with the provisions of this Section 7.20(a)) permitted or required by applicable law with respect to any insolvency proceeding instituted against CFC, ARSC or ARF by any other person.

(iv) Without limiting the foregoing, in the event of any voluntary or involuntary bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any Federal or state bankruptcy or similar law involving Cartus, CFC, ARSC, ARF or any other Affiliates of Cartus as debtor, or otherwise, the Secured Parties agree that if, notwithstanding the intent of the parties, Cartus is found to have a property interest in the Pool Assets, then, in such event, CFC and its assigns, including the Indenture Trustee, shall have a first and prior claim to the Pool Assets, and any claim or rights the Secured Parties may have to the Pool Assets, contractual or otherwise, shall be subject to the prior claims of the Indenture Trustee and the Noteholders until all amounts owing under the Indenture shall have been paid in full, and the Secured Parties agree to turn over to the Indenture Trustee any amounts received contrary to the provisions of this clause (iv).

(v) In taking a pledge of the Equity Interests of CFC, each Secured Party acknowledges that it has no right, title or interest in or to any assets of CFC, ARSC or ARF other than its rights to receive, as assignee of Cartus, any dividends or other distributions properly declared and paid or made in respect of the Equity Interests of CFC. Each Secured Party further agrees that it will not (A) until after the payment in full of all Notes, exercise any rights it may have under this Agreement (x) to foreclose on the Equity Interests of CFC or (y) to exercise any voting rights with respect to the Equity Interests of CFC, including any rights to nominate, elect or remove the independent members of the board of directors or managers of CFC or rights to amend the organizational documents of CFC, or (B) until one year and one day after the date on which all Notes have been paid in full, exercise any voting rights it may have to institute a voluntary bankruptcy proceeding on behalf of CFC.

(vi) Each Secured Party hereby covenants and agrees that it will not agree to any amendment, supplement or other modification of this Section 7.20(a) without the prior written consent of the Indenture Trustee. Each Secured Party further agrees that the provisions of this Section 7.20(a) are made for the benefit of, and may be relied upon and enforced by, the Indenture Trustee and that the Indenture Trustee shall be a third party beneficiary of this Section 7.20(a).

(b) For purposes of this Section 7.20(b), capitalized terms used herein and not otherwise defined in this Agreement shall have the meanings assigned to such terms in the Indenture, dated March 7, 2002 (the “ Kenosia Indenture ”), among Kenosia Funding, LLC (“ Kenosia ”) and The Bank of New York (the “ Trustee ”), or, if not defined therein, as assigned to such terms in the “ CMGFSC Purchase Agreement ”, the “ Receivables Purchase Agreement ” or the “ Fee Receivables Purchase Agreement ” referred to therein, in each case as each such

 

46


agreement has been amended by (I) that certain Omnibus Amendment, Agreement and Consent, dated December 20, 2004, (II) that certain Second Omnibus Amendment, Agreement and Consent dated May 19, 2005, (III) that certain Third Omnibus Amendment, Agreement and Consent, dated May 2, 2006, (IV) that certain Fourth Omnibus Amendment and Agreement, dated February 28, 2007 and (V) that certain Fifth Omnibus Amendment, dated April 10, 2007, by and among Kenosia, the Trustee, Cartus Relocation Corporation (“ CRC ”), Cartus Corporation (“ Cartus ”) and certain other parties. The Kenosia Indenture, the CMGFSC Purchase Agreement, the Receivables Purchase Agreement and the Fee Receivables Purchase Agreement, together with the respective amendments thereto described above, are collectively attached to this Agreement as Exhibit III. Subsequent references in this Section 7.20(b) to Cartus and CRC below shall mean and be references to such corporations as they currently exist but shall also include references to any limited liability companies which succeed to the assets and liabilities of such companies in connection with a conversion of any such corporation into a limited liability company. The Administrative Agent acknowledges and agrees, and each Secured Party by its execution of the Credit Agreement (or its Assignment and Acceptance) and/or its acceptance of the benefits of this Agreement acknowledges and agrees, as follows, solely in its capacity as a Secured Party:

(i) Each Secured Party hereby acknowledges that (A) CRC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing CMSC Purchased Assets (also referred to as Cartus Purchased Assets) from Cartus pursuant to the CMGFSC Purchase Agreement, making Equity Payments, Equity Loans, Mortgage Payoffs and Mortgage Payments to or on behalf of employees or otherwise purchasing Homes in connection with the Pool Relocation Management Agreements, funding such activities through the sale of Seller Receivables to Kenosia, and such other activities as it deems necessary or appropriate in connection therewith, and (B) Kenosia is a limited purpose limited liability company whose activities are limited in its limited liability company agreement to purchasing the Seller Receivables and other KF Purchased Assets from CRC under the Receivables Purchase Agreement and purchasing Originator Fee Receivables and other Originator Fee Assets from Cartus under the Fee Receivables Purchase Agreement, funding such acquisitions through the issuance of the Notes, pledging such purchased assets to the Trustee and such other activities as it deems necessary or appropriate to carry out such activities. The CMSC Receivables, the Seller Receivables and the Originator Fee Receivables are hereinafter referred to collectively as the “ Pool Receivables ”.

(ii) Each Secured Party hereby acknowledges and agrees that (A) the foregoing transfers are intended to be true and absolute sales as a result of which Cartus has no right, title and interest in and to any of the Cartus Purchased Assets, any Homes acquired by CRC in connection therewith or any Pool Receivables, including any Related Property relating thereto, any proceeds thereof or earnings thereon (collectively, the “ Pool Assets ”), (B) neither CRC nor Kenosia is a Loan Party, (C) such Secured Party is not a creditor of, and has no recourse to, CRC or Kenosia pursuant to the Credit Agreement or any other Loan Document, and (D) such Secured Party has no lien on or claim, contractual or otherwise, arising under the Credit Agreement or any other Loan Document to the Pool Assets (whether now existing or hereafter acquired and whether tangible or intangible); provided that nothing herein shall limit any rights the Secured Parties may have to any proceeds or earnings which are transferred from time to time to Cartus by CRC or Kenosia.

 

47


(iii) No Secured Party will institute against or join any other person in instituting against CRC or Kenosia any insolvency proceeding, or solicit, join in soliciting, cooperate with or encourage any motion in support of, any insolvency proceeding involving CRC or Kenosia until one year and one day after the payment in full of all Notes; provided that the foregoing shall not limit the right of any Secured Party to file any claim in or otherwise take any action (not inconsistent with the provisions of this Section 7.20(b)) permitted or required by applicable law with respect to any insolvency proceeding instituted against CRC or Kenosia by any other person.

(iv) Without limiting the foregoing, in the event of any voluntary or involuntary bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any Federal or state bankruptcy or similar law involving Cartus, CRC or Kenosia or any other Affiliates of Cartus as debtor, or otherwise, the Secured Parties agree that if, notwithstanding the intent of the parties, Cartus is found to have a property interest in the Pool Assets, then, in such event, CRC and Kenosia and Kenosia’s assigns, including the Trustee, shall have a first and prior claim to the Pool Assets, and any claim or rights the Secured Parties may have to the Pool Assets, contractual or otherwise, shall be subject to the prior claims of the Trustee and the Noteholders until all amounts owing under the Kenosia Indenture shall have been paid in full, and the Secured Parties agree to turn over to the Trustee any amounts received contrary to the provisions of this clause (iv).

(v) In taking a pledge of the Equity Interests of CRC, each Secured Party acknowledges that it has no right, title or interest in or to any assets of CRC or Kenosia other than its rights to receive, as assignee of Cartus, any dividends or other distributions properly declared and paid or made in respect of the Equity Interests of CRC. Each Secured Party further agrees that it will not (A) until after the payment in full of all Notes, exercise any rights it may have under this Agreement (x) to foreclose on the Equity Interests of CRC or (y) to exercise any voting rights with respect to the Equity Interests of CRC, including any rights to nominate, elect or remove the independent members of the board of directors or managers of CRC or rights to amend the organizational documents of CRC, or (B) until one year and one day after the date on which all Notes have been paid in full, exercise any voting rights it may have to institute a voluntary bankruptcy proceeding on behalf of CRC.

(vi) Each Secured Party hereby covenants and agrees that it will not agree to any amendment, supplement or other modification of this Section 7.20(b) without the prior written consent of the Trustee. Each Secured Party further agrees that the provisions of this Section 7.20(b) are made for the benefit of, and may be relied upon and enforced by, the Trustee and that the Trustee shall be a third party beneficiary of this Section 7.20(b).

SECTION 7.21. Relative Rights. This Agreement defined the relative rights of the Existing Notes Holders, on the one hand, and the Secured Loan Parties, on the other hand. Nothing in this Agreement shall (a) impair, as between any Grantor and any Existing Notes Holder, the Note Obligations of such Grantor, which are absolute and unconditional, to pay the

 

48


Indebtedness under the Existing Senior Notes Indenture, as and when the same shall become due and payable in accordance with the terms of the Existing Senior Notes Indenture; (b) impair, as between any Grantor and any Secured Loan Party, the Loan Obligations of such Grantor, which are absolute and unconditional, to pay the Indebtedness under the Credit Agreement, as and when the same shall become due and payable in accordance with the terms of the applicable Loan Documents; (c) prevent any Existing Notes Holder from exercising its available remedies upon a default or event of default under the Existing Senior Notes Indenture; or (d) prevent any Secured Loan Party from exercising its available remedies upon a Default or an Event of Default under the Loan Documents to which such Secured Loan Party is a party.

SECTION 7.22.  Successor Collateral Agent. The Administrative Agent may resign as collateral agent hereunder by giving not less than 30 days’ prior written notice to the Lenders. If the Administrative Agent shall resign as collateral agent under this Agreement, then either (a) the Required Lenders shall appoint a successor collateral agent hereunder, or (b) if a successor collateral agent shall not have been so appointed and approved within the 30 day period following the Administrative Agent’s notice to the Lenders of its resignation, then the Administrative Agent shall appoint a successor collateral agent that shall serve as collateral agent until such time as the Required Lenders appoint a successor collateral agent. Upon its appointment, such successor collateral agent shall succeed to the rights, powers and duties as collateral agent, and the term “Administrative Agent” under this Agreement and “Collateral Agent” under this Agreement and any other Security Document shall mean such successor, effective upon its appointment, and the former collateral agent’s rights, powers and duties as collateral agent shall be terminated without any other or further act or deed on the part of such former collateral agent or any of the parties to this Agreement.

[Signature Page Follows]

 

49


IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

REALOGY CORPORATION

DOMUS INTERMEDIATE HOLDINGS CORP.

AFS MORTGAGE

CGRN, INC.

ERA GENERAL AGENCY CORPORATION

ERA GENERAL AGENCY OF NEW JERSEY, INC.

FEDSTATE STRATEGIC CONSULTING, INCORPORATED

REALOGY FRANCHISE GROUP, INC.

REALOGY INTELLECTUAL PROPERTY HOLDINGS I, INC.

REALOGY INTELLECTUAL PROPERTY HOLDINGS II, INC.

REALOGY OPERATIONS, INC.

REALOGY SERVICES GROUP LLC

REALOGY SERVICES VENTURE PARTNER, INC.,

by  

/s/ Richard A. Smith

Name:   Richard A. Smith
Title:   President

[Signature Page to the Guarantee and Collateral Agreement]


A MARKET PLACE, INC.,
ALPHA REFERRAL NETWORK, INC.,
ASSOCIATED CLIENT REFERRAL CORP.,
ASSOCIATES INVESTMENTS,
ASSOCIATES REALTY NETWORK,
ASSOCIATES REALTY, INC.,
BOB TENDLER REAL ESTATE, INC.,
BURGDORFF REFERRAL ASSOCIATES, INC.,
BURNET REALTY INC. (A MINNESOTA CORPORATION),
BURNET REALTY, INC. (A WISCONSIN CORPORATION),
CAREER DEVELOPMENT CENTER, LLC,
CARTUS CORPORATION,
CARTUS PARTNER CORPORATION,
CENTURY 21 REAL ESTATE LLC,
COLDWELL BANKER KING THOMPSON AUCTION SERVICES, INC.,
COLDWELL BANKER REAL ESTATE CORPORATION,
COLDWELL BANKER REAL ESTATE SERVICES, INC.,
COLDWELL BANKER REAL ESTATE, INC.,
COLDWELL BANKER RESIDENTIAL BROKERAGE COMPANY,
COLDWELL BANKER RESIDENTIAL BROKERAGE CORPORATION,
COLDWELL BANKER RESIDENTIAL BROKERAGE INSURANCE AGENCY OF MAINE, INC.,

DEWOLFE REALTY AFFILIATES,

COLDWELL BANKER RESIDENTIAL BROKERAGE PARDOE, INC.,

COLDWELL BANKER RESIDENTIAL BROKERAGE, INC.,
COLDWELL BANKER RESIDENTIAL REAL ESTATE SERVICES OF WISCONSIN, INC.,
COLDWELL BANKER RESIDENTIAL REAL ESTATE, INC.,

COLDWELL BANKER RESIDENTIAL REFERRAL NETWORK

(A CALIFORNIA CORPORATION),

[Signature Page to the Guarantee and Collateral Agreement]


COLDWELL BANKER RESIDENTIAL REFERRAL NETWORK, INC. (A PENNSYLVANIA CORPORATION),
COLORADO COMMERCIAL, LLC,
COOK—PONY FARM REAL ESTATE, INC.,
CORCORAN GROUP—BROOKLYN LANDMARK, LLC,
CORCORAN MLS HOLDINGS, LLC,
COTTON REAL ESTATE, INC.,
DEWOLFE RELOCATION SERVICES, INC.,
DOUGLAS AND JEAN BURGDORFF, INC.,
ERA FRANCHISE SYSTEMS, INC.,
FIRST CALIFORNIA ESCROW CORPORATION,
FLORIDA’S PREFERRED SCHOOL OF REAL ESTATE, INC.,
FRED SANDS SCHOOL OF REAL ESTATE,
HILLSHIRE HOUSE, INCORPORATED,
HOME REFERRAL NETWORK INC.,
J. W. RIKER—NORTHERN R. I., INC.,
JACK GAUGHEN, INC.,

KENDALL, POTTER AND MANN, REALTORS, INC.

COSBY-TIPTON REAL ESTATE, INC.,

LMS (DELAWARE) CORP.,
NRT ARIZONA COMMERCIAL, INC.,
NRT ARIZONA EXITO, INC.,
NRT ARIZONA REFERRAL, INC.,
NRT ARIZONA, INC.,
NRT CHICAGO LLC,
NRT COLORADO, INC.,
NRT COLUMBUS, INC.,
NRT COMMERCIAL OHIO INCORPORATED,
NRT COMMERCIAL UTAH, INC.,
NRT COMMERCIAL, INC.,
NRT MID-ATLANTIC, INC.,
NRT MISSOURI REFERRAL NETWORK, INC.,
NRT MISSOURI, INC.,
NRT NEW ENGLAND INCORPORATED,
NRT RELOCATION LLC,
NRT SETTLEMENT SERVICES OF MISSOURI, INC.,
NRT SUNSHINE INC.,
NRT TEXAS REAL ESTATE SERVICES, INC.,

[Signature Page to the Guarantee and Collateral Agreement]


NRT TEXAS, INC.,

NRT THE CONDO STORE INCORPORATED,

NRT UTAH, INC. (A DELAWARE CORPORATION),

PACESETTER NEVADA, INC.,

PACIFIC ACCESS HOLDING COMPANY, LLC,

R.J. YOUNG CO.,

REAL ESTATE REFERRAL, INC.,

REAL ESTATE REFERRALS, INC.,

REAL ESTATE SERVICES, INC.,

REFERRAL ASSOCIATES OF FLORIDA, INC.,

REFERRAL ASSOCIATES OF NEW ENGLAND, INC.,

REFERRAL NETWORK, INC.,

REFERRAL NETWORK, INC. (A FLORIDA CORPORATION),

REFERRAL NETWORK, LLC,

SIGNATURE PROPERTIES, INC.,

SOLEIL FLORIDA CORP.,

SOTHEBY’S INTERNATIONAL REALTY AFFILIATES, INC.,

SOTHEBY’S INTERNATIONAL REALTY, INC.,

ST. JOE REAL ESTATE SERVICES, INC.,

THE CORCORAN GROUP EASTSIDE, INC.,

THE DEWOLFE COMPANIES, INC.,

THE DEWOLFE COMPANY, INC.,

THE FOUR STAR CORP.,

THE MILLER GROUP, INC.,

THE SUNSHINE GROUP LIMITED PARTNERSHIP,

THE SUNSHINE GROUP, LTD.,

TRUST OF NEW ENGLAND, INC.,

VALLEY OF CALIFORNIA, INC.,

by  

/s/ Richard A. Smith

Name:   Richard A. Smith
Title:   Chairman

[Signature Page to the Guarantee and Collateral Agreement]


ADVANTAGE TITLE & INSURANCE, LLC,
AMERICAN TITLE COMPANY OF HOUSTON,
APEX REAL ESTATE INFORMATION SERVICES LLP,
ATCOH HOLDING COMPANY,
BURNET TITLE OF OHIO, LLC,
BURNET TITLE, INC.,
BURNET TITLE L.L.C.,
BURROW ESCROW SERVICES, INC.,
CENTRAL FLORIDA TITLE COMPANY,
EQUITY TITLE COMPANY,
EQUITY TITLE MESSENGER SERVICE HOLDING COMPANY,
FRANCHISE SETTLEMENT SERVICES, INC.,
GRAND TITLE, LLC,
GUARDIAN HOLDING COMPANY,
GUARDIAN TITLE AGENCY, LLC,
GUARDIAN TITLE COMPANY,
GULF SOUTH SETTLEMENT SERVICES, LLC,
HICKORY TITLE, LLC,
KEYSTONE CLOSING SERVICES LLC,
LINCOLN SETTLEMENT SERVICES, LLC,
MARKET STREET SETTLEMENT GROUP, INC.,
MID-EXCHANGE, INC.,
MID-STATE ESCROW CORPORATION,
NATIONAL COORDINATION ALLIANCE, INC.,
NRT MID-ATLANTIC TITLE SERVICES, LLC,
NRT SETTLEMENT SERVICES OF TEXAS, INC.,
PATRIOT SETTLEMENT SERVICES, LLC,
PREMIER SETTLEMENT SERVICES, LLC,
PROCESSING SOLUTIONS, INCORPORATED,
ROCKY MOUNTAIN SETTLEMENT SERVICES, LLC,
SECURED LAND TRANSFERS, INC.,
SOUTH LAND TITLE CO., INC.,
SOUTH-LAND TITLE OF MONTGOMERY COUNTY, INC.,
ST. JOE TITLE SERVICES, INC.,
ST. JOE TITLE SERVICES, LLC,
TAW HOLDING INC.,
TEXAS AMERICAN TITLE COMPANY,

[Signature Page to the Guarantee and Collateral Agreement]


TEXAS AMERICAN TITLE COMPANY OF AUSTIN,

TITLE RESOURCE GROUP AFFILIATES HOLDINGS, INC.,

TITLE RESOURCE GROUP HOLDINGS, INC.,

TITLE RESOURCE GROUP SERVICES CORPORATION,

TITLE RESOURCES INCORPORATED,

WEST COAST ESCROW CLOSING CO.,

WEST COAST ESCROW COMPANY,

WILLIAM ORANGE REALTY, INC.,

ALLMON, TIERNAN & ELY, INC.,

BATJAC REAL ESTATE CORP.,

CHARTER TITLE, LLC,

COLDWELL BANKER COMMERCIAL PACIFIC PROPERTIES, LTD.,

COLDWELL BANKER CORPORATION,

COLDWELL BANKER PACIFIC PROPERTIES, LTD.,

NRT HAWAII REFERRAL, LLC,

NRT INCORPORATED,

NRT INSURANCE AGENCY, INC.,

NRT NEW YORK, INC.,

ONCOR INTERNATIONAL LLC,

PACIFIC PROPERTIES REFERRALS, INC.,

REALOGY GLOBAL SERVICES, INC.,

SCRANTON ABSTRACT, LLC,

SOTHEBY’S INTERNATIONAL REALTY REFERRAL COMPANY, LLC,

TBR SETTLEMENT SERVICES, LLC,

TEXAS AMERICAN TITLE COMPANY OF CORPUS CHRISTI,

TITLE RESOURCE GROUP LLC,

by  

/s/ Anthony E. Hull

Name:   Anthony E. Hull
Title:   Executive Vice President and Treasurer

[Signature Page to the Guarantee and Collateral Agreement]


REALOGY FRANCHISE FINANCE, INC.,
by  

/s/ Anthony E. Hull

Name:   Anthony E. Hull
Title:   President

[Signature Page to the Guarantee and Collateral Agreement]


APEX REAL ESTATE INFORMATION SERVICES, LLC,

C21 TM CORP.,

CB TM CORP.,

ERA TM CORP.,

REALOGY LICENSING, INC.,

SUMMIT ESCROW,

TERRAMAR GUARANTY TITLE & TRUSt, INC.,

by  

/s/ Joseph J. Huber

Name:   Joseph J. Huber
Title:   Senior Vice President, Tax

[Signature Page to the Guarantee and Collateral Agreement]


CDRE TM CORP.,
by  

/s/ Joseph J. Huber

Name:   Joseph J. Huber
Title:   Senior Vice President

[Signature Page to the Guarantee and Collateral Agreement]


SOTHEBY’S INTERNATIONAL REALTY
LICENSEE CORPORATION,
by  

/s/ Greg Macres

Name:   Greg Macres
Title:   President

[Signature Page to the Guarantee and Collateral Agreement]


FSA MEMBERSHIP SERVICES, LLC,
by  

/s/ Michael R. Piccola

Name:   Michael R. Piccola
Title:   Vice President

[Signature Page to the Guarantee and Collateral Agreement]


JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

By:   /s/    Marian N. Schulman
Name:   Marian N. Schulman
Title:   Managing Director

[Signature Page to the Guarantee and Collateral Agreement]


Exhibit I to the

Guarantee and Collateral Agreement

 

  SUPPLEMENT NO. [ · ] (this “ Supplement ”) dated as of [ · ], 20[ · ][ · ] to the Guarantee and Collateral Agreement dated as of April 10, 2007 (the “ Collateral Agreement ”), among DOMUS INTERMEDIATE HOLDINGS CORP. (“ Holdings ”), REALOGY CORPORATION (the “ Borrower ”), each Grantor identified therein and JPMORGAN CHASE BANK, N.A., as administrative agent and collateral agent (in such capacity, the “ Administrative Agent ”) for the Secured Parties (as defined therein).

A. Reference is made to the Credit Agreement dated as of April 10, 2007 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “ Credit Agreement ”), among Holdings, the Borrower, the Lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent for the Lenders, and the other parties thereto.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement or the Collateral Agreement referred to therein, as applicable.

C. The Borrower, Holdings and each of the Subsidiary Loan Parties (the “ Grantors ”) have entered into the Collateral Agreement in order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit. Section 7.16 of the Collateral Agreement provides that additional Subsidiaries of the Borrower may become Guarantors and Grantors under the Collateral Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “ New Grantor ”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Guarantor and a Grantor under the Collateral Agreement in order to induce the Lenders to make additional Loans and the Issuing Banks to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.

Accordingly, the Administrative Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 7.16 of the Collateral Agreement, the New Grantor by its signature below becomes a Grantor and a Guarantor under the Collateral Agreement with the same force and effect as if originally named therein as a Grantor and a Guarantor and the New Grantor hereby (a) agrees to all the terms and provisions of the Collateral Agreement applicable to it as a Grantor and a Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor and a Guarantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of Loan Obligations [and Note Obligations], does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the applicable Secured Parties, their successors and assigns, a security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Collateral Agreement) of the New Grantor. Each reference to a “Grantor” and “Guarantor” in the Collateral Agreement shall be deemed to include the New Grantor. The Collateral Agreement is hereby incorporated herein by reference.


SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) implied covenants of good faith and fair dealing.

SECTION 3. The New Grantor is a [company] duly [incorporated] under the law of [ name of relevant jurisdiction ]. [ If applicable: ] The guarantee of the New Grantor giving a guarantee other than in respect of its Subsidiary is subject to the following limitations:

(a) If the New Grantor is incorporated in [ · ] and is giving a guarantee other than in respect of its Subsidiary, those limitations set out in paragraph [ · ] of Section 2.06 of the Collateral Agreement shall also apply in relation to the New Grantor; and

(b) [ if the New Grantor is incorporated in any other jurisdiction, is giving a guarantee other than in respect of its Subsidiary and limitations other than those set out in Section 2.06 of the Collateral Agreement] are agreed in respect of the New Grantor, insert guarantee limitation wording for relevant jurisdiction .]

SECTION 4. The New Grantor confirms that no Default has occurred or would occur as a result of the New Grantor becoming a Guarantor or a Grantor under the Collateral Agreement.

SECTION 5. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 6. The New Grantor hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of (i) any and all Pledged Stock and Pledged Debt Securities now owned by the New Grantor and (ii) any and all Intellectual Property now owned by the New Grantor and (b) set forth under its signature hereto, is the true and correct legal name of the New Grantor and its jurisdiction of organization.

SECTION 7. Except as expressly supplemented hereby, the Collateral Agreement shall remain in full force and effect.

SECTION 8. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

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SECTION 9. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Collateral Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 10. All communications and notices hereunder shall (except as otherwise expressly permitted by the Collateral Agreement) be in writing and given as provided in Section 10.01 of the Credit Agreement. All communications and notices hereunder to the New Grantor shall be given to it in care of the Borrower as provided in Section 10.01 of the Credit Agreement.

SECTION 11. The New Grantor agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

 

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IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this Supplement to the Collateral Agreement as of the day and year first above written.

 

[NAME OF NEW GRANTOR],
by  

 

Name:  
Title:  
Address:  
Legal Name:
Jurisdiction of Formation:

 

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JPMORGAN CHASE BANK, N.A., as
Administrative Agent,
by  

 

Name:  
Title:  

 

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Schedule I to

Supplement No. [ · ] to the

Collateral Agreement

Collateral of the New Grantor

EQUITY INTERESTS

 

Issuer

 

Number of
Certificate

 

Registered
Owner

 

Number and
Class of
Equity Interest

 

Percentage
of Equity
Interests

       
       

PLEDGED DEBT SECURITIES

 

Issuer

 

Principal Amount

 

Date of Note

 

Maturity Date

     
     

INTELLECTUAL PROPERTY

[Follow format of Schedule II to the

Collateral Agreement.]


Exhibit II to the Guarantee

and Collateral Agreement

EXECUTION COPY

FIFTH OMNIBUS AMENDMENT

(Apple Ridge)

THIS Fifth Omnibus Amendment (this “ Agreement ”) is entered into this 10 th day of April, 2007 for the purpose of making amendments to the documents described in this Agreement.

WHEREAS, this Agreement is among (i) Cartus Corporation, a Delaware corporation (“ Cartus ”), (ii) Cartus Financial Corporation, a Delaware Corporation (“ CFC ”), (iii) Apple Ridge Services Corporation, a Delaware corporation (“ ARSC ”), (iv) Apple Ridge Funding LLC, a limited liability company organized under the laws of the State of Delaware (the “ Issuer ”), (v) Realogy Corporation, a Delaware Corporation (“ Realogy ” or the “ Performance Guarantor ”), (vi) The Bank of New York, as successor to JPMorgan Chase Bank, N.A., a banking corporation organized and existing under the laws of New York, as successor Indenture Trustee. (the “Indenture Trustee”), (vii) The Bank of New York, a New York state banking corporation (the “ Paying Agent ”), as paying agent, authentication agent and transfer agent and registrar, (vii) the Conduit Purchasers, Committed Purchasers and Managing Agents party to the Note Purchase Agreement defined below, and (ix) Calyon New York Branch (“ Calyon ”), as Administrative Agent and Lead Arranger (the “ Administrative Agent ”).

WHEREAS, this Agreement relates to the following documents (as such documents have previously been amended):

 

   

Purchase Agreement dated as of April 25, 2000 (the “ Purchase Agreement ”) by and between Cartus and CFC;

 

   

Receivables Purchase Agreement dated as of April 25, 2000 (the “ Receivables Purchase Agreement ”) by and between CFC and ARSC;

 

   

Master Indenture dated as of April 25, 2000 (the “ Master Indenture ”) among the Issuer, the Indenture Trustee and the Paying Agent;

 

   

Transfer and Servicing Agreement dated as of April 25, 2000 (the “ Transfer and Servicing Agreement ”) by and between ARSC, as transferor, Cartus, as originator and servicer, CFC, as originator, the Issuer, as transferee and the Indenture Trustee;

 

   

Performance Guaranty dated as of May 12, 2006 executed by Realogy in favor of CFC and the Issuer (the “ Performance Guaranty ”).

WHEREAS, the Purchase Agreement, the Receivables Purchase Agreement, the Master Indenture, the Transfer and Servicing Agreement and the Performance Guaranty are, in this Agreement, collectively the “ Affected Documents ”;


WHEREAS, terms used in this Agreement and not defined herein shall have the meanings assigned to such terms in the Purchase Agreement, and, if not defined therein, as defined in the Master Indenture.

NOW, THEREFORE, the parties hereto hereby recognize and agree:

 

  1. Amendments to Purchase Agreement . Effective as of the date hereof, the Purchase Agreement is hereby amended as follows:

 

  a. The definition of “Eligible Contract” in Appendix A is hereby amended to delete the reference to “in effect on the date of this Agreement” and substitute therefor “in effect on April 10, 2007”.

 

  b. The definition of “Eligible Obligor” in Appendix A is hereby amended to add, at the conclusion of clause (b), the following: “unless such Obligor qualifies as an Eligible Governmental Obligor”.

 

  c. Appendix A is further amended to insert, in the proper alphabetical location, the following new definitions:

“Eligible Governmental Obligor” shall mean the Federal Deposit Insurance Corporation, the United States Postal Service, and any other governmental obligor which is party to a Guaranteed Government Contract and is specifically approved in writing by the Buyer, the Issuer and the Majority Investors as an “Eligible Governmental Obligor”.

“Guaranteed Government Contract” shall mean any Relocation Management Agreement between Cartus and an Eligible Governmental Obligor which qualifies as an Eligible Contract and which has been designated as a Pool Relocation Management Agreement under the Purchase Agreement.”

 

  d. Section 7.3(j) is hereby amended to delete therefrom the phrase “to a Person that has executed and delivered an Acknowledgment Letter in favor of the Originator and the Buyer and its successors and assigns, including any Series Enhancer” and to substitute therefor the phrase “the terms of which include acknowledgment provisions in substantially the form of Exhibit 7.3(j) hereto.”

 

  e. Exhibit 7.3(j) is hereby amended and restated in its entirety as attached on Exhibit 7.3(j) hereto.

 

  2. Amendments to Receivables Purchase Agreement . Effective as of the date hereof, the Receivables Purchase Agreement is hereby amended as follows:

 

  a. Appendix A is hereby amended to insert, in the proper alphabetical location, the following definitions:

CRC ” shall mean Cartus Relocation Corporation, a wholly-owned subisdiary of Cartus.

 

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Governmental Receivable ” shall mean any Receivable arising under or in connection with a Government Guaranteed Contract.

Kenosia ” shall mean Kenosia Funding LLC, a wholly-owned subsidiary of CRC.

 

  b. The definition of “Eligible Receivable” in Appendix A is hereby amended to add, at the conclusion thereof the following: “The term “Eligible Receivable” shall also include each Governmental Receivable which (i) is acquired by Seller from Kenosia and CRC pursuant to documentation which is in form and substance reasonably satisfactory to the Buyer, and its assigns, including the Issuer and the Majority Investors, (ii) is in existence on the date the related Guaranteed Government Contract became a Pool Relocation Management Agreement and (iii) would qualify as an Eligible Receivable but for the fact that such Governmental Receivable was not acquired by Seller from the Originator under the Purchase Agreement and, in the case of any Governmental Receivable arising out of or with respect to Equity Payments, Mortgage Payments and Mortgage Payoffs, such Receivable was originated by CRC and not by Seller.”

 

  c. Section 2.1(a) of the Receivables Purchase Agreement is modified by deleting clause (ii) in its entirety and substituting the following therefor: “(ii) all Receivables arising out of or with respect to Equity Payments, Mortgage Payments and Mortgage Payoffs made by the Seller in respect of Home Purchase Contracts to which CFC is a party from and after the Closing Date and all Governmental Receivables acquired by the Seller from Kenosia and/or CRC (collectively, the “ Seller Receivables ”);”.

 

  d. Section 7.3(j) of the Receivables Purchase Agreement is modified by adding at the conclusion thereof: “Notwithstanding the foregoing, Seller shall be allowed to acquire Governmental Receivables from Kenosia and CRC, so long as (i) any such acquisition is pursuant to an assignment agreement which is in form and substance reasonably satisfactory to the Buyer and its assigns, including the Issuer and the Majority Investors and (ii) on or prior to the date of such acquisition, all UCC financing statements filed against the Seller shall be amended to reflect the inclusion of such Governmental Receivables in the Seller Receivables.”

 

  3. Amendments to Master Indenture . Effective as of the date hereof, the Master Indenture is hereby amended as follows:

 

  a. The definition of “Aggregate Adjustment Amount” in Section 1.01 is hereby amended and restated in its entirety as follows:

Aggregate Adjustment Amount ” shall mean, as of any date of determination, an amount equal to the sum of (a) the Overconcentration Amount, (b) the Excess Longer Term Receivable Amount, (c) the Excess Special Homes Receivables Amount, (d) the amount, if any, by which the aggregate Unpaid Balance of all Eligible Receivables relating to Homes that have been owned by CFC which are

 

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more than 450 but less than 540 days exceeds 1.50% of the sum of the Aggregate Employer Balances of all Eligible Receivables (other than Defaulted Receivables) as of the last day of the Monthly Period immediately preceding the date of calculation plus (e) the amount by which (i) the aggregate Unpaid Balance of all Eligible Receivables relating to Homes that have been owned by CFC which are more than 365 but less than 540 days, less the amount calculated under clause (d) above, exceeds (ii) 5.00% of the sum of the Aggregate Employer Balances of all Eligible Receivables (other than Defaulted Receivables) as of the last day of the Monthly Period immediately preceding the date of calculation plus (f) the aggregate Unpaid Balance of all Eligible Receivables relating to Homes that have been owned by CFC more than 540 days as of the last day of the Monthly Period immediately preceding the date of calculation.

 

  b. The definition of “Overconcentration Amount” in Section 1.01 is hereby amended and restated in its entirety as follows:

Overconcentration Amount ” shall mean, as of any date of determination, an amount equal to the sum of: (a) the greater of: (i) the excess, if any, of (A) the aggregate Modified Receivable Balances owing by (or, if less, the Obligor Limits of) the Obligors (excluding Eligible Governmental Obligors) who are the Obligors in respect of the five largest aggregate Modified Receivable Balances over (B) an amount equal to 22.5% of the Aggregate Receivable Balance, and (ii) the excess, if any, of (A) the aggregate Modified Receivable Balances owing by (or, if less, the Obligor Limits of) the Obligors (excluding Eligible Governmental Obligors) who are the Obligors in respect of the ten largest aggregate Modified Receivable Balances over (B) an amount equal to 30% of the Aggregate Receivable Balance; (b) the sum of the aggregate amount with respect to each Obligor (excluding Eligible Governmental Obligors) of the excess, if any, of (i) the aggregate Modified Receivable Balance owing by such Obligor over (ii) the Obligor Limit with respect to such Obligor and (c) the amount by which the aggregate Modified Receivable Balances owing by all Eligible Governmental Obligors exceeds 10% of the Aggregate Receivable Balance.

 

  4. Amendments to Transfer and Servicing Agreement . Effective as of the date hereof, the Transfer and Servicing Agreement is hereby amended as follows:

 

  a. Section 1.01 is hereby amended to insert, in the appropriate alphabetical order, the following:

Leverage Ratio ” shall mean on any date, the ratio of (a) Total Senior Secured Net Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters of the Borrower most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided , that EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis. Capitalized Terms used in this definition shall have the meaning set forth in the Realogy Credit Agreement as in effect on April 10, 2007, without giving effect to any subsequent amendments.

 

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Realogy Credit Agreement shall mean that certain Credit Agreement dated as of April 10, 2007 among Domus Intermediate Holdings Corp., Realogy, the lenders and other financial institutions party thereto and JP Morgan Chase Bank, N.A., as Administrative Agent.

Weekly Activity Report ” shall have the meaning provided in Section 3.07(d) .

Weekly Reporting Event ” shall mean that, commencing with the quarter ending June 30, 2007, the Leverage Ratio as of the end of such fiscal quarter exceeds the applicable ratio set forth below:

 

Fiscal Quarter Ending

   Senior Secured
Leverage Ratio

June 30, 2007

   6.00:1.00

September 30, 2007

   6.00:1.00

December 31, 2007

   6.00:1.00

March 31, 2008

   5.10:1.00

June 30, 2008

   5.10:1.00

September 30, 2008

   5.10:1.00

December 31, 2008

   5.10:1.00

March 31, 2009

   5.10:1.00

June 30, 2009

   5.10:1.00

September 30, 2009

   4.75:1.00

December 31, 2009

   4.75:1.00

March 31, 2010

   4.75:1.00

June 30, 2010

   4.75:1.00

September 30, 2010

   4.75:1.00

December 31, 2010

   4.75:1.00

March 31, 2011 and thereafter

   4.50:1.00

 

  b. Section 3.07 is hereby amended by inserting at the conclusion thereof the following new Section 3.07(d):

“(d) If as of the end of any fiscal quarter a Weekly Reporting Event has occurred, the Servicer shall, commencing on the applicable “ Weekly Reporting Commencement Date ” specified below and continuing until no such Weekly Reporting Event exists for two consecutive fiscal quarters, prepare and deliver to Cartus, CFC, the Transferor, the Issuer, the Indenture Trustee, each Series

 

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Enhancer and each Administrative Agent under any Series of Variable Funding Notes, on or before the fifth Business Day of each calendar week, a report with respect to the last Business Day of the preceding week, substantially in the form provided in the related Supplement or in such other form as is reasonably acceptable to the Issuer (each such report, a “ Weekly Activity Report ”). Such Weekly Activity Report shall include (i) a certification that, to the best of the Servicer’s knowledge, no Unmatured Servicer Default or Servicer Default has occurred and is continuing or, if any such event has occurred and is continuing, a description of such event and the action, if any, that the Servicer proposes to take with respect thereto and (ii) a calculation of the Adjusted Aggregate Receivable Balance based on the most recently available interim reporting derived from financial system-generated data in the Servicer’s financial records. As used herein, the “ Weekly Reporting Commencement Date ” shall mean: (1) with respect to any Weekly Reporting Event which occurs during calendar year 2007 or if the first such Weekly Reporting Event occurs as of the end of a fiscal year, the week immediately following the 135th calendar day after the end of the relevant fiscal quarter; (2) with respect to any other Weekly Reporting Event occurring as of the end of a fiscal year or if the first such Weekly Reporting Event occurs as of the end of any fiscal quarter after calendar year 2007, the week immediately following the 90th calendar day after the end of the relevant fiscal quarter and (3) otherwise, the week immediately following the 45th calendar day after the end of the relevant fiscal quarter.”

 

  c. Section 3.09 is hereby amended to delete therefrom the phrase “a firm of nationally recognized independent public accountants (who may also render other services to the Servicer, the Issuer, CMSC, CMF or the Transferor)” and to substitute therefor the phrase “Protiviti (or such other auditor acceptable to the financial institution acting as administrative agent for the Majority Investors”). Section 3.09 is further amended to add at the conclusion thereof: “Notwithstanding the foregoing, so long as the Series 2007-1 Notes are the only Notes issued under the Indenture and the Servicer complies with the audit provisions set forth in Section 5.01(g) of the related Note Purchase Agreement, the Servicer shall not be required to comply with the foregoing provisions of this Section 3.09.”

 

  d. Section 3.10(a) is hereby amended to delete therefrom the phrase “Receivables Activity Report” and substitute therefor the phrase “Receivables Activity Report and Weekly Activity Report, if applicable”.

 

  e. Section 7.04 is hereby amended to delete therefrom the phrase “Receivables Activity Report” and substitute therefor the phrase “Receivables Activity Report, Weekly Activity Report”.

 

  f. Section 9.01(a) is hereby amended to delete therefrom the phrase “Receivables Activity Report” and substitute therefor the phrase “Receivables Activity Report or Weekly Activity Report, if applicable”.

 

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  g. Section 9.01(f) is hereby amended and restated in its entirety as follows:

“(f) (i) Failure of the Servicer or the Performance Guarantor to pay any principal and/or interest in respect of any Indebtedness under the Realogy Credit Agreement or under any other indenture or agreement governing any Indebtedness the principal amount of which exceeds $25,000,000 and such failure shall continue beyond the applicable grace period, if any, specified in the agreement or instrument governing such Indebtedness; or (ii) the default by the Servicer or the Performance Guarantor in the performance of any term, provision or condition contained in any agreement described in clause (i) above, or the existence of any event or condition with respect to any Indebtedness arising under any such agreement, if the effect of such default, event or condition is to cause, or permit the holder of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity, including without limitation the occurrence of any “Event of Default” under the Realogy Credit Agreement; or (iii) any Indebtedness of the Servicer or the Performance Guarantor in a principal amount exceeding $25,000,000 shall be declared to be due and payable or is required to be prepaid (other than by a regularly scheduled payment or a mandatory redemption or prepayment provision) prior to the scheduled date of maturity thereof.”

 

  h. Section 9.05 is hereby amended and restated in its entirety as follows:

(a) If (i) Cartus is the Servicer, and (ii) the “Average Days in Inventory” (as defined below) is more than 120 days, the Issuer will be obligated to establish an account (the “ Marketing Expenses Account ”) to be established with, and pledged to, the Indenture Trustee and maintain on deposit therein, an amount at least equal to the Required Marketing Expenses Account Amount described below. On any day that the amount on deposit in the Marketing Expenses Account is less than the Required Marketing Expenses Account Amount, the Issuer will be required to deposit an amount into the Marketing Expenses Account equal to such shortfall. On any Distribution Date that the amount on deposit in the Marketing Expenses Account exceeds the Required Marketing Expenses Account Amount, the Issuer will be permitted to withdraw such excess, and any amount so withdrawn shall be transferred to the Collection Account.

(b) The Indenture Trustee will be permitted to withdraw funds from the Marketing Expenses Account (i) if Cartus is the Servicer, to pay for the cost of maintaining and marketing the Homes to the extent that Cartus as Servicer has failed to pay such costs, (ii) to reimburse a successor Servicer for the cost of maintaining and marketing the Homes, but only to the extent such costs were actually incurred, but not paid, by Cartus while acting as the Servicer or to the extent that such costs are attributable to Cartus’ breach of its duties as the Servicer prior to the appointment of a successor Servicer and (iii) to cover the costs of transition of servicing from Cartus to such successor Servicer. Payment of such costs from the Marketing Expenses Account shall not be deemed to be payment by the Servicer and shall not relieve the Servicer from any liability therefor under the other provisions of this Agreement.

 

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  5. Amendments to Performance Guaranty . Effective as of the date hereof, the Performance Guaranty is hereby amended as follows:

 

  a. The definition of “ Obligations ” in Section 1 is hereby amended to delete therefrom the phrase “(including Cartus’ obligation to fund the Marketing Expenses Account as and when required under the Transfer and Servicing Agreement)”.

 

  6. Inclusion of Receivables Assigned from Kenosia Funding LLC and Cartus Relocation Corporation . All of the parties hereto acknowledge and agree that, as a result of the amendments to Section 2.1(a) to the Receivables Purchase Agreement set forth herein, the definition of “Seller Receivables” in the Receivables Purchase Agreement may include certain Receivables (the “ Acquired Receivables ”) which were neither sold by Cartus to CFC under the Purchase Agreement nor originated by CFC. The parties hereto acknowledge and agree that, for all purposes of the Affected Documents, (i) the Acquired Receivables shall be considered to be CFC Receivables originated by CFC, and shall be deemed to be included in the ARSC Purchased Assets transferred to the Issuer and (ii), notwithstanding anything to the contrary in the Affected Documents, CFC shall be allowed to enter into an assignment agreement with each of Cartus, Kenosia and CRC, the form of which has been approved in writing by the Majority Investors, and to consummate the transfer of the Acquired Receivables along with the Related Property relating to such Acquired Receivables (collectively, the “ Acquired Assets ”) on the terms and conditions set forth therein. Such conditions shall include evidence of compliance with the Federal Assignment of Claims Act and confirmation from the Rating Agencies that the commercial paper ratings of the Conduit Purchasers under the Note Purchase Agreement will not be reduced or withdrawn by reason of such transaction. The parties hereto further acknowledge and agree that, so long as such Acquired Receivables satisfy all other criteria set forth in the definition of “Eligible Receivable”, such Acquired Receivables shall constitute Eligible Receivables within the meaning of the Receivables Purchase Agreement, the Transfer and Servicing Agreement and the Indenture notwithstanding the fact that such Acquired Receivables were neither sold to CFC under the Purchase Agreement nor otherwise originated by CFC.

 

  7. Each of the parties hereto acknowledges that one or more of Cartus, CFC and ARSC may elect to convert their status from that of a Delaware corporation to that of a Delaware limited liability company, either by filing a certificate of conversion with the Delaware Secretary of State or by merging with and into a newly formed Delaware limited liability company (such conversion or merger, as applicable, being herein called a “ Conversion ”). Each of the parties hereto agrees that, notwithstanding any covenants in the Affected Documents requiring Cartus, CFC or ARSC to maintain its “corporate existence”, such entity shall be allowed to effect a Conversion subject to the conditions that:

(i) (x) the Person formed by such Conversion (any such Person, the “ Surviving Entity ”) is an entity organized and existing under the laws of the United States of America or any State thereof, (y) such Surviving

 

8


Entity expressly assumes, by an agreement in form and substance satisfactory to the applicable transferee and its assignees, performance of every covenant and obligation of such Person under the Transaction Documents to which such Person is a party and (z) such Surviving Entity delivers to the other parties hereto an opinion of counsel that such Surviving Entity is duly organized and validly existing under the laws of its organization, has duly executed and delivered such supplemental agreement, and such supplemental agreement is a valid and binding obligation of such Surviving Entity, enforceable against such Surviving Entity in accordance with its terms (subject to customary exceptions relating to bankruptcy and equitable principles) and covering such other matters as the parties hereto may reasonably request;

(ii) all actions necessary to maintain the perfection of the security interests or ownership interests created by such Person under the Transaction Documents to which such Person is a party in connection with such Conversion shall have been taken, as evidenced by an opinion of counsel reasonably satisfactory to the parties hereto;

(iii) so long as such Person is the Servicer, no Servicer Default or Unmatured Servicer Default is then occurring or would result from such Conversion;

(iv) in the case of a Conversion of CFC or ARSC, (x) the organizational documents of any Surviving Entity with respect to CFC or ARSC shall contain limitations on its business activities and requirements for independent directors or managers substantially equivalent to those set forth in its current organizational documents, and (y) Orrick Herrington & Sutcliffe shall have delivered an opinion of counsel reasonably satisfactory to the other parties hereto that such Conversion will not, in and of itself, alter the conclusions set forth in its opinions previously issued in connection with the Transaction Documents with respect to true sale matters, substantive consolidation matters and bankruptcy issues relating to “home sale proceeds” (to the extent such opinions relate to such Person); and

(v) each party hereto shall have received such other documents as such party may reasonably request.

In connection with any such Conversion and the resulting change in name of such entity, Cartus, CFC and/or ARSC, as applicable, shall be required to comply with the name change covenants in the Transaction Documents, except that to the extent 30 days prior written notice of the name change is required, such notice period shall be reduced to five Business Days.

From and after any such Conversion effected in compliance with the above conditions, (a) all references in the Transaction Documents to any Person which has altered its corporate structure to become a limited liability company shall be deemed to be references to the Surviving Entity as successor to such Person, (b) all representations, warranties and covenants in the Transaction Documents which state that any of Cartus, CFC or ARSC is or is required to be a corporation shall be deemed

 

9


to permit and require the Surviving Entity to be a limited liability company, (c) all references to such Person’s certificate of incorporation, other organizational documents, capital stock, corporate action or other matters relating to its corporate form will be deemed to be references to the organizational documents and analogous matters relating to limited liability companies, (d) all references to such Person’s directors or independent directors will be deemed to be references to the Surviving Entity’s directors, independent directors, managers or independent managers, as the case may be and (e) no representation, warranty or covenant in any Transaction Document shall be deemed to be breached or violated solely as a result of the fact that the Surviving Entity in any Conversion may be disregarded as a separate entity for state, local or federal income tax purposes.

 

  8. Conditions Precedent . This Agreement shall be effective upon satisfaction of the following conditions precedent:

 

  a. the Series 2007-1 Supplement between the Issuer and the Indenture Trustee and the Series 2007-1 Note Purchase Agreement executed by and among the Issuer, the Servicer, the financial institutions and commercial paper conduits party thereto, and Calyon, as Administrative Agent and Lead Manager, shall each have become effective in accordance with their respective terms and the Series 2007-1 Note Purchaser shall have funded an amount sufficient to repay in full the Notes outstanding under the Series 2005-1 Supplement; and

 

  b. the Indenture Trustee shall have previously received (a) counterparts of the signature pages hereto executed by all parties hereto and (b) the consent of the Managing Agents representing the Majority Investors to the execution of this Agreement, which consent shall be evidenced by their execution of the signature pages attached to this Agreement.

 

  9. GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

  10. Counterparts . 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.

 

  11.

References to and Effect on Affected Documents . Upon the effectiveness of this Agreement: (i) all references in any Affected Document to “this Agreement”, “hereof”, “herein” or words of similar effect referring to such Affected Document shall be deemed to be references to such Affected Document as amended by this Agreement; (ii) each reference in any of the Affected Documents to any other Affected Document and each reference in any of the other Transaction Documents to any of the Affected Documents shall each mean and be a reference to such Affected Document as amended by this Agreement; and (iii) each reference in any Transaction

 

10


 

Document to any of the terms or provisions of an Affected Document which are redefined or otherwise modified hereby shall mean and be a reference to such terms or provisions as redefined or otherwise modified by this Agreement; provided , that, notwithstanding the foregoing or any other provisions of this Agreement , the amendments contained in this Agreement shall not be effective to (x) modify on a retroactive basis any representations or warranties previously made under any Affected Document with respect to Receivables transferred or purported to have been transferred prior to the date hereof, which representations and warranties shall continue to speak as of the dates such Receivables were transferred and based on the terms and provisions of the Affected Documents as in effect at such time or (y) otherwise modify the terms of any transfer or purported transfer of any Receivable transferred or purported to be transferred pursuant to an Affected Document prior to the date herein.

 

  12. No Waiver . This Agreement shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Affected Documents other than as set forth herein, each of which Affected Document, as modified hereby, remains in full force and effect and is hereby reaffirmed, ratified and confirmed.

 

  13. Direction to Indenture Trustee . By its signature hereto each of Calyon, Atlantic Asset Securitization LLC and LaFayette Asset Securitization LLC (collectively, the “ Investor Parties ”) hereby represent that: (i) they constitute all of the Managing Agents and the Investors in Series 2007-1, respectively, and therefore that, upon the execution of this Agreement by each such Investor Party, the “Rating Agency Condition” under the Series 2007-1 Supplement has been satisfied for the execution and delivery of this Agreement and the Series 2007-1 Supplement. Each Investor Party further represents, based on the Issuer’s representations in paragraph 14 below, that upon the payment in full of the Series 2005-1 Notes they constitute the “Majority Investors” for purposes of authorizing any amendment or supplemental indentures under Section 10.02 of the Indenture. Accordingly, each Investor Party hereby requests and directs the Indenture Trustee to agree, consent to and accept this Agreement and to execute and deliver the Series 2007-1 Supplement. For the purposes of the signature pages hereto, the term “Investor” is synonymous with the term “Noteholder” as defined in the Master Indenture. Each Conduit Purchaser party hereto further represents and warrants that (i) it is the beneficial owner of the Series 2007-1 Notes currently outstanding issued in its favor; (ii) it is duly authorized to consent to this Agreement and to direct the Indenture Trustee as set forth herein; and (iii) its authorization has not been granted or assigned to any other person or entity.

 

  14. Issuer Representations re Outstanding Series . The Issuer represents and warrants that, after giving effect to the initial funding under the Series 2007-1 Supplement, the Secured Variable Funding Notes, Series 2005-1 (the “ Series 2005-1 Notes ”) will no longer be outstanding and the Series 2007-1 Notes are the only Notes outstanding under the Master Indenture, and the Issuer hereby requests and directs the Indenture Trustee to agree, consent to and accept this Agreement and to execute and deliver the Series 2007-1 Supplement.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

 

CARTUS CORPORATION
By:   /s/ Eric Barnes
  Name:   Eric Barnes
  Title:   SVP, CFO
CARTUS FINANCIAL CORPORATION
By:   /s/ Eric Barnes
  Name:   Eric Barnes
  Title:   SVP, CFO
APPLE RIDGE SERVICES CORPORATION
By:   /s/ Eric Barnes
  Name:   Eric Barnes
  Title:   SVP, CFO
APPLE RIDGE FUNDING LLC
By:   /s/ Eric Barnes
  Name:   Eric Barnes
  Title:   SVP, CFO
REALOGY CORPORATION
By:   /s/ Seth Truwit
  Name:   Seth Truwit
  Title:  

S-1

Signature Page to Fifth Omnibus Amendment

April 2007


THE BANK OF NEW YORK, as Successor Indenture Trustee and Paying Agent
By:   /s/ Gregory J. Weachock
  Name:   Gregory J. Weachock
  Title:   Assistant Treasurer

S-2

Signature Page to Fifth Omnibus Amendment

April 2007


CALYON NEW YORK BRANCH, as Administrative Agent and a Managing Agent and as a Committed Purchaser
By:   /s/ Jerome LeJamtel
Name:   Jerome LeJamtel
Title:   Managing Director
By:   /s/ Kostantina Kourmpetis
Name:   Kostantina Kourmpetis
Title:   Managing Director
ATLANTIC ASSET SECURITIZATION LLC, as a Conduit Purchaser
By:   /s/ Jerome LeJamtel
Name:   Jerome LeJamtel
Title:   Managing Director
By:   /s/ Kostantina Kourmpetis
Name:   Kostantina Kourmpetis
Title:   Managing Director
LAFAYETTE ASSET SECURITIZATION LLC, as a Conduit Purchaser
By:   /s/ Jerome LeJamtel
Name:   Jerome LeJamtel
Title:   Managing Director
By:   /s/ Kostantina Kourmpetis
Name:   Kostantina Kourmpetis
Title:   Managing Director

S-3

Signature Page to Fifth Omnibus Amendment

April 2007


ACKNOWLEDGMENT PROVISIONS FOR APPLE RIDGE FUNDING, LLC

For purposes of this Section              , capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Transfer and Servicing Agreement, dated April 25, 2000, among Apple Ridge Services Corporation (“ ARSC ”), Cartus Corporation (“Cartus”), Cartus Financial Corporation (“CFC”), Apple Ridge Funding LLC (“ARF”) and The Bank of New York (the “Indenture Trustee ”), or, if not defined therein, as assigned to such terms in the “Purchase Agreement,” “Receivables Purchase Agreement” referred to therein, in each case as each such agreement has been amended by (i) that certain Amendment, Agreement and Consent dated December 20, 2004, (ii) that certain Second Omnibus Amendment dated January 31, 2005; (iii) that certain Amendment, Agreement and Consent dated January 30, 2006, (iv) that certain Third Omnibus Amendment and Agreement dated May 12, 2006, (v) that certain Fourth Omnibus Amendment dated November 29, 2006 and (vi) that certain Fifth Omnibus Amendment dated April 10, 2007. Subsequent references in this Section              to ARSC, Cartus and CFC below shall mean and be references to such corporations as they currently exist but shall also include references to any limited liability companies which succeed to the assets and liabilities of such companies in connection with a conversion of any such corporation into a limited liability company.

The Collateral Agent acknowledges and agrees, and each Secured Party by its execution of the Credit Agreement (or its Assignment and Acceptance) and/or its acceptance of the benefits of this Agreement acknowledges and agrees, as follows, solely in its capacity as a Secured Party:

(a) Each Secured Party hereby acknowledges that (i) CFC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing Cartus Purchased Assets (originally referred to as CMSC Purchased Assets) from Cartus pursuant to the Purchase Agreement, making Equity Payments, Equity Loans, Mortgage Payoffs and Mortgage Payments to or on behalf of employees or otherwise purchasing Homes in connection with the Pool Relocation Management Agreements, funding such activities through the sale of CFC Receivables (originally referred to as CMF Receivables) to ARSC, and such other activities as it deems necessary or appropriate in connection therewith and (ii) ARSC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing from CFC all CFC Receivables acquired by CFC from Cartus or otherwise originated by CFC, funding such acquisitions through the sale of the CFC Receivables to ARF and such other activities as it deems necessary or appropriate to carry out such activities, and (iii) ARF is a limited purpose limited liability company whose activities are limited in its limited liability company agreement to purchasing the Pool Receivables from ARSC, funding such acquisitions through the issuance of the Notes, pledging such Pool Receivables to the Indenture Trustee and such other activities as it deems necessary or appropriate to carry out such activities.

(b) Each Secured Party hereby acknowledges and agrees that (i) the foregoing transfers are intended to be true and absolute sales as a result of which Cartus has no right, title and interest in and to any of the Cartus Purchased Assets, any Homes acquired by CFC in connection therewith or any Pool Receivables, including any Related Property relating thereto, any proceeds thereof or earnings thereon (collectively, the “ Pool Assets ”), (ii) none of CFC, ARSC or ARF is a Loan Party, (iii) such Secured Party is not a creditor of, and has no recourse to, CFC, ARSC or ARF pursuant to the Credit Agreement or any other Loan Document, and (iv)


such Secured Party has no lien on or claim, contractual or otherwise, arising under the Credit Agreement or any other Loan Document to the Pool Assets (whether now existing or hereafter acquired and whether tangible or intangible); provided that nothing herein shall limit any rights the Secured Parties may have to any proceeds or earnings which are transferred from time to time to Cartus by CFC, ARSC or ARF.

(c) No Secured Party will institute against or join any other Person in instituting against CFC, ARSC or ARF any insolvency proceeding, or solicit, join in soliciting, cooperate with or encourage any motion in support of, any insolvency proceeding involving CFC, ARSC or ARF until one year and one day after the payment in full of all Notes provided , that the foreoging shall not limit the right of any Secured Party to file any claim in or otherwise take any action (not inconsistent with the provisions of this Section          ) permitted or required by applicable laws with respect to any insolvency proceeding instituted against CFC, ARSC or ARF by any other person.

(d) Without limiting the foregoing, in the event of any voluntary or involuntary bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any Federal or state bankruptcy or similar law involving Cartus, CFC, ARSC or ARF or any other Affiliates of Cartus as debtor, or otherwise, the Secured Parties agree that if, notwithstanding the intent of the parties, Cartus is found to have a property interest in the Pool Assets, then, in such event, CFC and its assigns, including the Indenture Trustee, shall have a first and prior claim to the Pool Assets, and any claim or rights the Secured Parties may have to the Pool Assets, contractual or otherwise, shall be subject to the prior claims of the Indenture Trustee and the Noteholders until all amounts owing under the Indenture shall have been paid in full, and the Secured Parties agree to turn over to the Trustee any amounts received contrary to the provisions of this clause (d).

(e) Each Secured Party hereby covenants and agrees that it will not agree to any amendment, supplement or other modification of this Section              without the prior written consent of the Trustee. Each Secured Party further agrees that the provisions of this Section              are made for the benefit of, and may be relied upon and enforced by, the Trustee and that the Trustee shall be a third party beneficiary of this Section              .


Exhibit III to the Guarantee

and Collateral Agreement

EXECUTION COPY

FIFTH OMNIBUS AMENDMENT AND

AGREEMENT

(Kenosia)

This Fifth Omnibus Amendment and Agreement (this “ Agreement ”) is entered into this 10th day of April 2007 for the purpose of amending the terms of the Secured Variable Funding Notes, Series 2002-1 (the “ Series 2002-1 Notes ”) and the Affected Documents described below and for the purpose of making amendments to the documents described in this Agreement related to the Series 2002-1 Notes.

WHEREAS, this Agreement is among (i) Cartus Corporation, a Delaware corporation (“ Cartus ”), (ii) Cartus Relocation Corporation, a Delaware corporation (“ CRC ”), (iii) Kenosia Funding, LLC, a limited liability company organized under the laws of the State of Delaware (the “ Issuer ”), (iv) The Bank of New York, a New York state banking corporation, as trustee (“ Trustee ”) under the Indenture described below and at the direction of Calyon New York Branch (“ Calyon ”) as “Administrative Agent” and as “Managing Agent” on behalf of Atlantic Asset Securitization LLC (“ Atlantic ”) the sole holder of the Series 2002-1 Notes, (v) Atlantic, as the purchaser, (vi) Calyon, as a committed purchaser of the Series 2002-1 Notes and (vii) Realogy Corporation (“ Realogy ”) as performance guarantor (the “ Performance Guarantor ”);

WHEREAS, this Agreement relates to the following documents:

 

  a. CMGFSC Purchase Agreement dated as of March 7, 2002 and as previously amended (the “ Purchase Agreement ”) by and between Cartus, as Originator and CRC, as Buyer;

 

  b. Receivables Purchase Agreement dated as of March 7, 2002 and as previously amended (the “ Receivables Purchase Agreement ”) by and between CRC, as originator and seller and the Issuer, as buyer;

 

  c. Fee Receivables Purchase Agreement dated as of March 7, 2002 and as previously amended (the “ Fee Receivables Purchase Agreement ”) by and between Cartus, as originator and the Issuer;

 

  d. Indenture dated as of March 7, 2002 and as previously amended (the “ Indenture ”) by and between the Issuer and the Trustee; and

 

  e. Servicing Agreement dated as of March 7, 2002 and as previously amended (the “ Servicing Agreement ”) among the Issuer, Cartus, CRC, and the Trustee;


(the foregoing agreements referenced in items a through e above, collectively, the “ Affected Documents ”).

WHEREAS, this Agreement also relates to that certain Performance Guaranty dated as of May 2, 2006 (the “ Prior Realogy Guaranty ”) executed by Realogy in favor of CRC, the Issuer, the Trustee, Gotham Funding Corporation (“ Gotham ”), as purchaser and The Bank of Tokyo Mitsubishi, UFJ, Ltd. (“ BTM ”) as “ Administrative Agent ”;

WHEREAS, this Agreement also relates to that certain Note Purchase Agreement dated as of March 7, 2002 and as previously amended (the “ Prior Note Purchase Agreement ”) by and among Cartus, CRC, the Issuer, Gotham and BTM;

WHEREAS, pursuant to that certain Assignment and Acceptance Agreement (the “ Assignment Agreement ”) dated as of even date herewith, Gotham and BTM have assigned to Atlantic and Calyon, respectively, all of their respective right, title and interest in and to the Affected Documents and the Series 2002-1 Notes, and Atlantic and Calyon, respectively, have agreed to assume the obligations of Gotham and BTM under the Affected Documents;

WHEREAS, Atlantic and Calyon have, as a condition of entering into the Assignment Agreement, required that the Prior Note Purchase Agreement and the Prior Realogy Guaranty be amended and restated to reflect certain modifications thereto and that the parties hereto execute this Agreement in order to modify certain other terms and provisions of the Affected Documents; and

WHEREAS, such modifications will, among other things, extend the maturity of the Series 2002-1 Notes and provide for the continued purchases of Receivables under the Affected Documents and are therefore of mutual benefit to the parties hereto;

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Defined Terms . Terms used in this Agreement and not defined herein shall have the meanings assigned to such terms in the Indenture, or, if not defined therein, in the applicable Affected Document to which such term refers. The parties hereto further agree that: (w) any references herein or in the Affected Documents as amended hereby to “Cartus” shall have the same meaning as is assigned to “CMSC” under the Affected Documents; (x) any references herein or in the Affected Documents as amended hereby to “CRC” shall have the same meaning as is assigned to “CMGFSC” under the Affected Documents; (y) any references herein, in the Amended Note Purchase Agreement or in the Affected Documents as amended hereby to capitalized terms using the word “Cartus” shall have the same meaning as is currently assigned to the equivalent term in the Affected Documents using the word “CMSC” (e.g., so that references to “Cartus Purchased Assets” shall have the same meaning as “CMSC Purchased Assets”), and (z) any references herein, in the Amended Note Purchase Agreement or in the Affected Documents as amended hereby to capitalized terms using the word “CRC” shall have the same meaning as is currently assigned to the equivalent term in the Affected Documents using the word “CMGFSC” (e.g., so that references to a “CRC Purchased Assets” shall have the same meaning as “CMGFSC Purchased Assets”.

 

2


2. Assignment and Acceptance . Each of the parties hereto acknowledges and agrees that, as of the date hereof, Atlantic has succeeded to all of the rights and all of the obligations of Gotham under the Affected Documents except as modified hereby, and that Calyon has succeeded to all of the rights and all of the obligations of BTM, individually or as Administrative Agent, except as modified hereby. From and after the effectiveness of this Agreement, all references in the Affected Documents (as in effect prior to the date hereof) to Gotham or the “Purchaser” (as defined under the Indenture) shall solely mean and be references to Atlantic or its assigns and all references in the Affected Documents (as in effect prior to the date hereof) to BTM (whether individually, as the Bank or as Administrative Agent) shall solely mean and be references to Calyon or its assigns, in each case except to the extent modified hereby. Without limiting the foregoing, each of Cartus, CRC, the Issuer, the Trustee and Realogy acknowledge and agree that every notice required to be given to the Purchaser under any of the Affected Documents shall be given (i) to Calyon as Administrative Agent under the Amended Note Purchase Agreement referred to below and (ii) to any other financial institution that subsequently becomes a “Managing Agent” under the Amended Note Purchase Agreement.

 

3. Restatement of Note Purchase Agreement . Concurrently with the effectiveness hereof, Cartus, CRC and the Issuer have entered into that certain Amended and Restated Note Purchase Agreement (the “ Amended Note Purchase Agreement ”) with Atlantic, Calyon and the Administrative Agent in order to amend and restate the rights and obligations of the various parties under the Prior Note Purchase Agreement. From and after the effectiveness of this Agreement: (i) all references in the Affected Documents to the Prior Note Purchase Agreement shall solely mean and be references to the Amended Note Purchase Agreement; (ii) all definitions in the Prior Note Purchase Agreement which are incorporated by reference in the Affected Documents shall mean and be such definitions as set forth in the Amended Note Purchase Agreement; (iii) all references in the Affected Documents to specific sections of the Prior Note Purchase Agreement, to the extent not modified hereby, shall mean and be references to the corresponding sections of the Amended Note Purchase Agreement; and (iv) the Affected Documents shall be amended accordingly.

 

4. Restatement of Prior Realogy Guaranty . Concurrently with the effectiveness hereof, Realogy has entered into that certain Amended and Restated Performance Guaranty (the “ Amended Performance Guaranty ”) with CRC and the Issuer in order to amend and restate the rights and obligations of the various parties under the Prior Realogy Guaranty. From and after the effectiveness of this Agreement: (i) all references in the Affected Documents to the Prior Realogy Guaranty shall solely mean and be references to the Amended Performance Guaranty; and (ii) the Affected Documents shall be amended accordingly. The terms and provisions of the Prior Realogy Guaranty shall be superseded in full by the terms of the Amended Performance Guaranty and each party hereto agrees, in consideration of Realogy’s entering into the Amended Performance Guaranty and being bound thereby, that Realogy shall be and hereby is released from all obligations under the Prior Realogy Guaranty.

 

3


5. Release and Sale of FDIC/USPS Receivables . The parties hereto acknowledge and agree that each of Cartus, CRC and the Issuer intends to enter into an assignment agreement (such agreement, the “ Kenosia Assignment Agreement ”) whereby each of Cartus, CRC and the Issuer will sell to Cartus Financial Corporation (“ CFC ”) all of its right, title and interest, if any, in and to all Receivables (the “ FDIC/USPS Receivables ”) outstanding as of a cut-off date specified in such agreement or thereafter arising under or in connection with the Relocation Management Agreements with the Federal Deposit Insurance Corporation and the United States Postal Service (such Relocation Management Agreements, the “ FDIC/USPS Contracts ”), all Related Property with respect to such FDIC/USPS Receivables (the “ FDIC/USPS Related Property ”), all CMSC Collections and CMGFSC Collections of such FDIC/USPS Receivables and FDIC/USPS Related Property, and all proceeds of and earnings on the foregoing (collectively, the “ FDIC/USPS Transferred Assets ”). The parties hereto agree that, notwithstanding anything to the contrary in the Affected Documents: (i) Cartus, CRC and the Issuer shall be allowed (x) to enter into the Kenosia Assignment Agreement provided that the form and substance of such agreement has been consented to by the Administrative Agent prior to execution thereof, and (y) to consummate the transfer of the FDIC/USPS Transferred Assets on the terms and conditions set forth therein; (ii) concurrently with such transfer, the FDIC/USPS Contracts shall cease to be “Pool Relocation Management Agreements” under any of the Affected Documents and Schedule 2.1 to the Purchase Agreement, the Receivables Purchase Agreement and the Fee Receivables Purchase Agreement, as applicable, shall be deemed amended to delete any references to the FDIC/USPS Contracts and any remaining references in the Affected Documents to the FDIC/USPS Contracts shall be of no further force and effect; (iii) any Lien the Trustee has on the FDIC/USPS Transferred Assets shall be automatically released without the need for any further action; and (iv) the Affected Documents shall be amended accordingly.

 

6. Conversion of Cartus and CRC to Limited Liability Companies . Each of the parties hereto acknowledges that Cartus and/or CRC may each elect to convert its status from that of a Delaware corporation to that of a Delaware limited liability company, either by filing a certificate of conversion with the Delaware Secretary of State or by merging with and into a newly formed Delaware limited liability company (such conversion or merger, as applicable, being herein called a “ Conversion ”). Each of the parties hereto agrees that, notwithstanding any covenants in the Affected Documents requiring Cartus and CRC to maintain its “corporate existence”, such entity shall be allowed to effect a Conversion subject to the conditions that:

(i) (x) the Person formed by such Conversion (any such Person, the “ Surviving Entity ”) is an entity organized and existing under the laws of the United States of America or any State thereof, (y) such Surviving Entity expressly assumes, by an agreement in form and substance satisfactory to the Issuer and its assignees, performance of every covenant and obligation of its predecessor entity under the Transaction Documents to which such predecessor entity is a party and (z) such Surviving Entity delivers to the other parties hereto an opinion of counsel that such Surviving Entity is duly organized and validly existing under the laws of its organization, has duly

 

4


executed and delivered such supplemental agreement, and such supplemental agreement is a valid and binding obligation of such Surviving Entity, enforceable against such Surviving Entity in accordance with its terms (subject to customary exceptions relating to bankruptcy and equitable principles) and covering such other matters as the parties hereto may reasonably request;

(ii) all actions necessary to maintain the perfection of the security interests or ownership interests created by such entity under the Transaction Documents in favor of CRC or the Issuer shall have been taken, as evidenced by an opinion of counsel reasonably satisfactory to the parties hereto;

(iii) if such entity is the Servicer, no Servicer Default, Unmatured Servicer Default, is then occurring or would result from such Conversion;

(iv) in the case of a Conversion of CRC, (x) the organizational documents of any Surviving Entity with respect to CRC shall contain limitations on its business activities and requirements for independent directors or managers substantially equivalent to those set forth in its current organizational documents, and (y) Orrick Herrington & Sutcliffe or other counsel reasonably satisfactory to the other parties hereto shall have delivered an opinion of counsel reasonably satisfactory to the other parties hereto that such Conversion will not in and of itself alter the conclusions set forth in its opinions previously issued in connection with the Transaction Documents with respect to true sale matters, substantive consolidation matters and bankruptcy issues relating to “home sale proceeds” to the extent relating to CRC; and

(v) each party hereto shall have received such other documents as such party may reasonably request.

In connection with any such Conversion and the resulting change in name of such entity, Cartus and CRC shall be required to comply with the name change covenants in the Transaction Documents, except that to the extent 30 days prior written notice of the name change is required, such notice period shall be reduced to five Business Days.

From and after any such Conversion effected in compliance with the above conditions: (a) all references in the Transaction Documents to any Person which has altered its corporate structure to become a limited liability company shall be deemed to be references to the Surviving Entity as successor to such Person; (b) all representations, warranties and covenants in the Transaction Documents which state that any of Cartus or CRC is or is required to be a corporation shall be deemed to permit and require the Surviving Entity to be a limited liability company; (c) all references to such Person’s certificate of incorporation, other organizational documents, capital stock, corporate action or other matters relating to its corporate form will be deemed to be references to the Surviving Entity’s organizational documents and analogous matters relating to limited liability companies; (d) all references to such Person’s directors or independent directors will be deemed to be

 

5


references to the Surviving Entity’s directors, independent directors, managers or independent managers, as the case may be and (e) no representation, warranty or covenant in any Transaction Document shall be deemed to be breached or violated solely as a result of the fact that the Surviving Entity in any Conversion may be disregarded as a separate entity for federal, state or local income tax purposes.

 

7. Amendments to the Purchase Agreement . Effective as of the date hereof, in addition to the modifications described above, the Purchase Agreement is hereby amended as follows:

 

  7.1. The definition of “CMGFSC Designated Receivable” set forth in Appendix A to the Purchase Agreement is hereby amended to delete therefrom the phrase “on behalf of CRC”.

 

  7.2. The definition of “Eligible Contract” set forth in Appendix A to the Purchase Agreement is hereby amended to delete the text of subsection (a)(ii) and to substitute therefor the following:

“(ii) (A) the rights to payment under which are assignable without the consent of the Employer party thereto or any other Person (other than the Originator), other than any such consent that has been obtained and remains in effect, or (B) if subject to any restriction on assignment of rights to payment, such Contract is in effect on April 10, 2007 and such restriction is, under Section 9-406 or Section 9-408 of the UCC, as applicable, not effective to prevent the creation of a security interest in or sale of the Receivables arising under such Contract”.

 

  7.3. The definition of “Eligible Home” set forth in Appendix A to the Purchase Agreement is hereby amended to add, immediately after the phrase “Originator and its Affiliates” in clause (c)(ii) thereof, the parenthetical phrase “(other than CRC and the Issuer)”.

 

  7.4. The definition of “Eligible Receivable” set forth in Appendix A to the Purchase Agreement is hereby amended to delete from paragraph (i) thereof the phrase “(or, with respect to any CMGFSC Receivable only, the Buyer)”.

 

  7.5. Paragraph (i) of the definition of “Eligible Receivable” set forth in Appendix A to the Purchase Agreement is hereby further amended to delete therefrom the phrase “if such Receivable constitutes a right to payment for services rendered not evidenced by an instrument or chattel paper” and to substitute therefor the phrase “if such restriction is not effective under Section 9-406 or Section 9-408 of the UCC, as applicable”.

 

  7.6. The definition of “Eligible Receivable” set forth in Appendix A to the Purchase Agreement is hereby amended to delete from paragraph (l) thereof the phrase “(or, with respect to any CMGFSC Receivable only, of the Buyer in Section 6.1(k) of the Receivables Purchase Agreement”).

 

6


  7.7. The definition of “Eligible Receivable” set forth in Appendix A to the Purchase Agreement is hereby amended: (x) to delete from clause (i) within paragraph (n) thereof the phrase “(or the Buyer, with respect to CRC Homes only),” to delete clause (ii) within paragraph (n) of such definition and to substitute therefor the following: “(ii) a Home Deed has been executed and delivered by the related Homeowner naming the Originator or the Buyer, as applicable, as transferee or has been executed and delivered in blank by the related Homeowner”.

 

  7.8. The definition of “Material Adverse Effect” set forth in Appendix A to the Purchase Agreement is hereby amended to delete the term “KF Purchased Assets” and to substitute therefor the term “Cartus Purchased Assets”.

 

  7.9. The definition of “Permitted Exception” set forth in Appendix A to the Purchase Agreement is hereby amended: (i) to delete the term “KF Purchased Assets” and to substitute therefor the term “Cartus Purchased Assets” and (ii) to delete each reference therein to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)” of the Servicing Agreement.

 

  7.10. The definition of “Permitted Lien” set forth in Appendix A to the Purchase Agreement is hereby amended to insert the word “and” at the conclusion of clause (a) thereof, to delete the text of clauses (b) and (c) in their entirety and to substitute therefor the following clause (b): “(b) any Lien in favor of the Buyer or its assigns pursuant to the Transaction Documents”.

 

  7.11. Section 2.1 of the Purchase Agreement is hereby amended: (i) to delete the phrase “agrees to buy” and substitute therefor the phrase “hereby purchases” and (ii) to delete therefrom the phrase “agrees to sell” and substitute therefor “hereby sells, transfers, sets over and conveys to the Buyer, without recourse except as provided herein”.

 

  7.12. Section 2.3 of the Purchase Agreement is hereby amended to delete each reference therein to the phrase “CMSC Receivables” and to substitute therefor the phrase “Cartus Purchased Assets”.

 

  7.13. Section 2.4 of the Purchase Agreement is hereby amended to add, after the phrase “any other Transaction Document” the phrase “to which it is a party”.

 

  7.14. Section 2.7 of the Purchase Agreement is hereby amended to delete the reference to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)” of the Servicing Agreement.

 

  7.15. Article II of the Purchase Agreement is hereby amended to add, at the conclusion thereof, the following Section 2.8:

“Section 2.8 Quitclaim . This Agreement provides that the Cartus Purchased Assets arising on or before April 10, 2007 (the “ Amendment Date ”) have been transferred by the Originator to the Buyer. To further evidence the intent of the parties hereto that all right, title and interest in and to the Cartus Purchased Assets is being sold and assigned to the Buyer pursuant to this Agreement as amended by that

 

7


certain Fifth Omnibus Amendment dated as of the Amendment Date, the Originator hereby irrevocably quitclaims, sells, transfers, assigns, and otherwise conveys to the Buyer all right, title and interest that it may have or be deemed to have in or to any of the Cartus Purchased Assets arising on or before the Amendment Date.”

 

  7.16. Section 3.1 of the Purchase Agreement is hereby amended to delete the second sentence thereof in its entirety and to substitute therefor the following: “On the twelfth calendar day of each month (or if such twelfth day is not a Business Day, the preceding Business Day) from the Closing Date to the Termination Date, the Originator shall deliver to the Servicer, for inclusion in the Monthly Originator Report to be prepared by the Servicer under the Servicing Agreement, information setting forth the amount of such Purchases and CRC Purchase Prices for the previous calendar month.”

 

  7.17. Article IV of the Purchase Agreement is hereby amended to add at the conclusions thereof the following Section 4.3:

“Section 4.3 Originator Adjustments .

(a) With respect to any Equity Receivable purchased by the Buyer from the Originator, if on any day the Buyer (or its assigns), the Servicer or the Originator determines that (i) such Equity Receivable (A) was not identified by the Originator as other than an Eligible Receivable on the Business Day such Receivable was sold hereunder or (B) was otherwise treated by the Originator as or represented by the Originator to be an Eligible Receivable in any Monthly Originator Report or Weekly Activity Report, as applicable, but was not in fact an Eligible Receivable on such date or (ii) any of the representations or warranties set forth in Section 6.1(d) or 6.1(k) was not true when made with respect to such Receivable or the related Equity Related Assets (each such Equity Receivable described in clause (i) or clause (ii), a “ Noncomplying Asset ”), then the Originator shall pay the aggregate Unpaid Balance of such Equity Receivables (such payment, a “ Noncomplying Asset Adjustment ”) to the Buyer in accordance with Section 4.3(c).

(b) If on any day the Unpaid Balance of any Equity Receivable is reduced as a result of any Concession made by the Originator, then the Originator shall pay to the Buyer the amount of such reduction (such payment, an “ Originator Dilution Adjustment ”) to the Buyer in accordance with Section 4.3(c).

(c) On each Business Day, the Originator shall pay to the Buyer, in cash in accordance with Section 4.2, an amount (an “ Originator Adjustment ”) equal to the sum of (A) the aggregate Originator Dilution Adjustment, if any, for each day from and including the immediately preceding Business Day plus (B) the Noncomplying Asset Adjustment, if any, for each day from and including the immediately preceding Business

 

8


Day. The Equity Receivables that gave rise to any Originator Dilution Adjustment and any related Equity Related Assets shall remain the property of the Buyer. From and after the day on which any Noncomplying Asset Adjustment is made, any collections received by the Buyer that are identified as proceeds of the Equity Receivables that gave rise to such Noncomplying Asset Adjustment and any Equity Related Property with respect to such Receivable shall be promptly returned to the Originator. The Buyer hereby directs the Originator to deposit all such Originator Adjustments directly into the Collection Account.”

 

  7.18. Section 6.1 of the Purchase Agreement is hereby amended to add at, the conclusion of the introductory paragraph thereof, the phrase “with respect to the Cartus Purchased Assets being transferred on such Closing Date or date of Purchase, as applicable”.

 

  7.19. Section 6.1(g) of the Purchase Agreement is hereby amended: (i) to delete the phrase “obtained by the Originator or Issuer” and substitute therefor the phrase “obtained by the Originator” and (ii) to delete the reference to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)” of the Servicing Agreement.

 

  7.20. Section 6.1(l) of the Purchase Agreement is hereby amended to delete the phrase “identified to the Buyer and its assignees by the Originator in the related Monthly Originator Report” and to substitute therefor the phrase “identified to the Buyer or the Servicer by the Originator”.

 

  7.21. Section 6.1(u) of the Purchase Agreement is hereby amended to delete the last sentence thereof its entirety.

 

  7.22. Section 7.1(c) of the Purchase Agreement is hereby amended to delete the text thereof in its entirety and to substitute therefor the following: “The Originator will maintain at all times accurate and complete books, records and accounts relating to the CMSC Purchased Assets and all CMSC Collections received by it, in which timely entries will be made and will, upon the reasonable request of the Buyer or its assignees, deliver copies of all CMSC Records maintained pursuant to this Section 7.1(c) to the Buyer or its designee.”

 

  7.23. Section 7.1(g) of the Purchase Agreement is hereby amended to delete the phrase “to the extent that any such funds” and substitute therefor the phrase “to the extent that the Originator has knowledge that any such funds”.

 

  7.24. Section 7.1(h) of the Purchase Agreement is hereby amended to delete the text thereof in its entirety and to substitute the following therefor: “The Originator will (i) establish and maintain necessary procedures for determining whether each CMSC Receivable, as of the date it is sold hereunder, qualifies as an Eligible Receivable, and for identifying all CMSC Receivables sold to the Buyer that are not Eligible Receivables on the date sold and (ii) will provide to the Servicer in a timely manner information that shows whether, and to what extent, the CMSC Receivables sold to the Buyer hereunder were not Eligible Receivables on the date sold.”

 

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  7.25. Section 7.1(j) of the Purchase Agreement is hereby amended to read in its entirety as follows: “ Accounting for Certain Assets . To the extent permitted by applicable law and GAAP, the Originator will account for and treat the transactions contemplated hereby (including but not limited to accounting and (to the extent taxes are not consolidated) for tax reporting purposes) as a sale of the Equity Assets by the Originator to the Buyer, it being understood that such sales may not be reflected in the consolidated financial statements of Originator and Buyer due to principles of consolidated financial reporting.”

 

  7.26. Section 7.1(k) of the Purchase Agreement is hereby amended to amend and restate the proviso in the last sentence thereof in its entirety so that it reads as follows: “ provided , however , that all such reviews will occur no more frequently than twice per year (with only the first such review in any year being at the Originator’s expense) unless Cartus is the Servicer and a Servicer Default has occurred and is continuing.”

 

  7.27. Section 7.1(p) of the Purchase Agreement is hereby amended to delete the term “KF Purchased Assets” and to substitute therefor the term “Cartus Purchased Assets”.

 

  7.28. Section 7.2(b) of the Purchase Agreement is hereby amended to delete therefrom the phrase “(as defined in the Indenture)”.

 

  7.29. Section 7.2(f) of the Purchase Agreement is hereby amended to delete therefrom the phrase “, including timely delivery of all such information required under any Enhancement Agreement”.

 

  7.30. Section 7.2(q) of the Purchase Agreement is hereby amended to delete the phrase “opinion of Orrick, Herrington & Sutcliffe LLP of even date herewith relating to security interest matters” and to substitute therefor the phrase “opinions of Orrick Herrington & Sutcliffe LLP dated as of April 10, 2007 relating to true sale matters with respect to the Purchase of the Equity Assets hereunder and substantive consolidation matters with respect to the Originator and the Buyer.”

 

  7.31. Section 7.3(a) of the Purchase Agreement is hereby amended (i) to add, immediately after the phrase “suffer to exist any Lien” the phrase “arising through or under it” and (ii) to delete the term “KF Purchased Asset” and substitute therefor the term “Cartus Purchased Asset”.

 

  7.32. Section 7.3(c)(ii) of the Purchase Agreement is hereby amended to read in its entirety as follows:

“(ii) convey, transfer or sell more than 25% of its properties and assets to any Person, provided that this provision shall not apply to or restrict the Originator’s ability to pledge its ownership interest in the Buyer to secure Indebtedness incurred or guaranteed in accordance with Section 7.3(j).”

 

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  7.33. Section 7.3(e) of the Purchase Agreement is hereby amended to delete the reference to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)” of the Servicing Agreement.

 

  7.34. Section 7.3(g) of the Purchase Agreement is hereby amended to delete the term “KF Purchased Assets” and to substitute therefor the term “Cartus Purchased Assets”.

 

  7.35. Section 7.3 of the Purchase Agreement is hereby further amended to add, at the conclusion thereof, the following new subsection (j):

“(j) Indebtedness for Borrowed Money . Create, incur, guarantee or permit to exist any Indebtedness for Borrowed Money, except for (A) any such Indebtedness owed on an intercompany basis to the Performance Guarantor or any Affiliate thereof and (B) any such Indebtedness the terms of which include acknowledgment provisions in substantially the form of Exhibit 7.3.(j) hereto.”

 

  7.36. Section 7.4(a) of the Purchase Agreement is hereby amended to delete from clause (ix) thereof the phrase “opinion of Orrick, Herrington & Sutcliffe LLP of even date herewith relating to security interest matters with respect to the Purchase of the CMSC Purchased Assets hereunder” and to substitute therefor the phrase “opinions of Orrick Herrington & Sutcliffe LLP dated as of April 10, 2007 relating to true sale matters with respect to the Purchase of the Equity Assets hereunder and substantive consolidation matters with respect to the Originator and the Buyer”.

 

  7.37. Section 9.1(b) of the Purchase Agreement is hereby amended to delete therefrom the phrase “any Monthly Originator Report or other” and to substitute therefor the phrase “or any”.

 

  7.38. Section 9.1(c) of the Purchase Agreement is hereby amended to delete therefrom the phrase “(A) in the case of a failure to deliver any Monthly Originator Report pursuant to Section 3.1(a), ten calendar days ( provided , however , that such ten-day period may be extended for an additional ten days if such failure to deliver a Monthly Originator Report is due to computer failure) or (B) in the case of any other failure” and to substitute therefor the phrase “in the case of any failure”.

 

  7.39. Section 9.1 of the Purchase Agreement is hereby further amended to delete from the final sentence thereof the phrase “If a CMGFSC Purchase Termination Event occurs” and substitute therefor the phrase “If a CRC Purchase Termination Event occurs of which the Originator has knowledge”.

 

  7.40.

Section 9.2(b) of the Purchase Agreement is hereby amended to delete therefrom the text in its entirety and to substitute the following therefor: “Upon the occurrence of a CRC Purchase Termination Event, the Buyer and its assignees shall have, in addition to

 

11


 

all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided to a buyer of accounts, chattel paper, promissory notes or payment intangibles under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Subject to the limitations on recourse set forth herein but otherwise without limiting the foregoing, the occurrence of a CRC Purchase Termination Event shall not deny to the Buyer or its assignees any remedy in addition to termination of its obligation to make Purchases hereunder to which the Buyer or its assignees may be otherwise appropriately entitled, whether by statute or applicable law, at law or in equity.”

 

  7.41. Section 10.1(a) of the Purchase Agreement is hereby amended to delete therefrom the phrase “any Monthly Originator Report or any other” and substitute therefor the phrase “or any”.

 

  7.42. Section 10.1(c) of the Purchase Agreement is hereby amended to add, immediately after the phrase “any Lien” the phrase “arising through or under it”.

 

  7.43. Section 10.1(g) of the Purchase Agreement is hereby amended (i) to delete the term “KF Purchased Assets” and to substitute therefor the term “Cartus Purchased Assets” and (ii) to delete the phrase “any Concession” and substitute therefor the phrase “any Concession made by the Originator or any Affiliate thereof (other than the Buyer or the Issuer)”.

 

  7.44. Section 10.1(h) of the Purchase Agreement is hereby amended to add, after the word “service”, the phrase “(other than any service provided by the Buyer or its assignees)”.

 

  7.45. Section 10.1 of the Purchase Agreement is hereby amended to add at the conclusion thereof the following paragraph:

“Notwithstanding anything to the contrary in this Agreement, any representations, warranties and covenants made by the Originator in this Agreement or the other Transaction Documents that are qualified by or limited to events or circumstances that have, or are reasonably likely to have, given rise to a Material Adverse Effect shall (solely for purposes of the indemnification obligations set forth in this Section 10.1) be deemed not to be so qualified or limited.”

 

  7.46. Section 11.6(a) of the Purchase Agreement is hereby amended: (i) to delete the phrase “the preservation of any rights under”, (ii) to delete the word “breach” and substitute therefor the phrase “breach by the Originator”, and (iii) to delete the phrase “or in advising such Persons as to their respective rights and remedies under this Agreement”.

 

  7.47. The exhibits to the Purchase Agreement are hereby amended to add, as Exhibit 7.3(j) thereto, the form of Exhibit A hereto.

 

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  7.48. Schedule 11.2 to the Purchase Agreement is hereby amended to reflect the Suite number of the Buyer in its notice address as “Suite 4C68” and to reflect its telecopy number as “203-205-1335.”

 

8. Amendments to the Receivables Purchase Agreement . Effective as of the date hereof, in addition to the modifications described above, the Receivables Purchase Agreement is hereby amended as follows:

 

  8.1. The definition of “Indebtedness” set forth in Appendix A of the Receivables Purchase Agreement” is hereby modified to add, after the phrase “(and its Subsidiaries), the following “ provided that, whenever the term Indebtedness is used with respect to the Indebtedness of the Seller, such term shall not include any Indebtedness of the Issuer notwithstanding that the Issuer is a Subsidiary of the Seller.”

 

  8.2. The definition of “Permitted Exception” set forth in Appendix A to the Purchase Agreement is hereby amended to delete the reference to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)” of the Servicing Agreement.

 

  8.3. Article I of the Receivables Purchase Agreement is hereby amended to delete from the introductory paragraph thereof the phrase “or as specified in Appendix A of the CMGFSC Purchase Agreement” and to substitute therefor the phrase “or, if not defined therein, as specified in Appendix A of the CMGFSC Purchase Agreement”.

 

  8.4. Section 2.1 of the Receivables Purchase Agreement is hereby amended to add, at the beginning of clause (vi) thereof, the phrase “to the extent not described in clauses (ii) or (iii)”, and to delete the parenthetical phrase “(if any)” appearing after the phrase “right, title and interest”

 

  8.5. Section 2.1 of the Receivables Purchase Agreement is hereby further amended to delete the last sentence of the paragraph immediately following clause (vi) and to substitute the following therefor: “The Seller Purchased Assets, the Seller Receivables and the Seller Related Assets, together with the property described in clause (vi) above, are sometimes collectively referred to herein as the “Seller Assets”.

 

  8.6. Section 2.2 of the Receivables Purchase Agreement is hereby amended to delete therefrom, each time it appears, the phrase “and any property described in clause (vi) of Section 2.1(a)”.

 

  8.7. Section 2.4 of the Receivables Purchase Agreement is hereby amended: (i) to delete therefrom the phrase “and any property described in clause (vi) of Section 2.1(a)” and (ii) to add, after the phrase “any other Transaction Document” the phrase “to which it is a party”.

 

  8.8. Section 2.7 of the Receivables Purchase Agreement is hereby amended to delete the reference to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)” of the Servicing Agreement.

 

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  8.9. Section 3.1(a) of the Receivables Purchase Agreement is hereby amended to delete the second sentence thereof in its entirety.

 

  8.10. Article IV of the Receivables Purchase Agreement is hereby amended to add at the conclusions thereof the following Section 4.3:

“Section 4.3 Seller Adjustments .

(a) With respect to any Seller Receivable created by the Seller and purchased by the Issuer from the Seller, if on any day the Issuer (or its assigns), the Servicer or the Seller determines that (i) such Seller Receivable (A) was not identified by the Seller as other than an Eligible Receivable on the Business Day such Receivable was sold hereunder or (B) was otherwise treated by the Seller as or represented by the Seller to be an Eligible Receivable in any Monthly Originator Report or Weekly Activity Report, as applicable, but was not in fact an Eligible Receivable on such date or (ii) any of the representations or warranties set forth in Section 6.1(d) or 6.1(k) was not true when made with respect to such Receivable or the related Equity Related Assets (each such Seller Receivable described in clause (i) or clause (ii), a “ Seller Noncomplying Asset ”), then the Seller shall pay the aggregate Unpaid Balance of such Seller Receivables (such payment, a “ Seller Noncomplying Asset Adjustment ”) to the Issuer in accordance with Section 4.3(c).

(b) If on any day the Unpaid Balance of any Seller Receivable is reduced as a result of any Concession made by the Seller, then the Seller shall pay to the Issuer the amount of such reduction (such payment, a “ Seller Dilution Adjustment ”) to the Issuer in accordance with Section 4.3(c).

(c) On each Business Day, the Seller shall pay to the Issuer, in cash in accordance with Section 4.2, an amount (a “ Seller Adjustment ”) equal to the sum of (A) the aggregate Seller Dilution Adjustment, if any, for each day from and including the immediately preceding Business Day plus (B) the Seller Noncomplying Asset Adjustment, if any, for each day from and including the immediately preceding Business Day. The Seller Receivables that gave rise to any Seller Dilution Adjustment and any related Seller Related Assets shall remain the property of the Issuer. From and after the day on which any Seller Noncomplying Asset Adjustment is made, any collections received by the Issuer that are identified as proceeds of the Seller Receivables that gave rise to such Noncomplying Asset Adjustment and any Seller Related Property with respect to such Receivable shall be promptly returned to the Seller. The Issuer hereby directs the Seller to deposit all such Seller Adjustments directly into the Collection Account.”

 

14


(d) The Seller shall pay to the Issuer in cash, on the date of receipt by the Seller, any payment received by the Seller in respect of “Originator Adjustments” under Section 4.3 of the Purchase Agreement. The Seller shall direct the Originator to deposit all payments in respect of such Originator Adjustments directly to the Collection Account.”

 

  8.11. Section 6.1 of the Receivables Purchase Agreement is hereby amended to add at, the conclusion of the introductory paragraph thereof, the phrase “with respect to the KF Purchased Assets being transferred on such Closing Date or date of Purchase, as applicable”.

 

  8.12. Section 6.1(g) of the Receivables Purchase Agreement is hereby amended: (i) to delete the phrase “obtained by the Seller or Issuer” and substitute therefor the phrase “obtained by the Seller” and (ii) to delete the reference to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)”.

 

  8.13. Section 6.1(l) of the Receivables Purchase Agreement is hereby amended to delete the phrase “identified to the Issuer and its assignees by the Seller in the related Monthly Originator Report” and to substitute therefor the phrase “identified to the Issuer or the Servicer by the Seller”.

 

  8.14. Section 7.1(c) of the Receivables Purchase Agreement is hereby amended: (i) to delete the word “Originator” and substitute therefor the word “Seller”, (ii) to delete the word “Originator’s” and substitute therefor the word “Seller’s”, and (iii) to delete therefrom the phrase “and will include without limitation all payments received with respect to the CMGFSC Purchased Assets.”

 

  8.15. Section 7.1(e)(iv) of the Receivables Purchase Agreement is hereby amended to insert, at the conclusion of the first sentence thereof, the phrase “except as permitted by the Transaction Documents”.

 

  8.16. Section 7.1(g) of the Receivables Purchase Agreement is hereby amended to delete the phrase “to the extent that any such funds” and substitute therefor the phrase “to the extent that the Seller has knowledge that any such funds”.

 

  8.17. Section 7.1(h) of the Receivables Purchase Agreement is hereby amended to delete the text thereof in its entirety and to substitute the following therefor: “The Seller will (i) establish and maintain necessary procedures for determining whether each Receivable included in the KF Purchased Assets, as of the date such Receivable is sold to the Issuer hereunder, qualifies as an Eligible Receivable, and for identifying all Receivables sold to the Issuer by the Seller hereunder that are not Eligible Receivables on the date sold and (ii) will provide to the Servicer in a timely manner information that shows whether, and to what extent, the Receivables sold to the Issuer hereunder were not Eligible Receivables on the date sold.”

 

  8.18. Section 7.1(j) of the Receivables Purchase Agreement is hereby amended to amend and restate the proviso in the last sentence thereof in its entirety so that it reads as follows: “ provided , however , that all such reviews will occur no more frequently than twice per year (with only the first such review in any year being at the Seller’s expense)”.

 

15


  8.19. Section 7.1(n) of the Receivables Purchase Agreement is hereby amended to delete the parenthetical phrase “(or will cause the Servicer to)”.

 

  8.20. Section 7.1(p) of the Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “opinion of Orrick, Herrington & Sutcliffe LLP of even date herewith relating to security interest matters with respect to the Purchase of the KF Purchased Assets hereunder” and to substitute therefor the phrase “opinions of Orrick Herrington & Sutcliffe LLP dated as of April 10, 2007 relating to true sale matters with respect with respect to the sales under the Purchase Agreement and substantive consolidation matters with respect to Cartus and the Seller”.

 

  8.21. Section 7.1(q) of the Receivables Purchase Agreement is hereby amended to delete the text thereof in its entirety and to substitute therefor: “The Seller will, on the reasonable request of the Issuer and its assignees, provide to the Issuer and its assignees such licenses, sublicenses and/or assignments of contract as the Seller is entitled to obtain under Section 7.1(l) of the CMGFSC Purchase Agreement”.

 

  8.22. Section 7.2 (a) of the Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “(as defined in the Indenture)”.

 

  8.23. Section 7.2(e) of the Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “, including timely delivery of all such information required under any Enhancement Agreement”.

 

  8.24. Section 7.3(a) of the Receivables Purchase Agreement is hereby amended to add, immediately after the phrase “suffer to exist any Lien” the phrase “arising through or under it”.

 

  8.25. Section 7.3(d) of the Receivables Purchase Agreement is hereby amended to delete the reference to “Section 2.01(d)(i)” of the Servicing Agreement and to substitute therefor “Section 3.06(e)”.

 

  8.26. Section 7.3(k) of the Receivables Purchase Agreement is hereby amended to add, at the conclusion thereof, the parenthetical phrase “(other than the Issuer)”.

 

  8.27. Section 7.4(a) of the Receivables Purchase Agreement is hereby amended to delete from clause (ix) thereof the phrase “opinion of Orrick, Herrington & Sutcliffe LLP of even date herewith relating to security interest matters with respect to the Purchase of the KF Assets hereunder” and to substitute therefor the phrase “opinion of Orrick Herrington & Sutcliffe LLP dated as of April 10, 2007 relating to substantive consolidation matters with respect to Cartus and the Seller”.

 

16


  8.28. Section 7.4(b) of the Receivables Purchase Agreement is amended to delete the text thereof in its entirety and to substitute therefor the following: “The Issuer assumes no obligations of the Seller under the Pool Relocation Management Agreements with respect to any Home Purchase Contracts, including without limitation any obligations of the Seller to make Equity Payments, Mortgage Payoffs and Mortgage Payments.”

 

  8.29. Section 8.3(b) of the Receivables Purchase Agreement is hereby amended: (i) to delete the parenthetical phrase “(or cause the Servicer to legend)” and (ii) to insert the phrase “in its possession” immediately after the words “CMGFSC Home Purchase Contracts”.

 

  8.30. Section 9.1(b) of the Receivables Purchase Agreement is hereby amended: (i) to delete therefrom the phrase “any Monthly Originator Report or other” and to substitute therefor the word “or any” and (ii) delete therefrom the term “any CMS Person” and to substitute therefor the term “the Seller”.

 

  8.31. Section 9.1(c) of the Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “(A) in the case of a failure to deliver any Monthly Originator Report pursuant to Section 3.1(a), ten calendar days ( provided , however , that such ten-day period may be extended for an additional ten days if such failure to deliver a Monthly Originator Report is due to computer failure) or (B) in the case of any other failure” and to substitute therefor the phrase “in the case of any failure”.

 

  8.32. Section 9.1 of the Receivables Purchase Agreement is hereby further amended to delete from the final sentence thereof the phrase “If a KF Purchase Termination Event occurs” and substitute therefor the phrase “If a KF Purchase Termination Event occurs of which the Seller has knowledge”.

 

  8.33. Section 9.2(a) of the Receivables Purchase Agreement is hereby amended to delete therefrom the first sentence thereof and to substitute the following therefor: “On the KF Termination Date, the Seller shall cease transferring KF Purchased Assets to the Issuer, provided that such cessation shall not limit any right, title and interest the Issuer may have in and to any CRC Designated Receivables arising from any Servicer Advances made thereafter, including any Related Property relating thereto and proceeds thereof.”

 

  8.34. Section 9.2(b) of the Receivables Purchase Agreement is hereby amended to delete therefrom the text in its entirety and to substitute the following therefor: “Upon the occurrence of a KF Purchase Termination Event, the Issuer and its assignees shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided to a buyer of accounts, chattel paper, promissory notes or payment intangibles under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Subject to the limitations on recourse set forth herein but otherwise without limiting the foregoing, the occurrence of a KF Purchase Termination Event shall not deny to the Issuer or its assignees any remedy in addition to termination of its obligation to make Purchases hereunder to which the Issuer or its assignees may be otherwise appropriately entitled, whether by statute or applicable law, at law or in equity.”

 

17


  8.35. Section 10.1(a) of the Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “any Monthly Originator Report or any other” and substitute therefor the phrase “or any”.

 

  8.36. Section 10.1(c) of the Purchase Agreement is hereby amended to add, immediately after the phrase “any Lien” the phrase “arising through or under it”.

 

  8.37. Section 10.1(g) of the Receivables Purchase Agreement is hereby amended to delete the phrase “any Concession” and substitute therefor the phrase “any Concession made by the Seller or for which the Seller is entitled to be indemnified under the CMGFSC Purchase Agreement”.

 

  8.38. Section 10.1(h) of the Receivables Purchase Agreement is hereby amended to add, after the word “service”, the phrase “(other than services provided by the Issuer or its assignees)”.

 

  8.39. Section 10.1 of the Receivables Purchase Agreement is hereby amended to add at the conclusion thereof the following paragraphs:

“Notwithstanding anything to the contrary in this Agreement, any representations, warranties and covenants made by the Seller in this Agreement or the other Transaction Documents that are qualified by or limited to events or circumstances that have, or are reasonably likely to have, given rise to a Material Adverse Effect shall (solely for purposes of the indemnification obligations set forth in this Section 10.1) be deemed not to be so qualified or limited.

The Issuer acknowledges that, in the event that the Seller does not have available funds to pay any indemnified amounts owing under this Article X, the excess of the amounts due under this Article X over such funds shall not constitute a “claim” under Section 101(5) of the federal Bankruptcy Code against the Seller until such time as the Seller has such funds; provided , that nothing in this paragraph shall limit the obligations of the Seller or the rights of the Issuer as assignee of the Seller to enforce any claims that may be owing to the Seller under the CMGFS Purchase Agreement.”

 

  8.40. Section 10.2 of the Receivables Purchase Agreement is hereby amended to delete therefrom, each time it appears, the phrase “and any interest of the Seller in the other property described in clause (vi) of Section 2.1(a)”.

 

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  8.41. Section 11.6(a) of the Receivables Purchase Agreement is hereby amended: (i) to delete the phrase “the preservation of any rights under,”, (ii) to delete the word “breach” and substitute therefor the phrase “breach by the Seller”, (iii) to delete the phrase “or in advising such Persons as to their respective rights and remedies under this Agreement”; and (iv) to add at the conclusion thereof, the following new subsection (c):

“The Issuer acknowledges that, in the event that the Seller does not have available funds to pay any costs and expenses owing under this Section 11.6, the excess of the amounts due under this Section 11.6 over such funds shall not constitute a “claim” under Section 101(5) of the federal Bankruptcy Code against the Seller until such time as the Seller has such funds; provided , that nothing in this paragraph shall limit the obligations of the Seller or the rights of the rights of the Issuer as assignee of the Seller to enforce any claims that may be owing to the Seller under the CMGFS Purchase Agreement.”

 

  8.42. Schedule 6.1(n) of the Receivables Purchase Agreement is hereby amended to delete the phrase ‘List of Offices Where the Seller Keeps CRC Records” and substitute therefor the phrase “List of Offices Where the Servicer Keeps CRC Records”.

 

  8.43. Schedule 11.2 to the Receivables Purchase Agreement is hereby amended to reflect the Suite number of the Buyer in its notice address as “Suite 4C68” and to reflect the telecopy number as “203-205-1335.”

 

  8.44. Exhibit 2.1 of the Receivables Purchase Agreement is hereby amended to add “Suite 4C68” after “40 Apple Ridge Road” in the address of the Issuer.

 

9. Amendments to the Fee Receivables Purchase Agreement . Effective as of the date hereof, in addition to the modifications described above, the Fee Receivables Purchase Agreement is hereby amended as follows:

 

  9.1. Subsection (ii) of the definition of “Eligible Contract” set forth in Appendix A to the Fee Receivables Purchase Agreement is hereby amended to read in its entirety as follows:

(ii) (A) the rights to payment under which are assignable without the consent of the Employer party thereto or any other Person (other than the Originator), other than any such consent that has been obtained and remains in effect, or (B) if subject to any restriction on assignment of rights to payment, such Contract is in effect on April 10, 2007 and such restriction is, under Section 9-406 or Section 9-408 of the UCC, as applicable, not effective to prevent the creation of a security interest in or sale of the Receivables arising under such Contract.

 

  9.2. The definition of “Eligible Receivable” set forth in Appendix A to the Fee Receivables Purchase Agreement is hereby amended to delete from clause (i) thereof the phrase “if such Receivable constitutes a right to payment for services rendered not evidenced by an instrument or chattel paper” and to substitute therefor the phrase “if such restriction is not effective under Section 9-406 or Section 9-408 of the UCC, as applicable”.

 

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  9.3. Section 2.1 of the Fee Receivables Purchase Agreement is hereby amended: (a) to delete the phrase “agrees to buy” and substitute therefor the phrase “hereby purchases” and (b) to delete therefrom the phrase “agrees to sell” and substitute therefor “hereby sells, transfers, sets over and conveys to the Issuer, without recourse except as provided herein”.

 

  9.4. Section 2.3 of the Fee Receivables Purchase Agreement is hereby amended to delete each reference therein to the phrase “CMSC Fee Receivables” and to substitute therefor the phrase “Cartus Fee Purchased Assets”.

 

  9.5. Section 2.4 of the Fee Receivables Purchase Agreement is hereby amended to add, after the phrase “any other Transaction Document” the phrase “to which it is a party”.

 

  9.6. Article II of the Fee Receivables Purchase Agreement is hereby amended to add, at the conclusion thereof, the following Section 2.8:

Section 2.8 Quitclaim . This Agreement provides that the Cartus Fee Purchased Assets arising on or before April 10, 2007 (the “ Amendment Date ”) have been transferred by the Originator to the Issuer. To further evidence the intent of the parties hereto that all right, title and interest in and to the Cartus Fee Purchased Assets is being sold and assigned to the Issuer pursuant to this Agreement as amended by that certain Fifth Omnibus Amendment dated as of the Amendment Date, the Originator hereby irrevocably quitclaims, sells, transfers, assigns, and otherwise conveys to the Issuer all right, title and interest that it may have or be deemed to have in or to any of the Cartus Fee Purchased Assets arising on or before the Amendment Date.

 

  9.7. Section 3.1 of the Fee Receivables Purchase Agreement is hereby amended to delete the second sentence thereof in its entirety and to substitute therefor the following: “On the twelfth calendar day of each month (or if such twelfth day is not a Business Day, the preceding Business Day) from the Closing Date to the Termination Date, the Originator shall deliver to the Servicer, for inclusion in the Monthly Originator Report to be prepared by the Servicer, information setting forth the amount of such Purchases and Fee Purchase Prices for the previous calendar month.”

 

  9.8. Article IV of the Fee Receivables Purchase Agreement is hereby amended to add at the conclusions thereof the following Section 4.3.

“Section 4.3 Originator Adjustments .

(a) With respect to any Originator Fee Receivable purchased by the Issuer from the Originator, if on any day the Issuer (or its assigns), the Servicer or the Originator determines that (i) such Originator Fee Receivable (A) was not identified by the Originator as other than an Eligible Receivable on the Business Day such Receivable was sold hereunder or (B) was otherwise treated by the Originator as or represented by the Originator to be an Eligible Receivable in any Monthly Originator Report or Weekly Activity

 

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Report, as applicable, but was not in fact an Eligible Receivable on such date or (ii) any of the representations or warranties set forth in Section 6.1(d) or 6.1(k) was not true when made with respect to such Receivable or the related Equity Related Assets (each such Originator Fee Receivable described in clause (i) or clause (ii), a “ Noncomplying Fee Asset ”), then the Originator shall pay the aggregate Unpaid Balance of such Originator Fee Receivables (such payment, a “ Noncomplying Fee Asset Adjustment ”) to the Issuer in accordance with Section 4.3(c).

(b) If on any day the Unpaid Balance of any Originator Fee Receivable is reduced as a result of any Concession made by the Originator, then the Originator shall pay to the Issuer the amount of such reduction (such payment, an “ Originator Fee Dilution Adjustment ”) to the Issuer in accordance with Section 4.3(c).

(c) On each Business Day, the Originator shall pay to the Issuer, in cash in accordance with Section 4.2, an amount (an “ Originator Fee Adjustment ”) equal to the sum of (A) the aggregate Originator Fee Dilution Adjustment, if any, for each day from and including the immediately preceding Business Day plus (B) the Noncomplying Fee Asset Adjustment, if any, for each day from and including the immediately preceding Business Day. The Originator Fee Receivables that gave rise to any Originator Fee Dilution Adjustment and any related Originator Fee Related Assets shall remain the property of the Issuer. From and after the day on which any Noncomplying Fee Asset Adjustment is made, any collections received by the Issuer that are identified as proceeds of the Originator Fee Receivables that gave rise to such Noncomplying Fee Asset Adjustment and any Originator Fee Related Property with respect to such Receivable shall be promptly returned to the Originator.”

 

  9.9. Section 6.1 of the Fee Receivables Purchase Agreement is hereby amended to add, at the conclusion of the introductory paragraph thereof, the phrase “with respect to the Cartus Fee Purchased Assets being transferred on such Closing Date or date of Purchase, as applicable”

 

  9.10. Section 6.1(g) of the Fee Receivables Purchase Agreement to delete the phrase “obtained by the Originator or Issuer” and substitute therefor the phrase “obtained by the Originator”.

 

  9.11. Section 6.1(l) of the Fee Receivables Purchase Agreement is hereby amended to delete the phrase “identified to the Issuer and its assignees by the Originator in the related Monthly Originator Report” and to substitute therefor the phrase “identified to the Issuer or the Servicer by the Originator”.

 

  9.12. Section 6.1(u) of the Fee Receivables Purchase Agreement is hereby amended to delete the last sentence thereof its entirety.

 

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  9.13. Section 7.1(c) of the Fee Receivables Purchase Agreement is hereby amended to delete the text thereof in its entirety and to substitute therefor the following: “The Originator will maintain at all times accurate and complete books, records and accounts relating to the CMSC Purchased Assets and all CMSC Collections received by it, in which timely entries will be made and will, upon the reasonable request of the Buyer or its assignees, deliver copies of all CMSC Records maintained pursuant to this Section 7.1(c) to the Buyer or its designee.”

 

  9.14. Section 7.1(g) of the Fee Receivables Purchase Agreement is hereby amended to delete the phrase “to the extent that any such funds” and substitute therefor the phrase “to the extent that the Originator has knowledge that any such funds”.

 

  9.15. Section 7.1(h) of the Fee Receivables Purchase Agreement is hereby amended to delete the text thereof in its entirety and to substitute the following therefor: “The Originator will (i) establish and maintain necessary procedures for determining whether each CMSC Fee Receivable, as of the date it is sold hereunder, qualifies as an Eligible Receivable, and for identifying all CMSC Fee Receivables sold to the Issuer that are not Eligible Receivables on the date sold and (ii) will provide to the Servicer in a timely manner information that shows whether, and to what extent, the CMSC Fee Receivables sold to the Issuer hereunder were not Eligible Receivables on the date sold.”

 

  9.16. Section 7.1(k) of the Fee Receivables Purchase Agreement is hereby amended to amend and restate the proviso in the last sentence thereof in its entirety so that it reads as follows: “ provided , however , that all such reviews will occur no more frequently than twice per year (with only the first such review in any year being at the Originator’s expense) unless Cartus is the Servicer and a Servicer Default has occurred and is continuing.

 

  9.17. Section 7.1(q) of the Fee Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “opinion of Orrick, Herrington & Sutcliffe LLP of even date herewith relating to security interest matters with respect to the Purchase of the CMSC Fee Purchased Assets hereunder” and to substitute therefor the phrase “opinions of Orrick Herrington & Sutcliffe LLP dated as of April 10, 2007 relating to true sale matters with respect with respect to the Purchase of the CMSC Fee Purchased Assets hereunder and substantive consolidation matters with respect to the Originator and the Issuer”.

 

  9.18. Section 7.2(b) of the Fee Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “(as defined in the Indenture)”.

 

  9.19. Section 7.2(f) of the Fee Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “, including timely delivery of all such information required under any Enhancement Agreement”.

 

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  9.20. Section 7.3(a) of the Fee Receivables Purchase Agreement is hereby amended to add, immediately after the phrase “suffer to exist any Lien” the phrase “arising through or under it”.

 

  9.21. Section 7.3(c)(ii) of the Fee Receivables Purchase Agreement is hereby amended to read in its entirety as follows:

“(ii) convey, transfer or sell more than 25% of its properties and assets to any Person, provided that this provision shall not apply to or restrict the Originator’s ability to pledge its ownership interest in the Buyer to secure Indebtedness incurred or guaranteed in accordance with Section 7.3(j).”

 

  9.22. Section 7.3 of the Fee Receivables Purchase Agreement is hereby further amended to add, at the conclusion thereof, the following new subsection (j):

“(j) Indebtedness for Borrowed Money . Create, incur, guarantee or permit to exist any Indebtedness for Borrowed Money, except for (A) any such Indebtedness owed on an intercompany basis to the Performance Guarantor or any Affiliate thereof and (B) any such Indebtedness the terms of which include acknowledgment provisions in substantially the form of Exhibit 7.3(j) hereto.”

 

  9.23. Section 7.4(a) of the Fee Receivables Purchase Agreement is hereby amended to delete from clause (ix) thereof the phrase “opinion of Orrick, Herrington & Sutcliffe LLP of even date herewith relating to security interest matters with respect to the Purchase of the CMSC Purchased Assets hereunder” and to substitute therefor the phrase “opinion of Orrick Herrington & Sutcliffe LLP dated as of April 10, 2007 relating to true sale matters with respect with respect to the Purchase of the CMSC Fee Purchased Assets hereunder and substantive consolidation matters with respect to the Originator and the Buyer”.

 

  9.24. Section 9.1(b) of the Fee Receivables Purchase Agreement is hereby amended to “delete the word “Seller” and substitute therefor the word “Originator” and to delete the phrase “any Monthly Originator Report”.

 

  9.25. Section 9.1(c) of the Fee Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “ (A) in the case of a failure to deliver any Monthly Originator Report pursuant to Section 3.1(a), ten calendar days ( provided , however , that such ten-day period may be extended for an additional ten days if such failure to deliver a Monthly Originator Report is due to computer failure) or (B) in the case of any other failure” and to substitute therefor the phrase “in the case of any failure”.

 

  9.26. Section 9.1 of the Fee Receivables Purchase Agreement is hereby further amended to delete from the final sentence thereof the phrase “If a KF Purchase Termination Event occurs” and substitute therefor the phrase “If a KF Purchase Termination Event occurs of which the Originator has knowledge”.

 

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  9.27. Section 9.2(b) of the Fee Receivables Purchase Agreement is hereby amended to delete therefrom the text in its entirety and to substitute the following therefor: “Upon the occurrence of a KF Purchase Termination Event, the Issuer and its assignees shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided to a buyer of accounts, chattel paper, promissory notes or payment intangibles under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Subject to the limitations on recourse set forth herein but otherwise without limiting the foregoing, the occurrence of a KF Purchase Termination Event shall not deny to the Issuer or its assignees any remedy in addition to termination of its obligation to make Purchases hereunder to which the Buyer or its assignees may be otherwise appropriately entitled, whether by statute or applicable law, at law or in equity.”

 

  9.28. Section 10.1(a) of the Fee Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “any Fee Monthly Originator Report or any other” and substitute therefor the phrase “or any”.

 

  9.29. Section 10.1(c) of the Fee Receivables Purchase Agreement is hereby amended to add, immediately after the phrase “any Lien” the phrase “arising through or under it”.

 

  9.30. Section 10.1(g) of the Fee Receivables Purchase Agreement is hereby amended to delete the phrase “any Concession” and substitute therefor the phrase “any Concession made by the Originator or any Affiliate thereof (other than the Buyer or the Issuer)”.

 

  9.31. Section 10.1(h) of the Fee Receivables Purchase Agreement is hereby amended to add, after the word “service”, the phrase “(other than any service provided by CRC or the Issuer or their assignees)”.

 

  9.32. Section 10.1 of the Fee Receivables Purchase Agreement is hereby further amended to delete from the second to last paragraph thereof, the phrase “the Issuer or the Issuer” and to substitute therefor the phrase “CRC or the Issuer”.

 

  9.33. Section 10.1 of the Fee Receivables Purchase Agreement is hereby further amended to add at the conclusion thereof the following paragraph:

“Notwithstanding anything to the contrary in this Agreement, any representations, warranties and covenants made by the Seller in this Agreement or the other Transaction Documents that are qualified by or limited to events or circumstances that have, or are reasonably likely to have, given rise to a Material Adverse Effect shall (solely for purposes of the indemnification obligations set forth in this Section 10.1) be deemed not to be so qualified or limited.”

 

  9.34. Section 10.2 of the Fee Receivables Purchase Agreement is hereby amended to delete therefrom the phrase “and any interest of the Originator in the other property described in clause (v) of Section 2.1(a)”, in both places where such phrase appears.

 

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  9.35. Schedule 11.2 of the Fee Receivables Purchase Agreement is hereby amended to reflect the Suite number of the Issuer in its notice address as “Suite 4C68” and its telecopy number as “203-205-1335.”

 

  9.36. Section 11.6(a) of the Fee Receivables Purchase Agreement is hereby amended: (i) to delete the phrase “the preservation of any rights under,”, (ii) to delete the word “breach” and substitute therefor the phrase “breach by the Originator”, and (iii) to delete the phrase “or in advising such Persons as to their respective rights and remedies under this Agreement”.

 

  9.37. The exhibits to the Fee Receivables Purchase Agreement are hereby amended to add, as Exhibit 7.3(j) thereto, the form of Exhibit A hereto.

 

10. Amendments to the Servicing Agreement . Effective as of the date hereof, in addition to the modifications described above, the Servicing Agreement is hereby amended as follows:

 

  10.1. Section 3.02(c) of the Servicing Agreement is hereby amended to insert, at the end of clause (v) therein, “in each case that such actions are commercially feasible”.

 

  10.2. Section 3.02(c) of the Servicing Agreement is hereby further amended to delete clause (vi) thereof in its entirety and to substitute the following therefor:

“(vi) to determine on or prior to each Reporting Date whether each Receivable included in the Pledged Assets during the previous month was an Eligible Receivable when sold by Cartus and to identify all Receivables sold to the Issuer during the previous month that were not Eligible Receivables as of the date sold by Cartus, and otherwise, based on the information provided to it in accordance with the Transaction Documents, to calculate the Net Receivables Balance and make the other calculations required to be included in the Receivables Activity Report.”

 

  10.3. Section 3.02(d) of the Servicing Agreement is hereby amended to insert, immediately after the phrase “without reimbursement”, the words “except as otherwise provided herein”.

 

  10.4. Section 3.03 of the Servicing Agreement (re Servicing Compensation) is hereby amended: (i) to delete therefrom the phrase “ multiplied by the Net Receivables Balance as of the first day of such Monthly Period” and to substitute therefor “ multiplied by the Aggregate Receivables Balance as of the last day of such Monthly Period” and (ii) to delete the phrase “CMSC is replaced as Servicer” and substitute therefor the phrase “any such Successor Servicer becomes Servicer”.

 

  10.5. Section 3.04 of the Servicing Agreement is hereby amended to add at the conclusion thereof the following subsection (l):

“(l) Accuracy of Information . All written information furnished by the Servicer to CRC, the Issuer or the Trustee pursuant to or in connection with any Transaction Document or any transaction contemplated herein or therein with respect to the Servicer is true and correct in all material respects on such date.”

 

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  10.6. Section 3.05 of the Servicing Agreement is hereby amended to delete therefrom the text of subsection (e) (currently marked “Reserved”) in its entirety and to substitute the following therefor:

(e) Separate Corporate Existence of CRC and the Issuer . The Servicer hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance upon each of the Issuer’s and CRC’s identity as a legal entity separate from the Servicer. As long as it is the Servicer hereunder, the Servicer will take such actions as shall be required in order that:

(i) Neither CRC’s nor the Issuer’s operating expenses will be paid by the Servicer, except that certain organizational expenses of CRC and the Issuer and expenses relating to creation and initial implementation of the Transaction Documents have been or will be paid by Cartus;

(ii) Any financial statements of the Servicer that are consolidated to include CRC and the Issuer will contain appropriate footnotes clearly stating that (A) all of CRC’s assets are owned by CRC and all of the Issuer’s assets are owned by the Issuer and (B) each of CRC and the Issuer is a separate corporate entity with its own separate creditors that will be entitled to be satisfied out its respective assets prior to any value in the Issuer or CRC becoming available to CRC’s equity holders;

(iii) Any transaction between CRC or the Issuer on the one hand and the Servicer on the other will be fair and equitable, will be the type of transaction that would be entered into by a prudent Person in the position of CRC and/or the Issuer, as applicable, with the Servicer, and will be on terms that are at least as favorable as may be obtained from a Person that is not the Servicer or an Affiliate thereof; and

(iv) The Servicer will not be, or will not hold itself out to be, responsible for the debts of CRC or the Issuer. “

 

  10.7. Section 3.05(g) of the Servicing Agreement is hereby amended to delete the phrase “to the extent that any such funds nevertheless are deposited into any of such Lockbox Accounts will promptly identify the same” and to substitute therefor the phrase “will promptly identify any such funds which, to its knowledge, are nevertheless deposited into any of such Lockbox Accounts”.

 

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  10.8. Section 3.06(e) of the Servicing Agreement is hereby amended to delete the text thereof in its entirety and to substitute therefor: “Record any Home Deeds in its own name or otherwise record any Home Deeds except that the Servicer may record Home Deeds and/or Home Purchase Contracts in the name of CRC or, if so requested by the Issuer, in the name of the Issuer or its transferees and in such capacities as the Issuer may require, (w) upon request by the relevant Obligor to record such Home Deeds and/or Home Purchase Contracts, (x) upon or after the lapse of one year from the possession date under the related Home Purchase Contract, (y) upon the bankruptcy or insolvency of the relevant Obligor or (z) otherwise as required or as deemed advisable in the judgment of the Servicer to be in the best interests of the Issuer and its assignees.”

 

  10.9. Section 3.07(b) of the Servicing Agreement is hereby amended to delete therefrom the phrase “at the expense of the Servicer” each time it appears therein and to substitute therefor the phrase “at the expense of the Issuer”.

 

  10.10. Section 3.07(c) of the Servicing Agreement is hereby further amended to add the words “to the Servicer” immediately after the words “identified” in the last sentence thereof.

 

  10.11. Section 3.07 of the Servicing Agreement is hereby further amended to add at the conclusion thereof the following new subsection (d):

(d) If as of the end of any fiscal quarter a Weekly Reporting Event under the Indenture has occurred, the Servicer shall, commencing on the applicable “ Weekly Reporting Commencement Date ” specified below and continuing until no such Weekly Reporting Event exists for two consecutive fiscal quarters, prepare and deliver to Cartus, CRC, the Issuer, the Trustee, and the Purchaser, on or before the fifth Business Day of each calendar week, a report with respect to the last Business Day of the preceding week, substantially in the form attached hereto as Exhibit 3.07(d) or in such other form as is reasonably acceptable to the Purchaser (each such report, a “ Weekly Activity Report ”). Such Weekly Activity Report shall include (i) a certification that, to the best of the Servicer’s knowledge, no Unmatured Servicer Default or Servicer Default has occurred and is continuing or, if any such event has occurred and is continuing, a description of such event and the action, if any, that the Servicer proposes to take with respect thereto and (ii) a calculation of the Net Receivables Balance based on the most recently available interim reporting derived from financial system-generated data in the Servicer’s financial records. As used herein, the “ Weekly Reporting Commencement Date ” shall mean: (1) with respect to any Weekly Reporting Event which occurs during calendar year 2007 or if the first such Weekly Reporting Event occurs as of the end of a fiscal year, the week immediately following the 135 th calendar day after the end of the relevant fiscal quarter; (2) with respect to any other Weekly Reporting Event occurring as of the end of a fiscal year or if the first such Weekly Reporting Event occurs as of the end of any other fiscal quarter after calendar year 2007, the week immediately following the 90th calendar day after the end of the relevant fiscal quarter and (3) otherwise, the week immediately following the 45 th calendar day after the end of the relevant fiscal quarter.”

 

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  10.12. Section 3.08 of the Servicing Agreement is hereby amended to delete the reference herein to “April 30,” and substitute therefor “May 31”.

 

  10.13. Section 3.09 of the Servicing Agreement is hereby deleted in its entirety.

 

  10.14. Section 3.10(a) of the Servicing Agreement is hereby amended to delete the text thereof (currently marked “Reserved”) in its entirety and to substitute the following therefor:

“(a) If on any day the Unpaid Balance of any Pool Receivable or Fee Receivable is reduced by the Servicer as a result of any Concessions made by the Servicer and that are unrelated to the ability of the related Obligor to pay such Pool Receivable or Fee Receivable (each such reduction, a “ Servicer Dilution Adjustment ”), then the Servicer shall deposit the amount of such Servicer Dilution Adjustment in cash in the Collection Account and shall report such amount on the next Monthly Originator Report or Weekly Activity Report, as applicable. The Servicer shall deposit in cash in the Collection Account the amount of all Originator Adjustments received under Section 4.3 of the Purchase Agreement, all Seller Adjustments received under Section 4.3 of the Receivables Purchase Agreement and all Originator Fee Adjustments received under Section 4.3 of the Fee Receivables Purchase Agreement, and shall report such amounts on the next Monthly Originator Report or Weekly Activity Report, as applicable.”

 

  10.15. Section 3.10(b) of the Servicing Agreement is hereby amended to add, at the conclusion thereof, the following: “Notwithstanding any other provision of this Agreement, any other Transaction Documents or the Credit and Collection Policy, the Servicer shall not be required to make any adjustment that would require it to make a Servicer Dilution Adjustment, and the Servicer shall not be required to make a Servicer Dilution Adjustment with respect to any extension described in the immediately preceding sentence.”

 

  10.16. Section 3.12(b) of the Servicing Agreement is hereby amended to delete therefrom the parenthetical phrase “( provided that Home Sale Proceeds will be applied only to reimburse Servicer Advances consistent with CMSC’s practices as of the Closing Date)”.

 

  10.17. Section 3.14(a) of the Servicing Agreement is hereby amended to delete therefrom the phrase “first, to amounts owed in respect of Pledged Assets and then to other receivables” and to substitute therefor “in the order that such receivables were originated, with the oldest receivable being paid first.”

 

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  10.18. Section 4.03 of the Servicing Agreement is hereby amended to delete therefrom the reference to ‘Section 8.07 of the Indenture” and to substitute therefor “Sections 8.04 and/or 9.04 of the Indenture, as applicable.”

 

  10.19. Section 7.04 of the Servicing Agreement is hereby amended: (i) to delete from clause (i) thereof the phrase “any Monthly Originator Report” and substitute therefor “any Monthly Originator Report or Weekly Activity Report, as applicable”; (ii) to insert, at the end of the parenthetical phrase in clause (ii), the words “or that are taken at the direction of the Trustee, the Administrative Agent or the Purchaser”, and (iii) to add, at the end of the parenthetical phrase “(but not including any write-off of any Receivable”) the words “or any adjustment required by law”.

 

  10.20. Section 11.03 of the Servicing Agreement is hereby amended to reflect the phone number, Suite number and telecopy number of the Issuer as set forth below:

Telephone: (203) 205-3054

Suite Number: 4C68

Telecopier: (203) 205-1335

 

  10.21. Section 11.06 of the Servicing Agreement is hereby amended to substitute, for the word “the Issuer” in each place it appears therein, the phrase “the Issuer or CRC”.

 

  10.22. Exhibit A is hereby amended to delete therefrom the reference to “Section 3.09” and substitute therefor “Section 3.08”.

 

  10.23. The exhibits to the Servicing Agreement are hereby amended to add, as Exhibit 3.07(d) thereto, the form of Exhibit E hereto.

 

11. Amendments to the Indenture . Effective as of the date hereof, in addition to the modifications described above, the Indenture is hereby amended as follows:

 

  11.1. The definitions of “Adjusted Days in Inventory”, “Administrative Agent”, “Aggregate Adjustment Amount”, “Amortization Period”, “Applicable Stress Factor”, “Base Rate”, “Base Rate Tranche”, “Breakage Amounts”, “Carrying Cost Reserve”, “Change of Control”, “Commercial Paper Notes”, “Concession”, “Concession Ratio” “Eurodollar Tranche”, “Final Stated Maturity Date”, “Funding Termination Date”, “Interest Payment Date”, “Liquidity Party”, “Loss Ratio”, “Loss-to-Acquisition Value Reserve”, “Monthly Program Fees”, “Overconcentration Amount”, “Purchaser”, “Required Enhancement Amount”, “Security”, “Servicing Fee Reserve”, “Weighted Average Inventory Hold Period” and “Yield Reserve” are hereby amended and restated in their entirety to read as follows:

Adjusted Days in Inventory ” shall mean, for any Monthly Period, the product of 2.25 times the Weighted Average Inventory Hold Period for such Monthly Period.

 

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Administrative Agent ” shall mean Calyon New York Branch, in its capacity as Administrative Agent under the Note Purchase Agreement, or any successor to Calyon in such capacity.

Aggregate Adjustment Amount ” shall mean, as of any date of determination, the sum of (a) the Overconcentration Amount, (b) the Geographic Overconcentration Amount and (c) the aggregate Unpaid Balance of all Unsold Home Receivables relating to Homes that have been owned by CRC for more than 365 days.

Amortization Period ” shall mean the period commencing at the earlier to occur of (a) the close of business on the Commitment Termination Date and (b) the close of business on the Business Day immediately preceding the day on which an Amortization Event has occurred, and ending on the date on which (x) the Outstanding Amount shall have been paid in full, together with all accrued interest thereon, and (y) all amounts owed to the Administrative Agent, the Purchaser and each Liquidity Party hereunder and under the Note Purchase Agreement shall have been paid and satisfied in full.

Applicable Stress Factor ” shall mean, as of any date of determination:

(i) as used in the calculation of any reserve other than the Carrying Cost Reserve, 2.25, and

(ii) as used in the calculation of the Carrying Cost Reserve, an amount calculated as follows: (1) 1.50 if the current month Weighted Average Inventory Hold Period is less than 120 days; (2) 1.75 if the current month Weighted Average Inventory Hold Period is greater than or equal to 120 days but not greater than 135 days; and (3) 2.25 if the current month Weighted Average Inventory Hold Period is greater than 135 days.

Base Rate ” shall have the meaning set forth in the Note Purchase Agreement.

Base Rate Tranche ” shall have the meaning set forth in the Note Purchase Agreement.

Breakage Amounts ” shall mean any amounts owed by the Issuer to the Purchaser or any assignee under Section 2.09 of the Note Purchase Agreement.

 

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Carrying Cost Reserve ” shall mean, as of any date of determination, the percentage equivalent of the product of:

(i) the greater of:

(a) the Applicable Stress Factor and (b), a fraction, calculated as of the last day of the most recently ended calendar month, the numerator of which is equal to the maximum Weighted Average Inventory Hold Period for appraised value homes over the most recent 12 months, and the denominator of which is equal to the minimum Weighted Average Inventory Hold Period for appraised value homes in Inventory over the most recent 12 months;

multiplied by

(ii) the highest Three Month Average Carrying Cost Ratio for the twelve calendar months ended as of the immediately preceding calendar month, multiplied by

(iii) the Unpaid Balance of the KF Equity Receivables that are Eligible Receivables as of the last day of the current calendar month.

Change of Control ” shall mean any of the following: (v) the Issuer ceases to be a wholly-owned subsidiary of Cartus, (w) any of Cartus, CRC, or the Issuer ceases to be a wholly-owned subsidiary of Realogy, (x) the equity owners of Realogy as of the Amendment Effective Date cease (other than as a result of a “Borrower Qualified IPO” as such term is defined in the Realogy Credit Agreement as in effect on the date hereof) to own, directly or indirectly, at least 51% of the equity interests in, or voting securities of, Realogy, (y) following any initial public offering of Realogy common stock, any other Person not an equity owner of the Performance Guarantor as of the Amendment Effective Date acquires more than 51% of the equity interests in or voting securities of Realogy or (z) any other “Change in Control” as defined in the Realogy Credit Agreement.

Commercial Paper Notes ” shall have the meaning set forth in the Note Purchase Agreement.

Concession ” means, with respect to any Receivable at any time that such Receivable (i) is reduced as a result of any cash discount or any adjustment by an Originator or the Servicer, (ii) is subject to reduction on account of any offsetting account payable of an Originator to an Obligor or is reduced or cancelled as a result of a set-off in respect of any claim by, or defense or credit of, the related Obligor against an Originator or the Servicer (whether such claim, defense or credit arises out of the same or a related or an unrelated transaction) or (iii) is reduced on account of the obligation of an Originator or the Servicer to the related Obligor.

Concession Ratio ” shall mean, for any calendar month and any Fee Receivables, the quotient, expressed as a percentage, of (a) the aggregate amount of reductions to the Unpaid Balances of Fee Receivables due to Concessions occurring during such calendar month divided by (b) the aggregate Unpaid Balance of Fee Receivables that are Eligible Receivables as of the last day of such calendar month.

 

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Eurodollar Tranche ” shall have the meaning set forth in the Note Purchase Agreement.

Final Stated Maturity Date ” shall mean the Distribution Date occurring in the 15 th Monthly Period following the Monthly Period in which the Amortization Period commenced.

Funding Termination Date ” shall mean (i) each date on and after the Commitment Termination Date, (ii) any date on which an Amortization Event, Servicer Default, Event of Default or any event which with the giving of notice of lapse of time or both would become an Amortization Event, Servicer Default or Event of Default; and (iii) any other date on which the conditions to an Increase set forth in the Note Purchase Agreement have not been satisfied.

Interest Payment Date ” shall mean unless a different definition is specified in the Note Purchase Agreement, each Distribution Date.

Liquidity Party ” shall have the meaning assigned to the term “Liquidity Provider” in the Note Purchase Agreement.

Loss Ratio ” shall mean for any calendar month and any Fee Receivables, the quotient, expressed as a percentage, of (a) the aggregate Unpaid Balances of Fee Receivables that have become Defaulted Receivables during such calendar month divided by (b) the aggregate Unpaid Balance of Fee Receivables that were generated during the sixth calendar month preceding such calendar month.

Loss to Acquisition Value Reserve ” shall mean, as of any date of determination, the percentage equivalent of the product of:

(i) Either:

(a) if the Three Month Average Loss-to-Acquisition Value Ratio is 5.00% or less, the highest Three Month Average Loss-to-Acquisition Value Ratio for any calendar month over the twelve calendar months ended as of the immediately preceding calendar month, or

(b), if the Three Month Average Loss-to-Acquisition Value Ratio is greater than 5.00%, the sum of (A) 5.00% plus (B) the product of (1) the Applicable Stress Factor and (2) the amount by which the highest Three Month Average Loss-to-Acquisition Value Ratio for any calendar month over the twelve calendar months ended as of the immediately preceding calendar month exceeds 5.00%.

 

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multiplied by

(ii) the Unpaid Balance of the KF Equity Receivables that are Eligible Receivables as of the last day of the most recently ended calendar month.

Monthly Program Fees ” shall mean for any Distribution Date, the fees payable to the Managing Agents under Section 2.03(c) of the Note Purchase Agreement.

Overconcentration Amount ” shall mean, as of any date of determination, the sum of the amounts, with respect to each Corporate Obligor, of the excess, if any, of (i) the aggregate Unpaid Balance of all Fee Receivables owing by such Obligor as of such date of determination over (ii) the Corporate Concentration Limit with respect to such Corporate Obligor.

Purchaser ” shall have the meaning set forth in the Note Purchase Agreement, provided that any references to “the Purchaser” in the singular shall mean and be references to all of the Purchasers in the event there is more than one Purchaser under the Note Purchase Agreement.

Required Enhancement Amount ” shall mean, as of any date of determination, an amount equal to the greater of (i) 15% of the Net Receivables Balance and (ii) the sum of the Fee Loss Reserve, the Loss-to-Acquisition Value Reserve, the Carrying Cost Reserve, the Yield Reserve, the Servicing Fee Reserve and the Unbilled USPS Loss Reserve; provided , however, that after the declaration or occurrence of an Amortization Event, the Required Enhancement Amount shall equal the Required Enhancement Amount in effect on the date of the declaration or occurrence of such Amortization Event.

Security ” shall mean a Security as defined in Section 2 of the Securities Act of 1933, as amended.

Servicing Fee Reserve ” shall mean, as of any date of determination, the product of (i) the Servicing Fee multiplied by (ii) a fraction, the numerator of which is the Adjusted Days in Inventory as of the end of the current Monthly Period and the denominator of which is 360, multiplied by (iii) the Aggregate Receivable Balance at the end of the most recent Monthly Period.

Weighted Average Inventory Hold Period ” shall mean, for any Monthly Period, the average number of days the Homes have been owned by CRC as of the close of business on the last day of such Monthly Period, weighted by the aggregate purchase prices paid by CRC for such Homes.

 

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Yield Reserve ” shall mean, as of any date of determination during an Interest Period, the quotient, expressed as a percentage, of (a) the product of (i) the sum of (A) 1.5% plus (B) the Eurodollar Rate for the Interest Period in which such date occurs multiplied by (ii) the Outstanding Amount multiplied by (iii) Adjusted Days in Inventory as of the end of the current Monthly Period, divided by (b) 360.

 

  11.2. The definition of “ Required Amount ” in Section 1.01 of the Indenture is hereby amended (x) to delete from clause (i) thereof the phrase “if CMSC is no longer the Servicer,” and (y) to delete from clause (ii) thereof the phrase “for which CMSC was not the Servicer”.

 

  11.3. The definition of “ Transaction Document s” in Section 1.01 of the Indenture is hereby amended to add at the conclusion thereof, “and the Subordinated Note”.

 

  11.4. The definitions of “ Federal Funds Rate ”, “ Finance Rate ”, “ Libor Rate ”, “ Liquidity Purchase ”, “ Liquidity Termination Date ”, “ Monthly Program Fee Rate ”, “ Related Commercial Paper ” and “ Reserve Percentage ” are hereby deleted in their entirety.

 

  11.5. The following new definitions are added to Section 1.01 of the Indenture, in appropriate alphabetical order:

Amendment Effective Date ” shall mean April 10, 2007.

Commitment Termination Date ” shall have the meaning set forth in the Note Purchase Agreement.

Leverage Ratio ” shall mean on any date, the ratio of (a) Total Senior Secured Net Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters of the Borrower most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided , that EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis. Capitalized Terms used in this definition shall have the meaning set forth in the Realogy Credit Agreement as in effect on April 10, 2007, without giving effect to any subsequent amendments.

Managing Agent ” shall have the meaning set forth in the Note Purchase Agreement.

Monthly Servicing Fee ” means, with respect to any Distribution Date, the portion of the Servicing Fee that has accrued with respect to the most recent Monthly Period.

 

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Performance Guarantor ” shall mean Realogy, as “guarantor” under the Realogy Guaranty.

Realogy Credit Agreement ” shall mean that certain Credit Agreement dated as of April 10, 2007 among Domus Intermediate Holdings, Corp. Realogy, the lenders and other financial institutions party hereby and JP Morgan Chase Bank, N.A., as Administrative Agent.

Six Month Weighted Average Inventory Hold Period ” for any calendar month will equal the average of the Weighted Average Inventory Hold Periods for each of the immediately preceding six calendar months.

Subordinated Note ” shall mean indebtedness of the Issuer to Cartus incurred pursuant to that certain Kenosia Subordinated Note dated as of April 10, 2007, the form of which is attached as Exhibit A hereto.

Three Month Weighted Average Inventory Hold Period ” for any calendar month will equal the average of the Weighted Average Inventory Hold Periods for each of the immediately preceding three calendar months.

Weekly Activity Report ” shall have the meaning set forth in Section 3.07(d) of the Servicing Agreement.

Weekly Reporting Event ” shall mean that, commencing with the quarter ending June 30, 2007, the Leverage Ratio as of the end of such fiscal quarter exceeds the applicable ratio set forth below:

 

Fiscal Quarter Ending

   Senior Secured
Leverage Ratio

June 30, 2007

   6.00:1.00

September 30, 2007

   6.00:1.00

December 31, 2007

   6.00:1.00

March 31, 2008

   5.10:1.00

June 30, 2008

   5.10:1.00

September 30, 2008

   5.10:1.00

December 31, 2008

   5.10:1.00

March 31, 2009

   5.10:1.00

June 30, 2009

   5.10:1.00

September 30, 2009

   4.75:1.00

December 31, 2009

   4.75:1.00

March 31, 2010

   4.75:1.00

June 30, 2010

   4.75:1.00

September 30, 2010

   4.75:1.00

December 31, 2010

   4.75:1.00

March 31, 2011 and thereafter

   4.50:1.00

 

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  11.6. Section 2.10(a) of the Indenture is hereby amended: (i) to delete therefrom the phrase “Liquidity Termination Date” and to substitute therefor the phrase “Funding Termination Date” and (ii) to delete therefrom the phrase “or the Servicer on its behalf”.

 

  11.7. Section 3.01(k) of the Indenture is hereby amended to add “Suite 4C68,” to the Issuer’s address between the word “Road” and the word “Danbury”.

 

  11.8. Section 3.01(p) of the Indenture is hereby amended to delete the first sentence thereof and to substitute the following therefor: “Each Receivable included in the Pledged Assets hereunder, unless otherwise identified to the Trustee, the Purchaser and the Servicer, is an Eligible Receivable on the date of transfer to the Issuer and on each date the same is reported by or on behalf of the Issuer as included in the calculation of the Net Receivables Balance.”

 

  11.9. Section 3.03 (f) of the Indenture is hereby amended to read in its entirety as follows:

(f) Indebtedness . Issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any debt, duty, liability or obligation of any kind except for (i) indebtedness owed to Cartus under the Subordinated Note which indebtedness was incurred for the purpose of acquiring Pledged Assets and which indebtedness is expressly subordinated to the payment of the Notes and (ii) any debt, duty, liability or other obligation which is expressly provided for pursuant to the terms of the Transaction Documents and the Notes;

 

  11.10.  Section 3.03(j) of the Indenture is hereby amended to delete the last sentence thereof and to substitute the following therefor: “For the avoidance of doubt, it is hereby agreed and acknowledged that (i) funds transferred or held by the Servicer pursuant to Section 4.01 of the Servicing Agreement and (ii) payments made to Cartus in respect of the Subordinated Note with any funds not required to be distributed to the Expense Subaccount or the Principal Subaccount under Section 9.04, are not considered Restricted Payments made in violation of this Section 3.03(j).

 

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  11.11.  Section 3.03 of the Indenture is hereby amended to add at the conclusion thereof the following subsection (k):

“(k) Limited Liability Company Agreement . Except with respect to a change in name made in compliance with Section 3.03(a), amend or modify its limited liability company agreement without the prior written consent of the Majority Investors.”

 

  11.12.  Section 3.06(e) of the Indenture is hereby amended to add at the conclusion thereof the following: “The Issuer shall not, without the prior written consent of the Trustee and the Majority Investors waive timely performance or observance by the Servicer of its obligations under the Servicing Agreement, by Cartus of its obligations under the Purchase Agreement or Fee Receivables Purchase Agreement, by CRC of its obligations under the Receivables Purchase Agreement or by Realogy of its obligations under the Realogy Guarantee.”

 

  11.13.  Section 3.07(b) of the Indenture is hereby amended to add at the conclusion thereof the following: “and the Issuer will maintain a telephone number and stationery that are separate and distinct from those of each CMS Person”.

 

  11.14.  Section 4.01 of the Indenture is hereby amended to delete the reference to Section “12.14” and to substitute therefor “13.14”.

 

  11.15.  Section 4.02 of the Indenture is hereby amended to delete therefrom the phrase “and the applicable Indenture Supplement’.

 

  11.16.  Section 8.04(d) of the Indenture is hereby amended to delete therefrom clauses (iii) and (iv) in their entirety and to substitute the following therefor:

“(iii) To the Expense Subaccount, the Monthly Servicing Fee to be distributed on such Distribution Date plus any Monthly Servicing Fee previously accrued with respect to any Monthly Period and unpaid;

(iv) During the Amortization Period, to the Principal Subaccount, the Collections on such Deposit Date (after giving effect to the transfers set forth in clauses (i), (ii) and (iii) above); provided , however , that the aggregate amount deposited into the Principal Subaccount pursuant to this clause on any Deposit Date shall not exceed the Outstanding Amount on the immediately preceding Business Day;”

 

  11.17.  Section 10.01(a) of the Indenture is hereby amended to delete therefrom the phrase “three Business Days” and to substitute therefor “five Business Days”.

 

  11.18.  Section 10.01(b) of the Indenture is hereby amended to delete therefrom the phrase “an Authorized Officer of any CMS Person” and substitute therefor the phrase “an Authorized Officer of the Issuer”.

 

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  11.19.  Section 10.01(h) of the Indenture (currently marked “Reserved”) is hereby amended to delete the text thereof in its entirety and to substitute therefor the following:

“(h) Failure of the Servicer or the Performance Guarantor to pay any principal and/or interest in respect of any Indebtedness under the Realogy Credit Agreement or under any other indenture or agreement governing any Indebtedness the principal amount of which exceeds $25,000,000 and such failure shall continue beyond the applicable grace period, if any, specified in the agreement or instrument governing such Indebtedness; or (ii) the default by the Servicer or the Performance Guarantor in the performance of any term, provision or condition contained in any agreement described in clause (i) above, or the existence of any event or condition with respect to any Indebtedness arising under any such agreement, if the effect of such default, event or condition is to cause, or permit the holder of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity, including without limitation the occurrence of any “Event of Default” under the Realogy Credit Agreement; or (iii) any Indebtedness of the Servicer or the Performance Guarantor in a principal amount exceeding $25,000,000 shall be declared to be due and payable or is required to be prepaid (other than by a regularly scheduled payment or a mandatory redemption or prepayment provision) prior to the scheduled date of maturity thereof.”

 

  11.20.  Section 10.01(l) of the Indenture is hereby amended to delete therefrom the number “8.5%” and to substitute therefor the number “10.0%”.

 

  11.21.  Section 10.01(n) of the Indenture is hereby amended to delete the text thereof in its entirety and to substitute therefor the following:

“(n) Either the Three Month Weighted Average Inventory Hold Period exceeds 150 days or the Six-Month Weighted Average Inventory Hold period exceeds 135 days”;

 

  11.22.  Section 10.01(o) of the Indenture (currently marked “Reserved”) is hereby amended to delete the text thereof in its entirety and to substitute therefor the following:

“(o) Realogy shall have breached its obligations under any financial covenants included in the Realogy Credit Agreement”.

 

  11.23.  Section 10.01 of the Indenture is hereby further amended to add the word “or” at the conclusion of Section 10.01(p) and then to add, immediately thereafter the following clause (q):

“(q) A Change of Control shall have occurred;”

 

  11.24.  Section 12.01 of the Indenture is hereby amended to delete the text thereof in its entirety and to substitute therefor “[Reserved]”.

 

  11.25.  Section 13.04 of the Indenture is hereby amended to add “Suite 4C68,” to the Issuer’s address between the word “Road” and the word “Danbury”.

 

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  11.26.  The Indenture is further amended by adding, as Exhibit A thereto, the form of Subordinated Note attached to this Amendment as Exhibit D.

 

12. Further Assurances . Each of Cartus, CRC, the Issuer, Atlantic, Calyon and Realogy agrees that the foregoing amendments have been entered into with the intent of implementing such modifications to the Affected Documents as are necessary to reflect the terms and provision of that certain Summary of Terms and Conditions (the “ Summary of Terms ”), a copy of which is attached hereto as Exhibit C , including the intent that covenants set forth in the similar documents for Apple Ridge Funding LLC, to the extent not inconsistent with express provisions in the Summary of Terms, be incorporated into the Affected Documents. Each party hereto agrees that, at the expense of the Issuer, Calyon will prepare amended and restated versions of the Affected Documents which will incorporate the modifications made prior to the date hereof and otherwise set forth herein, together with such other modifications as may be reasonably necessary (i) to implement the intent and provisions of the Summary of Terms, (ii) to eliminate any inconsistencies in the Affected Documents, whether resulting from the modifications herein or otherwise, and (iii) to reflect such other terms as may be mutually agreeable to such parties following further review of the Affected Documents. Each party agrees to use commercially reasonable efforts to review, and to execute and deliver such restated documents no later than June 30, 2007, it being understood that no party shall be required to agree to any amended terms which it reasonably deems to be materially adverse to it and are not otherwise expressly contemplated herein or in the Summary of Terms.

 

13. Consent to Amendment to Limited Liability Company Agreement . The parties hereto hereby consent to the amendment to the limited liability company agreement of the Issuer to permit the incurrence of subordinated indebtedness to the same extent provided in Section 3.03(f) of the Indenture, as such section is amended by this Agreement, and Calyon and Atlantic by execution hereof hereby state that this consent constitutes the consent of the Majority Investors.

 

14. Conditions Precedent . This Agreement shall become effective upon (A) receipt by the Trustee and Calyon of execution copies of this Agreement and (B) the receipt by the Trustee and Calyon of the other items listed on the Document Checklist attached hereto as Exhibit B or the waiver thereof by Calyon and (C) confirmation to the Trustee from Calyon that Calyon has received payment of all up-front fees owed to it under that certain Fee Letter of even date herewith between Calyon and the Issuer.

 

15. GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

16. Counterparts . 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.

 

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17. References to and Effect on Affected Documents . Upon the effectiveness of this Agreement: (i) all references in any Affected Document to “this agreement”, “hereof”, “herein” or words of similar effect referring to such Affected Document shall be deemed to be references to such Affected Document as amended by this Agreement; (ii) each reference in any of the Affected Documents to any other Affected Document and each reference in any of the other Transaction Documents to any of the Affected Documents shall each mean and be a reference to such Affected Document as amended by this Agreement; and (iii) each reference in any Transaction Document to any of the terms or provisions of an Affected Document which are redefined or otherwise modified hereby shall mean and be a reference to such terms or provisions as redefined or otherwise modified by this Agreement.

 

18. No Waiver . This Agreement shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Affected Documents other than as set forth herein, each of which Affected Document, as modified hereby, remains in full force and effect and is hereby reaffirmed, ratified and confirmed.

 

19. Confirmation of Sole Holder . The Issuer hereby confirms to the other parties hereto that the Issuer has not issued any Notes under the Indenture other than the Series 2002-1 Notes, and that Calyon as Managing Agent on behalf of Atlantic is the registered holder of 100% of the Series 2002-1 Notes issued under the Indenture. By its signature hereto each of Calyon and Atlantic hereby represent that (i) Atlantic is the sole beneficial owner of the Series 2002-1 Notes assigned under the Assignment Agreement; (ii) each of Atlantic and Calyon is duly authorized to consent to this Agreement and to direct the Trustee as set forth herein; and (iii) its authorization has not been granted or assigned to any other person or entity. Accordingly, each of the Issuer, Calyon and Atlantic hereby consents to this Agreement and the amendments to the Affected Documents contemplated hereby, and hereby directs the Trustee to consent to and accept this Agreement.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

 

CARTUS CORPORATION
By:   /s/ Eric Barnes
  Name:   Eric Barnes
  Title:   SVP, CFO
CARTUS RELOCATION CORPORATION
By:   /s/ Eric Barnes
  Name:   Eric Barnes
  Title:   SVP, CFO
KENOSIA FUNDING, LLC
By:   /s/ Eric Barnes
  Name:   Eric Barnes
  Title:   SVP, CFO
REALOGY CORPORATION
By:   /s/ Seth Truwit
  Name:   Seth I. Truwit
  Title:   Senior Vice President, Interim General Counsel, and Corporate Secretary

THE BANK OF NEW YORK,

not in its individual capacity but solely as Trustee

By:   /s/ Catherine Cerilles
  Name:   Catherine Cerilles
  Title:   Vice President

[Signature Page to Kenosia Fifth Omnibus Amendment]


ATLANTIC ASSET SECURITIZATION LLC

as a Conduit Purchaser

By:   /s/ Kostantina Kourmpetis
  Name:   Kostantina Kourmpetis
  Title:   Managing Director
By:   /s/ Richard McBride
  Name:   Richard McBride
  Title:   Director

CALYON NEW YORK BRANCH,

as Administrative Agent, as a Managing Agent and as a Committed Purchaser

By:   /s/ Kostantina Kourmpetis
  Name:   Kostantina Kourmpetis
  Title:   Managing Director
By:   /s/ Richard McBride
  Name:   Richard McBride
  Title:   Director

[Signature Page to Kenosia Fifth Omnibus Amendment]


EXHIBIT A

Form of Exhibit 7.3(j) to Purchase Agreement

Required Creditor Acknowledgment Provisions

See Attached.


ACKNOWLEDGMENT PROVISIONS FOR KENOSIA FUNDING, LLC

For purposes of this Section              , capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture dated as of March 7, 2002, among Kenosia Funding, LLC (“ Kenosia ”) and The Bank of New York (the “ Trustee ”), or, if not defined therein, as assigned to such terms in the “CMGFSC Purchase Agreement,” “Receivables Purchase Agreement” or “Fee Receivables Purchase Agreement” referred to therein, in each case as each such agreement has been amended by (i) that certain Omnibus Amendment, Agreement and Consent dated December 20, 2004, (ii) that certain Second Omnibus Amendment, Agreement and Consent dated May 19, 2005; (iii) that certain Third Omnibus Amendment, Agreement and Consent dated May 2, 2006, (v) that certain Fourth Omnibus Amendment and Agreement dated February 28, 2007 and (vi) that certain Fifth Omnibus Amendment dated April 10, 2007 by and among Kenosia, the Trustee, Cartus Relocation Corporation (“ CRC ”), Cartus Corporation (“ Cartus ”) and certain other parties. Subsequent references in this Section              to Cartus and CRC below shall mean and be references to such corporations as they currently exist but shall also include references to any limited liability companies which succeed to the assets and liabilities of such companies in connection with a conversion of any such corporation into a limited liability company.

The Collateral Agent acknowledges and agrees, and each Secured Party by its execution of the Credit Agreement (or its Assignment and Acceptance) and/or its acceptance of the benefits of this Agreement acknowledges and agrees, as follows, solely in its capacity as a Secured Party:

(a) Each Secured Party hereby acknowledges that (i) CRC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing CMSC Purchased Assets (also referred to as Cartus Purchased Assets) from Cartus pursuant to the CMGFSC Purchase Agreement, making Equity Payments, Equity Loans, Mortgage Payoffs and Mortgage Payments to or on behalf of employees or otherwise purchasing Homes in connection with the Pool Relocation Management Agreements, funding such activities through the sale of Seller Receivables to Kenosia, and such other activities as it deems necessary or appropriate in connection therewith and (ii) Kenosia is a limited purpose limited liability company whose activities are limited in its limited liability company agreement to purchasing Seller Receivables and other KF Purchased Assets from CRC under the Receivables Purchase Agreement and purchasing Originator Fee Receivables and other Originator Fee Assets from Cartus under the Fee Receivables Purchase Agreement, funding such acquisitions through the issuance of the Notes, pledging such purchased assets to the Trustee and such other activities as it deems necessary or appropriate to carry out such activities. The CMSC Receivables, the Seller Receivables and the Originator Fee Receivables are hereinafter referred to collectively as the “ Pool Receivables ”.

(b) Each Secured Party hereby acknowledges and agrees that (i) the foregoing transfers are intended to be true and absolute sales as a result of which Cartus has no right, title and interest in and to any of the Cartus Purchased Assets, any Homes acquired by CRC in connection therewith or any Pool Receivables, including any Related Property relating thereto, any proceeds thereof or earnings thereon (collectively, the “ Pool Assets ”), (ii) neither CRC nor Kenosia is a Loan Party, (iii) such Secured Party is not a creditor of, and has no recourse to, CRC


or Kenosia pursuant to the Credit Agreement or any other Loan Document, and (iv) such Secured Party has no lien on or claim, contractual or otherwise, arising under the Credit Agreement or any other Loan Document to the Pool Assets (whether now existing or hereafter acquired and whether tangible or intangible); provided that nothing herein shall limit any rights the Secured Parties may have to any proceeds or earnings which are transferred from time to time to Cartus by CRC or Kenosia.

(c) No Secured Party will institute against or join any other Person in instituting against CRC or Kenosia any insolvency proceeding, or solicit, join in soliciting, cooperate with or encourage any motion in support of, any insolvency proceeding involving CRC or Kenosia until one year and one day after the payment in full of all Notes provided , that the foreoging shall not limit the right of any Secured Party to file any claim in or otherwise take any action (not inconsistent with the provisions of this Section              ) permitted or required by applicable laws with respect to any insolvency proceeding instituted against CRC or Kenosia by any other person.

(d) Without limiting the foregoing, in the event of any voluntary or involuntary bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any Federal or state bankruptcy or similar law involving Cartus, CRC, Kenosia or any other Affiliates of Cartus as debtor, or otherwise, the Secured Parties agree that if, notwithstanding the intent of the parties, Cartus is found to have a property interest in the Pool Assets, then, in such event, CRC and Kenosia and Kenosia’s assigns, including the Trustee, shall have a first and prior claim to the Pool Assets, and any claim or rights the Secured Parties may have to the Pool Assets, contractual or otherwise, shall be subject to the prior claims of the Trustee and the Noteholders until all amounts owing under the Indenture shall have been paid in full, and the Secured Parties agree to turn over to the Trustee any amounts received contrary to the provisions of this clause (d).

(e) Each Secured Party hereby covenants and agrees that it will not agree to any amendment, supplement or other modification of this Section              without the prior written consent of the Trustee. Each Secured Party further agrees that the provisions of this Section              are made for the benefit of, and may be relied upon and enforced by, the Trustee and that the Trustee shall be a third party beneficiary of this Section              .


EXHIBIT B

Closing Checklist

See Attached.


4/4/07

$175,000,000

Kenosia Funding LLC,

Secured Variable Funding Notes, Series 2002-1

BTM-Calyon Assignment and Amendments

April 10, 2007

 

 

CLOSING INDEX

 

 

Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Indenture. All items listed in bold, italic font are to be delivered by the Issuer or its counsel and all items listed in italic, underlined font are to be delivered by Richards, Layton & Finger (“ RLF ”) . All items listed in SMALL CAPS ARE TO BE DELIVERED BY T HE B ANK OF N EW Y ORK .

Principal Documents

1. Fifth Omnibus Amendment, Agreement and Consent (the “Omnibus Amendment” ), dated as of April 10, 2007, and concerning the following documents:

1. Purchase Agreement , dated as of March 7, 2002 (the “ Purchase Agreement ”), between Cartus Corporation (“ Cartus ”) as Originator and Cartus Relocation Corporation (“ CRC ”) as Buyer.

2. Receivables Purchase Agreement , dated as of March 7, 2002 (the “ Receivables Purchase Agreement ”) between CRC as Seller and Kenosia Funding, LLC (the “ Issuer ”) as Buyer.

3. Fee Receivables Purchase Agreement , dated as of March 7, 2002 (the “ Fee Receivables Purchase Agreement ”) between Cartus as Seller and the Issuer as Buyer.

4. Servicing Agreement , dated as of March 7, 2002 (the “ Servicing Agreement ”) among Cartus, as Originator and Servicer, CFC as Originator, CRC as Originator, the Issuer and The Bank of New York (“ BNY ”) as Trustee.

5. Indenture , dated as of March 7, 2002 (the “ Indenture ”) between the Issuer and BNY as Trustee and as Paying Agent, Authentication Agent and Transfer Agent and Registrar.

2. Amended and Restated Guaranty from Realogy Corporation (“ Realogy ”),.


3. Assignment and Acceptance Agreement , dated as of April 10, 2007 (the “ Assignment Agreement ” among The Bank of Tokyo Mitsubishi, UFJ, Ltd. (“ BTM ”) and Gotham Funding Corporation (“ Gotham ”) as “Assignors” and Calyon New York Branch (“ Calyon ”) and Atlantic Asset Securitization Corp. (“ Atlantic ”) as Assignees.

4. Amended and Restated Note Purchase Agreement relating to the Series 2002-1 Notes, dated April 10, 2007 (the “ Note Purchase Agreement ”) among the Issuer, Cartus, Atlantic, Financial Institutions and Managing Agents from time to time party thereto, and Calyon as Administrative Agent.

 

SCHEDULES   I    Conditions Precedent Documents
  II    Purchaser Group Limits / Commitments
  III    Location of Certain Offices; Organizational and Federal Employer Identification Numbers
EXHIBITS   A    Form of Assignment and Acceptance
  B    Form of Increase Request
  C    Form of Joinder Agreement
  D    Form of Stated Amount Increase Notice

5. Variable Funding Note

(a) Calyon as Managing Agent on behalf of it and Atlantic.

6. Subordinated Note made by the Issuer and payable to the order of Cartus.

Kenosia Funding LLC

7. Certified copy of Amended Certificate of Formation from the Secretary of State of the State of Delaware.

8. Good Standing Certificate from the State of Delaware and qualification to do business in Connecticut.

9. Secretary’s Certificate of the Issuer relating to various matters including: (a) Limited Liability Company Agreement and Certificate of Formation of the Issuer; (b) authorizing resolutions of the Board of Directors of the Issuer; and (c) incumbency and specimen signatures of authorized signatories of the Issuer.

10. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by two Vice Presidents of the Issuer, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

11. Officer’s Certificate pursuant to the Indenture, certifying that all conditions precedent provided in the Indenture with respect to the Fifth Omnibus Amendment and the authentication and delivery of the new Note have been complied with.

 

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12. Order to Authenticate and Deliver the Note.

Cartus Corporation

13. Certified copy of Amended Certificate of Incorporation from the Secretary of State of the State of Delaware.

14. Good Standing Certificate from the State of Delaware and qualification to do business in Connecticut.

15. Secretary’s Certificate of Cartus, relating to various matters including: (a) Certificate of Incorporation; (b) Bylaws; (c) authorizing resolutions of the Board of Directors of Cartus; and (d) incumbency and specimen signatures of authorized signatories of Cartus.

16. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by any two of the Chairman of the Board of Directors, the President, any Vice President and the Treasurer of Cartus, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

Cartus Relocation Corporation

17. Certified copy of Amended Certificate of Incorporation from the Secretary of State of the State of Delaware.

18. Good Standing Certificate from the State of Delaware and qualification to do business in Connecticut.

19. Secretary’s Certificate of CRC, relating to various matters including: (a) Certificate of Incorporation; (b) Bylaws; (c) authorizing resolutions of the Board of Directors of CRC; and (d) incumbency and specimen signatures of authorized signatories of CRC.

20. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by any two of the Chairman of the Board of Directors, the President, any Vice President and the Treasurer of CRC, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

Realogy

21. Certified copy of Amended and Restated Certificate of Incorporation from the Secretary of State of the State of Delaware.

22. Good Standing Certificate from the State of Delaware.

23. Secretary’s Certificate of Realogy relating to various matters including: (a) Certificate of Incorporation; (b) Bylaws; (c) authorizing resolutions of the Board of Directors of Realogy; and (d) incumbency and specimen signatures of authorized signatories of Realogy.

 

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24. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by any two of the Chairman of the Board of Directors, the President, any Senior Vice President and the Treasurer of Realogy, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

Opinions

25. Opinion of Bruce Perlman, general counsel to Cartus, the Issuer, CRC and Kenosia.

26. Opinion of Seth Truwit, interim general counsel to Realogy.

27. Opinion of Orrick, Herrington & Sutcliffe LLP ( “Orrick” ), special counsel to Cartus, CRC and the Issuer, regarding enforceability and certain corporate matters.

28. Reliance Letter from Orrick, special counsel to Cartus, CRC and the Issuer, regarding certain prior opinions on UCC creation issues, enforceability, tax and other corporate matters.

29. Reliance Letter from Richards Layton & Finger, P.A., special Delaware counsel to Cartus, CRC and the Issuer, regarding UCC perfection issues.

30. Opinion of Orrick, special counsel to Cartus, CRC and the Issuer, regarding substantive non-consolidation matters with respect to Cartus, CRC and the Issuer.

31. Opinion of Orrick, special counsel to Cartus, regarding “true sale” matters with respect to the transfer of receivables by Cartus to CRC.

32. Opinion of Orrick, special counsel to Cartus, regarding “true sale” matters with respect to the transfer of receivables by Cartus to the Issuer .

33. Opinion of Orrick, special counsel to Cartus, CRC and the Issuer, regarding certain bankruptcy issues with respect to Home Sale Proceeds.

34. R ELIANCE L ETTER FROM T HACHER , P ROFITT &W OOD , C OUNSEL TO BNY, WITH RESPECT TO CERTAIN MATTERS RELATING TO BNY AS P AYING A GENT , A UTHENTICATING A GENT , T RANSFER A GENT AND R EGISTRAR .

Miscellaneous

35. Return of Notes from BTM for Cancellation.

36. Administrative Agent Fee Letter.

37. Fee Letter.

38. Issuer’s Form W-9.

Liquidity Documents

39. Liquidity Asset Purchase Agreement.

 

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EXHIBIT C

Summary of Terms

See Attached.


K ENOSIA F UNDING LLC

as Issuer

C ARTUS C ORPORATION

as Originator and Servicer

C ARTUS R ELOCATION C ORPORATION

as Originator

$175,000,000 Secured Variable Funding Notes

Preliminary Summary of Terms and Conditions

Not a Commitment – For Discussion Purposes Only

 

  Transaction Overview
 

Cartus Corporation (“ Cartus ” or the “ Originator ”), a wholly-owned indirect subsidiary of Realogy Corporation (“ Realogy ”) has established two special purpose, bankruptcy remote subsidiaries: (i) Cartus Relocation Corporation (“ CRC ”), and (ii) Kenosia Funding LLC (the “ Issuer ”). CRC and the Issuer were created for the purpose of purchasing from Cartus Receivables and acquiring interests in Homes arising under certain Pool Relocation Management Agreements (as each such term is hereinafter defined) with various employers (“ Employers ”). The Pool Relocation Management Agreements consist exclusively of Relocation Management Agreements (as defined below) which: (i) are entered into between Cartus and an Employer which is the United States of America, any state or local government, or any agency or instrumentality of any of the foregoing (each, a “ Governmental Obligor ”) or (ii) are entered into between Cartus and a private Employer (i.e., not the United States of America or any agency or instrumentality thereof) (each, a “ Corporate Obligor ”) and which do not obligate the Employer to reimburse Cartus for any losses it or its assignees incur on the resale of the related Home.

 

Under the Purchase Agreement (as defined below) CRC purchases, all Receivables arising under Pool Relocation Management Agreements constituting “Government Guaranteed Contracts” as defined below, in each case from the effective date of the assignment of such Government Guaranteed Contract to CRC, and all Receivables arising under Pool Relocation Management Agreements the Employer under which is a Corporate Obligor and which are generated by Cartus (the “ Cartus Receivables ”) from time to time under the Pool Relocation Management Agreements, all security interests and liens securing payment of such


 

Cartus Receivables, all rights under warranties, indemnities or insurance relating thereto, all rights to proceeds arising out of or with respect to any Homes under the related Relocation Management Agreement (“ Home Sale Proceeds ”) and all records relating thereto (collectively, “ Related Property ” and with respect to the Cartus Receivables, the “ Cartus Related Property ”), all collections received on account or otherwise in connection with the Cartus Receivables and all proceeds thereof and earnings thereon (together with the Cartus Receivables and the Cartus Related Property, the “ Cartus Purchased Assets ”) pursuant to a purchase agreement (the “ Purchase Agreement ”) between CRC and Cartus, as seller (the “ Seller ”). As used above, “ Government Guaranteed Contract ” means any Relocation Management Agreement with a Governmental Obligor that provides for the payment in full by such Governmental Obligor of all “Direct Expenses”, “Service Fees”, “Other Reimbursable Expenses” (each as defined in the Purchase Agreement) and any loss on sale with respect to a home. Capitalized terms used in this Preliminary Summary of Terms without definition shall have the meanings set forth in the Purchase Agreement or, if not defined therein, as defined in the Fee Receivables Purchase Agreement referred to below, or if not defined in either such agreement, in the Indenture referred to below.

 

CRC also has made and continues to make offers under the Pool Relocation Management Agreements to purchase residential real estate (“ Homes ”) from Employees (as hereinafter defined) and enters into a CRC Home Purchase Contract (as hereinafter defined) with each such Employee and acquires each such Home by making Equity Payments, Mortgage Payments and Mortgage Payoffs (as hereinafter defined). Cartus as Servicer retains all of its obligations under the Pool Relocation Management Agreements, including the obligation to remarket and sell the Homes.

 

CRC sells to the Issuer all of its right, title and interest in: (i) the Cartus Purchased Assets, (ii) all rights of CRC under the Purchase Agreement and the Performance Guarantee with respect to the Cartus Purchased Assets, all Receivables arising out of Equity Payments (as hereinafter defined), Mortgage Payments (as hereinafter defined) and Mortgage Payoffs (as hereinafter defined) made by CRC in respect of the CRC Home Purchase Contracts (collectively, the “ CRC Receivables ” and, together with the Cartus Receivables and the Originator Fee Receivables, the “ Pool Receivables ”), (iii) all Related Property to the CRC Receivables (the “ CRC Related Property ”), (iv) all Collections in connection with the CRC Receivables or CRC Related Property and (v) all proceeds thereof and earnings thereon (together with the CRC Receivables and the CRC Related Property, the “ CRC Purchased Assets ”). Such sales are made on a revolving basis to the Issuer pursuant to a receivables purchase agreement (the “ Receivables Purchase Agreement ”) between CRC, as seller and the Issuer, as buyer.

 

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The Issuer has also entered into a Fee Receivables Purchase Agreement (the “ KF Purchase Agreement ”) with Cartus pursuant to which the Issuer purchases from Cartus all Fee Receivables arising under Pool Relocation Management Agreements not constituting “Government Guaranteed Contracts” and which are generated by Cartus (the “ Originator Fee Receivables ”) from time to time under the Pool Relocation Management Agreements (as hereinafter defined), all Related Property with respect to such Originator Fee Receivables (the “ KF Related Property ”), all collections received on account or otherwise in connection with the Originator Fee Receivables and all proceeds thereof and earnings thereon (the “ Cartus Fee Purchased Assets ”). 1

 

The Cartus Fee Purchased Assets and the CRC Purchased Assets are collectively referred to as the “ Pool Assets ”.

 

The Issuer has financed its purchases of the Pool Assets by issuing Series 2002-1 Notes (the “ Notes” ) under an Indenture dated as of March 7, 2002 Master Indenture (as amended through the date hereof and on the “Assignment Effective Date” as defined below, the “ Indenture ”) which were originally sold to Gotham Funding Corporation, a commercial paper conduit (“ Gotham” ), under a Note Purchase Agreement dated as of March 7, 2002 (as previously amended, the “ Note Purchase Agreement ”) among Cartus, CRC, the Issuer, Gotham, and The Bank of Tokyo-Mitsubishi Ltd., New York Branch (“ BTM ”) as the Administrative Agent.

 

Calyon New York Branch (“Calyon”) proposes to arrange for an assignment of the Notes from Gotham to Atlantic Asset Securitization Corp., a commercial paper conduit (“ Atlantic ”), and an assignment from BTM to Calyon of BTM’s rights, duties and responsibilities as Administrative Agent. All such assignments shall be without recourse. Concurrently with such assignments, the existing Kenosia documentation shall be amended: (i) to permit the sale to Cartus Financial Corporation (“ CFC ”) and the release of all Receivables (the “ FDIC/USPS Receivables ”) arising under the Pool Relocation Management Agreements with the United States Postal Service and the Federal Deposit Insurance Corporation (such Relocation Management Agreements, the “ FDIC/USPS Contracts ”) from and after the effective date on which such FDIC/USPS Contracts are assigned to CFC, after

 

1

Note: Need to discuss proposed Cartus revisions here; the language in this term sheet tracks the current Fee Receivables Purchase Agreement and the requested language seemed to contemplate only what would happen after the FDIC/USPS Receivables have been sold so we did not revise.

 

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which date there will be no further sales to CRC or the Issuer of Receivables arising under the FDIC/USPS Contracts; (ii) to reflect any modifications to the business terms necessary to conform such documents to the business terms set forth herein, (iii) to eliminate any existing provisions for recourse to Realogy or Cartus for loss on sale or other similar indemnities, and (iv) to implement such other changes as may be identified by Orrick Herrington & Sutcliffe, LLP (“ Orrick ”) as reasonably necessary for their issuance of (x) a true sale opinion with respect to the sales of Pool Receivables from Cartus to CRC or the Issuer, as applicable, (y) an opinion with respect to the treatment of Home Sale Proceeds as not constituting property of Cartus’ estate in a bankruptcy proceeding involving Cartus, and (z) a non-consolidation opinion as between CRC and the Issuer, on the one hand, and Cartus on the other. It is understood that such opinions will contain qualifications based on the impact that any actions of the relevant parties prior to the dates of such opinions might have on the analysis set forth therein. Cartus, CRC and the Issuer shall represent and warrant at closing as to the degree to which such past actions have not complied with its covenants going forward in order to limit the scope of such retrospective qualification. Such opinions shall also include exceptions relating to the effect of the Assignment of Claims Act (or any similar law).

 

Concurrently with the amendments set forth above (the date of such assignment and amendments, the “ Assignment Effective Date ”), Calyon, the Issuer, Cartus, and CRC will also enter into a replacement Note Purchase Agreement in order to conform the existing Note Purchase Agreement to the amended documents as described in the preceding paragraph and also to allow for syndication of the Notes after closing so that purchases of new Notes and/or future fundings under the existing Notes will be made by Atlantic along with other conduits (each, a “ Conduit ” ) each of whom funds such purchases through the issuance of commercial paper notes. In the event a Conduit fails to fund its share of advances, one or more banks (each, a “ Bank ”) will fund such Conduit’s purchases. Each Conduit will have a “Managing Agent” which acts on its behalf and on the behalf of the related Banks which provide liquidity support to such Conduit, and Calyon will act as administrative agent (in such capacity, the “ Administrative Agent ”) on behalf of all the Conduits, Banks and Managing Agents. The principal balance of the Notes to be issued by the Issuer may be prepaid in whole or in part and reborrowed during the Revolving Period (as hereinafter defined) on the terms and conditions specified in the Indenture, provided the outstanding principal balance of the Notes may not exceed $175,000,000 (the “ Maximum Principal Amount ”).

 

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It is currently anticipated that not all of the above-described changes may be implemented in a manner that would permit future syndication on or before the date on which Realogy will be acquired by Apollo

Management, LP. Accordingly, the modified documents will provide for a period of not more than 60 days during which the parties mutually agree in good faith, at the expense of Cartus, to amend and restate the facility documents in a mutually satisfactory manner in order to incorporate the terms and conditions set forth herein as well as to ensure a successful syndication; provided , that no party shall be required to agree to any changes that it reasonably determines to be inconsistent with the terms set forth herein or (except for any provisions expressly contemplated hereunder) to be materially disadvantageous to such party.

   Transaction Participants
Issuer:    Kenosia Funding LLC, a bankruptcy remote, special purpose limited liability company, wholly owned by CRC. The Issuer’s sole purpose is to acquire Pool Assets from Cartus and CRC as described above.
   The Issuer will be required to satisfy certain criteria to ensure that the assets and liabilities of the Issuer will not be substantively consolidated with those of Realogy, Cartus or any of their affiliates (other than CRC). The business activities of the Issuer are limited to acquiring the Pool Assets from time to time pursuant to the Receivables Purchase Agreement and the KF Purchase Agreement, funding such acquisitions through the issuance of the Notes and certain other incidental activities.
CRC:    Cartus Relocation Corporation (f/k/a as Cendant Mobility Government Financial Services Corporation), a Delaware corporation, a bankruptcy-remote, special purpose corporation, wholly owned by Cartus. CRC is required to satisfy certain criteria to ensure that the assets and liabilities of CRC will not be substantively consolidated with those of Realogy, Cartus or any of its affiliates (other than the Issuer).
   The business activities of CRC are limited to: (i) acquiring the Cartus Receivables and the Cartus Related Property pursuant to the Purchase Agreement, (ii) entering into home purchase contracts (“ CRC Home Purchase Contracts ”) with Employees and acquiring Homes from Employees thereunder, (iii) making (A) equity payments thereunder (“ Equity Payments ”), (B) mortgage payments thereunder (“ Mortgage Payments ”) and mortgage payoffs thereunder (“ Mortgage Payoffs ”) with respect to the Homes and (C) other required payments with respect to the Homes, including payments in respect of taxes due and owing and payments in respect of liens on the Homes, and any other payments required to obtain clean title to the Homes, (iv) marketing, maintaining and reselling the Homes, (v) transferring the Cartus Receivables and the Cartus Related Property to the Issuer pursuant to the Receivables Purchase Agreement and (vi) certain other incidental activities. CRC generates CRC Receivables under the Pool Relocation Management Agreements when it makes Equity Payments, Mortgage Payments and Mortgage Payoffs and incurs costs and expenses in connection with the maintenance of the Homes.

 

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Servicer:    Cartus Corporation (f/k/a Cendant Mobility Services Corporation) (in its capacity as servicer, the “ Servicer ”). The Servicer is obligated to collect and post payments on the Pool Receivables, investigate delinquencies and enforce the Pool Receivables in accordance with the terms of a Servicing Agreement dated as of March 7, 2002 (as amended through the date hereof and on the Assignment Effective Date, the “ Servicing Agreement ”). The Servicing Agreement requires the Servicer to service the Pool Receivables in accordance with the servicing and collection policies and procedures set forth therein (the “ Credit and Collection Policies ”). In addition, the Servicer agrees to perform Cartus’ obligations under the Receivables Purchase Agreement to market and resell the Homes. In the event of a Servicer Default (as hereinafter defined) under the Servicing Agreement, the Servicer may be removed and a successor appointed by the Issuer, with the consent of the Majority Investors (as hereinafter defined). In the event Cartus is replaced as Servicer, the Majority Investors will have the ability to appoint sub-servicers to service distinct portions of the Pool Receivables and/or to perform certain obligations of the Servicer.
   The Servicing Agreement allows the Servicer, with the consent of the Majority Investors, to delegate any portion of its obligations thereunder to a third party. Such delegation will not relieve the Servicer of its obligations thereunder.
Performance Guarantor:    Realogy Corporation, a Delaware Corporation (together with any successors thereto, “ Realogy ” or the “ Performance Guarantor” ) executed that certain performance guarantee dated as of May 2, 2006, in favor of CRC, the Issuer, the Indenture Trustee, Gotham as purchaser and BTM as Administrative Agent, which will be amended and restated on the closing date (as so amended and restated, the “ Performance Guarantee ”).
Indenture Trustee:    The Bank of New York, a banking corporation organized and existing under the laws of New York, as successor to JPMorgan Chase Bank, N.A.
   Issuer Assets
Issuer Assets:    The assets of Issuer (“ Issuer Assets ”) include, among other things, the Pool Assets, all funds collected on the Pool Assets (including Home Sale Proceeds and payments by Obligors) and other “ Collections ” as defined below, including any payments by Cartus, CRC, or the Servicer in respect of credits or other billing adjustments made in respect of the Pool Receivables (“ Concessions ”), and the right to payments under the Performance Guarantee.

 

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Receivables:   

Receivable ” shall mean any right arising under a Contract to receive any payment or any funds from or on behalf of an Obligor, whether or not earned by performance and whether constituting an account, chattel paper, instrument, general intangible or otherwise. The term “Receivable” includes without limitation rights to payment (whether matured or unmatured and whether absolute or contingent) arising out of or with respect to Equity Loans, Equity Payments, Direct Expenses, Mortgage Payments, Mortgage Payoffs, Service Fees and Other Reimbursable Expenses and the right to payment of any and all Finance Charges with respect to any of the foregoing, whether such amounts are owed by an Employer, a Transferred Employee, an Ultimate Buyer or any other Obligor.

 

The Receivables include the following types of Receivables: (i) Receivables (“ Unsold Home Receivables ”), including finance charges, arising from the making of Equity Payments, Mortgage Payments, Mortgage Payoffs or Direct Expenses on a Home that has not yet been sold to an Ultimate Buyer and (ii) Receivables (“ Fee Receivables ”) which represent any rights to payment from or on behalf of an Obligor under a Contract, including without limitation right to payment of Direct Expenses, Service Fees and Other Reimbursable Expenses. The change of a Receivable’s status from that of Unbilled Receivable to Billed Receivable shall not be deemed the creation of a new Receivable for any purpose under the facility documents.

Pool Relocation Management Agreements:    “Pool Relocation Management Agreement” shall mean a “ Relocation Management Agreement ” which is designated as a Pool Relocation Management Agreement under the Purchase Agreement. “ Relocation Management Agreement ” means an agreement pursuant to which the Originator agrees to provide employee relocation, asset management or other services, as the same may be amended, restated or otherwise modified from time to time, including any and all supplements thereto, and any similar agreement, howsoever denominated, and any agreement for intercultural services.
Pool Relocation Management Agreement Criteria:    The Pool Relocation Management Agreements were initially designated by Cartus on Schedule 2.1 to the Purchase Agreement and Schedule 2.1 to the Fee Receivables Purchase Agreement as qualifying as Eligible Contracts (as hereinafter defined) and (ii) providing for payment by the Employer of: (a) (only if such Pool Relocation Management Agreement is a Government Guaranteed Contract) 2 costs incurred by Cartus or

 

2

Cartus and Calyon to confirm if this is now correct.

 

7


   CRC in preparing to acquire a Home from an Employee and costs incurred by Cartus or CRC in marketing, purchasing, carrying, preparing for sale and reselling any Home (including closing of resale) (“ Direct Expenses ”), including payments made by Cartus or CRC under any mortgage on an Employee’s Home, whether at the scheduled due date therefor or as a payment in full thereon, including payments for taxes and insurance and any notional mortgage interest accruing to Cartus or CRC with respect to a mortgage which Cartus or CRC has paid in full, and any loss on sale of the Home; (b) fees payable by Employers under Pool Relocation Management Agreements, including without limitation, with respect to the marketing and sale of Homes or other services rendered by Cartus (collectively, “ Service Fees ”) and (c) costs and expenses incurred and paid in connection with services under Pool Relocation Management Agreements or reimbursable by the Obligor under the applicable Pool Relocation Management Agreement and that are not included in the calculation of Direct Expenses (collectively, “ Other Reimbursable Expenses ”).
Buyer:    Buyer ” means (i) CRC with respect to any CRC Purchased Assets and (ii) the Issuer with respect to any Cartus Fee Purchased Assets.
Eligible Contracts:   

Eligible Contract ” shall mean:

 

(a) a Relocation Management Agreement (i) that has been duly executed and delivered by an Employer that is an Eligible Obligor, is in full force and effect, and (unless the Employer is a Corporate Obligor), the obligations of the Employer under which are full faith and credit obligations of the United States of America, (ii) (A) the rights to payment under which are assignable without the consent of the Employer party thereto or any other Person (other than the Originator), other than any such consent that has been obtained and remains in effect, or (B) which, if subject to any restriction on assignment of rights to payment, is in effect on the date of execution of the Fifth Omnibus Amendment and all of the Receivables under such Contract that are subject to such restriction constitute assets as to which such restriction is not effective under 9-406 or 9-408 of the UCC, as applicable, 3 (iii) that was originated in accordance with the Credit and Collection Policy and (iv) that is substantially in the form of the Relocation Management Agreement referenced in Schedule 2.1 to the Purchase Agreement, with such Permitted Changes to such form as may be made by the Originator in the ordinary course of its business (or such other form as has been approved in writing by the Buyer and its successors and assigns);

 

3

Note: this clause is modified from the existing Kenosia documents to conform to revised Article 9 and the corresponding language in the Apple Ridge criteria.

 

8


  

(b) an Equity Loan Agreement or Equity Loan Note (i) that has been duly executed and delivered by a Transferred Employee that is an Eligible Obligor and that is an employee of an Employer that is a party to a Pool Relocation Management Agreement (which Pool Relocation Management Agreement is then an Eligible Contract) and (ii) that is substantially in the form of Equity Loan Agreement referenced in the Pool Relocation Management Agreements listed in Schedule 2.1 to the Purchase Agreement or the form of Equity Loan Note referenced in the Pool Relocation Management Agreements listed in such Schedule 2.1, as applicable, with such Permitted Changes to such forms as may be made by the Originator in the ordinary course of its business (or, in either case, such other form as has been approved in writing by the Buyer and its successors and assigns);

 

(c) a Home Purchase Contract that (i) has been duly executed and delivered by a Transferred Employee of an Employer that is a party to a Pool Relocation Management Agreement (which Pool Relocation Management Agreement is then an Eligible Contract) and (ii) is substantially in the form of Home Purchase Contract referenced in the Pool Relocation Management Agreements listed in Schedule 2.1 to the Purchase Agreement, with such Permitted Changes to such form as may be made by the Originator in the ordinary course of its business (or such other form as has been approved in writing by the Buyer and its successors and assigns); or

 

(d) a Home Sale Contract that (i) was entered into by CRC under or in connection with a Pool Relocation Management Agreement (which Pool Relocation Management Agreement is then an Eligible Contract), (ii) has been duly executed and delivered by the applicable Ultimate Buyer and is in full force and effect and (iii) is substantially in the form of the contract of purchase and sale used in the area where the property is located, or on a form prescribed by CRC or the Servicer for that area, with such amendments and additions as may be reasonably negotiated to efficiently sell the Home.

Eligible Obligor:    An “ Eligible Obligor ” means each Obligor that satisfies the following eligibility criteria as of the date each Cartus Receivable of such Obligor is sold to CRC under the Purchase Agreement and each CRC Receivable of such Obligor is sold to the Issuer under the Receivables

 

9


   Purchase Agreement, as the case may be: (i) it is either a Governmental Obligor or a Corporate Obligor resident in the United States (including a United States division or branch of a Corporate Obligor organized in a jurisdiction outside of the United States, so long as such division or branch maintains a place of business in the United States to which all Pool Receivables are billed); (ii) it is not an affiliate of Cartus or CRC; (iii) it has been instructed by Cartus to make payments into one or more lockbox accounts maintained by the Servicer in the name of the Indenture Trustee; and (iv) it is not the subject of any voluntary or involuntary bankruptcy proceeding.
Eligible Receivable:    An “Eligible Receivable” means each Receivable that satisfies the following eligibility criteria: (i) the Obligor of which is an Eligible Obligor; (ii) that is denominated and payable only in US dollars; (iii) that, if a Cartus Receivable, was generated in the ordinary course of the Originator’s business; (iv) either (1) is a Cartus Receivable with respect to which all of the Originator’s right, title and interest has been validly transferred to the Buyer or the Issuer under and in accordance with the terms of the Purchase Agreement or the Fee Receivables Purchase Agreement, as applicable or (2) is a CRC Receivable and consists of an Equity Payment, Mortgage Payment or Mortgage Payoff made by CRC in respect of a CRC Home Purchase Agreement, (v) that arises under or in connection with a Pool Relocation Management Agreement that is then an Eligible Contract, (vi) that is not a Defaulted Receivable or a Concession; (vii) the purchase of which with the proceeds of the issuance of commercial paper constitutes a “current transaction” within the meaning of Section 3(a)(3) of the Securities Act of 1933; (viii) except in the case of an Equity Loan evidenced by an Equity Loan Note, that constitutes an “account” or a “general intangible” or “chattel paper” and not an “instrument” in each case within the meaning of the New York UCC; (ix) the transfer of which does not contravene or conflict with any Requirement of Law, or any Contractual Obligation or other restriction, limitation or encumbrance that applies to the Originator, CRC or the Issuer (including without limitation the related Contract in the case of a CRC Receivable), and the sale, assignment or transfer of which, and the granting of a security interest in which, does not require the consent of the Obligor thereof or any other Person other than any such consent that has been previously obtained and is in effect, provided that a Receivable arising out of a Relocation Management Agreement that is subject to a restriction on assignment may nonetheless be an Eligible Receivable if such restriction is not effective under 9-406 or 9-408 of the UCC, as applicable 4 ; (x) that has not been compromised, adjusted, amended or otherwise modified (including by

 

4

Note: this clause is modified from the existing Kenosia documents to conform to revised Article 9 and the corresponding language in the Apple Ridge criteria.

 

10


  extension of time for payment or the granting of any discounts, allowances or credits) except in a manner that is permitted under the Servicing Agreement; (xi) that, together with the Contracts related thereto, conforms in all material respects with all applicable requirements of law, rules, regulations, orders, judgments, decrees and determinations of all courts and other Governmental Authorities; (xii) if a Cartus Receivable with respect to which the representations and warranties of the Originator (or with respect to any CRC Receivables, of CRC) are true and correct; (xiii) that represents a bona fide obligation arising under a Contract that has been duly authorized and that, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the Obligor of such Receivable, enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and general principles of equity; (xiv) that, in the case of a Receivable arising on account of any Equity Payment, Mortgage Payment, Direct Expenses, or any Service Fee or Finance Charge arising in connection with any of the foregoing, relates to an Eligible Home as to which (i) a Home Purchase Contract has been executed and delivered by the related Homeowner and CRC and constitutes the legal, valid and binding obligation of such Homeowner, (ii) a Home Deed has been executed and delivered by the related Homeowner in blank or naming CRC as transferee, (iii) such Home Purchase Contract and Home Deed have been delivered to and are then in the possession of the agent of CRC and (iv) with respect to which either no Mortgage is outstanding or, if a Mortgage is outstanding, no more than one monthly payment on such Mortgage is past due; (xv) that, in the case of a Receivable that arises from an Equity Loan, arose under an Equity Loan Agreement and an Equity Loan Note, each of which are Eligible Contracts and are then in the possession of the Servicer; (xvi) that, in the case of an Unbilled Receivable, represents the right to payment for services rendered; (xvi) that, in the case of a Billed Receivable, has been fully earned by performance; (xvii) that, in the case of a Receivable arising on account of any Direct Expenses or any Service Fee or Finance Charge arising in connection with any of the foregoing, is payable no more than 60 days after the invoice date. Some of the foregoing eligibility criteria may only apply to Receivables sold under the Receivables Purchase Agreement or Purchase Agreement and not to Receivables sold under the Fee Receivables Purchase Agreement, and vice-versa.
  Borrowing Base
  Borrowing Base limitations will be calculated by looking to the “Net Receivable Balance” described below and subtracting therefrom the required credit enhancement described below.

 

11


Aggregate Receivable Balance:    Aggregate Receivable Balance ” shall mean, as of any date of determination, (a) the aggregate Unpaid Balance of the Fee Receivables and Pool Receivables arising under the Pool Relocation Management Agreements, calculated in the following manner: the Unpaid Balance will be reduced (without duplication), by (i) the amount of any funds received on account of or otherwise in connection with such Fee Receivable or Pool Receivable, including the amount of Home Sale Proceeds received with respect to the related Home (to the extent that they have not previously been applied to reduce the Unpaid Balance of the related Receivable) and (ii) the amount of any net gains on sales of Homes or other amounts (including without limitation rebates for referral fees, if any, and if allowed by law) that have not yet been remitted to the related Employer or the related Transferred Employee, to the extent required by the related Pool Relocation Management Agreement minus (b) the aggregate Unpaid Balance of all Pool Receivables and Fee Receivables that are not Eligible Receivables, but in the case of each amount calculated pursuant to clause (b) only to the extent such amounts have not already been subtracted in calculating such Aggregate Receivable Balance.
Net Receivables Balance:    The “ Net Receivables Balance ” as of any date will equal (i) the Aggregate Receivable Balance minus (ii) the Aggregate Adjustment Amount as of such date.
Aggregate Adjustment Amount:    The “ Aggregate Adjustment Amount ” will equal the sum of (a) the Overconcentration Amount, (b) the Geographic Overconcentration Amount and (c) the aggregate Unpaid Balance of all Unsold Home Receivables relating to Homes that have been owned by CRC for more than 365 days.
Overconcentration Amount:    The “ Overconcentration Amount ” shall mean, as of any date of determination, the sum of the amounts, with respect to each Corporate Obligor, of the excess, if any, of (i) the aggregate Unpaid Balance of all Fee Receivables (i.e., Receivables other than Unsold Home Receivables) owing by such Obligor over (ii) the Corporate Concentration Limit with respect to such Corporate Obligor.
Corporate Concentration Limit:    The “ Corporate Concentration Limit ” will equal: (a) with respect to the Fee Receivables attributable to each Corporate Obligor having a long term unsecured senior debt rating of “A” or better from Standard & Poor’s or “A2” or better from Moody’s, 10% of the Aggregate Receivable Balance, (b) with respect to the Fee Receivables attributable to each Corporate Obligor having a long term unsecured senior debt rating of less than “A” but “BBB” or better from Standard & Poor’s or less than “A2” but “Baa2” or better from Moody’s, 8% of the

 

12


   Aggregate Receivable Balance, (c) with respect to the Fee Receivables attributable to each Corporate Obligor having a long term unsecured senior debt rating of less than “BBB” but “BBB-” or better from Standard & Poor’s or less than “Baa2” but “Baa3” or better from Moody’s, 6% of the Aggregate Receivable Balance and (d) with respect to the Fee Receivables attributable to a Corporate Obligor which is not rated or which has a long term unsecured senior debt rating of less than “BBB-” from Standard & Poor’s or of less than “Baa3” from Moody’s , 5% of the Aggregate Receivable Balance; provided, that, the Purchaser may in its discretion approve any higher Corporate Concentration Limit for any Obligor under such terms and conditions which are acceptable to the Purchaser. If a Corporate Obligor is not rated but is the subsidiary of a rated entity, the parent’s rating or ratings shall for purposes of this definition, be deemed to be the ratings of the Corporate Obligor. If a Corporate Obligor’s rating results in two different Corporate Concentration Limits (because of differences in the ratings assigned by each of Standard & Poor’s and Moody’s), the Corporate Concentration Limit for such Corporate Obligor will be the lower of the two different Corporate Concentration Limits and if the Corporate Obligor is rated by Standard & Poor’s or by Moody’s, but not by both, the Corporate Concentration Limit shall be determined as if the Corporate Obligor were rated by both agencies at one level below its actual rating.
Geographic Overconcentration Amount:    The “ Geographic Overconcentration Amount ” as of any date of determination shall mean an amount equal to the sum of (a) the Excess ZIP Code Receivable Amount and (b) the Excess State Receivable Amount.
Excess State Receivable Amount:    Excess State Receivable Amount ” shall mean, as of any date of determination, an amount equal to the excess, if any of (a) the aggregate Unpaid Balance of all Eligible Receivables arising from or relating to all Homes with street addresses in a single state (for purposes of this definition, any U.S. territory or commonwealth and the District of Columbia shall each be deemed a single state), over (b) an amount equal to 15% of the Aggregate Receivable Balance as of the last day of such Monthly Period.
Excess ZIP Code Receivable Amount:    Excess ZIP Code Receivable Amount ” shall mean, as of any date of determination, an amount equal to the excess, if any of (a) the aggregate Unpaid Balance of all Eligible Receivables relating to all Homes with street addresses in the same ZIP code, over (b) an amount equal to 5% of the Aggregate Receivable Balance as of the last day of such Monthly Period.

 

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Defaulted Receivables:    A “ Defaulted Receivable ” is a Receivable that: (a) has been or should have been written off as uncollectible in conformity with the Credit and Collection Policy; or (b) is owed by an Obligor who is in insolvency proceedings or with respect to which an Event of Bankruptcy has occurred; or (c) has been billed and remains unpaid more than 120 days after the original due date thereof.
   Required Credit Enhancement
Required Asset Amount:    “Required Asset Amount” shall mean, as of any date of determination, an amount equal to the sum of (a) the Outstanding Amount plus (b) the Required Overcollateralization Amount.
  
Required Enhancement Amount:    Required Enhancement Amount ” shall mean, as of any date of determination, an amount equal to the greater of (i) 15% of the Net Receivables Balance and (ii) the sum of the Fee Loss Reserve, the Loss-to-Acquisition Value Reserve, the Carrying Cost Reserve, the Yield Reserve, the Servicing Fee Reserve and the Unbilled USPS Loss Reserve; provided , however , that after the declaration or occurrence of an Amortization Event, the Required Enhancement Amount shall equal the Required Enhancement Amount in effect on the date of the declaration or occurrence of such Amortization Event. 5
Required Over-collateralization Amount:    Required Overcollateralization Amount ” shall mean, as of any date of determination, the amount by which the Required Enhancement Amount exceeds the amount on deposit in the Principal Subaccount (as hereinafter defined).
Fee Loss Reserve:   

The “ Fee Loss Reserve ” as of the end of each month will equal the percentage equivalent of the product of:

 

(i) the Applicable Stress Factor (as hereinafter defined), multiplied by

 

(ii) Fee Receivable Loss Horizon, multiplied by

 

(iii) the sum of (A) the highest Three Month Rolling Fee Concession Ratio plus (B) the highest Three Month Rolling Fee Loss Ratio, in each case for any calendar month over the twelve calendar months ended as of the immediately preceding calendar month, multiplied by

 

(iv) the Unpaid Balance of the Fee Receivables that are Eligible Receivables as of the last day of the most recently ended calendar month.

 

5

Note: this definition is modified from the existing Indenture to eliminate, for purposes of simplicity, the concept of a pool-wide Reserve Percentage.

 

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Fee Receivable Loss Horizon:    The Fee Receivable Loss Horizon shall mean a fraction, calculated as of the last day of the most recently ended calendar month, the numerator of which is equal to the aggregate Unpaid Balance of all Fee Receivables created by each of Cartus and CRC during the six most recently ended calendar months and the denominator of which is equal to the aggregate Unpaid Balance of Fee Receivables that are Eligible Receivables as of the end of the most recently ended calendar month.
Concession Ratio:    The “ Concession Ratio ” as of the end of each month will equal the quotient, expressed as a percentage, of (a) the aggregate amount of reductions to the Unpaid Balances of Fee Receivables due to Concessions occurring during such calendar month divided by (b) the aggregate Unpaid Balance of Fee Receivables that are Eligible Receivables as of the last day of such calendar month. 6
Loss Ratio:    The “ Loss Ratio ” as of the end of each month will equal the quotient, expressed as a percentage, of (a) the aggregate Unpaid Balances of Fee Receivables that have become Defaulted Receivables during such calendar month 7 divided by (b) the aggregate Unpaid Balance of Fee Receivables that were generated during the sixth calendar month preceding such calendar month.
Three Month Rolling Fee Concession Ratio:    The “ Three Month Rolling Fee Concession Ratio ” for any calendar month will equal the rolling average of the Concession Ratios for each of the three calendar months preceding the prior calendar month.
Three Month Rolling Fee Loss Ratio:    The “ Three Month Rolling Fee Loss Ratio ” for any calendar month will equal the rolling average of the Loss Ratios for each of the three calendar months preceding the prior calendar month.
Loss-to-Acquisition Value Reserve:   

The “ Loss to Acquisition Value Reserve ” shall mean, as of any date of determination, the percentage equivalent to the product of:

 

(i) Either

 

6

Existing Kenosia documents use the phrase “such Fee Receivables” in the denominator of this definition and in the definition of “Loss Ratio”. We have deleted the word “such” to be clear that the denominator for purposes of this definition means all Fee Receivables that are Eligible as of month-end and for purposes of the Loss Ratio definition means all Receivables that were generated six months prior.

 

7

Note: the existing documents exclude from this calculation Receivables that have become defaulted due to insolvency of the related Obligor. That exclusion is being deleted so that the Loss Ratio going forward will include all Receivables that become Defaulted Receivables during the period in question.

 

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(a) If the Three Month Average Loss-to-Acquisition Value Ratio is 5.00% or less, the highest Three Month Average Loss-to-Acquisition Value Ratio for any calendar month over the twelve calendar months ended as of the immediately preceding calendar month;

 

Or

 

(b) If the Three Month Average Loss-to-Acquisition Value Ratio is greater than 5.00%, the sum of (A) 5.00% plus (B) the product of (1) the Applicable Stress Factor and (2) the amount by which the highest Three Month Average Loss-to-Acquisition Value Ratio for any calendar month over the twelve calendar months ended as of the immediately preceding calendar month exceeds 5.00%

 

Multiplied by

 

(ii) the Unpaid Balance of the KF Equity Receivables (as defined below) that are Eligible Receivables as of the last day of the most recently ended calendar month.

 

KF Equity Receivables ” means all Receivables arising out of or with respect to Equity Loans, Equity Payments, Mortgage Payments and Mortgage Payoffs unless such Receivables arose under a Guaranteed Government Contract.

Applicable Stress Factor   

“Applicable Stress Factor” shall mean, as of any date of determination,

 

(i) as used in the calculation of any reserve other than the Carrying Cost Reserve, 2.25, and

 

(ii) as used in the calculation of the Carrying Cost Reserve, an amount calculated as follows: (1) 1.50 if the current month Weighted Average Inventory Hold Period (as defined below) is less than 120 days; (2) 1.75 if the current month Weighted Average Inventory Hold Period is greater than or equal to 120 days but not greater than 135 days; and (3) 2.25 if the current month Weighted Average Inventory Hold Period is greater than 135 days.

Loss-to-Acquisition Value Ratio:    Loss-to-Acquisition Value Ratio” shall mean, for any calendar month and the KF Equity Receivables, the quotient , expressed as a percentage, of (a) for all related Homes sold during such calendar month, the aggregate of the amounts, if any, by which the purchase price of each such Home paid by the applicable Originator, exceeded the sale price for such Home received by the Servicer (the amount of any such excess

 

16


   with respect to a Home for purposes of this definition being a “ Loss ”) divided by (b) the aggregate purchase prices paid for such Homes. The Loss-to-Acquisition Value Ratio for any calendar month shall be based on the net Losses for such calendar month, which is calculated to include any gains on the sale of such Homes during such calendar month.
Three Month Average Loss-to-Acquisition Value Ratio:    The “ Three Month Average Los- to-Acquisition Value Ratio ” for any calendar month will equal the average of the Loss-to-Acquisition Value Ratios for each of the three calendar months preceding the prior calendar month.
Concession Ratio:    The “ Concession Ratio ” as of the end of each month will equal the quotient, expressed as a percentage, of (a) the aggregate amount of reductions to the Unpaid Balances of such Fee Receivables due to Concessions occurring during such calendar month divided by (b) the aggregate Unpaid Balance of such Fee Receivables that are Eligible Receivables as of the last day of such calendar month.
Carrying Cost Reserve:   

“Carrying Cost Reserve” shall mean, as of any date of determination:

 

the percentage equivalent of the product of:

 

(i) the greater of:

 

a. the Applicable Stress Factor and

 

b. a fraction, calculated as of the last day of the most recently ended calendar month, the numerator of which is equal to the maximum Weighted Average Inventory Hold Period for appraised value homes over the most recent 12 months, and the denominator of which is equal to the minimum Weighted Average Inventory Hold Period for appraised value homes in Inventory over the most recent 12 months

 

multiplied by

 

(ii) the highest Three Month Average Carrying Cost Ratio for the twelve calendar months ended as of the immediately preceding calendar month, multiplied by

 

(iii) the Unpaid Balance of the KF Equity Receivables that are Eligible Receivables as of the last day of the current calendar month.

 

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Weighted Average Inventory Hold Period    Weighted Average Inventory Hold Period ” shall mean, for any Monthly Period, the average number of days the Homes have been owned by CRC as of the close of business on the last day of such Monthly Period, weighted by the aggregate purchase prices paid by CRC for such Homes.
Three Month Average Carrying Cost Ratio:    The “ Three Month Average Carrying Cost Rati o” for any calendar month will equal the average of the Carrying Cost Ratios for each of the three calendar months preceding the prior calendar month.
Carrying Cost Ratio:    The “ Carrying Cost Rati o” for any calendar month will equal a quotient, expressed as a percentage, of (a) the aggregate amount of acquisition, carrying costs and closing costs incurred during the related Weighted Average Inventory Hold Period divided by (b) the aggregate Unpaid Balance of the KF Equity Receivables as of the last day of such calendar month.
Yield Reserve:    “Yield Reserve” shall mean, as of any date of determination during an Interest Period, the quotient , expressed as a percentage, of (a) the product of (i) the sum of (A) 1.5% plus (B) the Calyon Libor Rate for the Interest Period in which such date occurs multiplied by (ii) the Outstanding Amount multiplied by (iii) Adjusted Days in Inventory as of the end of the current Monthly Period, divided by (b) 360.
Adjusted Days in Inventory:    Adjusted Days in Inventory ” shall mean, for any Monthly Period, the product of 2.25 times the Weighted Average Inventory Hold Period for such Monthly Period.
Servicing Fee Reserve:    The “ Servicing Fee Reserve ” shall mean, as of any date of determination, the product of (i) the Servicing Fee multiplied by (ii) a fraction, the numerator of which is the Adjusted Days in Inventory as of the end of the current Monthly Period and the denominator of which is 360, multiplied by (iii) the Aggregate Receivable Balance at the end of the most recent Monthly Period.
Unbilled USPS Receivable Loss Reserve:   

The “ Unbilled USPS Receivable Loss Reserve ” shall mean, as of any date of determination, the percentage equivalent of the product of:

 

(i) the Applicable Factor multiplied by

 

(ii) a fraction, calculated as of the last day of the most recently ended calendar month, the numerator of which is equal to the aggregate Unpaid Balance of all Billed USPS Receivables created by each Originator during the twelve most recently ended calendar months, and the denominator of which is equal to the aggregate Unpaid Balance of Unbilled USPS Receivables that are Eligible Receivables as of the end of the most recently ended calendar month, multiplied by ;

 

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(iv) the sum of (A) the highest Three Month Rolling Billed USPS Concession Ratio plus (B) the highest Three Month Rolling Billed USPS Loss Ratio, in each case for any calendar month over the twelve calendar months ended as of the immediately preceding calendar month, multiplied by

 

(v) the Unpaid Balance of the Unbilled USPS Receivables that are Eligible Receivables as of the last day of the most recently ended calendar month.

Billed USPS Receivable:    Billed USPS Receivable ” shall mean any Billed Receivable arising under a Guaranteed Government Contract and out of or with respect to Direct Expenses, Service Fees and Other Reimbursable Expenses and the right to payment of any and all Finance Charges with respect to any of the foregoing.
Unbilled USPS Receivable:    Unbilled USPS Receivable ” shall mean any Unbilled Receivable arising out of or with respect to Direct Expenses, Equity Loans, Equity Payments, Mortgage Payments and Mortgage Payoffs with respect to a Guaranteed Government Contract.
Billed USPS Concession Ratio:    Billed USPS Concession Ratio ” shall mean, for any calendar month and any Billed USPS Receivables, the quotient, expressed as a percentage, of (a) the aggregate amount of reductions to the Unpaid Balances of such Billed USPS Receivables due to Concessions occurring during such calendar month divided by (b) the aggregate Unpaid Balance of such Billed USPS Receivables that are Eligible Receivables as of the last day of such calendar month.
Three Month Rolling Billed USPS Concession Ratio:    Three Month Rolling Billed USPS Concession Ratio ” shall mean, for any calendar month, the rolling average of the Billed USPS Concession Ratios for each of the three calendar months preceding the prior calendar month.
Billed USPS Loss Ratio:    Billed USPS Loss Ratio ” shall mean, for any calendar month and any Billed USPS Receivables, the quotient, expressed as a percentage, of (a) the aggregate Unpaid Balance of such Billed USPS Receivables that have become Defaulted Receivables during such calendar month divided by (b) the aggregate Unpaid Balance of such Billed USPS Receivables generated during the sixth calendar month preceding such calendar month.
Three Month Rolling Billed USPS Loss Ratio:    Three Month Rolling Billed USPS Loss Ratio” shall mean, for any calendar month, the rolling average of the Billed USPS Loss Ratios for each of the three calendar months preceding the prior calendar month.

 

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Purchase Agreement

 

On March 7, 2002 (the “ Series 2002-1 Closing Date ”), Cartus entered into the Purchase Agreement with CRC pursuant to which CRC purchased all of the Cartus Purchased Assets in a transaction intended to be a true sale and agreed to acquire all Cartus Receivables arising under the Pool Relocation Management Agreements thereafter and the Cartus Related Property in transactions which the parties intended to be treated as “true sales”. The Purchase Agreement permits Cartus to identify additional Contracts from time to time satisfying the eligibility criteria to become Pool Relocation Management Agreements under the Purchase Agreement. The Purchase Agreement contains such other terms and conditions as are customary for agreements of this type.

   The purchase price for each Cartus Receivable will equal the fair market value thereof. On the Series 2002-1 Closing Date, CRC paid the purchase price for the Cartus Receivables with cash received from the Issuer under the Receivables Purchase Agreement. Thereafter, the purchase price of new Cartus Receivables has been and will be paid by CRC with cash received from the Issuer under the Receivables Purchase Agreement, and new CRC Receivables may be generated by CRC. Under the Purchase Agreement, Cartus also agrees to convey to CRC all right, title and interest it may have, if any, in, to and under any CRC Receivables, including all Related Property with respect thereto and rights, if any, to reimbursement or, or interest on, such CRC Receivables, and all proceeds thereof.
   Purchases of Cartus Receivables under the Purchase Agreement are made without recourse except as provided in the Purchase Agreement. The Seller makes certain representations and warranties with respect to the Cartus Receivables and is liable to the extent of any misrepresentations and warranties. The Seller is also liable under the Purchase Agreement for the balance of all Cartus Receivables that are incorrectly designated as “Eligible Receivables” at the time of sale to CRC, as well as for any dilution or Concessions arising from the acts or omissions of Cartus. The Performance Guarantor will guarantee all of the Seller’s obligations under the Purchase Agreement pursuant to the Performance Guarantee.
   The Purchase Agreement contains customary representations and warranties for facilities and transactions of this type, subject to customary knowledge and materiality limitations, including among others, corporate existence, good standing, sale of the Cartus Receivables, no conflicts with laws, charter documents or agreements, no adverse proceedings, compliance with contractual obligations and

 

20


  laws, ownership and eligibility of the Cartus Receivables at the time of sale to CRC, absence of liens and security interests on the Cartus Receivables (other than certain permitted liens) at the time of sale to CRC, location of chief executive office and records, compliance with margin regulations, accuracy of information, solvency of the Seller, inapplicability of the 1940 Act, payment of taxes, potential existence of ERISA liens, forms of Pool Relocation Management Agreements, accounting treatment (solely as to intercompany purchases) and no “CRC Purchase Termination Event” (as hereinafter defined) with respect to Cartus under the Purchase Agreement.
  The Purchase Agreement contains affirmative covenants usual for facilities and transactions of this type, subject to customary materiality limitations, including, among others, maintenance of corporate existence and rights, compliance with laws, performance of obligations, inspection of books and properties, keeping of books and records, compliance with Credit and Collection Policies, payment of taxes and other liabilities, accounting treatment (on an intercompany basis) of transfer of Cartus Receivables from Cartus to CRC as sales, maintenance of separate corporate existence of CRC (including requirement that CRC maintain an independent director), notice of CRC Purchase Termination Events, litigation and other adverse action, delivery of unaudited financial statements of the Seller, delivery of audited financials of the Performance Guarantor and its consolidated subsidiaries (provided that, if any such financial statements are made available via publicly Securities and Exchange Commission filings, such filings shall constitute adequate delivery of such statements); delivery of financials of the Performance Guarantor and its consolidated subsidiaries; and delivery of compliance certificates relating to the foregoing.
  The Purchase Agreement contains negative covenants usual for facilities and transactions of this type, subject to customary materiality limitations, including among others, limitations on liens on Cartus Receivables, limitations on changes in business conducted by the Seller, limitations on changes in Credit and Collection Policies, limitations on changes to the Pool Relocation Management Agreements and limitations on changes in the Seller’s name. In addition, Cartus covenants not to (i) assert any interest in any Home or any Home Sale Proceeds, other than as Servicer, (ii) take any action that is inconsistent with the ownership of the Homes and the Home Sale Proceeds by CRC, (iii) account for the Homes or the Home Sale Proceeds as assets of Cartus, subject to GAAP or applicable tax laws, (iv) enter into any agreement with CRC or any Employee relating to the Homes or the Home Sale Proceeds, other than the Purchase Agreement and the Transfer and Servicing Agreement, respectively, (v) be a party to any Home Purchase Contract or any document, instrument, or agreement

 

21


  relating to the sale by CRC of a Home, unless it is expressly disclosed on the face of such document, instrument, or agreement to be acting as Servicer for and agent of CRC and not as principal, or be a party to any Home Sale Contract, (vi) enter into lines of business unrelated to its current business, (vii) sell any of its receivables except pursuant to the Purchase Agreement or pursuant to other securitization transactions (subject to conditions to be agreed upon, including delivery of acknowledgment letters from the participants in the other securitization transaction to the effect that they have no interest in the assets sold to CRC or the Issuer or (viii) incur debt for borrowed money or guarantee debt of its affiliates unless the relevant creditors deliver acknowledgment letters to the effect that, or the documents governing such debt otherwise provide that, such creditors will not claim any interest in the assets sold to CRC or the Issuer. 8
  The Purchase Agreement contains termination events (“ CRC Purchase Termination Events ”) that are customary for transactions of this type, including, but not limited to, violation of covenants, breach of any representation and warranty (other than any such breach relating to a Cartus Receivable that shall have been cured by the making of an adjustment payment), failure of the Purchase Agreement to be in full force and effect, the occurrence of an Amortization Event (as hereinafter defined) with respect to the Notes, the occurrence of certain events of bankruptcy, insolvency, conservatorship or receivership relating to the Performance Guarantor or the Seller, the failure of CRC to have a valid and perfected first priority ownership interest in the Cartus Receivables, the Home Sale Proceeds and the Cartus Related Property or the existence of tax or ERISA liens on the Cartus Receivables.
 

KF Purchase Agreement

 

On the Series 2002-1 Closing Date, the Issuer entered into the KF Purchase Agreement with Cartus pursuant to which the Issuer purchased all of the Originator Fee Receivables and KF Related Property and agreed to acquire all such Originator Fee Receivables and KF Related Property. The purchase price for each Originator Fee Receivable will equal the fair market value thereof and purchases of Originator Fee Receivables are made without recourse except as provided in the KF Purchase Agreement. The KF Purchase Agreement contains representations, warranties, affirmative covenants, negative covenants and termination events which are substantially similar to those set forth in the Purchase Agreement.

 

8

Note: to the extent any covenants in the existing Purchase Agreement, KF Purchase Agreement or Receivables Purchase Agreement are weaker than the analogous covenants in the Apple Ridge Purchase Agreement, Calyon reserves the right to request conforming amendments, whether or not such amendments are otherwise expressly stated herein.

 

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Receivables Purchase Agreement

 

On the Series 2002-1 Closing Date, CRC entered into the Receivables Purchase Agreement with the Issuer pursuant to which the Issuer purchased all of the CRC Purchased Assets and agreed to acquire all Pool Receivables arising under the Pool Relocation Management Agreements thereafter, the CRC Related Property and the Home Sale Proceeds. The Receivables Purchase Agreement contains such other terms and conditions as are customary for agreements of this type.

  The purchase price for each Receivable will equal the fair market value thereof.
  Purchases of Pool Receivables under the Receivables Purchase Agreement are made with limited recourse. CRC makes certain representations and warranties with respect to the creation of liens on the Pool Receivables and will be liable to the extent of any misrepresentations and breaches of such warranties.
  The Receivables Purchase Agreement contains customary representations and warranties for facilities and transactions of this type, subject to customary knowledge and materiality limitations, including among others, corporate existence, good standing, sale of the Pool Receivables, no conflicts with laws, charter documents or agreements, no adverse proceedings, compliance with contractual obligations and laws, ownership of the Pool Receivables, absence of liens and security interests on the Pool Receivables (other than certain permitted liens), location of chief executive office and records, compliance with margin regulations, accuracy of information, solvency of CRC, inapplicability of the 1940 Act, payment of taxes, potential existence of ERISA liens, accounting treatment and no “KF Purchase Termination Event” (as hereinafter defined) under the Receivables Purchase Agreement.
  The Receivables Purchase Agreement contains affirmative covenants usual for facilities and transactions of this type, subject to customary materiality limitations, including, among others, maintenance of corporate existence and rights, compliance with laws, performance of obligations, inspection of books and properties, keeping of books and records, payment of taxes and other liabilities, maintenance of separate corporate existence of CRC, notice of KF Purchase Termination Events, litigation and other adverse action.

 

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  The Receivables Purchase Agreement contains termination events (“ KF Purchase Termination Events ”) that are customary for transactions of this type, including, but not limited to, violation of covenants, breach of any representation and warranty, failure of the Receivables Purchase Agreement to be in full force and effect, the occurrence of an Amortization Event with respect to any Notes, the occurrence of certain events of bankruptcy, insolvency, conservatorship or receivership relating to the Performance Guarantor or the Seller, the failure of the Issuer to have a valid and perfected first priority ownership or security interest in the Pool Receivables and the CRC Related Property or the existence of tax or ERISA liens on the Pool Receivables.
  The Receivables Purchase Agreement contains negative covenants usual for facilities and transactions of this type, subject to customary materiality limitations, including among others, limitations on liens on Pool Receivables, limitations on changes in business conducted by CRC and limitations on changes in CRC’s name. In addition, CRC covenants not to (i) take any action that is inconsistent with its ownership of the Homes and the Home Sale Proceeds or (ii) enter into any agreement with Cartus or any Employee relating to the Homes or the Home Sale Proceeds, other than the Purchase Agreement and the Transfer and Servicing Agreement or the Home Sale Contracts, respectively.
 

Servicing Agreement

 

On the Series 2002-1 Closing Date, Cartus, CRC, the Trustee and the Issuer entered into the Servicing Agreement pursuant to which Cartus agreed to service the Pool Receivables on behalf of the Issuer and remarket, maintain and resell the Homes on behalf of CRC.

  The Performance Guarantor will guarantee all of the Servicer’s obligations under the Transfer and Servicing Agreement pursuant to the Performance Guarantee.
Servicing:   Pursuant to the Servicing Agreement, the Servicer agrees to manage the servicing and administration of the Pool Receivables, the collection of the payments due under the Pool Receivables and charging off of any Pool Receivables as uncollectible, all in accordance with the Credit and Collection Policies. The Servicer is obligated to use commercially reasonable efforts to collect, consistent with its past practices, as and when the same becomes due, the amount owing on each Receivable.
  The Servicer agrees to maintain, remarket and sell the Homes on behalf of CRC. In addition, the Servicer is obligated to make “ Servicer Advances ” in order to make Mortgage Payoffs, Direct Expenses, Mortgage Payments or Other Reimbursable Expenses in respect of the Homes owned by CRC, but only to the extent that it has determined in

 

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  its reasonable judgment that such Servicer Advances will be recoverable out of Collections on the Receivable arising as a result of such advance. The Servicer will be reimbursed for Servicer Advances first from Collections relating to the Homes with respect to which such Servicer Advances were made and, further, to the extent any such Servicer Advance has been determined to be nonrecoverable, from Collections on other Receivables. Under the terms of the Purchase Agreement, the Fee Receivables Purchase Agreement and the Receivables Purchase Agreement, the Receivables arising under the Pool Relocation Management Agreements in respect of Servicer Advances are conveyed to the Issuer and included in the Pool Receivables and the Pledged Assets.
  The Servicer may not extend, rescind, cancel, amend or otherwise modify, or attempt or purport to extend, rescind, cancel, amend or otherwise modify, the terms of, any Receivable, except in any such case, in accordance with the terms of the Credit and Collection Policies. If the Servicer adjusts the Aggregate Employer Balance of any Receivable due to Concessions made by the Servicer, the Servicer will make a payment to the Issuer in the amount of such reduction.
Collections:  

Collections ” shall mean all funds that are received on account of or otherwise in connection with any Cartus Purchased Asset, including without limitation all funds received (a) from or on behalf of any Obligor in payment of or otherwise in respect of any Cartus Receivable included in the Cartus Purchased Assets, (b) from or on behalf of any Ultimate Buyer or any other Person in respect of Cartus Home Sale Proceeds, (c) from any other Person to the extent such funds were applied, or should have been applied, pursuant to any Contract to repay or discharge any Cartus Receivable or Cartus Related Asset included in the Cartus Purchased Assets (including without limitation insurance payments that any Transaction Party applies in the ordinary course of its business to amounts owed in respect of such Cartus Purchased Assets and the amount of any Equity Payments applied to repayment of Equity Loans), (d) from the Originator in respect of any obligation of the Originator under the Purchase Agreement or the Fee Receivables Purchase Agreement, as applicable, and (e) from Realogy in respect of any payments made by Realogy as Performance Guarantor under the Performance Guarantee.

 

All Collections (other than Home Sale Proceeds) are deposited directly into a lockbox account maintained by the Servicer in the name of the Indenture Trustee. CRC and the Servicer have each agreed to direct that all Home Sale Proceeds be deposited into a lockbox account in the name of the Indenture Trustee or into the Collection Account (as defined below under Allocations) within two days of the sale of the related Home. Within two business days of receipt in the lockbox,

 

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  Collections will be transferred to the Indenture Trustee for deposit into the Collection Account. Collections will not be deposited in any account of, and will not be commingled with the assets of, the Performance Guarantor, Cartus or any of their other affiliates. Upon the occurrence of an Amortization Event, the Majority Investors will have the right to direct the Trustee to take control of the lockbox accounts in order to redirect such payments directly into the Collection Account. 9
Reporting Requirements: 10   Required reporting will include (a) at any time after a Servicer Default has occurred, a statement (a “ Daily Report ”) delivered by the Servicer with respect to each business day setting forth total Collections deposited in the Collection Account on such business day and the amount of Collections to be withdrawn from the Collection Account and paid to the Seller on such business day; (b) at any time that the Leverage Ratio exceeds the level of Realogy’s Revolving Credit Facility’s leverage covenant less 0.25 (a “ Weekly Reporting Trigger ”), a required weekly report (a “ Weekly Report ”) delivered by the Servicer with respect to the end of the preceding week setting forth certain calculations of the Adjusted Aggregate Receivable Balance and certain other calculations provided that, if a Weekly Reporting Trigger occurs during the 2007 calendar year, Cartus will have 90 days from the discovery of such Weekly Reporting Trigger before it must commence weekly reporting and provided further that, with respect to the first such Weekly Reporting Trigger, if such event occurs after the 2007 calendar year, Cartus will have 45 days from the discovery of such Weekly Reporting Trigger before it must commence weekly reporting on account of such event; (c) a monthly reporting statement (a “ Monthly Report ”) delivered by the Servicer two business days (the “ Determination Date ”) preceding each Distribution Date setting forth the information required to be set forth therein under the Servicing Agreement and the Indenture; (d) quarterly compliance certificates; (e) annual delivery of an agreed-upon procedures letter from Protiviti or such other auditor acceptable to the Administrative Agent [with the next such letter being due on May 31, 2008] 11 ; (f) annual audited

 

9

This particular provision was added to Apple Ridge in 2005 and therefore may not appear in the Kenosia documents but will need to be added.

 

10

Note: the existing Kenosia Documents do not provide for reporting and audit rights on the same scope as exists in the Apple Ridge documents. The summary set forth herein is based on the proposed terms for Apple Ridge; to the extent that the existing Kenosia documents do not provide for the same degree of reporting and audits contemplated herein, the Kenosia documents will be modified accordingly to include provisions for such reporting and audits.

 

11

Cartus to confirm.

 

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  financial statements of the Performance Guarantor and its consolidated subsidiaries; (g) quarterly unaudited financial statements of the Performance Guarantor and its consolidated subsidiaries; (h) annual and quarterly unaudited financial statements of the Servicer and its consolidated subsidiaries; (i) copies of any reports on Form 8-K filed by the Performance Guarantor with the Securities Exchange Commission that are routinely distributed to creditors of the Performance Guarantor; (j) notices of material legal proceedings, ERISA events and material adverse changes in the financial condition of the Performance Guarantor or its respective consolidated subsidiaries that would have a material adverse effect on the Notes; (k) notices of any Asset Amount Deficiency known to the Servicer, and (l) any other information reasonably requested by the Administrative Agent or any Managing Agent.
Audit Rights:   The Servicer will permit up to two audits annually on behalf of the Administrative Agent of the Servicer’s records and files relating to the Pool Receivables to be conducted upon reasonable notice during regular business hours by independent certified public accountants selected by the Administrative Agent which have agreed to follow the scope of an audit approved by the Administrative Agent; provided , however that, after the occurrence of a Servicer Default, the Agent and each Managing Agent will be permitted to conduct an audit of the Servicer’s records and files at any time and without limit as to number, upon reasonable notice during regular business hours, using independent certified public accountants selected by the Administrative Agent. The first audit in any year and any audit after the occurrence of a Servicer Default will be at the expense of the Servicer. The Administrative Agent will promptly furnish the Managing Agents with a copy of the audit report prepared in connection with each such audit.
Servicer Default:   The Servicing Agreement contains defaults (each a “ Servicer Default ”) that are customary for transactions of this type, subject to customary materiality limitations and grace periods, including, but not limited to, failure to deliver reports, failure to pay any amount required to be paid thereunder, violation of other covenants, breach of any representation and warranty, the occurrence of certain events of bankruptcy, insolvency, conservatorship or receivership relating to the Servicer, a cross default related to Realogy’s bank debt and other material indebtedness.
Servicer Termination:   In the event of any Servicer Default and so long as such Servicer Default remains unremedied, the Indenture Trustee may, and at the written direction of the Majority Investors, the Indenture Trustee will be obligated to, by notice then given in writing to the Servicer, terminate the rights and obligations of the Servicer under the Transfer and Servicing Agreement and to give notices to lockbox banks to

 

27


  forward collections directly to the accounts established under the Indenture. On the date that a successor Servicer has been appointed by the Indenture Trustee pursuant to the terms of the Transfer and Servicing Agreement, the authority and power of the Servicer under the Transfer and Servicing Agreement shall pass to and be vested in the successor Servicer. A successor Servicer may be appointed for the entire pool of Pool Receivables or for any subset of the Pool Receivables, as specified by the Majority Investors. “ Majority Investors ” will mean Noteholders holding more than 50% of the aggregate principal amount of the Notes outstanding. Each Managing Agent shall act as the representative of its related Conduit for purposes of giving any such directions, votes or consents.
Servicing Fee:   So long as the Servicer is Cartus, the Issuer will pay the Servicer as servicing compensation a monthly servicing fee (the “ Servicing Fee ”) equal to [0.75%] per annum (the “ Servicing Fee Rate ”) times the Aggregate Receivable Balance of all Pool Receivables as of the last day of such month. Cartus must represent that the Servicing Fee Rate is a market rate reflecting arms’ length terms. If Cartus is replaced as Servicer for all or any portion of the Pool Receivables, the successor Servicer will be compensated at such market rate as may be agreed between such successor Servicer and the Majority Investors.
 

Performance Guarantee

 

Pursuant to the Performance Guarantee, the Performance Guarantor guarantees the punctual performance of all of the Seller’s obligations under the Purchase Agreement, including, without limitation, its obligation to repurchase Pool Receivables as to which the Seller has breached a representation or warranty. The Performance Guarantor also guarantees the punctual performance of all of the Servicer’s obligations under the Servicing Agreement, including, without limitation, its obligation to make advances in respect of Home maintenance expenses, its obligation to deposit Home Sale Proceeds received by it into the Collection Account and its obligation to market the Homes from time to time.

 

Indenture

 

The Notes will be issued pursuant to the Indenture and will be secured under the Indenture by a first priority security interest in (i) the Issuer Assets, (ii) funds on deposit from time to time in the Collection Account and any accounts established under the Indenture and (iii) all proceeds of the foregoing (the “ Pledged Assets ”). The Notes will be limited recourse obligations of the Issuer, payable to the extent of the proceeds of the Pledged Assets.

 

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Distribution Date:   The [15 th ] day of each calendar month, or if the [15 th ] is not a business day, the succeeding business day (each, a “ Distribution Date ”).
Allocations:   Collections will be deposited by the Servicer in an account maintained in the name of the Indenture Trustee (the “ Collection Account ”) in accordance with the Servicing Agreement.
Representations, Warranties and Covenants of the Issuer:   The Indenture contains customary representations and warranties for facilities and transactions of this type, including among others, existence, good standing, no conflicts with laws, charter documents or agreements, no adverse proceedings, status of Indenture Trustee’s lien on the Collateral, compliance with contractual obligations and laws, filing of tax returns and payment of taxes, location of chief executive office and records, solvency of the Issuer, inapplicability of the 1940 Act, absence of liabilities and compliance with margin regulations.
  The Indenture contains customary affirmative covenants for facilities and transactions of this type, including among others, delivery of annual management reports of the Issuer, inspection of books and properties, compliance with laws, notice of Amortization Event (as hereinafter defined), Termination Event or Event of Default, litigation and other adverse action, payment of taxes, maintenance of separate existence (including requirement that the Issuer maintain an independent director), maintenance of existence, property and rights and further assurances.
  The Indenture contains customary negative covenants for facilities and transactions of this type, including among others, limitations on indebtedness, limitations on liens, limitations on guarantees, limitations on mergers, acquisitions and asset sales, limitations on restricted payments, limitations on changes in business, limitations on investments, limitations on entering into agreements, limitations on changing names or locations and limitations on amendments to the organizational documents.
Events of Default:   The Indenture contains customary events of default for facilities of this type, including among others, (a) The Issuer shall fail to make any payment of interest on the Notes when due and such failure shall remain unremedied for five Business Days; or (b) The Issuer shall fail to make any payment of the principal of the Notes when due and such failure shall remain unremedied for five Business Days; or (c) (i) The Issuer shall fail to perform or observe, as and when required, any term, covenant or agreement contained in the Indenture or any of the other transaction documents, (ii) such failure materially and adversely affects the rights of the Noteholders and (iii) such failure shall remain unremedied for 60 days after written notice thereof (specifying such failure and requiring it to be remedied and stating that such notice is a

 

29


  “Notice of Default” under the Indenture) shall have been given (A) to the Issuer by the Trustee or (B) to the Issuer and the Trustee by Noteholders evidencing at least 25% of the Outstanding Amount; or (d) (i) any representation or warranty made by the Issuer in this Indenture or any of the other transaction documents shall prove to have been untrue and incorrect in any material respect when made or deemed to have been made, (ii) such occurrence materially and adversely affects the rights of the Noteholders and (iii) such occurrence remains unremedied for 60 days after written notice thereof (specifying such failure and requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture) shall have been (A) given to the Issuer by the Trustee or (B) to the Issuer and the Trustee by Noteholders evidencing at least 25% of the Outstanding Amount; or (e) An Insolvency Event shall have occurred with respect to the Issuer; or (f) The Commission or other regulatory body having jurisdiction reaches a final determination that the Issuer is required to be registered under the Investment Company Act.;
  Upon the occurrence of an Event of Default specified in clause (e) or (f), the Notes will be immediately due and payable and upon the occurrence and continuance of any other Event of Default, the Indenture Trustee or the holders of Notes representing more than a majority of the principal amount of the Notes may declare all the Notes to be due and payable. If the Notes are accelerated, the Indenture Trustee may at the direction of the Noteholders (and shall, at the direction of Majority Investors) exercise certain remedies provided that, following the occurrence and continuance of an Event of Default specified in clause (a) or (b) above, the Indenture Trustee may not sell or otherwise liquidate the Issuer Assets unless (A) the holders of 100% of the Notes consent thereto; (B) the proceeds of such sale or liquidation distributable to Noteholders are sufficient to pay in full all principal of, and interest on, the Notes or (C) the Indenture Trustee determines that the Issuer Assets will not continue to provide sufficient funds for payment of principal of, and interest on, the Notes as they would have become due if the Notes had not been declared due and payable and the Indenture Trustee obtains the consent of holders of Notes evidencing at least 66 2/3% of the Outstanding Principal Amount.
Amortization Events:   The Indenture will contain certain “ Amortization Events ,” including: (i) failure on the part of the Issuer to pay principal of and interest or certain other amounts, which failure remains unremedied for five business days 12 or (ii) failure on the part of the Issuer duly to comply with law or perform or observe certain negative covenants and agreements, or (iii)

 

12

Note: changed from three business days (in existing documents) to conform to Apple Ridge.

 

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  failure on the part of the Issuer duly to perform or observe any other covenants or agreements of the Issuer set forth in the Indenture, which failure has a material adverse effect and which failure continues unremedied for a period of 30 days; (iv) certain representations and warranties made by the Issuer (i.e., those relating to enforceability of the Indenture, validity of the liens thereunder and absence of conflict with other agreements) prove to have been incorrect in any material respect when made, or (vi) any representation or warranty made by the Issuer therein proves to have been incorrect in any material respect when made, and continues to be incorrect in any material respect for a period of 30 days, in each case, after the date on which an officer of the Issuer knew or with reasonable diligence would have known of such failure; (vii) a Servicer Default has occurred under the Servicing Agreement and remains unremedied for a period of five Business Days; (viii) a Purchase Termination Event under either the Purchase Agreement, Receivables Purchase Agreement or Fee Receivables Purchase Agreement has occurred and, in each case, remains unremedied for a period of five Business Days; (ix) an Event of Default or a Funding Termination Date shall have occurred; (x) the failure to vest and maintain in the Trustee a perfected first priority security interest in the Pledged Assets; (xi) an Event of Bankruptcy shall occur with respect to the Issuer, the Performance Guarantor, Cartus or CRC’ (xii) a default occurring with respect to bank debt of the Servicer or the Performance Guarantor where the amount or amounts of such indebtedness exceeds $25,000,000 (or the equivalent thereof in any other currency) in the aggregate; (xiii) exclusive control of any Lockbox Account has not been transferred to the Administrative Agent upon request; (xiv) the Three Month Rolling Fee Concession Ratio shall exceed 1.5%; (xv) the Three Month Rolling Default Ratio shall exceed 12.5%; (xvi) the Three Month Average Loss-to-Acquisition Value Ratio shall exceed 10%; (xvii) any Pool Relocation Management Agreement is terminated for any reason, if the aggregate Unpaid Balance of Receivables arising under such Pool Relocation Management Agreement represent more than 30% of the Aggregate Receivables Balance, in each case as of the date such Pool Relocation Management Agreement is terminated; (xviii) the Three Month Weighted Average Inventory Hold Period exceeds [150] days; (xix) the Six Month Weighted Average Inventory Hold Period exceeds [135] days; (xx) Realogy shall have breached its financial covenants in its senior credit facility, (xxi) the Performance Guarantee is rescinded or shall cease to be the valid, binding and enforceable obligation of Realogy, or Realogy shall deny liability thereunder or default in the payment of performance thereunder or (xxii) a Change in Control.

 

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  A “ Change in Control ” shall mean any of: (i) CRC and the Issuer ceasing to be wholly-owned by Cartus, (ii) Cartus ceasing to be owned by Realogy, (iii) Apollo Management LLP and/or funds controlled by it ceasing to own a majority of Realogy’s voting stock other than by reason of an initial public offering or (iv) any other person becoming the majority owner of Realogy’s voting stock, subject to revision based on the corresponding definition in Realogy’s revolving credit agreement.
  Other Terms of the Notes
Maximum Principal Amount:   $175,000,000. The Issuer may, on thirty days’ notice to the Agent, reduce the Maximum Principal Amount from time to time in an amount not less than $5,000,000, provided the Maximum Principal Amount may not be reduced to an amount less than the outstanding principal amount of the Notes.
Interest:   To the extent funding of the Notes is provided by the Conduit from the issuance of commercial paper, interest shall be payable at the Conduit’s CP Rate plus 1.0% per annum and shall be paid in arrears on the last day of each Interest Period. To the extent funding of the Notes is provided by the Committed Purchasers, interest shall be payable at a per annum rate equal to one-month LIBOR plus a spread to be set forth on a grid set forth in the Note Purchase Agreement, and shall be paid in arrears on the last day of each Interest Period, provided, however, if LIBOR funding is not available, interest shall be payable at the Committed Purchaser’s prime rate in effect from time to time and shall be paid in arrears on each Distribution Date. All interest is due and payable monthly on each Distribution Date and each Conduit or its Managing Agent shall notify the Servicer, the Issuer and the Trustee, five days after the end of each Interest Period, of the total amount of interest to be paid on the next Distribution Date.
CP Rate:   With respect to each Interest Period, the sum of (i) the rate at which commercial paper notes having a term equal to such Interest Period are issued by the Conduit to fund or maintain the Notes (including commercial paper notes issued to funds accrued and unpaid discount) plus (ii) the commissions and charges of placement agents or commercial paper dealers with respect to such commercial paper notes.
Interest Period:  

Interest Period ” shall mean, with respect to each Tranche:

 

(a) initially, the period commencing on the date such Tranche is funded and ending such number of days thereafter selected by the Issuer and approved by the Administrative Agent; and

 

(b) thereafter, each period commencing on the last day of the immediately preceding Interest Period for such Tranche and ending such number of days thereafter selected pursuant to clause (a) above;

 

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in each case, provided that

 

(i) any Interest Period that otherwise would end on a day that is not a Business Day shall be extended to the next succeeding Business Day; provided , however , that if such Interest Period relates to a Eurodollar Tranche and such next succeeding Business Day would cause the Interest Period to end in the next calendar month, such Interest Period shall end on the next preceding Business Day; and

 

(ii) any Interest Period that otherwise would end beyond the Final Stated Maturity Date shall end on the Final Stated Maturity Date.

 

Unless otherwise approved by the Administrative Agent, an Interest Period shall be (i) one calendar month with respect to any CP Tranche or Base Rate Tranche and (ii) one, two or three months with respect to any Eurodollar Tranche.

Commitment Fee:  

During the Revolving Period, the Issuer shall pay the Agent (for the account of the Bank) a commitment fee on the unused portion of the Maximum Principal Amount at the applicable rate set forth below, payable on each Distribution Date in arrears.

 

If the outstanding principal of the Notes is 80% or more of the Maximum Principal Amount, then the Commitment Fee rate shall equal 30 bps.

 

If the outstanding principal of the Notes is less than 80% but 70% or more of the Maximum Principal Amount, then the Commitment Fee rate shall equal 37.5 bps.

 

If the outstanding principal of the Notes is less than 70% but 60% or more of the Maximum Principal Amount, then the Commitment Fee rate shall equal 45 bps.

 

If the outstanding principal of the Notes is less than 60% of the Maximum Principal Amount, then the Commitment Fee rate shall equal 52.5 bps.

 

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Final Stated Maturity Date:   The Distribution Date occurring in the 15 th month following the month in which the Amortization Period commenced.
Revolving Period:   The period beginning on the issuance date of the Notes and ending on the earliest to occur of (i) the fifth anniversary of the date the Notes are assigned to Calyon and (ii) the close of business on the business day immediately preceding the day on which an Amortization Event has occurred with respect to the Notes.
Amortization Period:   The period beginning at the close of business on the last day of the Revolving Period and ending on the day on which payment in full has been made of the principal amount of the Notes plus accrued and unpaid interest thereon plus any increased costs, fees, expenses and other amounts payable to the Conduits, the Banks, the Managing Agents or the Administrative Agent pursuant to the Indenture or the Note Purchase Agreement.
Increases in Principal Amount:   At any time during the Revolving Period, the Issuer may, on two Business Days’ notice to the Agent, request an increase in the outstanding principal amount of the Notes in an amount not less than $1,000,000. Subject to the conditions precedent that on the date of such requested increase, and immediately after giving effect thereto, (i) no Amortization Event or incipient Amortization Event shall exist, and (ii) the outstanding principal amount of the Notes shall not exceed the Maximum Principal Amount, each Conduit, on a discretionary basis, may fund such increase, and if such Conduit does not fund such increase, the Banks acting as liquidity providers to such Conduit on a committed basis will fund such increase.
Decreases in Principal Amount:   At any time during the Revolving Period, the Issuer may, on three Business Days’ notice to the Agent, decrease the outstanding principal amount of the Notes, in an amount not less than $1,000,000, provided that on the date of such decrease, and immediately after giving effect thereto, no Amortization Event or incipient Amortization Event shall exist. On the date of such decrease, the Issuer shall apply the amount of such decrease to pay the principal of the Notes and, unless an Interest Period in an amount at least equal to such decrease ends on such date, the Issuer shall also pay to the relevant Managing Agent (for the account of the Conduit and/or the Bank) the amount of any breakage costs incurred by the Conduit or the Bank in connection with such decrease.
Principal   During the Revolving Period, except as provided above in connection with Decreases in Principal Amount or as a result of an Asset Amount Deficiency no payments of principal will be made on the Notes and all Collections allocated to the Principal Subaccount (as hereinafter defined) will be reinvested in new Pool Receivables.

 

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  During the Amortization Period, all Collections allocated to the Principal Subaccount will be applied to pay the principal of the Notes on each Distribution Date thereafter.
Increased Costs:   Protection against increased costs, changes in capital adequacy, accounting changes, changes in taxes and LIBOR reserves will be afforded by the Issuer to the Conduit and the Bank (including their assignees) and will be payable from Collections.
Indemnification:   Issuer shall indemnify the holders of the Notes and the Agent against all liabilities, damages or losses associated with the transaction (“ Losses ”), excluding however (i) Losses to the extent resulting from the gross negligence or willful misconduct of the indemnified party and (ii) recourse for Pool Receivables which are uncollectible solely due to the Obligor’s financial inability to pay.
Allocation of Collections:   Collections will be allocated to the Expense Subaccount on each Deposit Date to the extent necessary to fund the applications described below under Interest and Other Payments.
Asset Amount Deficiency:   An “ Asset Amount Deficiency ” will occur with respect to the Notes if the Net Receivables Balance is less than the Required Asset Amount.
Interest and Other Payments:  

On each Distribution Date (and, if different, on each Interest Payment Date as well), amounts in the Expense Subaccount will be applied as follows:

 

(1) to pay accrued and unpaid monthly interest, plus any interest shortfall previously accrued and not reimbursed plus any Additional Interest previously accrued and not reimbursed

 

(2) to pay accrued and unpaid Monthly Program Fees, together with all accrued and unpaid Yield Protection Amounts, Breakage Amounts and Indemnity Amounts; and

 

(3) to pay accrued and unpaid Servicing Fees.

 

35


Conditions to Closing   Usual for facilities and transactions of this type, including but not limited to delivery of financial and statistical information with respect to the Pool Receivables; delivery of an agreed-upon procedures letter from Protiviti or such other auditor acceptable to the Administrative Agent relating to the Pool Receivables and Cartus’ systems data relating thereto and the historical financial information with respect thereto; satisfactory completion of due diligence (including review of Purchase Agreement, Receivables Purchase Agreement, Fee Receivables Purchase Agreement, Servicing Agreement and Indenture) and credit approval by the Banks; confirmation of the Conduit’s ratings (giving effect to the transaction); payment to Calyon of the up-front fee; accuracy of representations and warranties; absence of defaults, termination events or creation of liens under debt instruments or other agreements as a result of the transactions contemplated hereby; evidence of authority; execution and delivery of mutually satisfactory amendments and other documents; delivery of appropriate legal opinions, including, without limitation, a substantive nonconsolidation opinion, a “true sale” opinion as described above, and opinion relating to the transfers of the Pool Receivables under the applicable Uniform Commercial Code, an opinion as to the Indenture Trustee’s security interest in the Collateral under the applicable Uniform Commercial Code and an opinion that the Notes will be treated as debt for federal income tax purposes; required consents of all persons; compliance with applicable laws and regulations (including Federal Reserve margin regulations); absence of occurrence of any event or events, which, taken as a whole, have had, or would reasonably be expected to have, a material adverse effect on the business, assets, operations, properties, financial condition, contingent liabilities or material agreements and licenses of the Performance Guarantor and its consolidated subsidiaries, taken as a whole; and payment of fees and expenses.
  Miscellaneous
Expenses:   The Issuer will reimburse the Conduits, the Banks, the Managing Agents and the Administrative Agent for all reasonable out-of-pocket expenses (including but not limited to expenses incurred in connection with reasonable due diligence and the reasonable fees and disbursement of counsel) incurred by them in connection with the Notes.
Assignability:   Each Conduit may assign all or a portion of its interest in the Notes to any other commercial paper conduit sponsored by its Managing Agent or to any Bank. Each Bank may assign all or a portion (not less than $10,000,000) of its interest in the Notes (including its commitment to make Increases in Principal Amount) its affiliates or to any financial or other institution acceptable to the Administrative Agent, whereupon

 

36


  such affiliate or institution shall become a “Bank” under the Indenture. Each Bank, in addition to providing a commitment to the Issuer to purchase Increases in Principal Amount during the Revolving Period, also provides a committed liquidity facility to the Conduit.
Accounting and Tax Treatment:   The Issuer is a consolidated subsidiary of Realogy and the Notes will therefore be reflected as indebtedness under Realogy’s consolidated balance sheet for GAAP purposes as well as for federal income tax purposes.
Governing Law:   New York.
Counsel to Seller and Issuer:   Orrick, Herrington & Sutcliffe LLP
Counsel to Agent:   Sidley Austin LLP

 

37


EXHIBIT D

Form of Subordinated Note

( Exhibit A to Indenture )


KENOSIA SUBORDINATED NOTE

April 10, 2007

1. Note . FOR VALUE RECEIVED, the undersigned, KENOSIA FUNDING, LLC, a Delaware limited liability company (“Kenosia”), hereby unconditionally promises to pay to the order of CARTUS CORPORATION, a Delaware corporation (“Cartus”), in lawful money of the United States of America and in immediately available funds, on the day following the Final Payout Date, the aggregate unpaid principal sum outstanding of all loans (each a “Subordinated Loan”) made from time to time by Cartus to Kenosia pursuant to and in accordance with the terms of this note (the “Subordinated Note”). Kenosia is a party to that certain Receivables Purchase Agreement dated as of March 7, 2002 between Cartus Relocation Corporation and Kenosia (as amended, restated, supplemented, or otherwise modified from time to time, the “Receivables Purchase Agreement”) and that certain Fee Receivables Purchase Agreement dated as of March 7, 2002 between Cartus and Kenosia (as amended, restated, supplemented, or otherwise modified from time to time, the “Fee Receivables Purchase Agreement”). Under the Receivables Purchase Agreement Kenosia from time to time purchases Seller Assets (as such term is defined in the Receivables Purchase Agreement), and under the Fee Receivables Purchase Agreement, Kenosia from time to time purchases Originator Fee Assets (as such term is defined in the Fee Receivables Purchase Agreement). Kenosia may from time to time request advances under this Note for the purpose of paying, in whole or in part, the purchase price of such Seller Assets and/or Originator Fee Assets. Kenosia has also entered into that Indenture dated as of March 7, 2002 between Kenosia and The Bank of New York, as Trustee and as Paying Agent, Authentication Agent and Transfer Agent and Registrar (as amended, restated, supplemented, or otherwise modified from time to time, the “Indenture”) and pursuant to the Indenture has issued its Secured Variable Funding Notes, Series 2002-1 (the “Series 2002-1 Notes”). All capitalized terms used herein that are not otherwise specifically defined herein shall have the meanings given to such terms in the Indenture, the Receivables Purchase Agreement or the Fee Receivables Purchase Agreement, as applicable. No advance shall be made hereunder on any date if the aggregate principal amount outstanding hereunder on such date, after giving effect to such advance, plus the aggregate amount then outstanding under the Series 2002-1 Notes, would exceed an amount equal to 90% of the total assets of Kenosia. Proceeds of any loan hereunder shall be used solely for the purposes of paying the purchase price of the Seller Assets and the Originator Fee Assets.

As used in this Subordinated Note, “Final Payout Date” shall be the later of the Final Payout Date as defined in the Receivables Purchase Agreement and the Final Payout Date as defined in the Fee Receivables Purchase Agreement.

2. Agreement to Make Advances . Subject to the limitations set forth herein, Cartus may, from time to time, in its sole discretion, make a Subordinated Loan requested by Kenosia on or prior to the Funding Termination Date for the sole purpose of purchasing Seller Assets under the Receivables Purchase Agreement and/or Originator Fee Assets under the Fee Receivables Purchase Agreement.


3. Interest . Kenosia further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full hereof at a rate equal to LIBOR plus 2.25%; provided , however , that if Kenosia defaults in the payment of any principal hereof, Kenosia promises to pay, on demand, interest at the Prime Rate plus 2.00% per annum on any such unpaid amounts, accrued with respect to each Interest Period from the date such payment is due to the date of actual payment. LIBOR shall be determined on each LIBOR Determination Date on the basis of the rate for deposits in United States dollars for a one-month period which appears on the Reuters Screen LIBOR01 Page 3750 as of 11:00 a.m., London time, on such date. If such rate does not appear on LIBOR01 Page 3750, the rate for that LIBOR Determination Date shall be determined on the basis of the rates quoted to Cartus by four major banks in the London interbank market selected by Cartus as the rates at which deposits in United States dollars are offered on that day to prime banks in the London interbank market for a one-month period. Interest shall be payable on the Distribution Date in each month in arrears. The outstanding principal of any loan made under this Subordinated Note shall be due and payable on the day after the Final Payout Date, and may be repaid or prepaid at any time without premium or penalty.

LIBOR Determination Date means the second London Business Day prior to the commencement of the second and each subsequent Interest Period. A London Business Day is any Business Day on which dealings in deposits in U.S. dollars are transacted in the London interbank market and banking institutions in London are not authorized or obligated by law or regulation to close. An Interest Period is the period beginning on and including the Distribution Date immediately preceding such Distribution Date ; provided that the first Interest Period shall begin on and include April 10, 2007 and end on and exclude May 15, 2007. A Distribution Date means May 15, 2007 and the fifteenth day of each calendar month thereafter, or if such fifteenth day is not a Business Day, the next succeeding Business Day.

The “Prime Rate” means the rate of interest announced as such from time to time by Calyon Corporate and Investment Bank, New York Branch.

4. Principal Payments . Cartus is authorized and directed by Kenosia to enter in its books and records the date and amount of each loan made by it that is evidenced by this Subordinated Note and the amount of each payment of principal made by Kenosia and, absent manifest error, such entries shall constitute prima facie evidence of the accuracy of the information so entered; provided that neither the failure of Cartus to make any such entry or any error therein shall expand, limit or affect the obligations of Kenosia hereunder.

5. Subordination . The indebtedness evidenced by this Subordinated Note is subordinated to the prior payment in full of all of Kenosia’s recourse obligations under the Indenture. The subordination provisions contained herein are for the direct benefit of, and may be enforced by Kenosia’s successors and assigns and/or any of their respective assignees including the Trustee (collectively, the “Senior Claimants”) under the Indenture. Until the date after the Final Payout Date on which all amounts owed by Kenosia under the Indenture have been paid in full and all other obligations of Kenosia thereunder (all such obligations, collectively, the “Senior Claims”) have been indefeasibly paid and satisfied in full, Cartus shall

 

2


not demand, accelerate, sue for, take, receive or accept from Kenosia, directly or indirectly, in cash or other property or by set-off or any other manner (including without limitation from or by way of collateral) any payment or security of all or any of the indebtedness under this Subordinated Note or exercise any remedies or take any action or proceeding to enforce the same; provided , however , that (i) Cartus hereby agrees that it will not at any time institute against Kenosia or join in any institution against Kenosia, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to this Subordinated Note until the expiration of one year and one day has elapsed after the after payment in full of all Senior Claims and (ii) nothing in this paragraph shall restrict Kenosia from paying, or Cartus from requesting payments under this Subordinated Note from funds which are released to Kenosia free and clear of the lien of the Indenture and provided , further , that the making of such payment would not otherwise violate the terms and provisions of the Indenture. Should any payment, distribution or security or proceeds thereof be received by Cartus in violation of the immediately preceding sentence, Cartus agrees that such payment shall be segregated, received and held in trust for the benefit of, and deemed to be the property of, and shall be immediately paid over and delivered to the Trustee for the benefit of the Senior Claimants.

6. Bankruptcy; Insolvency . Upon the occurrence of any Insolvency Proceeding involving Kenosia as debtor, then and in any such event the Senior Claimants shall receive payment in full of all amounts due under the Indenture (whether or not any or all of such amount is an allowable claim in any such proceeding) before Cartus is entitled to receive payment on account of this Subordinated Note and, to that end, any payment or distribution of assets of Kenosia of any kind or character, whether in cash, securities or other property in any applicable Insolvency Proceeding which would otherwise be payable to, or deliverable upon or with respect to, any or all indebtedness under this Subordinated Note, is hereby assigned to and shall be paid or delivered by the Person making such payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee or otherwise) pursuant to the Indenture for application to, or as collateral for the payment of, the Senior Claim until such Senior Claim shall have been paid in full and satisfied. As used in this Subordinated Note, “Insolvency Proceeding” means mean, with respect to any Person, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any Federal or state bankruptcy or similar law or any other proceeding of the type described in the definition of Event of Bankruptcy in the Indenture, whether voluntary or involuntary.

7. Limitation on Recourse . Notwithstanding any provision in this Subordinated Note to the contrary, the obligation of Kenosia to pay any amounts owing under this Subordinated Note shall be limited solely to Available Amounts as defined in this Section 7. In the event that amounts payable under this Subordinated Note exceed the Available Amounts, the excess of the amounts due hereunder over the Available Amounts paid shall not constitute a “claim” against Kenosia under Section 101(5) of the Federal Bankruptcy Code until such time as Kenosia has Available Amounts. “Available Amounts” means Pool Collections, Fee Collections, any funds released to Kenosia under the Indenture or otherwise not subject to the lien of the Indenture, and other amounts which are not, under the terms of the Indenutre, required to be distributed to or held by the Trustee for the benefit of the holders of the Notes and each Liquidity Party, to the extent that such amounts are available for distribution to Kenosia.

 

3


7. GOVERNING LAW . THIS SUBORDINATED NOTE SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF NEW YORK. WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS SUBORDINATED NOTE.

8. Waivers . All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. Cartus additionally expressly waives all notice of the acceptance by any Senior Claimant of the subordination and other provisions of this Subordinated Note and expressly waives reliance by any Senior Claimant upon the subordination and other provisions herein provided.

[ The remainder of this page has been left blank intentionally ]

 

4


9. Assignment . Prior to the satisfaction and discharge of the Indenture pursuant to Article IV thereof, this Subordinated Note may not be assigned, pledged or otherwise transferred to any party.

 

KENOSIA FUNDING, LLC
By:   /s/ Eric J. Barnes
Name:   Eric J. Barnes
Title:   Senior Vice President and Chief Financial Officer

 

Acknowledged and agreed:
CARTUS CORPORATION
By:   /s/ Eric J. Barnes
Name:   Eric J. Barnes
Title:   Senior Vice President and Chief Financial Officer


Schedule I to the

Collateral Agreement

EQUITY INTERESTS

 

Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Realogy Corporation    1    Domus Intermediate Holdings Corp. - 100%    100    Common Stock
AFS Mortgage    20    Realogy Operations, Inc. - 100%    100,000    Common Stock
C21 TM Corp.    15    Realogy Intellectual Property Holdings I, Inc. - 50%    3,750    Class A Common Stock
   16    Realogy Intellectual Property Holdings II, Inc. - 50%    3,750    Class B Common Stock
CB TM Corp.    5    Realogy Intellectual Property Holdings I, Inc. - 50%    10,000    Common Stock
   6    Realogy Intellectual Property Holdings II, Inc. - 50%    10,000    Common Stock
Century 21 Real Estate LLC    9    Realogy Services Group LLC - 100%    1,000    Membership Units
CGRN, Inc.    4    Realogy Services Group LLC - 100%    100    Common Stock
Coldwell Banker Corporation    21    Realogy Services Group LLC - 100%    100    Common Stock
Coldwell Banker Real Estate Corporation    3    Coldwell Banker Corporation - 100%    1,000    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

ERA Franchise Systems, Inc.    4    Realogy Services Group LLC - 100%    100    Common Stock
ERA General Agency Corporation    8    ERA Franchise Systems, Inc. - 100%    500    Common Stock
ERA General Agency of New Jersey, Inc.    1    ERA General Agency, Corporation - 100%    100    Common Stock
ERA TM Corp.    22    Realogy Intellectual Property Holdings I, Inc. - 50%    50,000    Common Stock
   23    Realogy Intellectual Property Holdings II, Inc. - 50%    50,000    Common Stock
FedState Strategic Consulting, Incorporated    4    Realogy Operations, Inc. - 100%    100    Common Stock
FSA Membership Services, LLC    1    Realogy Services Group LLC - 100%    100    Membership Units
Oncor International LLC    2    Realogy Franchise Group, Inc. - 100%    100    Membership Units
Realogy Franchise Finance, Inc.    6    Realogy Services Group LLC - 100%    100    Common Stock
Realogy Franchise Group, Inc.    2    Realogy Services Group LLC - 100%    100    Common Stock
Realogy Global Services, Inc.    5    Realogy Services Group LLC - 100%    10    Common Stock
Realogy Intellectual Property Holdings I, Inc.    2    Realogy Services Group, LLC - 100%    100    Common Stock
Realogy Intellectual Property Holdings II, Inc.    2    Realogy Services Group, LLC - 100%    100    Common Stock
Realogy Licensing, Inc.    5    Realogy Services Group LLC - 100%    100    Common Stock
Realogy Operations, Inc.    5    Realogy Services Group, LLC - 100%    18,578    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Realogy Services Group, LLC    2    Realogy Corporation - 100%    100    Membership Units
Realogy Services Venture Partner, Inc.    3    Realogy Services Group LLC - 100%    100    Common Stock
Sotheby’s International Realty Affiliates, Inc.    4    Realogy Services Group LLC - 100%    100    Common Stock
Sotheby’s International Realty Licensee Corporation    4    Realogy Services Group LLC - 100%    100    Common Stock
Cartus Corporation    5    Realogy Services Group LLC - 100%    850    Common Stock
Cartus Partner Corporation    2    Cartus Corporation - 100%    100    Common Stock
A Market Place, Inc.    2    Coldwell Banker Residential Brokerage Company - 100%    500    Common Stock
Allmon, Tiernan & Ely, Inc.    7    NRT New York, Inc. - 100%    6    Common Stock
Alpha Referral Network, Inc.    5    Coldwell Banker Residential Referral Network (a California corporation) - 100%    1,000    Common Stock
Associated Client Referral Corp.    2    NRT Mid-Atlantic, Inc. - 100%    500    Common Stock
Associates Investments    38    Realogy Services Group LLC - 100%    11,660,363    Common Stock
Associates Realty Network    40    Associates Realty, Inc. - 100%    200    Common Stock
Associates Realty, Inc.    38    Associates Investments - 100%    67,000    Common Stock
Batjac Real Estate Corp.    2    Coldwell Banker Real Estate Services, Inc. - 100%    10    Common Stock
Bob Tendler Real Estate, Inc.    1    Coldwell Banker Residential Real Estate, Inc. - 100%    100    Common Stock
Burgdorff Referral Associates, Inc.    6    NRT Incorporated - 100%    200    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Burnet Realty, Inc. (a Minnesota corporation)    6    NRT Incorporated - 100%    10,000    Common Stock
Burnet Realty Inc. (a Wisconsin corporation)    6    NRT Incorporated - 100%    2,000    Common Stock
Career Development Center, LLC    2    NRT Arizona, Inc. - 100%    100    Common Stock
CDRE TM Corp.    1    NRT Incorporated - 100%    100    Common Stock
Coldwell Banker Commercial Pacific Properties, Ltd.    1    NRT Incorporated - 100%    100,000    Common Stock
Coldwell Banker King Thompson Auction Services, Inc.    1    Coldwell Banker Residential Real Estate, Inc. - 100%    100    Common Stock
Coldwell Banker Pacific Properties, Ltd.   

CV-18

   Coldwell Banker Real Estate Services, Inc. - 100%    10,000,000    Common Stock
   NV-7       1,990,000,000   
Coldwell Banker Real Estate Services, Inc.    2    Coldwell Banker Residential Real Estate, Inc. - 100%    100    Common Stock
Coldwell Banker Real Estate, Inc.    2    Coldwell Banker Residential Real Estate, Inc. - 100%    920    Common Stock
Coldwell Banker Residential Brokerage Company    9    Coldwell Banker Residential Brokerage Corporation - 100%    1,000    Common Stock
Coldwell Banker Residential Brokerage Corporation    5    NRT Incorporated - 100%    100    Common Stock
Coldwell Banker Residential Brokerage Insurance Agency of Maine, Inc.    3    NRT Insurance Agency, Inc. - 100%    100    Common Stock
Coldwell Banker Residential Brokerage Pardoe, Inc.    1    NRT Incorporated - 100%    100    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
   

Type of

Equity Interest

Coldwell Banker Residential Brokerage, Inc.    1    NRT Incorporated - 100%    1,000      Common Stock
Coldwell Banker Residential Real Estate Services of Wisconsin, Inc.    1    Coldwell Banker Residential Real Estate, Inc. - 100%    1,000      Common Stock
Coldwell Banker Residential Real Estate, Inc.    4    Coldwell Banker Residential Brokerage Corporation - 100 %    1,000      Common Stock
Coldwell Banker Residential Referral Network (a California corporation)    5    Coldwell Banker Residential Brokerage Corporation - 100%    1,000      Common Stock
Coldwell Banker Residential Referral Network, Inc. (a Pennsylvania corporation)    25    Coldwell Banker Real Estate, Inc. - 100%    100      Common Stock
Colorado Commercial, LLC    Uncertificated    NRT Colorado, Inc. - 100%    100   Membership Interests
Cook - Pony Farm Real Estate, Inc.    9    NRT New York, Inc. - 100%    200      Common Stock
Corcoran Group - Brooklyn Landmark, LLC    1    NRT New York, Inc. - 100%    100      Membership Units
Corcoran MLS Holdings, LLC    1    NRT New York, Inc. - 100%    100      Membership Units
Cosby-Tipton Real Estate, Inc.    4    Coldwell Banker Residential Brokerage Company - 100%    510      Common Stock
Cotton Real Estate, Inc.    5    Sotheby’s International Realty, Inc. - 100%    100      Common Stock
DeWolfe Realty Affiliates    1    The DeWolfe Company, Inc. - 100%    1,000      Common Stock
DeWolfe Relocation Services, Inc.    4    The DeWolfe Companies, Inc. - 100%    200      Common Stock
Douglas and Jean Burgdorff, Inc.    4    NRT Incorporated - 100%    2,000      Common Stock
Florida’s Preferred School of Real Estate, Inc.    3    St. Joe Real Estate Services, Inc. - 100%    100      Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Fred Sands School of Real Estate, Inc.    3    Coldwell Banker Residential Brokerage Corporation - 100%    2,000    Common Stock
Hillshire House, Incorporated    1    The DeWolfe Company, Inc. - 100%    5,000    Common Stock
Home Referral Network Inc.    6    NRT Incorporated - 100%    2,000    Common Stock
J.W. Riker - Northern R.I., Inc.    1    The DeWolfe Company, Inc. - 100%    600    Common Stock
Jack Gaughen, Inc.    8    NRT Mid-Atlantic, Inc. - 100%    5,322    Common Stock
Kendall, Potter and Mann, Realtors, Inc.    8    Valley of California, Inc. - 100%    5,500    Common Stock
LMS (Delaware) Corp.    1    NRT Sunshine Inc. - 100%    100    Common Stock
NRT Arizona Commercial, Inc.    1    NRT Arizona, Inc. - 100%    100    Common Stock
NRT Arizona Exito, Inc.    1    NRT Arizona, Inc. - 100%    100    Common Stock
NRT Arizona Referral, Inc.    1    NRT Arizona, Inc. - 100%    100    Common Stock
NRT Arizona, Inc.    1    NRT Incorporated - 100%    100    Common Stock
NRT Chicago LLC    1    NRT Incorporated - 100%    100    Membership Units
NRT Colorado, Inc.    2    NRT Incorporated - 100%    100    Common Stock
NRT Columbus, Inc.    C-1    Coldwell Banker Residential Real Estate, Inc. - 100%    1,000    Common Stock
NRT Commercial Ohio Incorporated    1    NRT Incorporated - 100%    100    Common Stock
NRT Commercial Utah, Inc.    C-2    NRT Incorporated - 100%    1,000    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

NRT Commercial, Inc.    1    NRT Incorporated - 100%    1,000    Common Stock
NRT Hawaii Referral, LLC    1    NRT Incorporated - 100%    100    Membership Units
NRT Incorporated    1    Realogy Services Group LLC - 100%    100    Common Stock
NRT Insurance Agency, Inc.    3    The DeWolfe Companies, Inc. - 100%    1,000    Common Stock
NRT Mid-Atlantic, Inc.    18    NRT Incorporated - 100%    46,505    Class A Common Stock
   18       46,505    Class B Common Stock
NRT Missouri Referral Network Inc.    4    Coldwell Banker Residential Referral Network (a California corporation) - 100%    50    Common Stock
NRT Missouri, Inc.    1    Coldwell Banker Residential Brokerage Corporation - 100%    11,949    Common Stock
NRT New England Incorporated    100    NRT Incorporated - 100%    3,879    Common Stock – Class A
   200       1,395    Common Stock – Class B
NRT New York, Inc.    2    NRT Incorporated - 100%    100    Common Stock
NRT Relocation LLC    2    Realogy Operations, Inc. - 100%    100    Membership Units
NRT Sunshine Inc.    1    NRT Incorporated - 100%    100    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
   

Type of

Equity Interest

NRT Texas Real Estate Services, Inc.    2    NRT Texas, Inc. - 100%    1,000      Common Stock
NRT Texas, Inc.    18    NRT Incorporated - 100%    100      Common Stock
NRT The Condo Store Incorporated    1    NRT Incorporated - 100%    100      Common Stock
NRT Utah, Inc. (a Delaware entity)    C-1    NRT Incorporated - 100%    1,000      Common Stock
Pacesetter Nevada, Inc.    3    Valley of California, Inc. - 100%    3,000      Common Stock
Pacific Properties Referrals, Inc.    3    Coldwell Banker Real Estate Services, Inc. - 100%    1,000      Common Stock
R.J. Young Co.    11    Sotheby’s International Realty, Inc. - 100%    1,000      Common Stock
Real Estate Referral, Inc. (a Connecticut corporation)    1    Hillshire House, Incorporated - 100%    5,000      Common Stock
Real Estate Referrals, Inc. (a Maryland corporation)    2    NRT Mid-Atlantic, Inc. - 100%    500      Common Stock
Real Estate Services, Inc.    1    NRT Incorporated - 100%    1,500      Common Stock
Referral Associates of Florida, Inc.    3    St. Joe Real Estate Services, Inc. - 100%    1,000      Common Stock
Referral Associates of New England, Inc.    1    DeWolfe Relocation Services, Inc. - 100%    100      Common Stock
Referral Network, Inc.    27    NRT Incorporated - 100%    100      Common Stock
Referral Network, Inc. (a Florida corporation)    26    Coldwell Banker Residential Referral Network (a California corporation) - 100%    100      Common Stock
Referral Network, LLC    Uncertificated    NRT Colorado, Inc. - 100%    100   Membership Interests
Signature Properties, Inc.    1    St. Joe Real Estate Services, Inc. - 100%    100      Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Soleil Florida Corp.    2    NRT Sunshine Inc. - 100%    100    Common Stock
Sotheby’s International Realty Referral Company, LLC    1    Sotheby’s International Realty, Inc. - 100%    100    Membership Units
Sotheby’s International Realty, Inc.    6    NRT Incorporated - 100%    8,333    Common Stock
St. Joe Real Estate Services, Inc.    2    NRT Incorporated - 100%    1,000    Common Stock
The Corcoran Group Eastside, Inc.    5    NRT New York, Inc. - 100%    100    Common Stock
The DeWolfe Companies, Inc.    1    NRT Incorporated - 100%    10,280    Common Stock
The DeWolfe Company, Inc.    1    The DeWolfe Companies, Inc. - 100%    950    Common Stock
The Four Star Corporation    2    Coldwell Banker Real Estate Services, Inc. - 100%    100    Common Stock
The Miller Group, Inc.    1    NRT Commercial, Inc. - 100%    780    Common Stock
The Sunshine Group, Ltd.    3    NRT Sunshine Inc. - 100%    1,000    Common Stock
The Sunshine Group Limited Partnership    Uncertificated   

The Sunshine Group, Ltd. - 1%

LMS (Delaware) Corp. - 99%

   N/A    Partnership interests
Trust of New England, Inc.    7    NRT New England Incorporated - 100%    36    Common Stock Series A
   9       36    Common Stock Series B
Valley of California, Inc.    5    Coldwell Banker Residential Brokerage Corporation - 100%    1,000    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
   

Type of

Equity Interest

William Orange Realty, Inc.    4    Coldwell Banker Real Estate Services, Inc. - 100%    1,000      Common Stock
Advantage Title & Insurance, LLC    1    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership Units
American Title Company of Houston    3    ATCOH Holding Company - 100%    1,000      Common Stock
APEX Real Estate Information Services, LLC    1    APEX Real Estate Information Services, LLP - 100%    100      Membership Units
APEX Real Estate Information Services, LLP    4    Title Resource Group, LLC - 1%    1      Partnership interest
   5    Title Resource Group Services Corporation - 99%    99     
ATCOH Holding Company    15    Texas American Title Company - 100%    160      Common Stock
Burnet Title, L.L.C.    8    Title Resource Group LLC - 100%    10,000      Membership Interests
Burnet Title of Ohio, LLC    1    Burnet Title L.L.C. - 100%    100   Membership Interests
Burnet Title, Inc.    4    Title Resource Group LLC - 100%    1,000      Common Stock
Central Florida Title Company    5    Terramar Guaranty Title & Trust, Inc. - 100%    500      Common Stock
Charter Title, LLC    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership Units
Equity Title Company    51    NRT Incorporated - 100%    6,000      Common Stock
Equity Title Messenger Service Holding Company    3    Title Resource Group LLC - 100%    1,000      Membership Units
First California Escrow Corporation    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Franchise Settlement Services, Inc.    2    Title Resource Group, LLC - 100%    100    Common Stock
Grand Title, LLC    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100    Membership Units
Guardian Holding Company    3    Title Resource Group LLC - 100%    100    Membership Units
Guardian Title Agency, LLC    5    Title Resource Group LLC - 100%    100    Membership Units
Guardian Title Company    6    Guardian Holding Company - 100%    7,000    Common Stock
Gulf South Settlement Services, LLC    1    Title Resource Group Affiliates Holdings, Inc. - 100%    100    Membership Units
Hickory Title, LLC    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100    Membership Units
Keystone Closing Services LLC    4    Title Resource Group LLC - 100%    50    Membership Units
Lincoln Settlement Services, LLC    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100    Membership Units
Market Street Settlement Group, Inc.    4    Title Resource Group Holdings, Inc. - 100%    300    Common Stock
Mid-Exchange, Inc.    4    Title Resource Group LLC - 100%    10    Common Stock
Mid-State Escrow Corporation    1    Title Resource Group Affiliates Holdings, Inc. - 100%    100    Common Stock
National Coordination Alliance, Inc.    6    Title Resource Group LLC - 100%    1,000,000    Common Stock
NRT Mid-Atlantic Title Services, LLC    1    Title Resource Group LLC - 100%    350    Membership Interests
NRT Settlement Services of Missouri, Inc.    1    NRT Settlement Services, Inc. - 100%    1,000    Common Stock
NRT Settlement Services of Texas, Inc.    C-2    Title Resource Group LLC - 100%    1,000    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
   

Type of

Equity Interest

Pacific Access Holding Company, LLC    1    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership Units
Patriot Settlement Services, LLC    1    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership Units
Premier Settlement Services, LLC    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership Interests
Processing Solutions, Incorporated    4    Title Resource Group LLC - 100%    10,000      Common Stock
Rocky Mountain Settlement Services, LLC    1    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership Units
Scranton Abstract, LLC    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership Units
Secured Land Transfers, Inc.    5    Title Resource Group LLC - 100%    2      Common Stock
South Land Title Co., Inc.    6    ATCOH Holding Company - 100%    1,000      Common Stock
South-Land Title of Montgomery County, Inc.    1    ATCOH Holding Company - 100%    1,000      Common Stock
St. Joe Title Services, Inc.    3    Title Resource Group LLC - 100%    1,000      Membership Units
St. Joe Title Services, LLC    Uncertificated    Title Resource Group LLC - 100%    100   Membership Interests
Summit Escrow    40    Associates Investments - 100%    200      Common Stock
TAW Holding Inc.    12    ATCOH Holding Company - 100%    750      Common Stock
TBR Settlement Services, LLC    2    Title Resource Group Affiliates Holdings, Inc. - 100%    100      Membership
Terramar Guaranty Title & Trust, Inc.    5    Title Resource Group LLC - 100%    10,000      Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Texas American Title Company    12    Title Resource Group LLC - 100%    450    Common Stock
Texas American Title Company of Austin    3    Texas American Title Company - 100%    1,000    Common Stock
Texas American Title Company of Corpus Christi    1    Texas American Title Company - 100%    100    Common Stock
Title Resource Group Affiliates Holdings, Inc.    2    Title Resource Group Holdings, Inc. - 100%    100    Common Stock
Title Resource Group Holdings, Inc.    2    Title Resource Group LLC - 100%    100    Common Stock
Title Resource Group LLC    4    Realogy Services Group LLC - 100%    1,000    Common Stock
Title Resource Group Services Corporation    3    St. Joe Title Services, Inc. - 100%    100    Common Stock
Title Resources Incorporated    1    TAW Holding Inc. - 100%    1,500    Common Stock
West Coast Escrow Closing Co.    6    Title Resource Group Affiliates Holdings, Inc. - 100%    1,000    Common Stock
APEX Real Estate Information Services Alabama, L.L.C.    1    APEX Real Estate Information Services, LLP - 100%    100    Membership Units
Prime Commercial, Inc.    7    NRT Commercial Utah, Inc. - 100%    30,000    Common Stock
Realty Stars, Ltd.    3    Coldwell Banker Residential Real Estate, Inc. - 100%    300    Common Stock
Realogy Cavalier Holdco, LLC    2    Cartus Corporation - 65%    65    Membership Units
Cartus Relocation Corporation    2    Cartus Corporation - 100%    1,000    Common Stock
Cartus Financial Corporation    3    Cartus Corporation - 100%    1,000    Common Stock


Issuer

  

Certificate
Number

  

Owners and Percentage of Equity
Interests

   Number of
Equity Interests
  

Type of

Equity Interest

Cartus Corporation (Canada)    C-1    Cartus Corporation - 65%    65    Common Stock
Cartus Holdings Limited    6    Cartus Corporation - 65%    4,875,000    Ordinary Shares
Sotheby’s International Realty Limited    1    Sotheby’s International Realty, Inc. -65%    65    Ordinary Shares

PLEDGED DEBT SECURITIES

None.


Schedule II to the

Collateral Agreement

INTELLECTUAL PROPERTY OWNED BY GRANTORS

See Attached


SCHEDULE II

Cartus Corporation

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CARTUS    Australia    Cartus Corporation    1097159    1097159
CARTUS AND GLOBE DESIGN    Australia    Cartus Corporation    1099707    1099707
CARTUS AND GLOBE DESIGN (in color)    Australia    Cartus Corporation    1100296    1100296
CARTUS RESOURCES    Australia    Cartus Corporation    1097160    1097160
GLOBE DESIGN    Australia    Cartus Corporation    1099706    1099706
GLOBE DESIGN (in color)    Australia    Cartus Corporation    1100295    1100295
HAMILTON WATTS INTERNATIONAL & Design***    Australia    Cendant HWI Pty Ltd       A598573
HAMILTON WATTS INTERNATIONAL & Design***    Australia    Cendant HWI Pty Ltd       A598574
Line & Dot Design**    Australia    Cartus Corporation    916766    916766
CARTUS    Canada    Cartus Corporation    1288571   
CARTUS AND GLOBE DESIGN    Canada    Cartus Corporation    1290421   
GLOBALNET    Canada    Cartus Corporation    798683    TMA577034
GLOBE DESIGN    Canada    Cartus Corporation    1290423   
GLOBE DESIGN (in color)    Canada    Cartus Corporation    1290424   
Line & Dot Design**    Canada    Cendant Mobility Services Corp    847387    TMA499069
CARTUS    China (Peoples Republic)    Cartus Corporation    5159090   
CARTUS    China (Peoples Republic)    Cartus Corporation    5158802   
CARTUS    China (Peoples Republic)    Cartus Corporation    5158803   
CARTUS    China (Peoples Republic)    Cartus Corporation    5158804   
CARTUS AND GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168322   
CARTUS AND GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168323   
CARTUS AND GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168324   
CARTUS AND GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168325   
CARTUS RESOURCES    China (Peoples Republic)    Cartus Corporation    5158805   
CARTUS RESOURCES    China (Peoples Republic)    Cartus Corporation    5158806   
CARTUS RESOURCES    China (Peoples Republic)    Cartus Corporation    5158807   
CARTUS RESOURCES    China (Peoples Republic)    Cartus Corporation    5158808   

 

1


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168334   
GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168335   
GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168316   
GLOBE DESIGN    China (Peoples Republic)    Cartus Corporation    5168317   
GLOBE DESIGN (in color)    China (Peoples Republic)    Cartus Corporation    5168318   
GLOBE DESIGN (in color)    China (Peoples Republic)    Cartus Corporation    5168319   
GLOBE DESIGN (in color)    China (Peoples Republic)    Cartus Corporation    5168320   
GLOBE DESIGN (in color)    China (Peoples Republic)    Cartus Corporation    5168321   
CARTUS    European Community    Cartus Corporation    4892832   
CARTUS AND GLOBE DESIGN    European Community    Cartus Corporation    4924023   
GLOBALNET    European Community    Cartus Corporation    126607    126607
GLOBE DESIGN    European Community    Cartus Corporation    4924031   
GLOBE DESIGN (in color)    European Community    Cartus Corporation    4924049   
CARTUS    Hong Kong    Cartus Corporation    300575721    300575721
CARTUS AND GLOBE DESIGN (in series)    Hong Kong    Cartus Corporation    300583588    300583588
CARTUS RESOURCES    Hong Kong    Cartus Corporation    300575730    300575730
GLOBE DESIGN (in series)    Hong Kong    Cartus Corporation    300583597    300583597
Line & Dot Design (series of 3)**    Hong Kong    CENDANT CORPORATION    16357/2002    200316325
Line & Dot Design (series of 3)**    Hong Kong    CENDANT CORPORATION    16358/2002    200316326
Line & Dot Design (series of 3)**    Hong Kong    CENDANT CORPORATION    16359/2002    200316327
HFS MOBILITY SERVICES**    Mexico    Cendant Mobility Services Corp    296613    635006
HFS MOBILITY SERVICES**    Mexico    Cendant Mobility Services Corp    296612    635005
HFS MOBILITY SERVICES**    Mexico    Cendant Mobility Services Corp    296611    635004
Line & Dot Design**    Mexico    Cendant Mobility Services Corp    297581    556670
Line & Dot Design**    Mexico    Cendant Mobility Services Corp    297582    635009
Line & Dot Design**    Mexico    Cendant Mobility Services Corp    297583    556671
WE MOVE THE PEOPLE WHO MOVE THE WORLD**    Mexico    Cendant Mobility Services Corp    300145    619783

 

2


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

WE MOVE THE PEOPLE WHO MOVE THE WORLD**    Mexico    Cendant Mobility Services Corp    300144    630881
WE MOVE THE PEOPLE WHO MOVE THE WORLD**    Mexico    Cendant Mobility Services Corp    300146    619214
CARTUS    Singapore    Cartus Corporation    T0602094F   
CARTUS    Singapore    Cartus Corporation    T0602095D    T0602095D
CARTUS    Singapore    Cartus Corporation    T0602096B   
CARTUS    Singapore    Cartus Corporation    T0602097J    T0602097J
CARTUS AND GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603007J   
CARTUS AND GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603008I    T0603008I
CARTUS AND GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603009G   
CARTUS AND GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603011I    T0603011I
CARTUS RESOURCES    Singapore    Cartus Corporation    T0602099G    T0602099G
CARTUS RESOURCES    Singapore    Cartus Corporation    T0602100D   
CARTUS RESOURCES    Singapore    Cartus Corporation    T0602101B    T0602101B
GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603003H   
GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603004F    T0603004F
GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603005D   
GLOBE DESIGN (in series)    Singapore    Cartus Corporation    T0603006B    T0603006B
Line & Dot Design (series of 3)**    Singapore    Cendant Mobility Services Corp    T0215462Z    T0215462Z
Line & Dot Design (series of 3)**    Singapore    Cendant Mobility Services Corp    T0215463H    T0215463H
Line & Dot Design**    Singapore    Cendant Mobility Services Corp    T0215464F    T0215464F
CARTUS    United Kingdom    Cartus Corporation    2412844    2412844
CARTUS AND GLOBE DESIGN (in series)    United Kingdom    Cartus Corporation    2414215   
CARTUS RESOURCES    United Kingdom    Cartus Corporation    2412845    2412845
GLOBE DESIGN (in series)    United Kingdom    Cartus Corporation    2414216    2414216
HOME AND MOVE FROM CARTUS & Gate Design    United Kingdom    Cartus Corporation    2419497   
HOME AND MOVE FROM CENDANT MOBILITY & Gate Design *    United Kingdom    Cendant Mobility Ltd.    2392004    2392004
Line & Dot Design**    United Kingdom    Cendant Mobility Services Corp    2135198    2135198
WE MOVE THE PEOPLE WHO MOVE THE WORLD    United Kingdom    Cartus Corporation    2137549    2137549
CARTUS    United States    Cartus Corporation    78808792   
CARTUS AND GLOBE DESIGN    United States    Cartus Corporation    78818082   
CARTUS AND GLOBE DESIGN    United States    Cartus Corporation    78817923   
CARTUS AND GLOBE DESIGN    United States    Cartus Corporation    78818045   
CARTUS AND GLOBE DESIGN    United States    Cartus Corporation    78818064   

 

3


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CARTUS RESOURCES    United States    Cartus Corporation    78808802   
EASYTOUR    United States    Cartus Corporation    78659865   
GLOBALNET    United States    Cartus Corporation    75153284    2198869
GLOBE DESIGN    United States    Cartus Corporation    78818087   
GLOBE DESIGN    United States    Cartus Corporation    78817943   
GLOBE DESIGN    United States    Cartus Corporation    78818047   
GLOBE DESIGN    United States    Cartus Corporation    78818069   
GLOBE DESIGN (in color)    United States    Cartus Corporation    78818090   
GLOBE DESIGN (in color)    United States    Cartus Corporation    78817954   
GLOBE DESIGN (in color)    United States    Cartus Corporation    78818055   
GLOBE DESIGN (in color)    United States    Cartus Corporation    78818077   
HOME AND MOVE    United States    Cartus Corporation    78817256   
HOME AND MOVE & Design    United States    Cartus Corporation    78817258   
LINE & DOT Design    United States    Cartus Corporation    75304945    2192066
MILITARY RELOCATION MANAGEMENT Design    United States    Cartus Corporation    78044960    2757428
WE MOVE THE PEOPLE WHO MOVE THE WORLD    United States    Cartus Corporation    75304946    2455642
WE TREAT EACH MOVE LIKE IT'S OUR OWN    United States    Cartus Corporation    75737491    2528111

 

* Application was filed in the name of Cartus Corporation’s UK subsidiary prior to the divestiture. Realogy and its subsidiaries do not have any rights to marks that contain the term CENDANT. Therefore, this mark will be allowed to lapse without renewal.
** Cartus Corporation has determined that it is not using the designated marks, therefore we did not incur the costs to record the change of name against them – exceptions were made if recordal did not incur additional expense. They will be allowed to lapse without renewal.
*** Cartus Corporation (f/k/a Cendant Mobility) bought Hamilton Watts' Australian, Malay and Singapore operations in 2000 and changed the name to Cendant HWI Pty Ltd. and then to Cendant Mobility shortly after the acquisition. Given that there was no expected use of the marks, the decision not to incur costs associated with the recordal to Cendant Mobility and then Cartus Corporation was made.

 

4


SCHEDULE II

US Patent Applications

 

Owner Name

  

Type of
Patent

  

Patent Title

   Application No.

Realogy Operations, Inc.

   Utility   

Method and System For Computing Financial Forecasts

   10/379,622

Realogy Operations, Inc.

   Utility   

Method and System for Computing Personal and Business Financial Information

   10/706,026

Realogy Operations, Inc.

   Utility   

Methods and Arrangements For Facilitating The Processing of Real Estate Information

   10/167,132

Cartus Corporation

   Utility   

System and Method of Selecting Freight Forwarding Companies

   10/819,813

Title Resource Group, LLC

   Utility   

System and Method for Communicating Document Information

   11/542,851

The DeWolfe Company Inc.

   Utility   

Data Communications Network-Assisted Method for Purchase and Sale of Real Estate

   10/097,805


SCHEDULE II

CDRE TM Corp.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

OUR TOWN Design Only    United States    CDRE TM CORP    78466983   
CORNERSTONES OF LIFE PROGRAM & Design    United States    CDRE TM CORP    77119473   
PLACE    United States    CDRE TM CORP    78407701   
ALL SQUARE FEET ARE NOT CREATED EQUAL    United States    CDRE TM CORP    76408232    2683552
THE SUNSHINE GROUP LTD    United States    CDRE TM CORP    76408231    2768873
YOU'RE HOME NOW    United States    CDRE TM CORP    78104866    2761684
CORCORAN WEXLER    United States    CDRE TM CORP    76315555    2576142
WWW.CORCORAN.COM    United States    CDRE TM CORP    75732288    2499454
THE CORCORAN GROUP    United States    CDRE TM CORP    75689238    2366134
CORCORANS    United States    CDRE TM CORP    75688924    2533288
IT'S ABOUT LIFE    United States    CDRE TM CORP    78280153    2973564
HOME DELIVERY    United States    CDRE TM CORP    76454296    2794095
OUR TOWN    United States    CDRE TM CORP    78449628    3094142
LOCALINK    United States    CDRE TM CORP    78525869    3110476
WHERE DO YOU WANT TO LIVE    United States    CDRE TM CORP    75433774    2353088
LIVE WHO YOU ARE    United States    CDRE TM CORP    78713347    3178618
HOME STYLES & Design    United States    CDRE TM CORP    78121411    2827643
FS FRED SANDS REALTORS & Design    United States    CDRE TM CORP    73330014    1228983
FS & Design    United States    CDRE TM CORP    73330013    1228982
MURPHY REALTY PREFERRED HOMES    United States    CDRE TM CORP    76109107    2657335
MURPHY REALTY    United States    CDRE TM CORP    76109108    2530984
IMAGINE IT. FIND IT. OWN IT    United States    CDRE TM CORP    76495320    2806481


SCHEDULE II

Century 21 Real Estate LLC

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    African Union Territories (OAPI)    Century 21 Real Estate LLC      
CENTURY 21    African Union Territories (OAPI)    Century 21 Real Estate LLC      
CENTURY 21 & New House Design    African Union Territories (OAPI)    Century 21 Real Estate LLC    54335    54335
CENTURY 21 & New House Design    African Union Territories (OAPI)    Century 21 Real Estate LLC    54336    54336
CENTURY 21    Algeria    Century 21 Real Estate LLC    052378   
CENTURY 21 & New House Design    Algeria    Century 21 Real Estate LLC    052379   
CENTURY 21    Anguilla    Century 21 Real Estate Corp.       2706
CENTURY 21    Antigua and Barbuda    Century 21 Real Estate Corp.      
CENTURY 21 & New House Design    Antigua and Barbuda    Century 21 Real Estate Corp.      
CENTURY 21    Argentina    Century 21 Real Estate Corp.    1789489    1939876
CENTURY 21    Argentina    Century 21 Real Estate Corp.    1789490    1939877
CENTURY 21 & New House Design    Argentina    Century 21 Real Estate LLC    1793605    1940048
CENTURY 21 & New House Design    Argentina    Century 21 Real Estate LLC    1793606    1940040
SIGLO 21    Argentina    Century 21 Real Estate LLC    2,146,237    1794783
CENTURY 21    Aruba    Century 21 Real Estate Corp.    89051914    14483
CENTURY 21    Aruba    Century 21 Real Estate Corp.    91030422    15154
CENTURY 21 & New House Design    Aruba    Century 21 Real Estate Corp.    91030421    15153
CENTURION    Australia    Century 21 Real Estate LLC    559492    559492
CENTURION    Australia    Century 21 Real Estate LLC    559493    559493
CENTURY 21    Australia    Century 21 Real Estate LLC    326586    326586
CENTURY 21    Australia    Century 21 Real Estate LLC    491233    491233
CENTURY 21    Australia    Century 21 Real Estate LLC    491234    491234

 

1


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House & Sign Design (Series of 2)    Australia    Century 21 Real Estate LLC    554728    554728
CENTURY 21 & New House & Sign Design (Series of 2)    Australia    Century 21 Real Estate LLC    554729    554729
CENTURY 21 & New House Design    Australia    Century 21 Real Estate LLC    542303    542303
CENTURY 21 & New House Design    Australia    Century 21 Real Estate LLC    542304    542304
CENTURY 21 & Old House & Sign Design    Australia    Century 21 Real Estate LLC    428138    428138
CENTURY 21 & Old House Design    Australia    Century 21 Real Estate LLC    491235    491235
CENTURY 21 & Old House Design    Australia    Century 21 Real Estate LLC    491236    491236
CENTURY 21 & Sign & Post Design (Series of 2)    Australia    Century 21 Real Estate LLC    554730    554730
CENTURY 21 & Sign & Post Design (Series of 2)    Australia    Century 21 Real Estate LLC    554731    554731
THE WORLD IS SOLD ON CENTURY 21    Australia    Century 21 Real Estate LLC    1050167    1050167
CENTURY 21    Austria    Century 21 Real Estate LLC    AM 2269/75    81547
CENTURY 21 & New House Design    Austria    Century 21 Real Estate LLC    AM 5860/90    136271
CENTURY 21    Azerbaijan    Century 21 Real Estate LLC    20060373   
CENTURY 21 & New House Design    Azerbaijan    Century 21 Real Estate LLC    20060374   
CENTURY 21    Bahamas    Century 21 Real Estate LLC    8282    8282
CENTURY 21 & New House Design    Bahamas    Century 21 Real Estate LLC    14542    14542
CENTURY 21    Bahrain    Century 21 Real Estate Corp.    422/89    12537
CENTURY 21    Bahrain    Century 21 Real Estate Corp.    423/89    706
CENTURY 21 & New House Design    Bahrain    Century 21 Real Estate Corp.    387/91    884
CENTURY 21 & New House Design    Bahrain    Century 21 Real Estate Corp.    424/89    12538
CENTURY 21 & New House Design    Bahrain    Century 21 Real Estate Corp.    425/89    707
CENTURY 21    Barbados    Century 21 Real Estate Corp.       81/534
CENTURY 21    Barbados    Century 21 Real Estate Corp.       81/490
CENTURY 21    Barbados    Century 21 Real Estate Corp.       81/6593
CENTURY 21 & New House Design    Barbados    Century 21 Real Estate Corp.       81/6249
CENTURY 21 & New House Design    Barbados    Century 21 Real Estate Corp.       81/6594

 

2


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Belize    Century 21 Real Estate Corp.    1724.03    1724.03
CENTURY 21    Belize    Century 21 Real Estate LLC    6234    6234
CENTURY 21 & New House Design    Belize    Century 21 Real Estate Corp.    1725.03    1725.03
SIGLO 21    Belize    Century 21 Real Estate Corp.    1723.03    1723.03
CENTURION    Benelux    Century 21 Real Estate LLC    766104    497239
CENTURY 21    Benelux    Century 21 Real Estate LLC    34606    335022
CENTURY 21    Benelux    Century 21 Real Estate LLC    691728    151437
CENTURY 21    Benelux    Century 21 Real Estate LLC    834723    556946
CENTURY 21 & New House Design    Benelux    Century 21 Real Estate LLC    755505    487878
CENTURY 21 & New House Design    Benelux    Century 21 Real Estate LLC    834724    556947
CENTURY 21 & Sign & Post Design    Benelux    Century 21 Real Estate LLC    774593    508016
CENTURY 21 & Sign Design    Benelux    Century 21 Real Estate LLC    774594    508017
EEUW 21    Benelux    Century 21 Real Estate LLC    739532    475269
SIECLE 21    Benelux    Century 21 Real Estate LLC    739533    475270
VIP    Benelux    Century 21 Real Estate LLC    766105    497240
CENTURY 21    Bermuda    Century 21 Real Estate LLC    42240    42240
CENTURY 21    Bermuda    Century 21 Real Estate LLC    7935    7935
CENTURY 21 & New House Design    Bermuda    Century 21 Real Estate LLC    21330    21330
CENTURY 21 & New House Design    Bermuda    Century 21 Real Estate LLC    42241    42241
CENTURY 21    Bolivia    Century 21 Real Estate LLC    146214    70734-C
CENTURY 21    Bolivia    Century 21 Real Estate LLC    146214    70777-C
CENTURY 21    Bolivia    Century 21 Real Estate LLC    146214    70778-C
CENTURY 21 & New House Design    Bolivia    Century 21 Real Estate LLC    146214    70733-C
SIGLO 21    Bolivia    Century 21 Real Estate LLC    2541921    76434-C
CENTURY 21    Bosnia and Herzegovina    Century 21 Real Estate LLC    BAZ069892A   
CENTURY 21 & New House Design    Bosnia and Herzegovina    Century 21 Real Estate LLC    BAZ069891A   

 

3


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Brazil    Century 21 Real Estate Corp.    10882/79    7201044
CENTURY 21    Brazil    Century 21 Real Estate Corp.    26404/75    7061021
CENTURY 21    Brazil    Century 21 Real Estate Corp.    817906088    817906088
CENTURY 21    Brazil    Century 21 Real Estate LLC    817906096    817906096
CENTURY 21 & New House Design    Brazil    Century 21 Real Estate Corp.    815817355    815817355
CENTURY 21 & New House Design    Brazil    Century 21 Real Estate Corp.    815818670    815818670
CENTURY 21 & New House Design    Brazil    Century 21 Real Estate LLC    817906100    817906100
SECULO 21    Brazil    Century 21 Real Estate Corp.    820707775    820707775
SECULO 21    Brazil    Century 21 Real Estate Corp.    820829749    820829749
CENTURY 21    Brunei Darussalam    Century 21 Real Estate Corp.    35586    35586
CENTURY 21 & New House Design    Brunei Darussalam    Century 21 Real Estate Corp.    35588    35588
CENTURY 21    Bulgaria    Century 21 Real Estate LLC    12207    18876
CENTURY 21    Bulgaria    Century 21 Real Estate LLC    12208    1675
CENTURY 21 & New House Design    Bulgaria    Century 21 Real Estate LLC    67145    52033
AD/PAC    Canada    Century 21 Real Estate LLC    476194    286901
CENTURY 21    Canada    Century 21 Real Estate LLC    417509    233529
CENTURY 21    Canada    Century 21 Real Estate LLC    587710    368747
CENTURY 21 & New House Design    Canada    Century 21 Real Estate LLC    673854    401397
CENTURY 21 & New House Design    Canada    Century 21 Real Estate LLC    673857    397606
CENTURY 21 & New House Design    Canada    Century 21 Real Estate LLC    673859    397607
CENTURY 21 & Old Design    Canada    Century 21 Real Estate LLC    373123    227777
CENTURY 21 & Old Design    Canada    Century 21 Real Estate LLC    373124    225671
CENTURY 21 & Old Design    Canada    Century 21 Real Estate LLC    391141    238899
CENTURY 21 & Old Design    Canada    Century 21 Real Estate LLC    587712    368748
CENTURY 21 & Sign & Post Design    Canada    Century 21 Real Estate LLC    673855    400535
CENTURY 21 & Sign & Post Design (Color)    Canada    Century 21 Real Estate LLC    673856    400536

 

4


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 CONNECTIONS GUICHET UNIQUE VALUER AJOUTEE & Design    Canada    Century 21 Real Estate LLC    1080726    595238
CENTURY 21 CONNECTIONS REAL CONVENIENCE REAL VALUE & Design    Canada    Century 21 Real Estate LLC    1027978    587032
CENTURY 21 REAL ESTATE & North America Design    Canada    Century 21 Real Estate LLC    417511    234463
CENTURY 21 Sign & Post Design (Gold & Black)    Canada    Century 21 Real Estate LLC    673852    397605
CENTURY 21 Sign & Post Design (Gold & Brown)    Canada    Century 21 Real Estate LLC    424313    260388
CENTURY 21 SignPost Design (Gold)    Canada    Century 21 Real Estate LLC    1179262    605650
CREATE 21    Canada    Century 21 Real Estate LLC    1234772   
NORTH AMERICA'S NUMBER 1 TOP SELLER, CENTURY 21    Canada    Century 21 Real Estate LLC    462978    274562
THE NEIGHBOURHOOD PROFESSIONALS    Canada    Century 21 Real Estate LLC    417510    235878
THE REAL ESTATE INVESTMENT JOURNAL    Canada    Century 21 Real Estate LLC    476195    292131
VIP    Canada    Century 21 Real Estate LLC    476192    276212
WE'RE HERE FOR YOU    Canada    Century 21 Real Estate LLC    409209    228416
WE'RE NATIONAL, BUT WE'RE NEIGHBOURLY    Canada    Century 21 Real Estate LLC    409208    228795
CENTURY 21    Cape Verde    Century 21 Real Estate LLC      
CENTURY 21    Cape Verde    Century 21 Real Estate LLC      
CENTURY 21 & New House Design    Cape Verde    Century 21 Real Estate LLC      
CENTURY 21 & New House Design    Cape Verde    Century 21 Real Estate LLC      
CENTURY 21    Cayman Islands    Century 21 Real Estate LLC       1062225
CENTURY 21    Cayman Islands    Century 21 Real Estate LLC       1274764
CENTURY 21    Cayman Islands    Century 21 Real Estate LLC       1274765
CENTURY 21 & New House Design    Cayman Islands    Century 21 Real Estate LLC       1453969
CENTURY 21 & Sign & Post Design    Cayman Islands    Century 21 Real Estate LLC       1459099
CENTURY 21 & Sign Design    Cayman Islands    Century 21 Real Estate LLC       1459101

 

5


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Chile    Century 21 Real Estate LLC    299472    760388
CENTURY 21    Chile    Century 21 Real Estate LLC    299473    604353
CENTURY 21 & New House Design    Chile    Century 21 Real Estate LLC    272613    611278
CENTURY 21 & New House Design    Chile    Century 21 Real Estate LLC    272614    611277
SIGLO 21    Chile    Century 21 Real Estate Corp.    564471   
CENTURY 21    China (Peoples Republic)    Century 21 Real Estate LLC    8924591    523152
CENTURY 21    China (Peoples Republic)    Century 21 Real Estate LLC    93094145    777124
CENTURY 21 & New House Design    China (Peoples Republic)    Century 21 Real Estate LLC       3065318
CENTURY 21 & New House Design    China (Peoples Republic)    Century 21 Real Estate LLC       3065316
CENTURY 21 & New House Design    China (Peoples Republic)    Century 21 Real Estate LLC    90053105    577417
CENTURY 21 & New House Design    China (Peoples Republic)    Century 21 Real Estate LLC    93094136    777122
CENTURY 21 & New House Design (with Chinese)    China (Peoples Republic)    Century 21 Real Estate LLC    2000055326    1672792
CENTURY 21 & New House Design (with Chinese)    China (Peoples Republic)    Century 21 Real Estate LLC    2000055327    1647735
CENTURY 21 & New House Design (with Chinese)    China (Peoples Republic)    Century 21 Real Estate LLC    2000085135    1655868
CENTURY 21 & New House Design (with Chinese)    China (Peoples Republic)    Century 21 Real Estate LLC    2000085849    1699741
CENTURY 21 & New House Design (with Chinese)    China (Peoples Republic)    Century 21 Real Estate LLC    2000085850    1651932
CENTURY 21 (in Chinese)    China (Peoples Republic)    Century 21 Real Estate LLC       3501579
CENTURY 22    China (Peoples Republic)    Century 21 Real Estate LLC    3894723   
CENTURY 22    China (Peoples Republic)    Century 21 Real Estate LLC    3894724   
CENTURY 22    China (Peoples Republic)    Century 21 Real Estate LLC    3894725   
CENTURY 21    Colombia    Century 21 Real Estate LLC    306032    141915
CENTURY 21    Colombia    Century 21 Real Estate LLC    306033    141916
CENTURY 21 & New House Design    Colombia    Century 21 Real Estate LLC    97069262    211360
CENTURY 21 & Old Design    Colombia    Century 21 Real Estate LLC    306054    141917
CENTURY 21 & Old Design    Colombia    Century 21 Real Estate LLC    306055    141918
SIGLO 21    Colombia    Century 21 Real Estate LLC    98022229    214489

 

6


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & Design    Colorado    Century 21 Real Estate Corp.       911069098
CENTURY 21    Costa Rica    Century 21 Real Estate LLC    72248    72248
CENTURY 21    Costa Rica    Century 21 Real Estate LLC    72530    72530
CENTURY 21 & New House Design    Costa Rica    Century 21 Real Estate LLC    77838    77838
CENTURY 21 & New House Design    Costa Rica    Century 21 Real Estate LLC    78188    78188
SIGLO 21    Costa Rica    Century 21 Real Estate LLC    111092    111092
CENTURY 21    Croatia    Century 21 Real Estate LLC    Z20060597A    Z20060597
CENTURY 21 & New House Design    Croatia    Century 21 Real Estate LLC    Z20060598A    Z20060598
CENTURY 21    Cyprus, Republic of    Century 21 Real Estate Corp.    30846    30846
CENTURY 21    Cyprus, Republic of    Century 21 Real Estate Corp.    33210    33210
CENTURY 21 & New House Design    Cyprus, Republic of    Century 21 Real Estate Corp.    30847    30847
CENTURY 21 & New House Design    Cyprus, Republic of    Century 21 Real Estate Corp.    33209    33209
CENTURY 21    Czech Republic    Century 21 Real Estate LLC    170452    170452
21 ARHUNDREDE    Denmark    Century 21 Real Estate LLC    00080    08796
CENTURY 21    Denmark    Century 21 Real Estate LLC    04211    00100
CENTURY 21 & New House Design    Denmark    Century 21 Real Estate LLC    08959    07414
CENTURY 21    Dominica    Century 21 Real Estate Corp.    1/89    1/89
CENTURY 21    Dominican Republic    Century 21 Real Estate LLC    41404    41404
CENTURY 21    Dominican Republic    Century 21 Real Estate LLC    41405    41405
CENTURY 21 & New House Design    Dominican Republic    Century 21 Real Estate LLC    34822    34822
CENTURY 21 & New House Design    Dominican Republic    Century 21 Real Estate LLC    60133    60133
CENTURY 21 & New House Design    Dominican Republic    Century 21 Real Estate LLC    60153    60153
CENTURY 21    Ecuador    Century 21 Real Estate Corp.    61730    662-97
CENTURY 21    Ecuador    Century 21 Real Estate Corp.    61731    663-97
CENTURY 21    Ecuador    Century 21 Real Estate Corp.    61732    1451-97
CENTURY 21 & New House Design    Ecuador    Century 21 Real Estate Corp.    57790    206-97

 

7


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House Design    Ecuador    Century 21 Real Estate Corp.    57791    189-97
CENTURY 21 & New House Design    Ecuador    Century 21 Real Estate Corp.    57792    190-97
SIGLO 21    Ecuador    Century 21 Real Estate Corp.    86.879    4382-01
CENTURY 21    Egypt    Century 21 Real Estate Corp.    74584    74584
CENTURY 21 & New House Design    Egypt    Century 21 Real Estate Corp.    78959    78959
CENTURY 21 & New House Design    Egypt    Century 21 Real Estate Corp.    78960    78960
CENTURY 21    El Salvador    Century 21 Real Estate Corp.       112 book 6
CENTURY 21    El Salvador    Century 21 Real Estate Corp.    1596-98    58 book 95
CENTURY 21 & New House Design    El Salvador    Century 21 Real Estate Corp.       18 book 10
CENTURY 21 & New House Design    El Salvador    Century 21 Real Estate Corp.       10 book 23
SIGLO 21    El Salvador    Century 21 Real Estate Corp.    E-1599-98    146 book 93
CENTURY 21    Estonia    Century 21 Real Estate LLC    2226    7566
CENTURY 21 & Old Design    Estonia    Century 21 Real Estate Corp.    2228    7568
21 ARHUNDREDE    European Community    Century 21 Real Estate LLC    146746    146746
21OS AIUN    European Community    Century 21 Real Estate LLC    146589    146589
AD/PAC    European Community    Century 21 Real Estate LLC    146787    146787
CENTURION    European Community    Century 21 Real Estate LLC    146316    146316
CENTURY 21    European Community    Century 21 Real Estate LLC    146068    146068
CENTURY 21 & New House Design    European Community    Century 21 Real Estate LLC    146357    46357
CENTURY 21 & Sign & Post Design    European Community    Century 21 Real Estate LLC    146258    146258
CENTURY 21 & Sign Design    European Community    Century 21 Real Estate LLC    146191    146191
CENTURY 21 2 & 1    European Community    Century 21 Real Estate LLC    146761    146761
CENTURY 21 GESTION    European Community    Century 21 Real Estate LLC    146332    146332
KIOSQUE 21    European Community    Century 21 Real Estate LLC    146233    146233
SECOLO 21    European Community    Century 21 Real Estate LLC    146555    146555
SECULO 21    European Community    Century 21 Real Estate LLC    146522    146522

 

8


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

SEKEL 21    European Community    Century 21 Real Estate LLC    146472    146472
SIECLE 21    European Community    Century 21 Real Estate LLC    146720    146720
SIGLO 21    European Community    Century 21 Real Estate LLC    146449    146449
VIP    European Community    Century 21 Real Estate LLC    146142    146142
VOISISATA 21    European Community    Century 21 Real Estate LLC    146373    146373
CENTURY 21    Fiji    Century 21 Real Estate Corp.    20423    20423
CENTURY 21 & New House Design    Fiji    Century 21 Real Estate LLC    160/06   
CENTURY 21 & New House Design    Fiji    Century 21 Real Estate Corp.    21711    21711
CENTURY 21 & Old Design    Fiji    Century 21 Real Estate Corp.    20424    20424
CENTURY 21    Finland    Century 21 Real Estate LLC    3976/75    72169
CENTURY 21 & New House Design    Finland    Century 21 Real Estate LLC    4832/90    117908
VUOSISATA 21    Finland    Century 21 Real Estate LLC    5820/89    124952
CENTURION    France    Century 21 Real Estate LLC    300135    1682705
CENTURY 21    France    Century 21 Real Estate LLC    841807    1399704
CENTURY 21 & New House Design    France    Century 21 Real Estate LLC    239193    1617044
CENTURY 21 & Sign & Post Design    France    Century 21 Real Estate LLC    063454990   
CENTURY 21 & Sign Design    France    Century 21 Real Estate LLC    063454991   
CENTURY 21 GESTION    France    Century 21 Real Estate LLC    476409    93476409
CENTURY 21 IMMOBILIER D’ENTREPRISE & Design    France    Century 21 Real Estate LLC    99775039    99775039
KIOSQUE 21    France    Century 21 Real Estate LLC       94516614
SIECLE 21    France    Century 21 Real Estate LLC    166203    1636431
VIP    France    Century 21 Real Estate LLC    300134    1682704
CENTURY 21 & New House Design    Gaza District    Century 21 Real Estate LLC    5126    5126
CENTURY 21 (in English & Arabic)    Gaza District    Century 21 Real Estate LLC    5127    5127
CENTURY 21    Germany    Century 21 Real Estate LLC    25330/16    976127
CENTURY 21    Germany    Century 21 Real Estate LLC    27704/36    992054

 

9


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Germany    Century 21 Real Estate LLC    65907/16    653579
CENTURY 21 & New House Design    Germany    Century 21 Real Estate LLC    41001/36    1184574
CENTURY 21    Greece    Century 21 Real Estate LLC    111125    111125
CENTURY 21    Greece    Century 21 Real Estate LLC    55558    55558
CENTURY 21 & New House Design    Greece    Century 21 Real Estate LLC    111062    111062
CENTURY 21    Grenada    Century 21 Real Estate Corp.       90/1998
CENTURY 21    Grenada    Century 21 Real Estate Corp.       91/1998
CENTURY 21 & New House Design    Grenada    Century 21 Real Estate Corp.       84/1998
CENTURY 21 & New House Design    Grenada    Century 21 Real Estate Corp.       85/1998
CENTURY 21    Guatemala    Century 21 Real Estate Corp.    002722    121727
CENTURY 21    Guatemala    Century 21 Real Estate Corp.    002723    121356
CENTURY 21 & New House Design    Guatemala    Century 21 Real Estate Corp.    04974    66514
CENTURY 21 & New House Design    Guatemala    Century 21 Real Estate Corp.    4975    64944
SIGLO 21    Guatemala    Century 21 Real Estate Corp.    2783    104939
CENTURY 21    Guyana    Century 21 Real Estate Corp.    16553A    16553A
CENTURY 21 & Design    Guyana    Century 21 Real Estate Corp.    16552A    16552A
CENTURY 21    Haiti    Century 21 Real Estate LLC    179-149    179-149
CENTURY 21    Haiti    Century 21 Real Estate LLC    227-87    289-126
CENTURY 21 & New House Design    Haiti    Century 21 Real Estate LLC    233-99    374-140
CENTURY 21 & New House Design    Haiti    Century 21 Real Estate LLC    234-99    375-140
CENTURY 21    Honduras    Century 21 Real Estate Corp.    5393-89    941F176TIII
CENTURY 21    Honduras    Century 21 Real Estate Corp.    5408-89    52329F460TXX
CENTURY 21 & Design    Honduras    Century 21 Real Estate Corp.    3616/91    1210F445TIII
CENTURY 21 & Design    Honduras    Century 21 Real Estate Corp.    3617/91    55034F165T42
SIGLO 21    Honduras    Century 21 Real Estate Corp.    3757/98   
CENTURION    Hong Kong    Century 21 Real Estate LLC    5513/1992    7743/1995

 

10


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURION    Hong Kong    Century 21 Real Estate LLC    5898/1992    4807/1993
CENTURION    Hong Kong    Century 21 Real Estate LLC    7146/1991    599/1993
CENTURY 21    Hong Kong    Century 21 Real Estate LLC    4567/1993    B6914/1996
CENTURY 21    Hong Kong    Century 21 Real Estate LLC    5830/1992    B602/1995
CENTURY 21    Hong Kong    Century 21 Real Estate LLC    6197/1988    2843/1992
CENTURY 21 & New House Design    Hong Kong    Century 21 Real Estate LLC    4565/1993    B8023/1996
CENTURY 21 & New House Design    Hong Kong    Century 21 Real Estate LLC    5831/1992    B603/1995
CENTURY 21 & New House Design    Hong Kong    Century 21 Real Estate LLC    6196/1988    2842/1992
CENTURY 21 & New House Design (with Chinese)    Hong Kong    Century 21 Real Estate LLC    11943/1993    B3447/1997
CENTURY 21 & New House Design (with Chinese)    Hong Kong    Century 21 Real Estate LLC    11944/1993    B3448/1997
CENTURY 21 & New House Design (with Chinese)    Hong Kong    Century 21 Real Estate LLC    11945/1993    B3449/1997
CENTURY 21 & Sign & Post Design    Hong Kong    Century 21 Real Estate LLC    114/1992    B5441/1994
CENTURY 21 & Sign Design    Hong Kong    Century 21 Real Estate LLC    115/1992    B2683/1995
CENTURY 21 (in Chinese)    Hong Kong    Century 21 Real Estate LLC    10475/1993    B3446/1997
CENTURY 21 (in Chinese)    Hong Kong    Century 21 Real Estate LLC    6503/1988    B601/1995
CENTURY 21 VIP    Hong Kong    Century 21 Real Estate LLC    10476/1993    B8068/1997
VIP    Hong Kong    Century 21 Real Estate LLC    5424/1992    1903/1995
VIP    Hong Kong    Century 21 Real Estate LLC    7150/1991    5017/1994
CENTURY 21    Hungary    Century 21 Real Estate LLC    46/90    138029
CENTURY 21 & New House Design    Hungary    Century 21 Real Estate LLC    3647/90    139852
CENTURY 21    Iceland    Century 21 Real Estate LLC    172/1989    199/1991
CENTURY 21 & New House Design    Iceland    Century 21 Real Estate LLC    173/1989    380/1991
OLDIN 21    Iceland    Century 21 Real Estate LLC    11/1990    203/1991
OLDIN 21    Iceland    Century 21 Real Estate LLC    789/1990    80/1991
CENTURY 21    India    Century 21 Real Estate LLC    1359561   
CENTURY 21    India    Century 21 Real Estate Corp.    506834    506834

 

11


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House Design    India    Century 21 Real Estate LLC    1359563   
CENTURY 21 & Old Design    India    Century 21 Real Estate Corp.    506833    506833
CENTURY 21    Indonesia    Century 21 Real Estate Corp.       488535
CENTURY 21    Indonesia    Century 21 Real Estate Corp.       302542
CENTURY 21    Indonesia    Century 21 Real Estate Corp.       488202
CENTURY 21 & New House Design    Indonesia    Century 21 Real Estate Corp.       302616
CENTURY 21 & New House Design    Indonesia    Century 21 Real Estate Corp.       488203
CENTURION    Ireland    Century 21 Real Estate LLC    3402    150073
CENTURION    Ireland    Century 21 Real Estate LLC    4702    150608
CENTURY 21    Ireland    Century 21 Real Estate LLC    2700    088749
CENTURY 21    Ireland    Century 21 Real Estate LLC    4088    201312
CENTURY 21 & New House Design    Ireland    Century 21 Real Estate LLC    4090    201423
CENTURY 21 & New House Design    Ireland    Century 21 Real Estate LLC    6690    142535
CENTURY 21 & Sign & Post Design    Ireland    Century 21 Real Estate LLC    0857    151789
CENTURY 21 & Sign Design    Ireland    Century 21 Real Estate LLC    0858    151790
CENTURY 21    Israel    Century 21 Real Estate LLC    46053    46053
CENTURY 21    Israel    Century 21 Real Estate LLC    46054    46054
CENTURY 21    Israel    Century 21 Real Estate LLC    85988    85988
CENTURY 21 & New House Design    Israel    Century 21 Real Estate LLC    78817    78817
CENTURY 21 & New House Design    Israel    Century 21 Real Estate LLC    78818    78818
CENTURY 21 (in Hebrew)    Israel    Century 21 Real Estate LLC    74955    74955
CENTURY 21 (in Hebrew)    Israel    Century 21 Real Estate LLC    74956    74956
CENTURY 21    Italy    Century 21 Real Estate LLC    34978/75    731278
CENTURY 21 & New House Design    Italy    Century 21 Real Estate Corp.    26645C/90    608428
CENTURY 21 & New House Design in Rectangle    Italy    Century 21 Real Estate Corp.    92C000633    639745
CENTURY 21 & Sign & Post Design    Italy    Century 21 Real Estate Corp.    92C000632    639744

 

12


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

SECOLO 21    Italy    Century 21 Real Estate LLC    38699C/90    588935
SECOLO 21    Italy    Century 21 Real Estate Corp.    98C000928    836806
CENTURY 21    Jamaica    Century 21 Real Estate Corp.       B19093
CENTURY 21    Jamaica    Century 21 Real Estate Corp.    41296    41296
CENTURY 21 & Design    Jamaica    Century 21 Real Estate Corp.    16/1470    25542
CENTURY 21 & New House Design    Japan    Century 21 Real Estate LLC    241187/92    3158940
CENTURY 21 HOME in Katakana    Japan    Century 21 Real Estate LLC    168212/97    4253681
CENTURY 21 HOUSING in Katakana    Japan    Century 21 Real Estate LLC    168213/97    4253682
CENTURY 21 IMPORT HOME in Katakana    Japan    Century 21 Real Estate LLC    168215/97    4303578
CENTURY 21 IMPORT HOUSE in Katakana    Japan    Century 21 Real Estate LLC    168211/97    4303576
CENTURY 21 IMPORT HOUSE in Katakana    Japan    Century 21 Real Estate LLC    168214/97    4303577
CENTURY 21 in Katakana    Japan    Century 21 Real Estate LLC    241188/92    3202692
CENTURY 21 MY HOME AUCTION (in Katakana)    Japan    Century 21 Real Estate LLC    82130/00    4547714
CENTURY 21 REAL ESTATE    Japan    Century 21 Real Estate LLC    979/84    1854786
CENTURY 21 REAL ESTATE AUCTION (in Japanese)    Japan    Century 21 Real Estate LLC    82131/00    4511522
CENTURY 21 REAL ESTATE CORPORATION & Design    Japan    Century 21 Real Estate LLC    111178/90    2691387
CENTURY 21 REAL ESTATE in Katakana    Japan    Century 21 Real Estate LLC    11558/90    2476784
CENTURY 21 Sign & Post Design    Japan    Century 21 Real Estate LLC    42404/91    2696263
CENTURY 21 Sign Design    Japan    Century 21 Real Estate LLC    42405/91    2696264
CENTURY 22    Japan    Century 21 Real Estate LLC    162372/97    4693536
CLUBCENTURION (with Katakana)    Japan    Century 21 Real Estate LLC    10977/99    4405635
CENTURY 21    Jordan    Century 21 Real Estate LLC    83335    83335
CENTURY 21    Jordan    Century 21 Real Estate LLC    83595    83595
CENTURY 21 & New House Design    Jordan    Century 21 Real Estate LLC    83576    83576
CENTURY 21 & New House Design    Jordan    Century 21 Real Estate LLC    83644    83644

 

13


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

BEK 21    Kazakhstan    Century 21 Real Estate Corp.    35900   
BEK 21 & Design    Kazakhstan    Century 21 Real Estate Corp.    35901   
CENTURY 21    Kazakhstan    Century 21 Real Estate LLC    33108   
CENTURY 21 & New House Design    Kazakhstan    Century 21 Real Estate LLC    33109   
CENTURY 21 & New House Design (in Kazakh)    Kazakhstan    Century 21 Real Estate LLC    34554   
CENTURY 21 & New House Design (in Cyrillic)    Kazakhstan    Century 21 Real Estate LLC    34845   
CENTURY 21 (in Cyrillic)    Kazakhstan    Century 21 Real Estate LLC    34846   
CENTURY 21 (in Kazakh)    Kazakhstan    Century 21 Real Estate LLC    34555   
CENTURY 21    Kenya    Century 21 Real Estate Corp.    0191    0191
CENTURY 21    Kenya    Century 21 Real Estate Corp.    36999    36999
CENTURY 21 & Design    Kenya    Century 21 Real Estate Corp.    0192    0192
CENTURY 21 & Design    Kenya    Century 21 Real Estate Corp.    37000    37000
CENTURY 21    Korea, Republic of    Century 21 Real Estate LLC    1984-1027    5370
CENTURY 21    Korea, Republic of    Century 21 Real Estate LLC    1984-15644    117926
CENTURY 21 & New House Design (with Korean)    Korea, Republic of    Century 21 Real Estate LLC    2000-15614    72575
CENTURY 21    Kuwait    Century 21 Real Estate Corp.    33326   
CENTURY 21    Kuwait    Century 21 Real Estate Corp.    33327   
CENTURY 21 & New House Design    Kuwait    Century 21 Real Estate Corp.    33328   
CENTURY 21 & Old Design    Kuwait    Century 21 Real Estate Corp.    11624    11624
CENTURY 21    Latvia    Century 21 Real Estate Corp.    M-92-1273    M 10874
CENTURY 21 & New House Design    Latvia    Century 21 Real Estate Corp.    M-02-1615    M 51933
CENTURY 21    Lebanon    Century 21 Real Estate Corp.    182665/7    55911
CENTURY 21    Lebanon    Century 21 Real Estate Corp.    244649/490    53458
CENTURY 21 & New House Design    Lebanon    Century 21 Real Estate Corp.    142171/285    54948
CENTURY 21 & New House Design    Lebanon    Century 21 Real Estate Corp.    182665/6    55910
CENTURY 21 & Old Design    Lebanon    Century 21 Real Estate Corp.    244649/490    53459

 

14


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Liberia    Century 21 Real Estate LLC       00067/2006
CENTURY 21 & New House Design    Liberia    Century 21 Real Estate LLC       00068/2006
CENTURY 21 & Old Design    Liechtenstein    Century 21 Real Estate Corp.    7863    7863
CENTURY 21 & Old Design    Liechtenstein    Century 21 Real Estate Corp.    7864    7864
CENTURY 21    Lithuania    Century 21 Real Estate LLC    4512    7971
CENTURY 21 & New House Design    Lithuania    Century 21 Real Estate LLC    4514    21930
CENTURY 21    Macao    Century 21 Real Estate LLC    12657 M    12657 M
CENTURY 21    Macao    Century 21 Real Estate LLC    12658 M    12658 M
CENTURY 21 & New House Design    Macao    Century 21 Real Estate LLC    12659 M    12659 M
CENTURY 21 & New House Design    Macao    Century 21 Real Estate LLC    12660 M    12660 M
CENTURY 21 & Sign & Post Design    Macao    Century 21 Real Estate LLC    12662 M    12662 M
CENTURY 21 & Sign & Post Design    Macao    Century 21 Real Estate LLC    12663 M    12663 M
CENTURY 21    Macedonia    Century 21 Real Estate LLC    2005/862   
CENTURY 21 & New House Design    Macedonia    Century 21 Real Estate LLC    2005/863   
CENTURION    Malaysia    Century 21 Real Estate Corp.    9201794    9201794
CENTURION    Malaysia    Century 21 Real Estate Corp.    97/18284    97/18284
CENTURION    Malaysia    Century 21 Real Estate Corp.    97018285    97018285
CENTURY 21    Malaysia    Century 21 Real Estate Corp.    88/04830    88/04830
CENTURY 21    Malaysia    Century 21 Real Estate Corp.    98001032    98001032
CENTURY 21 & New House Design    Malaysia    Century 21 Real Estate Corp.    88/04829    88/04829
CENTURY 21 & New House Design    Malaysia    Century 21 Real Estate Corp.    98001033    98001033
CENTURY 21 Sign & Post    Malaysia    Century 21 Real Estate Corp.    91/01718   
CENTURY 21 Sign & Post    Malaysia    Century 21 Real Estate Corp.    91/04500   
CENTURY 21 Sign Design    Malaysia    Century 21 Real Estate Corp.    91/01717    91/01717
CENTURY 21 Sign Design    Malaysia    Century 21 Real Estate Corp.    91/03818    91/03818
VIP    Malaysia    Century 21 Real Estate Corp.    92-01793    92/01793

 

15


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Malta    Century 21 Real Estate Corp.    20260    20260
CENTURY 21 & New House Design    Malta    Century 21 Real Estate Corp.    20261    20261
CENTURY 21 & Sign & Post Design    Malta    Century 21 Real Estate Corp.    20398    20398
CENTURY 21 & Sign Design    Malta    Century 21 Real Estate Corp.    20399    20399
CAREERTRAK    Mexico    Century 21 Real Estate LLC    90128    384181
CASA ABIERTA    Mexico    Century 21 Real Estate LLC    154195    483652
CENTURION    Mexico    Century 21 Real Estate LLC    119465    483935
CENTURION    Mexico    Century 21 Real Estate LLC    119467    422142
CENTURY 21    Mexico    Century 21 Real Estate LLC    117459    849730
CENTURY 21    Mexico    Century 21 Real Estate LLC    117471    527091
CENTURY 21    Mexico    Century 21 Real Estate LLC    47531    434652
CENTURY 21    Mexico    Century 21 Real Estate LLC    52724    360990
CENTURY 21    Mexico    Century 21 Real Estate LLC    52726    360991
CENTURY 21    Mexico    Century 21 Real Estate LLC    52727    360992
CENTURY 21    Mexico    Century 21 Real Estate LLC    52728    360993
CENTURY 21    Mexico    Century 21 Real Estate LLC    77331    388000
CENTURY 21 & New House Design    Mexico    Century 21 Real Estate LLC    117455    454485
CENTURY 21 & New House Design    Mexico    Century 21 Real Estate LLC    117466    478179
CENTURY 21 & New House Design    Mexico    Century 21 Real Estate LLC    117479    422506
CENTURY 21 & New House Design    Mexico    Century 21 Real Estate LLC    97783    435000
CENTURY 21 & Old Design    Mexico    Century 21 Real Estate LLC    160072    247331
CENTURY 21 & Old Design    Mexico    Century 21 Real Estate LLC    77330    394015
CENTURY 21 & Sign & Post Design    Mexico    Century 21 Real Estate LLC    107933    403696
CENTURY 21 & Sign & Post Design    Mexico    Century 21 Real Estate LLC    117470    420317
CENTURY 21 & Sign & Post Design    Mexico    Century 21 Real Estate LLC    117473    423754
CENTURY 21 & Sign Design    Mexico    Century 21 Real Estate LLC    117467    420316

 

16


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 HOME IMPROVEMENTS    Mexico    Century 21 Real Estate LLC    247361    524430
CENTURY 21 HOME IMPROVEMENTS    Mexico    Century 21 Real Estate LLC    247362    549869
CENTURY 21 HOME IMPROVEMENTS    Mexico    Century 21 Real Estate LLC    247363    546079
CENTURY 21 HOME IMPROVEMENTS    Mexico    Century 21 Real Estate LLC    247364    524431
CENTURY 21 HOME IMPROVEMENTS    Mexico    Century 21 Real Estate LLC    247365    524432
CENTURY 21 HOME IMPROVEMENTS    Mexico    Century 21 Real Estate LLC    247367    612100
CENTURY 21 HOME IMPROVEMENTS    Mexico    Century 21 Real Estate LLC    247368    524433
PONGA SU CONFIANZA EN EL NUMERO UNO    Mexico    Century 21 Real Estate LLC    119468    410948
PONGA SU CONFIANZA EN EL NUMERO UNO    Mexico    Century 21 Real Estate LLC    119469    410949
SIGLO 21    Mexico    Century 21 Real Estate LLC    117454    841573
SIGLO 21    Mexico    Century 21 Real Estate LLC    117465    659818
SIGLO 21    Mexico    Century 21 Real Estate LLC    117472   
SIGLO 21    Mexico    Century 21 Real Estate LLC    117474    436004
SIGLO 21    Mexico    Century 21 Real Estate LLC    52725    507194
VIP    Mexico    Century 21 Real Estate LLC    119472    527967
VIP    Mexico    Century 21 Real Estate LLC    119473    428418
CENTURION    Monaco    Century 21 Real Estate LLC    14083    01.22851
CENTURY 21    Monaco    Century 21 Real Estate LLC    11316    97.17947
CENTURY 21    Monaco    Century 21 Real Estate LLC    13115    00.21138
CENTURY 21 & New House Design    Monaco    Century 21 Real Estate LLC    26756    06.25281
CENTURY 21 & Sign & Post Design    Monaco    Century 21 Real Estate LLC    14180    92.14147
CENTURY 21 & Sign Design    Monaco    Century 21 Real Estate LLC    14179    92.14146
SIECLE 21    Monaco    Century 21 Real Estate LLC    13114    00.21137
VIP    Monaco    Century 21 Real Estate LLC    14082    01.22850
CENTURY 21    Montserrat    Century 21 Real Estate Corp.    1432    1432
CENTURY 21    Morocco    Century 21 Real Estate LLC    75533    75533

 

17


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House Design    Morocco    Century 21 Real Estate LLC    75534    75534
CENTURY 21    Netherlands Antilles    Century 21 Real Estate LLC    D-600644    12451
CENTURY 21 & New House Design    Netherlands Antilles    Century 21 Real Estate LLC    16277    01028
CENTURY 21 & New House Design    Netherlands Antilles    Century 21 Real Estate LLC    D-300531    10146
CENTURION    New Zealand    Century 21 Real Estate Corp.    211267    211267
CENTURION    New Zealand    Century 21 Real Estate Corp.    211268    211268
CENTURY 21    New Zealand    Century 21 Real Estate Corp.    113348    113348
CENTURY 21    New Zealand    Century 21 Real Estate Corp.    182993    182993
CENTURY 21    New Zealand    Century 21 Real Estate Corp.    192823    192823
CENTURY 21 & New House Design    New Zealand    Century 21 Real Estate Corp.    204877    204877
CENTURY 21 & New House Design    New Zealand    Century 21 Real Estate Corp.    204878    204878
CENTURY 21 & Old Design    New Zealand    Century 21 Real Estate Corp.    182994    182994
CENTURY 21 & Old Sign Design    New Zealand    Century 21 Real Estate Corp.    192824    192824
CENTURY 21 & Old Sign Design    New Zealand    Century 21 Real Estate Corp.    192825    192825
CENTURY 21 & Sign & Post Design    New Zealand    Century 21 Real Estate Corp.    209832    209832
CENTURY 21 & Sign & Post Design    New Zealand    Century 21 Real Estate Corp.    209833    209833
CENTURY 21 & Sign Design    New Zealand    Century 21 Real Estate Corp.    209834    209834
CENTURY 21 & Sign Design    New Zealand    Century 21 Real Estate Corp.    209835    209835
CENTURY 21    Nicaragua    Century 21 Real Estate Corp.    4327    20120
CENTURY 21    Nicaragua    Century 21 Real Estate Corp.    4419    20151
CENTURY 21 & Design    Nicaragua    Century 21 Real Estate Corp.    2001/00773    51219
CENTURY 21 & Design    Nicaragua    Century 21 Real Estate Corp.    98-01044    38878 CC
SIGLO 21    Nicaragua    Century 21 Real Estate Corp.    98-01046    38889 CC
CENTURY 21    Nigeria    Century 21 Real Estate Corp.    TP 6465    55325
CENTURY 21 & New House Design    Nigeria    Century 21 Real Estate Corp.    TP 6466    55326
ARHUNDRE 21    Norway    Century 21 Real Estate LLC    905034    153820

 

18


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Norway    Century 21 Real Estate LLC    123490    102752
CENTURY 21 & New House Design    Norway    Century 21 Real Estate LLC    906024    152873
CENTURY 21    Oman    Century 21 Real Estate Corp.    3373    3373
CENTURY 21    Oman    Century 21 Real Estate Corp.    3374    3374
CENTURY 21 & New House Design    Oman    Century 21 Real Estate Corp.    5144    5144
CENTURY 21 & New House Design    Oman    Century 21 Real Estate Corp.    5145    5145
CENTURY 21 & Old Design    Oman    Century 21 Real Estate Corp.    3371    3371
CENTURY 21 & Old Design    Oman    Century 21 Real Estate Corp.    3372    3372
CENTURY 21    Pakistan    Century 21 Real Estate Corp.    103018   
CENTURY 21    Pakistan    Century 21 Real Estate Corp.    201865   
CENTURY 21 & New House Design    Pakistan    Century 21 Real Estate Corp.    109017   
CENTURY 21 & New House Design    Pakistan    Century 21 Real Estate Corp.    201864   
CENTURY 21    Panama    Century 21 Real Estate Corp.    46721    46721
CENTURY 21    Panama    Century 21 Real Estate Corp.    46733    46733
CENTURY 21 & New House Design    Panama    Century 21 Real Estate Corp.    64716    64716
CENTURY 21 & New House Design    Panama    Century 21 Real Estate Corp.    64717    64717
CENTURY 21 & Sign & Post Design    Panama    Century 21 Real Estate Corp.    64835    64835
SIGLO 21    Panama    Century 21 Real Estate Corp.    92979    92979
CENTURY 21    Papua New Guinea    Century 21 Real Estate Corp.    56203    56203
CENTURY 21    Papua New Guinea    Century 21 Real Estate Corp.    56204    56204
CENTURY 21 & New House Design    Papua New Guinea    Century 21 Real Estate Corp.    56525    56525
CENTURY 21 & Sign & Post Design    Papua New Guinea    Century 21 Real Estate Corp.    56956    56956
CENTURY 21 & Sign & Post Design    Papua New Guinea    Century 21 Real Estate Corp.    57047    57047
CENTURY 21 & Sign Design    Papua New Guinea    Century 21 Real Estate Corp.    56955    56955
CENTURY 21 & Sign Design    Papua New Guinea    Century 21 Real Estate Corp.    57046    57046
CENTURY 21    Paraguay    Century 21 Real Estate LLC    006295    291160

 

19


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Paraguay    Century 21 Real Estate LLC    006296    291159
CENTURY 21 & New House Design    Paraguay    Century 21 Real Estate LLC    006293    291066
CENTURY 21 & New House Design    Paraguay    Century 21 Real Estate LLC    006294    291065
SIGLO 21    Paraguay    Century 21 Real Estate LLC    8978    211345
CENTURY 21    Peru    Century 21 Real Estate LLC    60156    47487
CENTURY 21    Peru    Century 21 Real Estate LLC    60161    15048
CENTURY 21 & New House Design    Peru    Century 21 Real Estate LLC    60159    15047
CENTURY 21 & New House Design    Peru    Century 21 Real Estate LLC    60160    47813
SIGLO 21    Peru    Century 21 Real Estate LLC    164356    32792
CENTURY 21    Philippines    Century 21 Real Estate Corp.    120726    120726
CENTURY 21 & New House Design    Philippines    Century 21 Real Estate Corp.    120725   
CENTURY 21    Poland    Century 21 Real Estate LLC    89660    68493
CENTURY 21    Poland    Century 21 Real Estate LLC    Z-237717    158490
CENTURY 21 & New House Design    Poland    Century 21 Real Estate LLC    117091    83480
CENTURY 21 & New House Design    Poland    Century 21 Real Estate LLC    Z-237716    158489
CENTURY 21    Portugal    Century 21 Real Estate LLC    190308    190308
CENTURY 21 & New House Design    Portugal    Century 21 Real Estate LLC    270646    270646
CENTURY 21 & New House Design    Portugal    Century 21 Real Estate LLC    270647    270647
EM CASA COM A CENTURY 21    Portugal    Century 21 Real Estate LLC    386229    386229
SECULO 21    Portugal    Century 21 Real Estate LLC    261233    261233
SECULO 21    Portugal    Century 21 Real Estate LLC    261234    261234
CENTURY 21    Puerto Rico    Century 21 Real Estate Corp.       45171
CENTURY 21 & New House Design    Puerto Rico    Century 21 Real Estate Corp.       45172
CENTURY 21 & Sign & Post Design    Puerto Rico    Century 21 Real Estate Corp.       7935
CENTURY 21    Qatar    Century 21 Real Estate LLC    21058    21058
CENTURY 21    Qatar    Century 21 Real Estate LLC    21059    21059

 

20


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House Design    Qatar    Century 21 Real Estate LLC    21060    21060
CENTURY 21 & New House Design    Qatar    Century 21 Real Estate LLC    21061    21061
CENTURY 21    Romania    Century 21 Real Estate Corp.    22820    16676
CENTURY 21 & New House Design    Romania    Century 21 Real Estate LLC    200607307   
BEK 21    Russian Federation    Century 21 Real Estate LLC    2006722910   
BEK 21 & Design    Russian Federation    Century 21 Real Estate LLC      
CENTURY 21    Russian Federation    Century 21 Real Estate LLC    113589    88734
CENTURY 21 & New House Design    Russian Federation    Century 21 Real Estate LLC    92010718    123932
CENTURY 21 & New House Design (in Cyrillic)    Russian Federation    Century 21 Real Estate LLC    2006712394   
CENTURY 21 (in Cyrillic)    Russian Federation    Century 21 Real Estate LLC    2006712393   
CENTURY 21    Saudi Arabia    Century 21 Real Estate LLC    2808    83/17
CENTURY 21 & New House Design    Saudi Arabia    Century 21 Real Estate LLC    12952    241/14
CENTURY 21 & New House Design    Saudi Arabia    Century 21 Real Estate LLC    12953    241/15
CENTURY 21    Serbia    Century 21 Real Estate LLC    Z-1284/2000    46528
CENTURY 21 & New House Design    Serbia    Century 21 Real Estate LLC    Z-800/2006   
CENTURION    Singapore    Century 21 Real Estate LLC    6349    6349
CENTURION    Singapore    Century 21 Real Estate LLC    6350    6350
CENTURY 21    Singapore    Century 21 Real Estate LLC    1426    1426
CENTURY 21    Singapore    Century 21 Real Estate LLC    75995    75995
CENTURY 21 & New House Design    Singapore    Century 21 Real Estate LLC    1427    1427
CENTURY 21 & New House Design    Singapore    Century 21 Real Estate LLC    8106    T9008106I
CENTURY 21 & Sign & Post Design    Singapore    Century 21 Real Estate LLC    2378    2378
CENTURY 21 & Sign & Post Design    Singapore    Century 21 Real Estate LLC    2380    2380
CENTURY 21 & Sign Design    Singapore    Century 21 Real Estate LLC    2379    2379
CENTURY 21 & Sign Design (in series)    Singapore    Century 21 Real Estate LLC    15210I    15210I
CENTURY 21    Slovakia    Century 21 Real Estate LLC    170452    170452

 

21


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21    Solomon Islands    Century 21 Real Estate Corp.    1062225    1386
CENTURY 21    South Africa    Century 21 Real Estate LLC    75/5356    75/5356
CENTURY 21    South Africa    Century 21 Real Estate LLC    75/5357    75/5357
CENTURY 21    South Africa    Century 21 Real Estate LLC    91/4114    91/4114
CENTURY 21 & New House Design    South Africa    Century 21 Real Estate LLC    91/0140    91/0140
CENTURY 21 & New House Design    South Africa    Century 21 Real Estate LLC    91/0141    91/0141
CENTURY 21 & New House Design (Black & Gold)    South Africa    Century 21 Real Estate LLC    200700537   
CENTURY 21 & New House Design (Black & Gold)    South Africa    Century 21 Real Estate LLC    200700538   
CENTURY 21 & New House Design (Black & Gold)    South Africa    Century 21 Real Estate LLC    200700539   
CENTURY 21 & New House Design (Black & Gold)    South Africa    Century 21 Real Estate LLC    200700540   
CENTURY 21 & New House Design (Black & Gold)    South Africa    Century 21 Real Estate LLC    200700535   
CENTURY 21 & New House Design (Black & Gold)    South Africa    Century 21 Real Estate LLC    200700536   
CENTURY 21    Spain    Century 21 Real Estate LLC    800432    800432
CENTURY 21 & Design    Spain    Century 21 Real Estate LLC    1594972    1594972
CENTURY 21 & Design    Spain    Century 21 Real Estate LLC    1594973    1594973
CENTURY 21 BAHIA    Spain    Century 21 Real Estate LLC    2641550    2641550
VEINTE & UNO INMOBILIARIA    Spain    Century 21 Real Estate LLC    2042000    2042000
CENTURY 21    Sri Lanka    Century 21 Real Estate Corp.    71860    71860
CENTURY 21 & New House Design    Sri Lanka    Century 21 Real Estate Corp.    71861    71861
CENTURY 21 & New House Design    St. Lucia    Century 21 Real Estate Corp.    104/91    104/91
CENTURY 21    St. Vincent and the Grenadines    Century 21 Real Estate Corp.       3 of 1998
CENTURY 21 & New House Design    St. Vincent and the Grenadines    Century 21 Real Estate Corp.       4 of 1998
CENTURY 21    Suriname    Century 21 Real Estate Corp.    16558    16558
CENTURY 21 & New House Design    Suriname    Century 21 Real Estate Corp.    15910    15910
ARHUNDRADE 21    Sweden    Century 21 Real Estate LLC    90-2278    242489
CENTURY 21    Sweden    Century 21 Real Estate LLC    75-4254    156766

 

22


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House Design    Sweden    Century 21 Real Estate LLC    91-00141    236989
SEKEL 21    Sweden    Century 21 Real Estate LLC    90-2277    242488
CAREERTRAK    Switzerland    Century 21 Real Estate LLC    16210/1993.8    405632
CAREERTRAK    Switzerland    Century 21 Real Estate LLC    4300/1990.6    383143
CENTURION    Switzerland    Century 21 Real Estate LLC    4879/1991.6    396770
CENTURY 21    Switzerland    Century 21 Real Estate LLC    1621/1993.0    405633
CENTURY 21    Switzerland    Century 21 Real Estate LLC    4254/75    279690
CENTURY 21 & New House Design    Switzerland    Century 21 Real Estate LLC    134/1991.2    390456
CENTURY 21 & New House Design    Switzerland    Century 21 Real Estate LLC    1622/1993.1    405850
CENTURY 21 & New House Design in Rectangle    Switzerland    Century 21 Real Estate LLC    1713/1991.1    388098
CENTURY 21 & Sign & Post Design    Switzerland    Century 21 Real Estate LLC    1714/1991.3    388099
JAHRHUNDERT 21    Switzerland    Century 21 Real Estate LLC    6744/1990.8    391692
SECOLO 21    Switzerland    Century 21 Real Estate LLC    6745/1990.0    391693
SIECLE 21    Switzerland    Century 21 Real Estate LLC    379729    379729
VIP    Switzerland    Century 21 Real Estate LLC    4880/1990.2    391576
CENTURION    Taiwan    Century 21 Real Estate LLC    83-037514    678042
CENTURION    Taiwan    Century 21 Real Estate LLC    83-037515    73356
CENTURION    Taiwan    Century 21 Real Estate LLC    83-037517    75126
CENTURY 21    Taiwan    Century 21 Real Estate LLC    74-2071    300696
CENTURY 21    Taiwan    Century 21 Real Estate LLC    74-2072    17933
CENTURY 21    Taiwan    Century 21 Real Estate LLC    74-2073    18204
CENTURY 21    Taiwan    Century 21 Real Estate LLC    83-043310    675129
CENTURY 21    Taiwan    Century 21 Real Estate LLC    83-043311    675135
CENTURY 21 & New House Design    Taiwan    Century 21 Real Estate LLC    83-037505    678086
CENTURY 21 & New House Design    Taiwan    Century 21 Real Estate LLC    83-037506    72852
CENTURY 21 & New House Design    Taiwan    Century 21 Real Estate LLC    83-037508    75131

 

23


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House Design (with Chinese)    Taiwan    Century 21 Real Estate LLC    82-005443    66001
CENTURY 21 & Sign & Post Design    Taiwan    Century 21 Real Estate LLC    83-037511    678088
CENTURY 21 & Sign & Post Design    Taiwan    Century 21 Real Estate LLC    83-037512    72854
CENTURY 21 & Sign & Post Design    Taiwan    Century 21 Real Estate LLC    83-037513    75133
CENTURY 21 & Sign Design    Taiwan    Century 21 Real Estate LLC    83-035709    72853
CENTURY 21 & Sign Design    Taiwan    Century 21 Real Estate LLC    83-037508    678087
CENTURY 21 & Sign Design    Taiwan    Century 21 Real Estate LLC    83-037510    75132
CENTURY 21 (in Chinese)    Taiwan    Century 21 Real Estate LLC    82-005441    65970
CENTURY 21 REAL ESTATE (in Chinese)    Taiwan    Century 21 Real Estate LLC    86-040884    104268
CENTURY 21 REAL ESTATE (in Chinese)    Taiwan    Century 21 Real Estate LLC    86-040885    104269
CENTURY 21 REAL ESTATE (in Chinese)    Taiwan    Century 21 Real Estate LLC    86-040886    104270
VIP    Taiwan    Century 21 Real Estate LLC    83-037519    75127
CENTURY 21    Tanganyika    Century 21 Real Estate LLC    20794    20794
CENTURY 21 & New House Design    Tanganyika    Century 21 Real Estate Corp.    20800    20800
CENTURY 21    Tangier    Century 21 Real Estate Corp.    18559    18559
CENTURY 21 & Design    Tangier    Century 21 Real Estate Corp.    18560    18560
CENTURY 21    Thailand    Century 21 Real Estate Corp.    189170    Khor124654
CENTURY 21    Thailand    Century 21 Real Estate Corp.    225528    BOR 238
CENTURY 21 & Design    Thailand    Century 21 Real Estate Corp.    209760    KHOR130034
CENTURY 21 & Design    Thailand    Century 21 Real Estate Corp.    225529    BOR 237
CENTURY 21    Trinidad and Tobago    Century 21 Real Estate LLC    24404    24404
CENTURY 21    Trinidad and Tobago    Century 21 Real Estate LLC    24405    24405
CENTURY 21 & New House Design    Trinidad and Tobago    Century 21 Real Estate LLC    19582    19582
CENTURY 21 & New House Design    Trinidad and Tobago    Century 21 Real Estate LLC    24402    24402
CENTURY 21 & New House Design    Trinidad and Tobago    Century 21 Real Estate LLC    24403    24403
CENTURY 21    Tunisia    Century 21 Real Estate Corp.    EE00.2178    EE00.2178

 

24


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 & New House Design    Tunisia    Century 21 Real Estate Corp.    EE00.2179    EE00.2179
CENTURY 21    Turkey    Century 21 Real Estate LLC    14216    112956
CENTURY 21    Turkey    Century 21 Real Estate LLC    1897    176890
CENTURY 21 & New House Design    Turkey    Century 21 Real Estate LLC    1898    169560
CENTURY 21 & New House Design    Turkey    Century 21 Real Estate LLC    55782    130768
CENTURY 21    Turks and Caicos Islands    Century 21 Real Estate LLC    10564    10564
CENTURY 21    Turks and Caicos Islands    Century 21 Real Estate LLC    12406    12406
CENTURY 21 & New House Design    Turks and Caicos Islands    Century 21 Real Estate LLC    11179    11179
CENTURY 21 & New House Design    Turks and Caicos Islands    Century 21 Real Estate LLC    12407    12407
CENTURY 21 & Sign & Post Design (Gold & Brown)    Turks and Caicos Islands    Century 21 Real Estate Corp.      
CENTURY 21 & Sign & Post Design (Gold & Brown)    Turks and Caicos Islands    Century 21 Real Estate Corp.      
BEK 21    Ukraine    Century 21 Real Estate LLC      
BEK 21 & Design    Ukraine    Century 21 Real Estate LLC    2006722911   
CENTURY 21    Ukraine    Century 21 Real Estate LLC    200516000   
CENTURY 21 & New House Design    Ukraine    Century 21 Real Estate LLC    200515998   
CENTURY 21 & New House Design (in Cyrillic)    Ukraine    Century 21 Real Estate LLC      
CENTURY 21 & New House Design (in Ukranian)    Ukraine    Century 21 Real Estate LLC    200606808   
CENTURY 21 (in Cyrillic)    Ukraine    Century 21 Real Estate LLC      
CENTURY 21 (in Ukranian)    Ukraine    Century 21 Real Estate LLC    200606804   
CENTURY 21    United Arab Emirates    Century 21 Real Estate Corp.    30183    22616
CENTURY 21    United Arab Emirates    Century 21 Real Estate Corp.    37513    28176
CENTURY 21 & New House Design    United Arab Emirates    Century 21 Real Estate Corp.    37514    30595
CENTURY 21 & New House Design    United Arab Emirates    Century 21 Real Estate Corp.    37515    28189
AD/PAC    United Kingdom    Century 21 Real Estate LLC    1581508    1581508
ADPAC    United Kingdom    Century 21 Real Estate LLC    1312811    1312811
CENTURION    United Kingdom    Century 21 Real Estate LLC    1469923    1469923

 

25


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURION    United Kingdom    Century 21 Real Estate LLC    1469924    1469924
CENTURY 21    United Kingdom    Century 21 Real Estate LLC    1062225    1062225
CENTURY 21    United Kingdom    Century 21 Real Estate LLC    1274764    1274764
CENTURY 21    United Kingdom    Century 21 Real Estate LLC    1274765    1274765
CENTURY 21    United Kingdom    Century 21 Real Estate LLC    1274766    1274766
CENTURY 21 & New House Design    United Kingdom    Century 21 Real Estate LLC    1453968    1453968
CENTURY 21 & New House Design    United Kingdom    Century 21 Real Estate LLC    1453969    1453969
CENTURY 21 & Old Design    United Kingdom    Century 21 Real Estate LLC    1312814    1312814
CENTURY 21 & Old Design    United Kingdom    Century 21 Real Estate LLC    1312815    1312815
CENTURY 21 & Sign & Post Design    United Kingdom    Century 21 Real Estate LLC    1459098    1459098
CENTURY 21 & Sign & Post Design    United Kingdom    Century 21 Real Estate LLC    1459099    1459099
CENTURY 21 & Sign Design    United Kingdom    Century 21 Real Estate LLC    1459100    1459100
CENTURY 21 & Sign Design    United Kingdom    Century 21 Real Estate LLC    1459101    1459101
CENTURY 21 2 & 1    United Kingdom    Century 21 Real Estate LLC    1312819    1312819
CENTURY 21 THE NEIGHBOURHOOD PROFESSIONAL    United Kingdom    Century 21 Real Estate LLC    1312812    1312812
CENTURY 21 WE’RE THE NEIGHBOURHOOD PROFESSIONAL    United Kingdom    Century 21 Real Estate LLC    1312813    1312813
SIGLO 21    United Kingdom    Century 21 Real Estate LLC    2161639    2161639
SIGLO 21    United Kingdom    Century 21 Real Estate LLC    2173509    2173509
VIP    United Kingdom    Century 21 Real Estate LLC    1312816    1312816
CENTURY 21    Uruguay    Century 21 Real Estate Corp.    294114    294114
CENTURY 21    Uruguay    Century 21 Real Estate Corp.    315904    315904
CENTURY 21 & New House Design    Uruguay    Century 21 Real Estate Corp.    240868    354160
SIGLO 21    Uruguay    Century 21 Real Estate Corp.    302.999    302999
CENTURY 21 & New House Design    Venezuela    Century 21 Real Estate Corp.    13080-97    12130
CENTURY 21 (CENTURIA 21)    Venezuela    Century 21 Real Estate Corp.    343-94    2667

 

26


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

SIGLO 21    Venezuela    Century 21 Real Estate Corp.    10993-98   
SIGLO 21 BIENES RAICES & Design    Venezuela    Century 21 Real Estate Corp.    1535-98    13019
CENTURY 21    Viet Nam    Century 21 Real Estate LLC    29 552    24819
CENTURY 21    Viet Nam    Century 21 Real Estate LLC    4 2001 00266    40746
CENTURY 21 & New House Design    Viet Nam    Century 21 Real Estate LLC    29 553    24820
CENTURY 21 & New House Design    Viet Nam    Century 21 Real Estate LLC    4 2001 00267    40747
CENTURY 21    Virgin Islands (British)    Century 21 Real Estate Corp.       1822
CENTURY 21 & New House Design    Virgin Islands (British)    Century 21 Real Estate Corp.       1823
CENTURY 21    West Bank    Century 21 Real Estate LLC    5937    5937
CENTURY 21 & New House Design    West Bank    Century 21 Real Estate LLC    5935    5935
CENTURY 21 (in Arabic)    West Bank    Century 21 Real Estate LLC    5936    5936
CENTURY 21    Zanzibar    Century 21 Real Estate LLC    70/89    92/93
CENTURY 21 & New House Design    Zanzibar    Century 21 Real Estate LLC    142/90    182/93

Note - Century 21 Real Estate Corporation changed its name to Century 21 Real Estate LLC in December 2004. The change of name has either been recorded or filed for recordal in the majority of the countries, and we continue to work on instructing the remaining countries (roughly 10 or less). The owner name in our database does not change until we receive confirmation that the recordal is complete.

 

27


SCHEDULE II

CGRN Inc.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CGRN    United States    CGRN Inc.    75540186    2466103
Stick Man Design    United States    CGRN Inc.    75673268    2332340


SCHEDULE II

Coldwell Banker Corporation

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Albania    Coldwell Banker Corporation    AL-M-05-00353    10833
COLDWELL BANKER CB & Design    Albania    Coldwell Banker Corporation    AL-M-05-00356    10839
COLDWELL BANKER COMMERCIAL    Albania    Coldwell Banker Corporation    AL-M-05-00355   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Albania    Coldwell Banker Corporation    AL-M-05-00354    10837
COLDWELL BANKER    Algeria    Coldwell Banker Corporation    051140    098967
COLDWELL BANKER CB & Design    Algeria    Coldwell Banker Corporation    051143    068970
COLDWELL BANKER COMMERCIAL    Algeria    Coldwell Banker Corporation    051141    068968
COLDWELL BANKER PREVIEWS INTERNATIONAL    Algeria    Coldwell Banker Corporation    051142    068969
COLDWELL BANKER    Andorra    Coldwell Banker Corporation    014021    14021
COLDWELL BANKER CB & Design    Andorra    Coldwell Banker Corporation    014022    14022
COLDWELL BANKER COMMERCIAL    Andorra    Coldwell Banker Corporation    014019    14019
COLDWELL BANKER PREVIEWS    Andorra    Coldwell Banker Corporation    014020    14020
COLDWELL BANKER    Anguilla    Coldwell Banker Corporation       2912
COLDWELL BANKER CB & Design    Anguilla    Coldwell Banker Corporation       2911
COLDWELL BANKER COMMERCIAL & Design    Anguilla    Coldwell Banker Corporation       3014
COLDWELL BANKER    Antigua and Barbuda    Coldwell Banker Corporation    5192    5192
COLDWELL BANKER CB & Design    Antigua and Barbuda    Coldwell Banker Corporation    5202    5202
COLDWELL BANKER CB & Design    Antigua and Barbuda    Coldwell Banker Corporation    NA    5105
COLDWELL BANKER COMMERCIAL & Design    Antigua and Barbuda    Coldwell Banker Corporation    2238    2238
COLDWELL BANKER PREVIEWS    Antigua and Barbuda    Coldwell Banker Corporation    2130    2130
COLDWELL BANKER    Argentina    Coldwell Banker Corporation    2143148    1,743,115
COLDWELL BANKER    Argentina    Coldwell Banker Corporation    2143149    1,743,117
COLDWELL BANKER CB & Design    Argentina    Coldwell Banker Corporation    2056964    1657202

 

1


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER CB & Design    Argentina    Coldwell Banker Corporation    2056965    1657201
COLDWELL BANKER COMMERCIAL    Argentina    Coldwell Banker Corporation    2195149    1,781,457
COLDWELL BANKER COMMERCIAL    Argentina    Coldwell Banker Corporation    2195450    1,781,458
COLDWELL BANKER PREVIEWS    Argentina    Coldwell Banker Corporation    21954451    1,781,455
COLDWELL BANKER PREVIEWS    Argentina    Coldwell Banker Corporation    21954452    1,781,456
COLDWELL BANKER    Aruba    Coldwell Banker Corporation       18942
COLDWELL BANKER CB & Design    Aruba    Coldwell Banker Corporation       18943
COLDWELL BANKER COMMERCIAL    Aruba    Coldwell Banker Corporation       10673
COLDWELL BANKER PREVIEWS    Aruba    Coldwell Banker Corporation       18897
CB & Design    Australia    Coldwell Banker Corporation    366321    366321
CB & Design    Australia    Coldwell Banker Corporation    366323    366323
CB & Design    Australia    Coldwell Banker Corporation    574981    574981
COLDWELL BANKER    Australia    Coldwell Banker Corporation    1001041    1001041
COLDWELL BANKER    Australia    Coldwell Banker Corporation    485910    485910
COLDWELL BANKER    Australia    Coldwell Banker Corporation    574983    574983
COLDWELL BANKER    Australia    Coldwell Banker Corporation    726957    726957
COLDWELL BANKER    Australia    Coldwell Banker Corporation    727940    727940
COLDWELL BANKER CB & Design    Australia    Coldwell Banker Corporation    575125    575125
COLDWELL BANKER COMMERCIAL    Australia    Coldwell Banker Corporation    574982    574982
COLDWELL BANKER COMMERCIAL & Design    Australia    Coldwell Banker Corporation    485909    485909
COLDWELL BANKER COMMERCIAL & Design    Australia    Coldwell Banker Corporation    574980    574980
COLDWELL BANKER PREVIEWS    Australia    Coldwell Banker Corporation    784897    784897
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Australia    Coldwell Banker Corporation    1084094   
COLDWELL MORTGAGE    Australia    Coldwell Banker Corporation    1001042    1001042
COLDWELL BANKER    Austria    Coldwell Banker Corporation    4675/98    179094
COLDWELL BANKER CB & Design    Austria    Coldwell Banker Corporation    4678/98    179097

 

2


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Austria    Coldwell Banker Corporation    4676/98    179095
COLDWELL BANKER PREVIEWS    Austria    Coldwell Banker Corporation    4677/98    179096
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Austria    Coldwell Banker Corporation    004725041    004725041
CB & Design    Bahamas    Coldwell Banker Corporation    10778    10778
COLDWELL BANKER CB & Design    Bahamas    Coldwell Banker Corporation    10777    10777
COLDWELL BANKER COMMERCIAL    Bahamas    Coldwell Banker Corporation    20763    20763
COLDWELL BANKER PREVIEWS    Bahamas    Coldwell Banker Corporation    20247    20247
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Bahamas    Coldwell Banker Corporation    28828   
COLDWELL BANKER    Bahrain    Coldwell Banker Corporation    5051    5051
COLDWELL BANKER CB & Design    Bahrain    Coldwell Banker Corporation    5052    5052
COLDWELL BANKER COMMERCIAL    Bahrain    Coldwell Banker Corporation    5053    5053
COLDWELL BANKER COMMERCIAL CB & Design    Bahrain    Coldwell Banker Corporation    39877    39877
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Bahrain    Coldwell Banker Corporation    48487   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Bahrain    Coldwell Banker Corporation    48488   
COLDWELL BANKER    Barbados    Coldwell Banker Corporation    81/8844    81/8844
COLDWELL BANKER    Barbados    Coldwell Banker Corporation    81/8845    81/8845
COLDWELL BANKER CB & Design    Barbados    Coldwell Banker Corporation    81/11687    81/11687
COLDWELL BANKER CB & Design    Barbados    Coldwell Banker Corporation    81/11688    81/11688
COLDWELL BANKER COMMERCIAL    Barbados    Coldwell Banker Corporation    81/13146    81/13146
COLDWELL BANKER COMMERCIAL    Barbados    Coldwell Banker Corporation    81/13147    81/13147
COLDWELL BANKER PREVIEWS    Barbados    Coldwell Banker Corporation    81/10083    81/10083
COLDWELL BANKER PREVIEWS    Barbados    Coldwell Banker Corporation    81/10084    81/10084
COLDWELL BANKER    Belarus    Coldwell Banker Corporation    20052603   
COLDWELL BANKER CB & Design    Belarus    Coldwell Banker Corporation    20052604   
COLDWELL BANKER COMMERCIAL    Belarus    Coldwell Banker Corporation    20052605   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Belarus    Coldwell Banker Corporation    20052606   

 

3


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Belize    Coldwell Banker Corporation       8008
COLDWELL BANKER CB & Design    Belize    Coldwell Banker Corporation       8007
COLDWELL BANKER COMMERCIAL & Design    Belize    Coldwell Banker Corporation       8006
CB & Design    Benelux    Coldwell Banker Corporation    47243    383644
COLDWELL BANKER    Benelux    Coldwell Banker Corporation    067090    462767
COLDWELL BANKER    Benelux    Coldwell Banker Corporation    47244    383645
COLDWELL BANKER COMMERCIAL & Design    Benelux    Coldwell Banker Corporation    067091    463574
COLDWELL BANKER MAKELAARS & Design    Benelux    Coldwell Banker Corporation    0980610    0692777
COLDWELL BANKER PREVIEWS    Benelux    Coldwell Banker Corporation    904394    621373
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Benelux    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Bermuda    Coldwell Banker Corporation    28879    28879
COLDWELL BANKER    Bermuda    Coldwell Banker Corporation    28880    28880
COLDWELL BANKER CB & Design    Bermuda    Coldwell Banker Corporation    28881    28881
COLDWELL BANKER CB & Design    Bermuda    Coldwell Banker Corporation    28882    28882
COLDWELL BANKER COMMERCIAL    Bermuda    Coldwell Banker Corporation    29771    29771
COLDWELL BANKER COMMERCIAL    Bermuda    Coldwell Banker Corporation    29772    29772
COLDWELL BANKER PREVIEWS    Bermuda    Coldwell Banker Corporation    29302    29302
COLDWELL BANKER PREVIEWS    Bermuda    Coldwell Banker Corporation    29303    29303
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Bermuda    Coldwell Banker Corporation    45008   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Bermuda    Coldwell Banker Corporation    45009   
COLDWELL BANKER    Bolivia    Coldwell Banker Corporation       78855
COLDWELL BANKER    Bolivia    Coldwell Banker Corporation       78854
COLDWELL BANKER CB & Design    Bolivia    Coldwell Banker Corporation       78807
COLDWELL BANKER CB & Design    Bolivia    Coldwell Banker Corporation       78890
COLDWELL BANKER COMMERCIAL    Bolivia    Coldwell Banker Corporation       78852
COLDWELL BANKER COMMERCIAL    Bolivia    Coldwell Banker Corporation       78853

 

4


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER PREVIEWS    Bolivia    Coldwell Banker Corporation       78741
COLDWELL BANKER PREVIEWS    Bolivia    Coldwell Banker Corporation       78856
COLDWELL BANKER    Bosnia and Herzegovina    Coldwell Banker Corporation    BAZ059310A   
COLDWELL BANKER CB & Design    Bosnia and Herzegovina    Coldwell Banker Corporation    BAZ059311A   
COLDWELL BANKER COMMERCIAL    Bosnia and Herzegovina    Coldwell Banker Corporation    BAZ059312A   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Bosnia and Herzegovina    Coldwell Banker Corporation    BAZ059313A   
COLDWELL BANKER    Brazil    Coldwell Banker Corporation    819804479    819804479
COLDWELL BANKER    Brazil    Coldwell Banker Corporation    819804495    819804495
COLDWELL BANKER    Brazil    Coldwell Banker Corporation    824021568   
COLDWELL BANKER CB & Design    Brazil    Coldwell Banker Corporation    819804487    819804487
COLDWELL BANKER CB & Design    Brazil    Coldwell Banker Corporation    819804509    819804509
COLDWELL BANKER CB & Design    Brazil    Coldwell Banker Corporation    824021550   
COLDWELL BANKER COMMERCIAL    Brazil    Coldwell Banker Corporation    821405527    821405527
COLDWELL BANKER COMMERCIAL    Brazil    Coldwell Banker Corporation    821405535    821405535
COLDWELL BANKER PREVIEWS    Brazil    Coldwell Banker Corporation    821405543    821405543
COLDWELL BANKER PREVIEWS    Brazil    Coldwell Banker Corporation    821405551    821405551
COLDWELL BANKER    Bulgaria    Coldwell Banker Corporation    79651   
COLDWELL BANKER CB & Design    Bulgaria    Coldwell Banker Corporation    79650   
COLDWELL BANKER COMMERCIAL    Bulgaria    Coldwell Banker Corporation    79652   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Bulgaria    Coldwell Banker Corporation    79649   
AT HOME    Canada    Coldwell Banker Corporation    700191    448494
BEST BUYER    Canada    Coldwell Banker Corporation    688130    416314
BEST BUYER HOME FACTS    Canada    Coldwell Banker Corporation    766627    458949
BEST SELLER    Canada    Coldwell Banker Corporation    700941    458215
BLUE RIBBON AWARD    Canada    Coldwell Banker Corporation    653358    403169
CB & Design    Canada    Coldwell Banker Corporation    475816    288117

 

5


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CELEBRATE CANADA WITH COLDWELL BANKER & Design    Canada    Coldwell Banker Corporation    760138    476847
COLDWELL BANKER    Canada    Coldwell Banker Corporation    475815    305849
COLDWELL BANKER CB & Design    Canada    Coldwell Banker Corporation    524800    348510
COLDWELL BANKER CB & Design THE HOME SELLERS    Canada    Coldwell Banker Corporation    677434    433292
COLDWELL BANKER COMMERCIAL    Canada    Coldwell Banker Corporation    628871    397708
COLDWELL BANKER COMMERCIAL & Design    Canada    Coldwell Banker Corporation    873439    539972
COLDWELL BANKER COMMERCIAL CB & Design    Canada    Coldwell Banker Corporation    1,007,132    562602
COLDWELL BANKER CONCIERGE    Canada    Coldwell Banker Corporation    1021982    564894
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Canada    Coldwell Banker Corporation    1276998   
DOOR KNOCKER Design    Canada    Coldwell Banker Corporation    655529    411023
EVERY DAY UNTIL IT’S SOLD    Canada    Coldwell Banker Canada Limited    0810410    473534
EXPECT THE BEST    Canada    Coldwell Banker Corporation    597708    387686
HOMES INTERNATIONAL    Canada    Coldwell Banker Corporation    668172    437499
INTERNATIONAL RESORT PROPERTY NETWORK    Canada    Coldwell Banker Corporation    700189    466679
PREVIEWS    Canada    Coldwell Banker Corporation    516910    312761
PREVIEWS    Canada    Coldwell Banker Corporation    641461    405992
RELOCATION 1 (Stylized)    Canada    Coldwell Banker Corporation    689511    425530
SUPPORT YOU CAN COUNT ON    Canada    Coldwell Banker Corporation    776075    497595
SUPPORT YOU CAN COUNT ON & Design    Canada    Coldwell Banker Corporation    776074    497604
THE BESTSELLERS    Canada    Coldwell Banker Corporation    617011    414307
ULTIMATE RELOCATION SERVICES    Canada    Coldwell Banker Canada Limited    1130378    634191
ULTIMATE SERVICE    Canada    Coldwell Banker Corporation    837398    493320
ULTIMATE SERVICE & Color Design    Canada    Coldwell Banker Corporation    837399    493319
ULTIMATE SERVICE & Design    Canada    Coldwell Banker Corporation    837397    493322
WE KEEP OUR PROMISES, OR YOU DON’T KEEP US    Canada    Coldwell Banker Canada Limited    0837396    485716
YOUR PASSPORT TO INDEPENDENCE    Canada    Coldwell Banker Corporation    726806    464650

 

6


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

YOUR PASSPORT TO INDEPENDENCE & Design    Canada    Coldwell Banker Corporation    726807    464651
COLDWELL BANKER    Cayman Islands    Coldwell Banker Corporation       1346215
COLDWELL BANKER CB & Design    Cayman Islands    Coldwell Banker Corporation       1273340
COLDWELL BANKER COMMERCIAL & Design    Cayman Islands    Coldwell Banker Corporation       1346216
COLDWELL BANKER PREVIEWS    Cayman Islands    Coldwell Banker Corporation       2150408
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design (in series)    Cayman Islands    Coldwell Banker Corporation    2405562    2405562
COLDWELL BANKER    Chile    Coldwell Banker Corporation    364.683    490142
COLDWELL BANKER    Chile    Coldwell Banker Corporation    436.731    545270
COLDWELL BANKER CB & Design    Chile    Coldwell Banker Corporation    361.092    490057
COLDWELL BANKER CB & Design    Chile    Coldwell Banker Corporation    436.732    544900
COLDWELL BANKER COMMERCIAL    Chile    Coldwell Banker Corporation    436.727    544896
COLDWELL BANKER COMMERCIAL    Chile    Coldwell Banker Corporation    436.728    544897
COLDWELL BANKER PREVIEWS    Chile    Coldwell Banker Corporation    436.729    544898
COLDWELL BANKER PREVIEWS    Chile    Coldwell Banker Corporation    436.730    544899
SIGLO 21    Chile    Century 21 Real Estate Corp.    564471   
COLDWELL BANKER    China (Peoples Republic)    Coldwell Banker Corporation    93068431    779263
COLDWELL BANKER    China (Peoples Republic)    Coldwell Banker Corporation    940002713    508584
COLDWELL BANKER CB & Design    China (Peoples Republic)    Coldwell Banker Corporation    9306842    779264
COLDWELL BANKER COMMERCIAL    China (Peoples Republic)    Coldwell Banker Corporation    8903351    508583
COLDWELL BANKER COMMERCIAL    China (Peoples Republic)    Coldwell Banker Corporation    9900020454    1487631
COLDWELL BANKER PREVIEWS    China (Peoples Republic)    Coldwell Banker Corporation    9900020455    1487632
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    China (Peoples Republic)    Coldwell Banker Corporation    4991660   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    China (Peoples Republic)    Coldwell Banker Corporation    4991661   
COLDWELL BANKER    Colombia    Coldwell Banker Corporation    96 058578    201244
COLDWELL BANKER    Colombia    Coldwell Banker Corporation    96 058579    200927
COLDWELL BANKER CB & Design    Colombia    Coldwell Banker Corporation    96 058580    200951

 

7


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER CB & Design    Colombia    Coldwell Banker Corporation    96 058581    200508
COLDWELL BANKER COMMERCIAL    Colombia    Coldwell Banker Corporation    98 075970    226225
COLDWELL BANKER COMMERCIAL    Colombia    Coldwell Banker Corporation    98 075971    226236
COLDWELL BANKER PREVIEWS    Colombia    Coldwell Banker Corporation    98 075972    226235
COLDWELL BANKER PREVIEWS    Colombia    Coldwell Banker Corporation    98 075973    226234
COLDWELL BANKER    Costa Rica    Coldwell Banker Corporation       111085
COLDWELL BANKER    Costa Rica    Coldwell Banker Corporation       111083
COLDWELL BANKER CB & Design    Costa Rica    Coldwell Banker Corporation       111106
COLDWELL BANKER CB & Design    Costa Rica    Coldwell Banker Corporation       111986
COLDWELL BANKER COMMERCIAL    Costa Rica    Coldwell Banker Corporation       111086
COLDWELL BANKER COMMERCIAL    Costa Rica    Coldwell Banker Corporation       111088
COLDWELL BANKER PREVIEWS    Costa Rica    Coldwell Banker Corporation       111087
COLDWELL BANKER PREVIEWS    Costa Rica    Coldwell Banker Corporation       111084
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Costa Rica    Coldwell Banker Corporation    0005958   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Costa Rica    Coldwell Banker Corporation    0005959   
COLDWELL BANKER    Croatia    Coldwell Banker Corporation    Z20051853A    Z20051853
COLDWELL BANKER CB & Design    Croatia    Coldwell Banker Corporation    Z20051854A    Z20051854
COLDWELL BANKER COMMERCIAL    Croatia    Coldwell Banker Corporation    Z20051855A    Z20051855
COLDWELL BANKER PREVIEWS INTERNATIONAL    Croatia    Coldwell Banker Corporation    Z20051856A    Z20051856
COLDWELL BANKER    Cuba    Coldwell Banker Corporation    1324/98    127801
COLDWELL BANKER    Cuba    Coldwell Banker Corporation    1325/98    129066
COLDWELL BANKER CB & Design    Cuba    Coldwell Banker Corporation    1326/98    129067
COLDWELL BANKER CB & Design    Cuba    Coldwell Banker Corporation    1327/98    129068
COLDWELL BANKER COMMERCIAL    Cuba    Coldwell Banker Corporation    1328/98    127802
COLDWELL BANKER COMMERCIAL    Cuba    Coldwell Banker Corporation    1329/98    129069
COLDWELL BANKER PREVIEWS    Cuba    Coldwell Banker Corporation    1330/98    131549

 

8


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER PREVIEWS    Cuba    Coldwell Banker Corporation    1331/98    127803
COLDWELL BANKER    Cyprus, Republic of    Coldwell Banker Corporation    50979    50979
COLDWELL BANKER    Cyprus, Republic of    Coldwell Banker Corporation    50980    50980
COLDWELL BANKER CB & Design    Cyprus, Republic of    Coldwell Banker Corporation    50981    50981
COLDWELL BANKER CB & Design    Cyprus, Republic of    Coldwell Banker Corporation    50982    50982
COLDWELL BANKER COMMERCIAL    Cyprus, Republic of    Coldwell Banker Corporation    50983    50983
COLDWELL BANKER COMMERCIAL    Cyprus, Republic of    Coldwell Banker Corporation    50984    50984
COLDWELL BANKER PREVIEWS    Cyprus, Republic of    Coldwell Banker Corporation    50985    50985
COLDWELL BANKER PREVIEWS    Cyprus, Republic of    Coldwell Banker Corporation    50986    50986
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Cyprus, Republic of    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Czech Republic    Coldwell Banker Corporation    155320    235825
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Czech Republic    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Denmark    Coldwell Banker Corporation    06134/1998    VR 1999 02179
COLDWELL BANKER CB & Design    Denmark    Coldwell Banker Corporation    01635/98    VR 1999 02180
COLDWELL BANKER COMMERCIAL    Denmark    Coldwell Banker Corporation    01632/98    VR 1999 02177
COLDWELL BANKER PREVIEWS    Denmark    Coldwell Banker Corporation    01633/98    VR 1999 02178
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Denmark    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Dominica    Coldwell Banker Corporation    5/99    5/99
COLDWELL BANKER CB & Design    Dominica    Coldwell Banker Corporation    4/99    4/99
COLDWELL BANKER COMMERCIAL & Design    Dominica    Coldwell Banker Corporation    2/99    2/99
COLDWELL BANKER PREVIEWS    Dominica    Coldwell Banker Corporation    3/99    3/99
COLDWELL BANKER    Dominican Republic    Coldwell Banker Corporation    363968    0093287
COLDWELL BANKER CB & Design    Dominican Republic    Coldwell Banker Corporation    99146747    93,286
COLDWELL BANKER COMMERCIAL    Dominican Republic    Coldwell Banker Corporation       99,423
COLDWELL BANKER COMMERCIAL    Dominican Republic    Coldwell Banker Corporation       98,889
COLDWELL BANKER PREVIEWS    Dominican Republic    Coldwell Banker Corporation    49664    95,525

 

9


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER PREVIEWS    Dominican Republic    Coldwell Banker Corporation    49668    95,526
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Dominican Republic    Coldwell Banker Corporation    05073399    2005-73399
COLDWELL BANKER    Ecuador    Coldwell Banker Corporation    92102    366-00 DNPI
COLDWELL BANKER    Ecuador    Coldwell Banker Corporation    92103    1044-00 DNPI
COLDWELL BANKER CB & Design    Ecuador    Coldwell Banker Corporation    92104    1045-00 DNPI
COLDWELL BANKER CB & Design    Ecuador    Coldwell Banker Corporation    92105    367-00 DNPI
COLDWELL BANKER COMMERCIAL    Ecuador    Coldwell Banker Corporation    92106    1046-00 DNPI
COLDWELL BANKER COMMERCIAL    Ecuador    Coldwell Banker Corporation    92107    368-00 DNPI
COLDWELL BANKER PREVIEWS    Ecuador    Coldwell Banker Corporation    92100    365-00 DNPI
COLDWELL BANKER PREVIEWS    Ecuador    Coldwell Banker Corporation    92101    1043-00 DNPI
COLDWELL BANKER    Egypt    Coldwell Banker Corporation    127339    127339
COLDWELL BANKER CB & Design    Egypt    Coldwell Banker Corporation    127340    127340
COLDWELL BANKER COMMERCIAL    Egypt    Coldwell Banker Corporation    127337    127337
COLDWELL BANKER PREVIEWS    Egypt    Coldwell Banker Corporation    127338    127338
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Egypt    Coldwell Banker Corporation    180510   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Egypt    Coldwell Banker Corporation    180511   
COLDWELL BANKER    El Salvador    Coldwell Banker Corporation    1678-98    38 BOOK 112
COLDWELL BANKER    El Salvador    Coldwell Banker Corporation    1679-98    35 BOOK 109
COLDWELL BANKER CB & Design    El Salvador    Coldwell Banker Corporation    1697-98    241 BOOK 121
COLDWELL BANKER CB & Design    El Salvador    Coldwell Banker Corporation    1698-98    167 BOOK 127
COLDWELL BANKER COMMERCIAL    El Salvador    Coldwell Banker Corporation    1699-98    125 BOOK 112
COLDWELL BANKER COMMERCIAL    El Salvador    Coldwell Banker Corporation    1700-98   
COLDWELL BANKER PREVIEWS    El Salvador    Coldwell Banker Corporation    1680-98    124 BOOK 112
COLDWELL BANKER PREVIEWS    El Salvador    Coldwell Banker Corporation    1701-98   
COLDWELL BANKER    Estonia    Coldwell Banker Corporation    9801766    31481
COLDWELL BANKER CB & Design    Estonia    Coldwell Banker Corporation    9801767    31482

 

10


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Estonia    Coldwell Banker Corporation    9801768    31483
COLDWELL BANKER PREVIEWS    Estonia    Coldwell Banker Corporation    9801769    31484
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Estonia    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    European Community    Coldwell Banker Corporation    129197    129197
COLDWELL BANKER CB & Design    European Community    Coldwell Banker Corporation    126821    126821
COLDWELL BANKER COMMERCIAL    European Community    Coldwell Banker Corporation    896621    896621
COLDWELL BANKER COMMERCIAL CB & Design    European Community    Coldwell Banker Corporation    5237029   
COLDWELL BANKER PREVIEWS    European Community    Coldwell Banker Corporation    685040    685040
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    European Community    Coldwell Banker Corporation    4725041    4725041
COLDWELL BANKER    Fiji    Coldwell Banker Corporation    268/98    268/98
COLDWELL BANKER CB & Design    Fiji    Coldwell Banker Corporation    269/98    269/98
COLDWELL BANKER COMMERCIAL    Fiji    Coldwell Banker Corporation    271/98    271/98
COLDWELL BANKER PREVIEWS    Fiji    Coldwell Banker Corporation    270/98    270/98
COLDWELL BANKER    Finland    Coldwell Banker Corporation    T199802570    214283
COLDWELL BANKER CB & Design    Finland    Coldwell Banker Corporation    T199802571    216563
COLDWELL BANKER COMMERCIAL    Finland    Coldwell Banker Corporation    T199802572    214284
COLDWELL BANKER PREVIEWS    Finland    Coldwell Banker Corporation    T199802573    214285
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Finland    Coldwell Banker Corporation    004725041    004725041
CB & Design    France    Coldwell Banker Corporation       1205212
COLDWELL BANKER    France    Coldwell Banker Corporation    631430    1205213
COLDWELL BANKER COMMERCIAL    France    Coldwell Banker Corporation    98765497    98765497
COLDWELL BANKER COMMERCIAL & Design    France    Coldwell Banker Corporation    129049    1528876
COLDWELL BANKER IMMOBILIER & Design    France    Coldwell Banker Corporation    00 306099    00 306099
COLDWELL BANKER PREVIEWS    France    Coldwell Banker Corporation    97703392    97703392
COLDWELL BANKER PREVIEWS    France    Coldwell Banker Corporation    97703397    97703397
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    France    Coldwell Banker Corporation    004725041    004725041

 

11


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Georgia    Coldwell Banker Corporation    34736    16868
COLDWELL BANKER CB & Design    Georgia    Coldwell Banker Corporation    34739    16871
COLDWELL BANKER COMMERCIAL    Georgia    Coldwell Banker Corporation    34737    16869
COLDWELL BANKER PREVIEWS INTERNATIONAL    Georgia    Coldwell Banker Corporation    34738    16870
COLDWELL    Germany    Coldwell Banker Corporation    C41 447/36Wz    2021170
COLDWELL BANKER    Germany    Coldwell Banker Corporation    398 21 061.6    398 21 061
COLDWELL BANKER CB & Design    Germany    Coldwell Banker Corporation    398 21 062.4    298 21 062
COLDWELL BANKER COMMERCIAL    Germany    Coldwell Banker Corporation    398 21 063.2    398 21 063
COLDWELL BANKER PREVIEWS    Germany    Coldwell Banker Corporation    398 21 064.0    398 21 064
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Germany    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Gibraltar    Coldwell Banker Corporation    9288    9288
COLDWELL BANKER    Gibraltar    Coldwell Banker Corporation    9290    9290
COLDWELL BANKER CB & Design    Gibraltar    Coldwell Banker Corporation    9286    9286
COLDWELL BANKER CB & Design    Gibraltar    Coldwell Banker Corporation    9291    9291
COLDWELL BANKER COMMERCIAL    Gibraltar    Coldwell Banker Corporation    9292    9292
COLDWELL BANKER COMMERCIAL & Design    Gibraltar    Coldwell Banker Corporation    9287    9287
COLDWELL BANKER    Greece    Coldwell Banker Corporation    1445556    1445556
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Greece    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Grenada    Coldwell Banker Corporation       250/1997
COLDWELL BANKER    Grenada    Coldwell Banker Corporation       251/1997
COLDWELL BANKER CB & Design    Grenada    Coldwell Banker Corporation       249/1997
COLDWELL BANKER    Guatemala    Coldwell Banker Corporation    98-1625    118092
COLDWELL BANKER    Guatemala    Coldwell Banker Corporation    98-1626    106212
COLDWELL BANKER CB & Design    Guatemala    Coldwell Banker Corporation    98-1619    106206
COLDWELL BANKER CB & Design    Guatemala    Coldwell Banker Corporation    98-1620    106207
COLDWELL BANKER COMMERCIAL    Guatemala    Coldwell Banker Corporation    98-1623    106210

 

12


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Guatemala    Coldwell Banker Corporation    98-1624    106211
COLDWELL BANKER PREVIEWS    Guatemala    Coldwell Banker Corporation    98-1621    106208
COLDWELL BANKER PREVIEWS    Guatemala    Coldwell Banker Corporation    98-1622    106209
COLDWELL BANKER    Guyana    Coldwell Banker Corporation    17,134A    17,134A
COLDWELL BANKER CB & Design    Guyana    Coldwell Banker Corporation    17,135A    17,135A
COLDWELL BANKER COMMERCIAL    Guyana    Coldwell Banker Corporation    17,133A    17,133A
COLDWELL BANKER PREVIEWS    Guyana    Coldwell Banker Corporation    17,132A    17,132A
COLDWELL BANKER    Haiti    Coldwell Banker Corporation    898    236/113
COLDWELL BANKER    Haiti    Coldwell Banker Corporation    899    237/113
COLDWELL BANKER CB & Design    Haiti    Coldwell Banker Corporation    900    234/113
COLDWELL BANKER CB & Design    Haiti    Coldwell Banker Corporation    901    235/113
COLDWELL BANKER COMMERCIAL    Haiti    Coldwell Banker Corporation    491    150/118
COLDWELL BANKER COMMERCIAL    Haiti    Coldwell Banker Corporation    492    151/118
COLDWELL BANKER PREVIEWS INTERNATIONAL    Haiti    Coldwell Banker Corporation    541-A    112-148
COLDWELL BANKER PREVIEWS INTERNATIONAL    Haiti    Coldwell Banker Corporation    542-A    113-148
COLDWELL BANKER    Honduras    Coldwell Banker Corporation    3470/98    72784
COLDWELL BANKER    Honduras    Coldwell Banker Corporation    3471/98    5039
COLDWELL BANKER CB & Design    Honduras    Coldwell Banker Corporation    3468/98    73346
COLDWELL BANKER CB & Design    Honduras    Coldwell Banker Corporation    3469/98    5595
COLDWELL BANKER COMMERCIAL    Honduras    Coldwell Banker Corporation    3467/98    72879
COLDWELL BANKER COMMERCIAL    Honduras    Coldwell Banker Corporation    3480/98    5038
COLDWELL BANKER PREVIEWS    Honduras    Coldwell Banker Corporation    3472/98    72783
COLDWELL BANKER PREVIEWS    Honduras    Coldwell Banker Corporation    3479/98    5040
CB & Design    Hong Kong    Coldwell Banker Corporation    5846/92    03512
COLDWELL BANKER    Hong Kong    Coldwell Banker Corporation    10946/98    05705
COLDWELL BANKER    Hong Kong    Coldwell Banker Corporation    5842/92    04023

 

13


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER CB & Design    Hong Kong    Coldwell Banker Corporation    10948/98    09131
COLDWELL BANKER CB & Design    Hong Kong    Coldwell Banker Corporation    5845/92    03511
COLDWELL BANKER COMMERCIAL    Hong Kong    Coldwell Banker Corporation    10947/98    09130
COLDWELL BANKER COMMERCIAL    Hong Kong    Coldwell Banker Corporation    5843/92    04024
COLDWELL BANKER COMMERCIAL & Design    Hong Kong    Coldwell Banker Corporation    5844/92    04025
COLDWELL BANKER PREVIEWS    Hong Kong    Coldwell Banker Corporation    10949/98    09681
COLDWELL BANKER PREVIEWS    Hong Kong    Coldwell Banker Corporation    10950/98    09682
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Hungary    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    India    Coldwell Banker Corporation    1241393    1241393
COLDWELL BANKER    India    Coldwell Banker Corporation    744350    744350
COLDWELL BANKER CB & Design    India    Coldwell Banker Corporation    1241395   
COLDWELL BANKER CB & Design    India    Coldwell Banker Corporation    744349    744349
COLDWELL BANKER COMMERCIAL    India    Coldwell Banker Corporation    1289307    520710
COLDWELL BANKER COMMERCIAL    India    Coldwell Banker Corporation    1483273   
COLDWELL BANKER COMMERCIAL CB & Design    India    Coldwell Banker Corporation    1483272   
COLDWELL BANKER COMMERCIAL CB & Design    India    Coldwell Banker Corporation    1483274   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    India    Coldwell Banker Corporation    1397467   
COLDWELL BANKER    Indonesia    Coldwell Banker Corporation    D98-14058    441953
COLDWELL BANKER    Indonesia    Coldwell Banker Corporation    J96-25793    402031
COLDWELL BANKER & Design    Indonesia    Coldwell Banker Corporation    D98-06222    418765
COLDWELL BANKER CB & Design    Indonesia    Coldwell Banker Corporation    J96-25794    402058
COLDWELL BANKER COMMERCIAL    Indonesia    Coldwell Banker Corporation    J98-15117    442266
COLDWELL BANKER COMMERCIAL & Design    Indonesia    Coldwell Banker Corporation    D98-15684    IDM000025909
COLDWELL BANKER PREVIEWS    Indonesia    Coldwell Banker Corporation    D98 14057    441952
COLDWELL BANKER PREVIEWS    Indonesia    Coldwell Banker Corporation    D98-14056    441951
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Indonesia    Coldwell Banker Corporation    D05-26944   

 

14


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Indonesia    Coldwell Banker Corporation    J05-26943   
COLDWELL BANKER PROPERTI & CB Design    Indonesia    Coldwell Banker Corporation    20822-20970    519595
COLDWELL BANKER    Ireland    Coldwell Banker Corporation    3113/98    210114
COLDWELL BANKER CB & Design    Ireland    Coldwell Banker Corporation    3114/98    210115
COLDWELL BANKER COMMERCIAL    Ireland    Coldwell Banker Corporation    3115/98    210116
COLDWELL BANKER PREVIEWS    Ireland    Coldwell Banker Corporation    3116/98    210117
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Ireland    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Israel    Coldwell Banker Corporation    125382    125382
COLDWELL BANKER    Israel    Coldwell Banker Corporation    125385    125385
COLDWELL BANKER CB & Design    Israel    Coldwell Banker Corporation    185105   
COLDWELL BANKER CB & Design    Israel    Coldwell Banker Corporation    185106   
COLDWELL BANKER COMMERCIAL    Israel    Coldwell Banker Corporation    125380    125380
COLDWELL BANKER COMMERCIAL    Israel    Coldwell Banker Corporation    125383    125383
COLDWELL BANKER PREVIEWS    Israel    Coldwell Banker Corporation    125381    125381
COLDWELL BANKER PREVIEWS    Israel    Coldwell Banker Corporation    125384    125384
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Israel    Coldwell Banker Corporation    184491   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Israel    Coldwell Banker Corporation    184492   
CB & Design    Italy    Coldwell Banker Corporation       408810
COLDWELL BANKER    Italy    Coldwell Banker Corporation       404799
COLDWELL BANKER    Italy    Coldwell Banker Corporation    VI98C 000302    824263
COLDWELL BANKER CB & Design    Italy    Coldwell Banker Corporation    VI98C 000303    824264
COLDWELL BANKER COMMERCIAL    Italy    Coldwell Banker Corporation    VI98C 000305    824266
COLDWELL BANKER PREVIEWS    Italy    Coldwell Banker Corporation    VI98C 000304    824265
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Italy    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Jamaica    Coldwell Banker Corporation    16/2432    34052
COLDWELL BANKER    Jamaica    Coldwell Banker Corporation    41298    41298

 

15


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER CB & Design    Jamaica    Coldwell Banker Corporation    16/2433    32897
COLDWELL BANKER COMMERCIAL    Jamaica    Coldwell Banker Corporation    16/2606    35277
COLDWELL BANKER PREVIEWS    Jamaica    Coldwell Banker Corporation    16/2469    35961
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Jamaica    Coldwell Banker Corporation    0467660   
COLDWELL BANKER    Japan    Coldwell Banker Corporation    8-126344    4234028
COLDWELL BANKER CB & Design    Japan    Coldwell Banker Corporation    10-080818    4406318
COLDWELL BANKER CB & Design    Japan    Coldwell Banker Corporation    8-126345    4234029
COLDWELL BANKER COMMERCIAL    Japan    Coldwell Banker Corporation    10-080817    4406317
COLDWELL BANKER PREVIEWS    Japan    Coldwell Banker Corporation    10-080816    4406316
PREVIEWS    Japan    Coldwell Banker Corporation    59-133140    2111528
COLDWELL BANKER    Jordan    Coldwell Banker Corporation    56186    56186
COLDWELL BANKER    Jordan    Coldwell Banker Corporation    78572    78572
COLDWELL BANKER CB & Design    Jordan    Coldwell Banker Corporation    56185    56185
COLDWELL BANKER CB & Design    Jordan    Coldwell Banker Corporation    78571    78571
COLDWELL BANKER COMMERCIAL    Jordan    Coldwell Banker Corporation    55484    55484
COLDWELL BANKER COMMERCIAL    Jordan    Coldwell Banker Corporation    78574    78574
COLDWELL BANKER PREVIEWS    Jordan    Coldwell Banker Corporation    55485    55485
COLDWELL BANKER PREVIEWS INTERNATIONAL    Jordan    Coldwell Banker Corporation    78573    78573
COLDWELL BANKER PREVIEWS INTERNATIONAL    Jordan    Coldwell Banker Corporation    79149    79149
COLDWELL BANKER    Kiribati    Coldwell Banker Corporation    1561    1561
COLDWELL BANKER CB & Design    Kiribati    Coldwell Banker Corporation    1560    1560
COLDWELL BANKER COMMERCIAL    Kiribati    Coldwell Banker Corporation    1559    1559
COLDWELL BANKER PREVIEWS    Kiribati    Coldwell Banker Corporation    1655    1655
COLDWELL BANKER    Korea, Democratic People’s Republic of    Coldwell Banker Corporation    18998    10134
COLDWELL BANKER CB & Design    Korea, Democratic People’s Republic of    Coldwell Banker Corporation    18997    10133

 

16


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Korea, Democratic People’s Republic of    Coldwell Banker Corporation    18995    10131
COLDWELL BANKER PREVIEWS    Korea, Democratic People’s Republic of    Coldwell Banker Corporation    18996    10132
CB & Design    Korea, Republic of    Coldwell Banker Corporation    1990-1839    15101
COLDWELL BANKER    Korea, Republic of    Coldwell Banker Corporation    1988-001212    10506
COLDWELL BANKER (in Korean)    Korea, Republic of    Coldwell Banker Corporation    1996-3371    39983
COLDWELL BANKER CB & Design    Korea, Republic of    Coldwell Banker Corporation    1990-001840    15102
COLDWELL BANKER COMMERCIAL    Korea, Republic of    Coldwell Banker Corporation    4520062798   
COLDWELL BANKER COMMERCIAL & Design    Korea, Republic of    Coldwell Banker Corporation    1988-001210    10504
COLDWELL BANKER COMMERCIAL CB & Design    Korea, Republic of    Coldwell Banker Corporation    4520062800   
COLDWELL BANKER PREVIEWS    Korea, Republic of    Coldwell Banker Corporation    1998-1730    56325
COLDWELL BANKER    Kuwait    Coldwell Banker Corporation    36128    32264
COLDWELL BANKER CB & Design    Kuwait    Coldwell Banker Corporation    36129    32384
COLDWELL BANKER COMMERCIAL    Kuwait    Coldwell Banker Corporation    57402    59879
COLDWELL BANKER COMMERCIAL CB & Design    Kuwait    Coldwell Banker Corporation    61814    55596
COLDWELL BANKER    Latvia    Coldwell Banker Corporation    M981682    M44821
COLDWELL BANKER CB & Design    Latvia    Coldwell Banker Corporation    M981683    M44822
COLDWELL BANKER COMMERCIAL    Latvia    Coldwell Banker Corporation    M981684    M44823
COLDWELL BANKER PREVIEWS    Latvia    Coldwell Banker Corporation    M981685    M44824
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Latvia    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Lebanon    Coldwell Banker Corporation       91112
COLDWELL BANKER CB & Design    Lebanon    Coldwell Banker Corporation       91110
COLDWELL BANKER COMMERCIAL    Lebanon    Coldwell Banker Corporation       91109
COLDWELL BANKER COMMERCIAL CB & Design    Lebanon    Coldwell Banker Corporation       91111

 

17


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Lebanon    Coldwell Banker Corporation    3245    107129
COLDWELL BANKER    Liechtenstein    Coldwell Banker Corporation       11457
COLDWELL BANKER CB & Design    Liechtenstein    Coldwell Banker Corporation       11456
COLDWELL BANKER COMMERCIAL    Liechtenstein    Coldwell Banker Corporation       11455
COLDWELL BANKER PREVIEWS    Liechtenstein    Coldwell Banker Corporation       11458
COLDWELL BANKER    Lithuania    Coldwell Banker Corporation    20051127   
COLDWELL BANKER CB & Design (black on white)    Lithuania    Coldwell Banker Corporation    20051126   
COLDWELL BANKER COMMERCIAL    Lithuania    Coldwell Banker Corporation    20051128   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Lithuania    Coldwell Banker Corporation    20051129   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Lithuania    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Macao    Coldwell Banker Corporation    4843    4843
COLDWELL BANKER    Macao    Coldwell Banker Corporation    4844    4844
COLDWELL BANKER CB & Design    Macao    Coldwell Banker Corporation    4841    4841
COLDWELL BANKER CB & Design    Macao    Coldwell Banker Corporation    4842    4842
COLDWELL BANKER COMMERCIAL    Macao    Coldwell Banker Corporation    4837    4837
COLDWELL BANKER COMMERCIAL    Macao    Coldwell Banker Corporation    4838    4838
COLDWELL BANKER PREVIEWS    Macao    Coldwell Banker Corporation    4839    4839
COLDWELL BANKER PREVIEWS    Macao    Coldwell Banker Corporation    4840    4840
COLDWELL BANKER    Macedonia    Coldwell Banker Corporation    2005/839   
COLDWELL BANKER CB & Design    Macedonia    Coldwell Banker Corporation    2005/838   
COLDWELL BANKER COMMERCIAL    Macedonia    Coldwell Banker Corporation    2005/837   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Macedonia    Coldwell Banker Corporation    2005/836   
COLDWELL BANKER    Malaysia    Coldwell Banker Corporation    88-02130    88-02130
COLDWELL BANKER CB & Design    Malaysia    Coldwell Banker Corporation    98-11330   
COLDWELL BANKER CB & Design    Malaysia    Coldwell Banker Corporation    98-11342   
COLDWELL BANKER COMMERCIAL    Malaysia    Coldwell Banker Corporation    98-11345   

 

18


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Malaysia    Coldwell Banker Corporation    98-11346   
COLDWELL BANKER COMMERCIAL & Design    Malaysia    Coldwell Banker Corporation    88-02131    88-02131
COLDWELL BANKER PREVIEWS    Malaysia    Coldwell Banker Corporation    98/11343    98/11343
COLDWELL BANKER PREVIEWS    Malaysia    Coldwell Banker Corporation    98-11344   
COLDWELL BANKER    Malta    Coldwell Banker Corporation    31125    31125
COLDWELL BANKER CB & Design    Malta    Coldwell Banker Corporation    31124    31124
COLDWELL BANKER COMMERCIAL    Malta    Coldwell Banker Corporation    31122    31122
COLDWELL BANKER PREVIEWS    Malta    Coldwell Banker Corporation    31123    31123
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Malta    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Mexico    Coldwell Banker Corporation    151921    461261
COLDWELL BANKER    Mexico    Coldwell Banker Corporation    151922    461262
COLDWELL BANKER BIENES RAICES & Design    Mexico    Coldwell Banker Corporation    454607    692903
COLDWELL BANKER BIENES RAICES & Design    Mexico    Coldwell Banker Corporation    454608    689478
COLDWELL BANKER CB & Design    Mexico    Coldwell Banker Corporation    219301    544515
COLDWELL BANKER CB & Design    Mexico    Coldwell Banker Corporation    220127    495425
COLDWELL BANKER COMMERCIAL & Design    Mexico    Coldwell Banker Corporation    164949    467981
COLDWELL BANKER COMMERCIAL & Design    Mexico    Coldwell Banker Corporation    166799   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Mexico    Coldwell Banker Corporation    747841    915747
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Mexico    Coldwell Banker Corporation    747843    915748
PREVIEWS    Mexico    Coldwell Banker Corporation    213821    493374
PREVIEWS    Mexico    Coldwell Banker Corporation    213822    503301
COLDWELL BANKER    Moldova    Coldwell Banker Corporation    019696   
COLDWELL BANKER CB & Design    Moldova    Coldwell Banker Corporation    019694   
COLDWELL BANKER COMMERCIAL    Moldova    Coldwell Banker Corporation    019695   
COLDWELL BANKER COMMERCIAL CB & Design    Moldova    Coldwell Banker Corporation    019697   
CB & Design    Monaco    Coldwell Banker Corporation    019079    R 98.18971

 

19


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Monaco    Coldwell Banker Corporation    019080    R 98.18972
COLDWELL BANKER    Montserrat    Coldwell Banker Corporation       3166
COLDWELL BANKER CB & Design    Montserrat    Coldwell Banker Corporation       3167
COLDWELL BANKER COMMERCIAL & Design    Montserrat    Coldwell Banker Corporation      
COLDWELL BANKER    Morocco    Coldwell Banker Corporation    95826    95826
COLDWELL BANKER CB & Design    Morocco    Coldwell Banker Corporation    95827    95827
COLDWELL BANKER COMMERCIAL    Morocco    Coldwell Banker Corporation    96356    96356
COLDWELL BANKER PREVIEWS INTERNATIONAL    Morocco    Coldwell Banker Corporation    96357    96357
COLDWELL BANKER    Netherlands Antilles    Coldwell Banker Corporation       20094
COLDWELL BANKER CB & Design    Netherlands Antilles    Coldwell Banker Corporation       20115
COLDWELL BANKER COMMERCIAL    Netherlands Antilles    Coldwell Banker Corporation       20900
COLDWELL BANKER PREVIEWS    Netherlands Antilles    Coldwell Banker Corporation       20550
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Netherlands Antilles    Coldwell Banker Corporation    D-600060    11910
COLDWELL BANKER    New Zealand    Coldwell Banker Corporation    182322    182322
COLDWELL BANKER    New Zealand    Coldwell Banker Corporation    272215    272215
COLDWELL BANKER CB & Design    New Zealand    Coldwell Banker Corporation    272216    272216
COLDWELL BANKER CB & Design    New Zealand    Coldwell Banker Corporation    272217    272217
COLDWELL BANKER COMMERCIAL    New Zealand    Coldwell Banker Corporation    182323    182323
COLDWELL BANKER COMMERCIAL    New Zealand    Coldwell Banker Corporation    296127    296127
COLDWELL BANKER PREVIEWS    New Zealand    Coldwell Banker Corporation    296125    296125
COLDWELL BANKER PREVIEWS    New Zealand    Coldwell Banker Corporation    296126    296126
COLDWELL BANKER    Nicaragua    Coldwell Banker Corporation    98-00950    39641
COLDWELL BANKER    Nicaragua    Coldwell Banker Corporation    98-00951    39849
COLDWELL BANKER CB & Design    Nicaragua    Coldwell Banker Corporation    98-00956    40289
COLDWELL BANKER CB & Design    Nicaragua    Coldwell Banker Corporation    98-00957    40271
COLDWELL BANKER COMMERCIAL    Nicaragua    Coldwell Banker Corporation    98-00952    39861

 

20


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Nicaragua    Coldwell Banker Corporation    98-00953    40325
COLDWELL BANKER PREVIEWS    Nicaragua    Coldwell Banker Corporation    98-00954    39850
COLDWELL BANKER PREVIEWS    Nicaragua    Coldwell Banker Corporation    98-00955    39862
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Nicaragua    Coldwell Banker Corporation    05-03745    0602020
COLDWELL BANKER    Norway    Coldwell Banker Corporation    9803109    193419
COLDWELL BANKER CB & Design    Norway    Coldwell Banker Corporation    9803112    193422
COLDWELL BANKER COMMERCIAL    Norway    Coldwell Banker Corporation    9803111    193421
COLDWELL BANKER PREVIEWS    Norway    Coldwell Banker Corporation    9803110    193420
COLDWELL BANKER    Oman    Coldwell Banker Corporation    36879    36879
COLDWELL BANKER    Oman    Coldwell Banker Corporation    36880    36880
COLDWELL BANKER CB & Design    Oman    Coldwell Banker Corporation    36885    36885
COLDWELL BANKER CB & Design    Oman    Coldwell Banker Corporation    36886    36886
COLDWELL BANKER COMMERCIAL    Oman    Coldwell Banker Corporation    36881    36881
COLDWELL BANKER COMMERCIAL    Oman    Coldwell Banker Corporation    36882    36882
COLDWELL BANKER PREVIEWS INTERNATIONAL    Oman    Coldwell Banker Corporation    36883    36883
COLDWELL BANKER PREVIEWS INTERNATIONAL    Oman    Coldwell Banker Corporation    36884    36884
COLDWELL BANKER    Pakistan    Coldwell Banker Corporation    150872   
COLDWELL BANKER CB & Design    Pakistan    Coldwell Banker Corporation    150870   
COLDWELL BANKER COMMERCIAL    Pakistan    Coldwell Banker Corporation    150869    150869
COLDWELL BANKER PREVIEWS    Pakistan    Coldwell Banker Corporation    150871    150871
COLDWELL BANKER    Panama    Coldwell Banker Corporation    85644    85644
COLDWELL BANKER    Panama    Coldwell Banker Corporation    85645    85655
COLDWELL BANKER CB & Design    Panama    Coldwell Banker Corporation    84324    84324
COLDWELL BANKER CB & Design    Panama    Coldwell Banker Corporation    84325    84325
COLDWELL BANKER COMMERCIAL    Panama    Coldwell Banker Corporation    95108    95108
COLDWELL BANKER COMMERCIAL    Panama    Coldwell Banker Corporation    95111    95111

 

21


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER PREVIEWS    Panama    Coldwell Banker Corporation    95119    95119
COLDWELL BANKER PREVIEWS    Panama    Coldwell Banker Corporation    95120    95120
COLDWELL BANKER    Papua New Guinea    Coldwell Banker Corporation    A61877    A61877
COLDWELL BANKER CB & Design    Papua New Guinea    Coldwell Banker Corporation    A61878    A61878
COLDWELL BANKER COMMERCIAL    Papua New Guinea    Coldwell Banker Corporation    A61875    A61875
COLDWELL BANKER PREVIEWS    Papua New Guinea    Coldwell Banker Corporation    A61876    A61876
COLDWELL BANKER    Paraguay    Coldwell Banker Corporation    27311    291782
COLDWELL BANKER    Paraguay    Coldwell Banker Corporation    27317    219980
COLDWELL BANKER CB & Design    Paraguay    Coldwell Banker Corporation    27313    280547
COLDWELL BANKER CB & Design    Paraguay    Coldwell Banker Corporation    27314    220929
COLDWELL BANKER COMMERCIAL    Paraguay    Coldwell Banker Corporation    27316    219899
COLDWELL BANKER COMMERCIAL    Paraguay    Coldwell Banker Corporation    27318    216618
COLDWELL BANKER PREVIEWS    Paraguay    Coldwell Banker Corporation    27312    241792
COLDWELL BANKER PREVIEWS    Paraguay    Coldwell Banker Corporation    27315    222647
COLDWELL BANKER    Peru    Coldwell Banker Corporation    40117    040817
COLDWELL BANKER    Peru    Coldwell Banker Corporation    40118    012571
COLDWELL BANKER CB & Design    Peru    Coldwell Banker Corporation    40119    012652
COLDWELL BANKER CB & Design    Peru    Coldwell Banker Corporation    40120    041437
COLDWELL BANKER COMMERCIAL    Peru    Coldwell Banker Corporation    068027    050118
COLDWELL BANKER COMMERCIAL    Peru    Coldwell Banker Corporation    068111    016046
COLDWELL BANKER PREVIEWS    Peru    Coldwell Banker Corporation    068026    050117
COLDWELL BANKER PREVIEWS    Peru    Coldwell Banker Corporation    068109    016045
COLDWELL BANKER    Philippines    Coldwell Banker Corporation    4-2005-010581   
COLDWELL BANKER    Philippines    Coldwell Banker Corporation    4-2005-011621   
COLDWELL BANKER CB & Design    Philippines    Coldwell Banker Corporation    4-1997-117565    4-1997-117565
COLDWELL BANKER CB & Design    Philippines    Coldwell Banker Corporation    4-2005-011620   

 

22


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER CB & Design    Philippines    Coldwell Banker Corporation    5010583   
COLDWELL BANKER COMMERCIAL    Philippines    Coldwell Banker Corporation    4-2005-010582   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Philippines    Coldwell Banker Corporation    4-2006-01758   
COLDWELL BANKER    Poland    Coldwell Banker Corporation    Z-174262    122325
COLDWELL BANKER CB & Design    Poland    Coldwell Banker Corporation    Z-174261    122326
COLDWELL BANKER COMMERCIAL    Poland    Coldwell Banker Corporation    Z191810    132539
COLDWELL BANKER PREVIEWS    Poland    Coldwell Banker Corporation    Z-191811    132802
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Poland    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Portugal    Coldwell Banker Corporation    330677    330677
COLDWELL BANKER CB & Design    Portugal    Coldwell Banker Corporation    330680    330680
COLDWELL BANKER COMMERCIAL    Portugal    Coldwell Banker Corporation    330679    330679
COLDWELL BANKER PREVIEWS    Portugal    Coldwell Banker Corporation    330678    330678
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Portugal    Coldwell Banker Corporation    004725041    004725041
CB Design    Puerto Rico    Coldwell Banker Corporation       6791
COLDWELL BANKER    Puerto Rico    Coldwell Banker Corporation       6793
COLDWELL BANKER PREVIEWS    Puerto Rico    Coldwell Banker Corporation       42035
COLDWELL BANKER PREVIEWS    Puerto Rico    Coldwell Banker Corporation       42034
COLDWELL BANKER    Qatar    Coldwell Banker Corporation    28126    28126
COLDWELL BANKER CB & Design    Qatar    Coldwell Banker Corporation    28127   
COLDWELL BANKER COMMERCIAL    Qatar    Coldwell Banker Corporation    28128   
COLDWELL BANKER COMMERCIAL CB & Design    Qatar    Coldwell Banker Corporation    28129   
COLDWELL BANKER    Romania    Coldwell Banker Corporation    M 2005 10239    71644
COLDWELL BANKER CB & Design    Romania    Coldwell Banker Corporation    M 2005 10240    71665
COLDWELL BANKER COMMERCIAL    Romania    Coldwell Banker Corporation    200510241    71666
COLDWELL BANKER COMMERCIAL CB & Design    Romania    Coldwell Banker Corporation    M 200608817   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Romania    Coldwell Banker Corporation    M 2005 10242    71664

 

23


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Russian Federation    Coldwell Banker Corporation    2005715047   
COLDWELL BANKER CB & Design    Russian Federation    Coldwell Banker Corporation    2005715049   
COLDWELL BANKER COMMERCIAL    Russian Federation    Coldwell Banker Corporation    2005715048   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Russian Federation    Coldwell Banker Corporation    2005715046   
COLDWELL BANKER    Saudi Arabia    Coldwell Banker Corporation    77790    708/72
COLDWELL BANKER CB & Design    Saudi Arabia    Coldwell Banker Corporation    77791    708/73
COLDWELL BANKER COMMERCIAL    Saudi Arabia    Coldwell Banker Corporation    77792    708/74
COLDWELL BANKER COMMERCIAL CB & Design    Saudi Arabia    Coldwell Banker Corporation    77793    688/94
COLDWELL BANKER PREVIEWS    Saudi Arabia    Coldwell Banker Corporation    77794    708/75
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Saudi Arabia    Coldwell Banker Corporation    101267   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Saudi Arabia    Coldwell Banker Corporation    101268   
COLDWELL BANKER    Serbia    Coldwell Banker Corporation    1521/05    51779
COLDWELL BANKER CB & Design    Serbia    Coldwell Banker Corporation    1520/05    51778
COLDWELL BANKER COMMERCIAL    Serbia    Coldwell Banker Corporation    1522/05    51780
COLDWELL BANKER PREVIEWS INTERNATIONAL    Serbia    Coldwell Banker Corporation    1523/05    51781
COLDWELL BANKER    Singapore    Coldwell Banker Corporation    9294/96    T96/09294A
COLDWELL BANKER    Singapore    Coldwell Banker Corporation    9295/96    T96/09295Z
COLDWELL BANKER CB & Design    Singapore    Coldwell Banker Corporation    9296/96    T96/09296H
COLDWELL BANKER CB & Design    Singapore    Coldwell Banker Corporation    9297/96    T96/09297F
COLDWELL BANKER COMMERCIAL    Singapore    Coldwell Banker Corporation    9313/98    T98/09313I
COLDWELL BANKER PREVIEWS    Singapore    Coldwell Banker Corporation    9315/98    T98/09315E
COLDWELL BANKER PREVIEWS    Singapore    Coldwell Banker Corporation    9316/98    T98/09316C
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design (in series)    Singapore    Coldwell Banker Corporation    T05/21302C    T05/21302C
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design (in series)    Singapore    Coldwell Banker Corporation    T05/21304Z   
COLDWELL BANKER    Slovakia    Coldwell Banker Corporation    5803-2005    214572

 

24


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER CB & Design    Slovakia    Coldwell Banker Corporation    5804-2005    214573
COLDWELL BANKER COMMERCIAL    Slovakia    Coldwell Banker Corporation    5802-2005    214571
COLDWELL BANKER PREVIEWS INTERNATIONAL    Slovakia    Coldwell Banker Corporation    5801-2005    214570
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Slovakia    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Slovenia    Coldwell Banker Corporation    200571513    200571513
COLDWELL BANKER CB & Design    Slovenia    Coldwell Banker Corporation    200571515    200571515
COLDWELL BANKER COMMERCIAL    Slovenia    Coldwell Banker Corporation    200571514    200571514
COLDWELL BANKER PREVIEWS INTERNATIONAL    Slovenia    Coldwell Banker Corporation    200571512    200571512
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Slovenia    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER    Solomon Islands    Coldwell Banker Corporation       1879
COLDWELL BANKER CB & Design    Solomon Islands    Coldwell Banker Corporation       1740
COLDWELL BANKER COMMERCIAL    Solomon Islands    Coldwell Banker Corporation       1739
COLDWELL BANKER    South Africa    Coldwell Banker Corporation    9615596    9615596
COLDWELL BANKER    South Africa    Coldwell Banker Corporation    9615597    9615597
COLDWELL BANKER CB & Design    South Africa    Coldwell Banker Corporation    9615594    9615594
COLDWELL BANKER CB & Design    South Africa    Coldwell Banker Corporation    9615595    9615595
COLDWELL BANKER COMMERCIAL    South Africa    Coldwell Banker Corporation    9815096    9815096
COLDWELL BANKER COMMERCIAL    South Africa    Coldwell Banker Corporation    9815097    9815097
COLDWELL BANKER PREVIEWS    South Africa    Coldwell Banker Corporation    9718988    9718988
COLDWELL BANKER PREVIEWS    South Africa    Coldwell Banker Corporation    9718989    9718989
CB & Design    Spain    Coldwell Banker Corporation    1005732    1005732
COLDWELL BANKER    Spain    Coldwell Banker Corporation    1005730    1005730
COLDWELL BANKER    Spain    Coldwell Banker Corporation    1005731    1005731
COLDWELL BANKER BIENES RAICES & Design    Spain    Coldwell Banker Corporation    2354151    2354151
COLDWELL BANKER BIENES RAICES & Design    Spain    Coldwell Banker Corporation    2354152    2354152
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Spain    Coldwell Banker Corporation    004725041    004725041

 

25


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    St. Kitts and Nevis    Coldwell Banker Corporation    0385   
COLDWELL BANKER CB & Design    St. Kitts and Nevis    Coldwell Banker Corporation    0387   
COLDWELL BANKER COMMERCIAL    St. Kitts and Nevis    Coldwell Banker Corporation    0384   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    St. Kitts and Nevis    Coldwell Banker Corporation    0386   
COLDWELL BANKER CB & Design    St. Lucia    Coldwell Banker Corporation    214/97    214/97
COLDWELL BANKER PREVIEWS    St. Lucia    Coldwell Banker Corporation    299/97    299/97
COLDWELL BANKER PREVIEWS    St. Lucia    Coldwell Banker Corporation    300/97    300/97
COLDWELL BANKER    St. Vincent and the Grenadines    Coldwell Banker Corporation       220/97
COLDWELL BANKER    St. Vincent and the Grenadines    Coldwell Banker Corporation       221/97
COLDWELL BANKER COMMERCIAL    St. Vincent and the Grenadines    Coldwell Banker Corporation       125/98
COLDWELL BANKER COMMERCIAL CB & Design    St. Vincent and the Grenadines    Coldwell Banker Corporation       222/97
COLDWELL BANKER    Suriname    Coldwell Banker Corporation       16176
COLDWELL BANKER CB & Design    Suriname    Coldwell Banker Corporation       16174
COLDWELL BANKER COMMERCIAL    Suriname    Coldwell Banker Corporation       16178
COLDWELL BANKER PREVIEWS    Suriname    Coldwell Banker Corporation       16177
COLDWELL BANKER    Sweden    Coldwell Banker Corporation    98-2806    335804
COLDWELL BANKER CB & Design    Sweden    Coldwell Banker Corporation    98-2810    363103
COLDWELL BANKER PREVIEWS    Sweden    Coldwell Banker Corporation    98-2807    363102
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Sweden    Coldwell Banker Corporation    004725041    004725041
CB    Switzerland    Coldwell Banker Corporation       322480
COLDWELL BANKER    Switzerland    Coldwell Banker Corporation       322319
COLDWELL BANKER    Switzerland    Coldwell Banker Corporation    2989/1998    454943
COLDWELL BANKER CB & Design    Switzerland    Coldwell Banker Corporation    2987/1998    454925
COLDWELL BANKER COMMERCIAL    Switzerland    Coldwell Banker Corporation    2988/1998    454942
COLDWELL BANKER PREVIEWS    Switzerland    Coldwell Banker Corporation    2990/1998    454944
CB & Design    Taiwan    Coldwell Banker Corporation    81009666    49072

 

26


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Taiwan    Coldwell Banker Corporation    020887    41372
COLDWELL BANKER & Design    Taiwan    Coldwell Banker Corporation    020889    41936
COLDWELL BANKER CB & Design    Taiwan    Coldwell Banker Corporation    79021407    49508
COLDWELL BANKER COMMERCIAL    Taiwan    Coldwell Banker Corporation    87042618    154261
COLDWELL BANKER PREVIEWS    Taiwan    Coldwell Banker Corporation    87042619    154262
CB & Design    Thailand    Coldwell Banker Corporation    227809    Bor 18814
COLDWELL BANKER    Thailand    Coldwell Banker Corporation    227806    Bor 18817
COLDWELL BANKER    Thailand    Coldwell Banker Corporation    368287    Khor97339
COLDWELL BANKER & Design    Thailand    Coldwell Banker Corporation    179353    Khor80061
COLDWELL BANKER CB & Design    Thailand    Coldwell Banker Corporation    227807    Bor 18816
COLDWELL BANKER COMMERCIAL & Design    Thailand    Coldwell Banker Corporation    178611    Khor79278
COLDWELL BANKER COMMERCIAL & Design    Thailand    Coldwell Banker Corporation    227808    Bor 18815
COLDWELL BANKER PREVIEWS    Thailand    Coldwell Banker Corporation    368288    Khor101571
COLDWELL BANKER PREVIEWS    Thailand    Coldwell Banker Corporation    368289   
COLDWELL BANKER    Tonga    Coldwell Banker Corporation    00184    00278
COLDWELL BANKER CB & Design    Tonga    Coldwell Banker Corporation    00183    00277
COLDWELL BANKER COMMERCIAL    Tonga    Coldwell Banker Corporation    00181    00275
COLDWELL BANKER PREVIEWS    Tonga    Coldwell Banker Corporation    00182    00276
COLDWELL BANKER    Trinidad and Tobago    Coldwell Banker Corporation    27277    27277
COLDWELL BANKER    Trinidad and Tobago    Coldwell Banker Corporation    27280    27280
COLDWELL BANKER CB & Design    Trinidad and Tobago    Coldwell Banker Corporation    27278    27278
COLDWELL BANKER CB & Design    Trinidad and Tobago    Coldwell Banker Corporation    27279    27279
COLDWELL BANKER COMMERCIAL    Trinidad and Tobago    Coldwell Banker Corporation    28332    28332
COLDWELL BANKER PREVIEWS    Trinidad and Tobago    Coldwell Banker Corporation    27946    27946
COLDWELL BANKER    Tunisia    Coldwell Banker Corporation    EE05.0058   
COLDWELL BANKER CB & Design    Tunisia    Coldwell Banker Corporation    EE05.0057   

 

27


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Tunisia    Coldwell Banker Corporation    EE05.0779   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Tunisia    Coldwell Banker Corporation    EE050778   
COLDWELL BANKER    Turkey    Coldwell Banker Corporation    6730    187775
COLDWELL BANKER    Turkey    Coldwell Banker Corporation    6731    187815
COLDWELL BANKER CB & Design    Turkey    Coldwell Banker Corporation    6728    185408
COLDWELL BANKER CB & Design    Turkey    Coldwell Banker Corporation    6729    187757
COLDWELL BANKER COMMERCIAL    Turkey    Coldwell Banker Corporation    12675    202490
COLDWELL BANKER COMMERCIAL    Turkey    Coldwell Banker Corporation    12676    202269
COLDWELL BANKER PREVIEWS    Turkey    Coldwell Banker Corporation    12673    205807
COLDWELL BANKER PREVIEWS    Turkey    Coldwell Banker Corporation    12674    200328
COLDWELL BANKER    Turkish Republic of Northern Cyprus    Coldwell Banker Corporation    7420   
COLDWELL BANKER CB & Design    Turkish Republic of Northern Cyprus    Coldwell Banker Corporation    7422   
COLDWELL BANKER COMMERCIAL    Turkish Republic of Northern Cyprus    Coldwell Banker Corporation    7421   
COLDWELL BANKER COMMERCIAL CB & Design    Turkish Republic of Northern Cyprus    Coldwell Banker Corporation    7423   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Turkish Republic of Northern Cyprus    Coldwell Banker Corporation    7435   
COLDWELL BANKER    Turks and Caicos Islands    Coldwell Banker Corporation       11494
COLDWELL BANKER    Turks and Caicos Islands    Coldwell Banker Corporation       12408
COLDWELL BANKER CB & Design    Turks and Caicos Islands    Coldwell Banker Corporation       11495
COLDWELL BANKER CB & Design    Turks and Caicos Islands    Coldwell Banker Corporation       12409
COLDWELL BANKER PREVIEWS    Turks and Caicos Islands    Coldwell Banker Corporation       12,475
COLDWELL BANKER PREVIEWS    Turks and Caicos Islands    Coldwell Banker Corporation       12312
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Turks and Caicos Islands    Coldwell Banker Corporation    14098    14098
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Turks and Caicos Islands    Coldwell Banker Corporation    14099    14099

 

28


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Tuvalu    Coldwell Banker Corporation       TM854
COLDWELL BANKER CB & Design    Tuvalu    Coldwell Banker Corporation       TM853
COLDWELL BANKER COMMERCIAL    Tuvalu    Coldwell Banker Corporation       TM852
COLDWELL BANKER PREVIEWS    Tuvalu    Coldwell Banker Corporation       TM913
COLDWELL BANKER    Ukraine    Coldwell Banker Corporation    200511479   
COLDWELL BANKER CB & Design    Ukraine    Coldwell Banker Corporation    200511480   
COLDWELL BANKER COMMERCIAL    Ukraine    Coldwell Banker Corporation    200511481   
COLDWELL BANKER PREVIEWS INTERNATIONAL    Ukraine    Coldwell Banker Corporation    200511482   
COLDWELL BANKER    United Arab Emirates    Coldwell Banker Corporation    48337    52794
COLDWELL BANKER CB & Design    United Arab Emirates    Coldwell Banker Corporation    48338    52795
COLDWELL BANKER COMMERCIAL    United Arab Emirates    Coldwell Banker Corporation    48339    59487
COLDWELL BANKER COMMERCIAL CB & Design    United Arab Emirates    Coldwell Banker Corporation    48340    59486
CB & Design    United Kingdom    Coldwell Banker Corporation    1177297    1177297
CB & Design    United Kingdom    Coldwell Banker Corporation    1273339    1273339
CB & Design    United Kingdom    Coldwell Banker Corporation    1422532    1422532
COLDWELL BANKER    United Kingdom    Coldwell Banker Corporation    1273338    1273338
COLDWELL BANKER    United Kingdom    Coldwell Banker Corporation    1346215    1346215
COLDWELL BANKER    United Kingdom    Coldwell Banker Corporation    2185020    2185020
COLDWELL BANKER CB & Design    United Kingdom    Coldwell Banker Corporation    1273340    1273340
COLDWELL BANKER CB & Design    United Kingdom    Coldwell Banker Corporation    2185011    2185011
COLDWELL BANKER COMMERCIAL    United Kingdom    Coldwell Banker Corporation    2185014    2185014
COLDWELL BANKER COMMERCIAL & Design    United Kingdom    Coldwell Banker Corporation    1346216    1346216
COLDWELL BANKER PREVIEWS    United Kingdom    Coldwell Banker Corporation    2150397    2150397
COLDWELL BANKER PREVIEWS    United Kingdom    Coldwell Banker Corporation    2150408    2150408
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    United Kingdom    Coldwell Banker Corporation    004725041    004725041
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design (in series)    United Kingdom    Coldwell Banker Corporation    2405562    2405562

 

29


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER    Uruguay    Coldwell Banker Corporation    309085    309085
COLDWELL BANKER CB & Design    Uruguay    Coldwell Banker Corporation    309086    309086
COLDWELL BANKER COMMERCIAL    Uruguay    Coldwell Banker Corporation    309087    309087
COLDWELL BANKER PREVIEWS    Uruguay    Coldwell Banker Corporation    309088    309088
COLDWELL BANKER    Vanuatu    Coldwell Banker Corporation    10311    10311
COLDWELL BANKER COMMERCIAL    Vanuatu    Coldwell Banker Corporation    10312    10312
COLDWELL BANKER    Venezuela    Coldwell Banker Corporation    25462-97    209784
COLDWELL BANKER    Venezuela    Coldwell Banker Corporation    25465-97    9130
COLDWELL BANKER CB & Design    Venezuela    Coldwell Banker Corporation    327-97    208476
COLDWELL BANKER CB & Design    Venezuela    Coldwell Banker Corporation    328-98    8947
COLDWELL BANKER COMMERCIAL    Venezuela    Coldwell Banker Corporation    02-99    215483
COLDWELL BANKER COMMERCIAL    Venezuela    Coldwell Banker Corporation    03-99    11041
COLDWELL BANKER PREVIEWS    Venezuela    Coldwell Banker Corporation    25463-97    9309
COLDWELL BANKER PREVIEWS    Venezuela    Coldwell Banker Corporation    25466-97    209785
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Venezuela    Coldwell Banker Corporation    25344   
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    Venezuela    Coldwell Banker Corporation    25345   
COLDWELL BANKER    Viet Nam    Coldwell Banker Corporation    11559    9887
COLDWELL BANKER CB & Design    Viet Nam    Coldwell Banker Corporation    11560    9888
COLDWELL BANKER COMMERCIAL    Viet Nam    Coldwell Banker Corporation    41501    42111
COLDWELL BANKER PREVIEWS    Viet Nam    Coldwell Banker Corporation    41500    43732
COLDWELL BANKER    Virgin Islands (British)    Coldwell Banker Corporation       3169
COLDWELL BANKER CB & Design    Virgin Islands (British)    Coldwell Banker Corporation       3177
COLDWELL BANKER COMMERCIAL    Virgin Islands (British)    Coldwell Banker Corporation       1641
COLDWELL BANKER PREVIEWS    Virgin Islands (British)    Coldwell Banker Corporation       3301
COLDWELL BANKER    Western Samoa    Coldwell Banker Corporation    3804    3804
COLDWELL BANKER CB & Design    Western Samoa    Coldwell Banker Corporation    3803    3803

 

30


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER COMMERCIAL    Western Samoa    Coldwell Banker Corporation    3801    3801
COLDWELL BANKER PREVIEWS    Western Samoa    Coldwell Banker Corporation    3802    3802

 

31


SCHEDULE II

Realogy Services Group LLC

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

REALOGY    United States    Realogy Services Group LLC    78810057   
REALOGY    United States    Realogy Services Group LLC    78810142   
REALOGY    United States    Realogy Services Group LLC    78810039   
REALOGY    United States    Realogy Services Group LLC    78810051   
REALOGY (Stylized)    United States    Realogy Services Group LLC    78818200   
REALOGY (Stylized)    United States    Realogy Services Group LLC    78818186   
REALOGY (Stylized)    United States    Realogy Services Group LLC    78818197   
REALOGY (Stylized)    United States    Realogy Services Group LLC    78818203   
REALOGY: THE BUSINESS OF REAL ESTATE    United States    Realogy Services Group LLC    78842043   
REALOGY: THE BUSINESS OF REAL ESTATE    United States    Realogy Services Group LLC    78842038   
REALOGY: THE BUSINESS OF REAL ESTATE    United States    Realogy Services Group LLC    78842046   
REALOGY: THE BUSINESS OF REAL ESTATE    United States    Realogy Services Group LLC    78849192   
THE ART OF REAL ESTATE    United States    Realogy Services Group LLC    78811352   
THE ART OF REAL ESTATE    United States    Realogy Services Group LLC    78811453   
THE ART OF REAL ESTATE    United States    Realogy Services Group LLC    78811469   
THE ART OF REAL ESTATE    United States    Realogy Services Group LLC    78811324   


SCHEDULE II

Cotton Real Estate, Inc.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CAPE COD STYLE    United States    COTTON REAL ESTATE, INC.    76410655    2971401
COTTON REAL ESTATE    United States    COTTON REAL ESTATE, INC.    78181435    2771791
A REAL ESTATE OF MIND    United States    COTTON REAL ESTATE, INC.    78192825    2846759
CAPE COD STYLE    United States    COTTON REAL ESTATE, INC.    76410657    2736246


SCHEDULE II

ERA Franchise Systems, Inc.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA    Albania    ERA Franchise Systems, Inc.    AL-M-05-00413    10841
ERA & New House Design    Albania    ERA Franchise Systems, Inc.    AL-M-05-00415    10843
ERA    Algeria    ERA Franchise Systems, Inc.    051197    069735
ERA & New House Design (black on white)    Algeria    ERA Franchise Systems, Inc.    051198    069736
ERA    Andorra    ERA Franchise Systems, Inc.    20920    22553
ERA & New House Design (black on white)    Andorra    ERA Franchise Systems, Inc.    20921    22557
ERA & New House Design (color)    Andorra    ERA Franchise Systems, Inc.    20932    22635
ERA & New House Design (series of 3)    Anguilla    ERA Franchise Systems, Inc.    3012    3012
ERA    Antigua and Barbuda    ERA Franchise Systems, Inc.    1978    1978
ERA & New House Design    Antigua and Barbuda    ERA Franchise Systems, Inc.    1981    1981
ERA    Argentina    ERA Franchise Systems, Inc.    2730940   
ERA    Argentina    ERA Franchise Systems, Inc.    2730941   
ERA & New House Design    Argentina    ERA Franchise Systems, Inc.    2730942   
ERA & New House Design    Argentina    ERA Franchise Systems, Inc.    2730943   
ERA    Aruba    ERA Franchise Systems, Inc.    IM980420.28    19134
ERA & New House Design    Aruba    ERA Franchise Systems, Inc.    IM980420.27    19133
ERA    Australia    ERA Franchise Systems, Inc.    389378    389378
ERA    Australia    ERA Franchise Systems, Inc.    613949    613949
ERA    Australia    ERA Franchise Systems, Inc.    614060    614060
ERA & New House Design (series of 2)    Australia    ERA Franchise Systems, Inc.    734308    734308
ERA & Old House, Circle Design    Australia    ERA Franchise Systems, Inc.    328034    328034
ERA & Old House, Circle Design    Australia    ERA Franchise Systems, Inc.    389379    389379
ERA & Old House, Circle Design    Australia    ERA Franchise Systems, Inc.    614146    614146

 

1


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & Old House, Circle Design    Australia    ERA Franchise Systems, Inc.    614147    614147
TEAM ERA    Australia    ERA Franchise Systems, Inc.    613952    613952
TEAM ERA    Australia    ERA Franchise Systems, Inc.    613953    613953
ERA & New House Design    Austria    ERA Franchise Systems, Inc.    4684/97    172178
ERA    Bahamas    ERA Franchise Systems, Inc.    20611    20611
ERA & Design    Bahamas    ERA Franchise Systems, Inc.    20596    20596
ERA    Bahrain    ERA Franchise Systems, Inc.    42829   
ERA    Bahrain    ERA Franchise Systems, Inc.    42830   
ERA & New House Design (color)    Bahrain    ERA Franchise Systems, Inc.    42831   
ERA & New House Design (color)    Bahrain    ERA Franchise Systems, Inc.    42832   
ERA    Barbados    ERA Franchise Systems, Inc.    NA    8113157
ERA    Barbados    ERA Franchise Systems, Inc.    NA    81/13156
ERA & New House Design (black on white)    Barbados    ERA Franchise Systems, Inc.    NA    8113154
ERA & New House Design (black on white)    Barbados    ERA Franchise Systems, Inc.    NA    81/13155
ERA    Belize    ERA Franchise Systems, Inc.    3175.05    3175.05
ERA & New House Design (black on white)    Belize    ERA Franchise Systems, Inc.    3174.05    3174.05
AMSTERDAM ERA MAKELAARS    Benelux    ERA Franchise Systems, Inc.    1109584    799660
ERA & New House Design (white on black)    Benelux    ERA Franchise Systems, Inc.    888757    607767
ERA & Old House, Circle Design    Benelux    ERA Franchise Systems, Inc.    767096    506289
ERA & Sign & Post Design    Benelux    ERA Franchise Systems, Inc.    618741    618741
ERA AMSTERDAM    Benelux    ERA Franchise Systems, Inc.    1109585    799661
ERA MAKELAAR OPEN HUIZEN ROUTE & Design    Benelux    ERA Franchise Systems, Inc.    1067707    766494
ERA MAKELAARS AMSTERDAM    Benelux    ERA Franchise Systems, Inc.    1109265    811386
ERA    Bermuda    ERA Franchise Systems, Inc.    34365    34565
ERA & New House Design (black on white)    Bermuda    ERA Franchise Systems, Inc.    34366    34366
ERA    Bosnia and Herzegovina    ERA Franchise Systems, Inc.    BAZ059324A   

 

2


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & New House Design    Bosnia and Herzegovina    ERA Franchise Systems, Inc.    BAZ059323A   
ERA & Design    Brazil    ERA Franchise Systems, Inc.    819488011    819488011
ERA & New House Design (black on white)    Brunei Darussalam    ERA Franchise Systems, Inc.    BRU/28160    25588
ERA    Bulgaria    ERA Franchise Systems, Inc.    82714   
ERA & New House Design (black on white)    Bulgaria    ERA Franchise Systems, Inc.    82715   
ERA & New House Design (color)    Bulgaria    ERA Franchise Systems, Inc.    82716   
ERA    Cambodia    ERA Franchise Systems, Inc.    13156    12854
ERA    Cambodia    ERA Franchise Systems, Inc.    13157    12855
ERA & New House Design    Cambodia    ERA Franchise Systems, Inc.    12606    12665
ERA & New House Design    Cambodia    ERA Franchise Systems, Inc.    12607    12666
ERA    Canada    ERA Franchise Systems, Inc.    502174    297534
ERA    Canada    ERA Franchise Systems, Inc.    505554    289140
ERA & New House Design    Canada    ERA Franchise Systems, Inc.    1277797   
ERA & Old House, Circle Design    Canada    ERA Franchise Systems, Inc.    408381    249498
ERA & Old House, Circle Design    Canada    ERA Franchise Systems, Inc.    505555    296842
ERA    Cayman Islands    ERA Franchise Systems, Inc.       1584675
ERA & New House Design (series of 3)    Cayman Islands    ERA Franchise Systems, Inc.       2132336
ERA    China (Peoples Republic)    ERA Franchise Systems, Inc.    9900119491    1512620
ERA & New House Design (black on white)    China (Peoples Republic)    ERA Franchise Systems, Inc.    9900119489    1512612
ERA (new house design)    China (Peoples Republic)    ERA Franchise Systems, Inc.    9900119490    1487627
ERA    Colombia    ERA Franchise Systems, Inc.    01 00174    285870
ERA    Colombia    ERA Franchise Systems, Inc.    95 41908    287103
ERA & New House Design (black on white)    Colombia    ERA Franchise Systems, Inc.    98 0511    275576
ERA & New House Design (black on white)    Colombia    ERA Franchise Systems, Inc.    98 22226    275305
ERA & Old House, Circle Design    Colombia    ERA Franchise Systems, Inc.    95 41907    292845
ERA    Costa Rica    ERA Franchise Systems, Inc.    80449    80449

 

3


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA    Costa Rica    ERA Franchise Systems, Inc.    80451    80451
ERA & Old House, Circle Design    Costa Rica    ERA Franchise Systems, Inc.    80450    80450
ERA REAL ESTATE & New House Design (in color)    Costa Rica    ERA Franchise Systems, Inc.    2002-006229    138005
ERA    Croatia    ERA Franchise Systems, Inc.    20051765    20051765
ERA & New House Design    Croatia    ERA Franchise Systems, Inc.    20051766    20051766
ERA    Cuba    ERA Franchise Systems, Inc.    985/98    127447
ERA    Cuba    ERA Franchise Systems, Inc.    986/98    127452
ERA (new design)    Cuba    ERA Franchise Systems, Inc.    987/98    127453
ERA (new design)    Cuba    ERA Franchise Systems, Inc.    988/98    127458
ERA & New House Design    Czech Republic    ERA Franchise Systems, Inc.    145439    227727
ERA    Denmark    ERA Franchise Systems, Inc.    01389/98    2000 0031
ERA & New House Design    Denmark    ERA Franchise Systems, Inc.    01390/98    2000 0032
ERA    Dominica    ERA Franchise Systems, Inc.    99181888    93/98
ERA & Design (new design)    Dominica    ERA Franchise Systems, Inc.    99181887    92/98
ERA    Dominican Republic    ERA Franchise Systems, Inc.       98235
ERA    Dominican Republic    ERA Franchise Systems, Inc.    98036562    99422
ERA & N. Design    Dominican Republic    ERA Franchise Systems, Inc.    98036563    99417
ERA (and design)    Dominican Republic    ERA Franchise Systems, Inc.       98236
ERA    Ecuador    ERA Franchise Systems, Inc.    58777    30597
ERA    Ecuador    ERA Franchise Systems, Inc.    58780    30697
ERA & New House Design    Ecuador    ERA Franchise Systems, Inc.    180790   
ERA & New House Design    Ecuador    ERA Franchise Systems, Inc.    180791   
ERA & Old House Design    Ecuador    ERA Franchise Systems, Inc.    58776    30497
ERA & Old House Design    Ecuador    ERA Franchise Systems, Inc.    58779    72097
ERA    Egypt    ERA Franchise Systems, Inc.    161968   
ERA    Egypt    ERA Franchise Systems, Inc.    161969   

 

4


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & New House Design    Egypt    ERA Franchise Systems, Inc.    161970   
ERA & New House Design    Egypt    ERA Franchise Systems, Inc.    161971   
ERA    El Salvador    ERA Franchise Systems, Inc.    20050065387   
ERA    El Salvador    ERA Franchise Systems, Inc.    20050065390    94 Book 52
ERA & New House Design (black on white)    El Salvador    ERA Franchise Systems, Inc.    20050065383   
ERA & New House Design (black on white)    El Salvador    ERA Franchise Systems, Inc.    20050065384    87 Book 52
ERA    European Community    ERA Franchise Systems, Inc.    4575379   
ERA    European Community    ERA Franchise Systems, Inc.    538421    538421
ERA & New House Design (color)    European Community    ERA Franchise Systems, Inc.    4575361   
ERA & New House Design (white on black)    European Community    ERA Franchise Systems, Inc.    782995    782995
ERA    Finland    ERA Franchise Systems, Inc.    T199800268    219819
ERA & New House Design    Finland    ERA Franchise Systems, Inc.    T199800269    219820
ERA & New House Design (black on white)    France    ERA Franchise Systems, Inc.    97686901    97686901
ERA & New House Design (color)    France    ERA Franchise Systems, Inc.    97686900    97686900
ERA & New House Design (white on black)    France    ERA Franchise Systems, Inc.    97667132    97667132
ERA & New House Design    Germany    ERA Franchise Systems, Inc.    39721035.3    39721035
ERA & Old House, Circle Design    Germany    ERA Franchise Systems, Inc.    E20240/36 Wz    994162
ERA    Gibraltar    ERA Franchise Systems, Inc.    9332    9332
ERA & New House Design (series of 3)    Gibraltar    ERA Franchise Systems, Inc.    9331    9331
ERA    Greece    ERA Franchise Systems, Inc.    136042    136042/98
ERA (and design)    Greece    ERA Franchise Systems, Inc.    136043    136043/98
ERA    Grenada    ERA Franchise Systems, Inc.    87/1998    87/1998
ERA & New House Design    Grenada    ERA Franchise Systems, Inc.    88/1998    88/1998
ERA    Guatemala    ERA Franchise Systems, Inc.    4150    141018
ERA    Guatemala    ERA Franchise Systems, Inc.    4152   
ERA & New House Design (black on white)    Guatemala    ERA Franchise Systems, Inc.    4148   

 

5


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & New House Design (black on white)    Guatemala    ERA Franchise Systems, Inc.    4149    140849
ERA    Haiti    ERA Franchise Systems, Inc.    371-T    248 Reg. 115
ERA    Haiti    ERA Franchise Systems, Inc.    372-T    249 Reg. 115
ERA & New House Design    Haiti    ERA Franchise Systems, Inc.    373-T    160 Reg. 118
ERA & New House Design    Haiti    ERA Franchise Systems, Inc.    374-T    161 Reg. 118
ERA    Honduras    ERA Franchise Systems, Inc.    4726/98    5057
ERA    Honduras    ERA Franchise Systems, Inc.    4727/98   
ERA & Design    Honduras    ERA Franchise Systems, Inc.    4610/98    5068
ERA & New House Design (black on white)    Honduras    ERA Franchise Systems, Inc.    4614/98   
ERA & Design    Hong Kong    ERA Franchise Systems, Inc.    14652/92    4256/95
ERA & New House Design (black on white)    Hong Kong    ERA Franchise Systems, Inc.    3804/97    199901582
ERA & New House Design (series of 2)    Hong Kong    ERA Franchise Systems, Inc.    7896/97    199810953
ERA    India    ERA Franchise Systems, Inc.    1290397    1290397
ERA & New House Design    India    ERA Franchise Systems, Inc.       32107
ERA & New House Design    India    ERA Franchise Systems, Inc.    01309561    1309561
ERA    Indonesia    ERA Franchise Systems, Inc.    14416    IDM000048946
ERA    Indonesia    ERA Franchise Systems, Inc.    14417    IDM000048950
ERA    Indonesia    ERA Franchise Systems, Inc.    14418    IDM000048951
ERA    Indonesia    ERA Franchise Systems, Inc.    14419    IDM000048952
ERA & New House Design (color)    Indonesia    ERA Franchise Systems, Inc.    11737    432455
ERA & Old House, Circle Design    Indonesia    ERA Franchise Systems, Inc.    14420    IDM000048948
ERA & Old House, Circle Design    Indonesia    ERA Franchise Systems, Inc.    14421    IDM000046993
ERA & Old House, Circle Design    Indonesia    ERA Franchise Systems, Inc.    14422    IDM000048949
ERA & Old House, Circle Design    Indonesia    ERA Franchise Systems, Inc.    14423    IDM000048947
ERA & Old House, Circle Design    Indonesia    ERA Franchise Systems, Inc.    168861    IDM000042824
ERA    Ireland    ERA Franchise Systems, Inc.    98/1442    213581

 

6


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA (and design)    Ireland    ERA Franchise Systems, Inc.    98/1443    213604
ERA    Israel    ERA Franchise Systems, Inc.    106137    106137
ERA & New House Design (black on white)    Israel    ERA Franchise Systems, Inc.    112398    112398
ERA & New House Design (white on black)    Italy    ERA Franchise Systems, Inc.    RM97C004101    783703
ERA & Old House, Circle Design    Italy    ERA Franchise Systems, Inc.    RM91C002238    612993
ERA    Jamaica    ERA Franchise Systems, Inc.    162603    36774
ERA    Jamaica    ERA Franchise Systems, Inc.    41297    41297
ERA & Design    Jamaica    ERA Franchise Systems, Inc.    162604    36783
ERA    Japan    ERA Franchise Systems, Inc.    88513/93    3337980
ERA    Japan    ERA Franchise Systems, Inc.    88514/1993    3287800
ERA & Design (new design)    Japan    ERA Franchise Systems, Inc.    28049/1997    4240288
ERA    Jordan    ERA Franchise Systems, Inc.    79187    79187
ERA    Jordan    ERA Franchise Systems, Inc.    79188    79188
ERA & New House Design    Jordan    ERA Franchise Systems, Inc.    79191    79191
ERA & New House Design    Jordan    ERA Franchise Systems, Inc.    79192    79192
           
ERA & New House Design (color)    Korea, Republic of    ERA Franchise Systems, Inc.    11635/97    50945
ERA    Kuwait    ERA Franchise Systems, Inc.    70260    59155
ERA    Kuwait    ERA Franchise Systems, Inc.    72481    61063
ERA & New House Design    Kuwait    ERA Franchise Systems, Inc.    70261    59156
ERA & New House Design    Kuwait    ERA Franchise Systems, Inc.    72482    61064
ERA & New House Design (black on white)    Latvia    ERA Franchise Systems, Inc.    M-99-1240    M47 436
ERA    Lebanon    ERA Franchise Systems, Inc.    95533    95533
ERA & New House Design    Lebanon    ERA Franchise Systems, Inc.    95534    95534
ERA    Libya    ERA Franchise Systems, Inc.    5186   
ERA    Libya    ERA Franchise Systems, Inc.    5187   
ERA & New House Design    Libya    ERA Franchise Systems, Inc.    5188   

 

7


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & New House Design    Libya    ERA Franchise Systems, Inc.    5189   
ERA    Liechtenstein    ERA Franchise Systems, Inc.    013766    13766
ERA & New House Design    Liechtenstein    ERA Franchise Systems, Inc.    013767    13767
ERA & New House Design (black on white)    Lithuania    ERA Franchise Systems, Inc.    99-1695    40601
ERA    Macedonia    ERA Franchise Systems, Inc.    2005/928   
ERA & New House Design    Macedonia    ERA Franchise Systems, Inc.    2005/931   
ERA & New House Design    Malaysia    ERA Franchise Systems, Inc.    99/226    99000226
ERA & New House Design (black on white)    Malaysia    ERA Franchise Systems, Inc.    97012663    97012663
ERA & Old House, Circle Design    Malaysia    ERA Franchise Systems, Inc.    91/1152    91/1152
ERA Old House, Circle Design    Malaysia    ERA Franchise Systems, Inc.    M91025    91025
ERA    Mexico    ERA Franchise Systems, Inc.    796171   
ERA    Mexico    ERA Franchise Systems, Inc.    796173   
ERA & New House Design (black on white)    Mexico    ERA Franchise Systems, Inc.    303572    561277
ERA & New House Design (black on white)    Mexico    ERA Franchise Systems, Inc.    796172   
ERA & New House Design (black on white)    Mexico    ERA Franchise Systems, Inc.    837793   
ERA & New House Design    Monaco    ERA Franchise Systems, Inc.    021010    9920833
ERA    Montserrat    ERA Franchise Systems, Inc.       1463
ERA & Design    Montserrat    ERA Franchise Systems, Inc.      
ERA    Morocco    ERA Franchise Systems, Inc.    92690    92690
ERA    Morocco    ERA Franchise Systems, Inc.    92691    92691
ERA    Morocco    ERA Franchise Systems, Inc.    95010    95010
ERA    Morocco    ERA Franchise Systems, Inc.    95011    95011
ERA & New House Design (color)    Morocco    ERA Franchise Systems, Inc.    92692    92692
ERA & New House Design (color)    Morocco    ERA Franchise Systems, Inc.    92693    92693
ERA & New House Design (color)    Morocco    ERA Franchise Systems, Inc.    95012    95012
ERA & New House Design (color)    Morocco    ERA Franchise Systems, Inc.    95013    95013

 

8


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA    Myanmar    ERA Franchise Systems, Inc.    4/23/2000    4/23/2000
ERA    Myanmar    ERA Franchise Systems, Inc.    4/23/2000    4/23/2000
ERA (and design)    Myanmar    ERA Franchise Systems, Inc.    4/22/2000    4/22/2000
ERA (and design)    Myanmar    ERA Franchise Systems, Inc.    4/22/2000    4/22/2000
ERA    Netherlands Antilles    ERA Franchise Systems, Inc.    20771    20771
ERA & New House Design    Netherlands Antilles    ERA Franchise Systems, Inc.    20779    20779
ERA    New Zealand    ERA Franchise Systems, Inc.    126136    126136
ERA    New Zealand    ERA Franchise Systems, Inc.    192008    A192008
ERA & N. Design, series of 3    New Zealand    ERA Franchise Systems, Inc.    276680    276680
ERA    Nicaragua    ERA Franchise Systems, Inc.    2005-01929    0600601
ERA & New House Design (black on white)    Nicaragua    ERA Franchise Systems, Inc.    2005-01930    0600600
ERA    Norway    ERA Franchise Systems, Inc.    98.00537    194678
ERA & New House Design (black on white)    Norway    ERA Franchise Systems, Inc.    98.00538    196289
ERA (design)    Norway    ERA Franchise Systems, Inc.    199907703    203264
ERA    Oman    ERA Franchise Systems, Inc.    36887   
ERA    Oman    ERA Franchise Systems, Inc.    36888    36888
ERA & New House Design (black on white)    Oman    ERA Franchise Systems, Inc.    36889    36889
ERA & New House Design (black on white)    Oman    ERA Franchise Systems, Inc.    36890    36890
ERA    Panama    ERA Franchise Systems, Inc.    143044    143044
ERA    Panama    ERA Franchise Systems, Inc.    143045    143045
ERA & New House Design (color)    Panama    ERA Franchise Systems, Inc.    143046    143046
ERA & New House Design (color)    Panama    ERA Franchise Systems, Inc.    143048    143048
ERA    Papua New Guinea    ERA Franchise Systems, Inc.    A62360    A62,360
ERA    Papua New Guinea    ERA Franchise Systems, Inc.    A62361    A62,361
ERA (and design)    Papua New Guinea    ERA Franchise Systems, Inc.    A62362    A62,362
ERA (and design)    Papua New Guinea    ERA Franchise Systems, Inc.    A62363    A62,363

 

9


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & New House Design (black on white)    Philippines    ERA Franchise Systems, Inc.    120853    120853
ERA    Poland    ERA Franchise Systems, Inc.    Z-197068    137441
ERA & New House Design    Poland    ERA Franchise Systems, Inc.    Z-197067    137440
           
ERA & New House Design (black on white)    Portugal    ERA Franchise Systems, Inc.    325827    325827
ERA    Puerto Rico    ERA Franchise Systems, Inc.       43022
ERA    Puerto Rico    ERA Franchise Systems, Inc.       43021
ERA & New House Design    Puerto Rico    ERA Franchise Systems, Inc.       43023
ERA & New House Design    Puerto Rico    ERA Franchise Systems, Inc.       43025
ERA    Qatar    ERA Franchise Systems, Inc.    32846   
ERA    Qatar    ERA Franchise Systems, Inc.    32847   
ERA & New House Design    Qatar    ERA Franchise Systems, Inc.    32848   
ERA & New House Design    Qatar    ERA Franchise Systems, Inc.    32849   
ERA    Romania    ERA Franchise Systems, Inc.    M2005 11899    71512
ERA & New House Design    Romania    ERA Franchise Systems, Inc.    M2005 11900    71513
ERA & New House Design    Russian Federation    ERA Franchise Systems, Inc.    2006725599   
ERA (in Cyrillic)    Russian Federation    ERA Franchise Systems, Inc.    2005720989   
ERA (New House Design)    Russian Federation    ERA Franchise Systems, Inc.    2005720988    314603
ERA    Saudi Arabia    ERA Franchise Systems, Inc.    95698   
ERA    Saudi Arabia    ERA Franchise Systems, Inc.    95699   
ERA & New House Design    Saudi Arabia    ERA Franchise Systems, Inc.    95700   
ERA & New House Design    Saudi Arabia    ERA Franchise Systems, Inc.    95701   
ERA    Serbia    ERA Franchise Systems, Inc.    1564   
ERA & New House Design    Serbia    ERA Franchise Systems, Inc.    1563   
ERA & New House Design (series of 3)    Singapore    ERA Franchise Systems, Inc.    T97/10483H    T97/10483H
ERA & Old House Design    Singapore    ERA Franchise Systems, Inc.    S8047/91    8047/91
ERA & Design (new design)    Slovakia    ERA Franchise Systems, Inc.    1541/2000    196635

 

10


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & Design    South Africa    ERA Franchise Systems, Inc.    81/4136    81/4136
ERA & Design    South Africa    ERA Franchise Systems, Inc.    90/1483    90/1483
ERA & Design (old design)    South Africa    ERA Franchise Systems, Inc.    89/6989    89/6989
ERA & New House Design (black on white)    South Africa    ERA Franchise Systems, Inc.    9707024    9707024
ERA & New House Design (color)    South Africa    ERA Franchise Systems, Inc.    9707023    9707023
ERA & New House Design (color)    Spain    ERA Franchise Systems, Inc.    2093058    2093058
ERA & New House Design (white on black)    Spain    ERA Franchise Systems, Inc.    2093057    2093057
SIEMPRE AHI PARA TI    Spain    ERA Franchise Systems, Inc.       2,286,011/8
ERA    St. Kitts and Nevis    ERA Franchise Systems, Inc.    S97    97
ERA & Design    St. Kitts and Nevis    ERA Franchise Systems, Inc.    S96    96
ERA    St. Lucia    ERA Franchise Systems, Inc.    118/1998    118/98
ERA    St. Lucia    ERA Franchise Systems, Inc.    119/1998    119/98
ERA & Design (new design)    St. Lucia    ERA Franchise Systems, Inc.    116/1998    116/98
ERA & Design (new design)    St. Lucia    ERA Franchise Systems, Inc.    117/1998    117/98
ERA    St. Vincent and the Grenadines    ERA Franchise Systems, Inc.    236/2006   
ERA & New House Design (series of 3)    St. Vincent and the Grenadines    ERA Franchise Systems, Inc.       129 OF 1998
ERA    Sweden    ERA Franchise Systems, Inc.    95-04899    308825
ERA    Switzerland    ERA Franchise Systems, Inc.    54080/2003    515800
ERA    Switzerland    ERA Franchise Systems, Inc.    5587/91    399265
ERA & New House Design    Switzerland    ERA Franchise Systems, Inc.    01739/2001    486736
ERA & New House Design    Switzerland    ERA Franchise Systems, Inc.    54079/2003    515779
ERA    Taiwan    ERA Franchise Systems, Inc.    79-46327    51875
ERA & New House Design (white on black)    Taiwan    ERA Franchise Systems, Inc.    86025221    100963
ERA    Tangier    ERA Franchise Systems, Inc.    32105   
ERA    Tangier    ERA Franchise Systems, Inc.    32106   
ERA & Design    Tangier    ERA Franchise Systems, Inc.    32107   

 

11


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA & Design    Tangier    ERA Franchise Systems, Inc.    32108   
ERA & New House Design (black on white)    Thailand    ERA Franchise Systems, Inc.    335635    Bor6378
ERA    Trinidad and Tobago    ERA Franchise Systems, Inc.    28261   
ERA & Design (new/b&w)    Trinidad and Tobago    ERA Franchise Systems, Inc.    28262    28262
ERA    Tunisia    ERA Franchise Systems, Inc.    EE042636   
ERA REAL ESTATE & New House Design    Tunisia    ERA Franchise Systems, Inc.    EE042637   
ERA    Turkey    ERA Franchise Systems, Inc.    50587    50587
ERA    Turkey    ERA Franchise Systems, Inc.    61342   
ERA & New House Design    Turkey    ERA Franchise Systems, Inc.    50588    50588
ERA & New House Design    Turkey    ERA Franchise Systems, Inc.    61343   
ERA GRUP and Design    Turkey    ERA Franchise Systems, Inc.    2002/35722    2002/35722
ERA    Turks and Caicos Islands    ERA Franchise Systems, Inc.       11691
ERA    Turks and Caicos Islands    ERA Franchise Systems, Inc.    12413    12413
ERA & Design (new/b&w)    Turks and Caicos Islands    ERA Franchise Systems, Inc.    12414    12414
ERA (new house design)    Turks and Caicos Islands    ERA Franchise Systems, Inc.    10602    11798
ERA    United Arab Emirates    ERA Franchise Systems, Inc.    56947    48035
ERA    United Arab Emirates    ERA Franchise Systems, Inc.    56948    48034
ERA & New House Design    United Arab Emirates    ERA Franchise Systems, Inc.    56782    48033
ERA & New House Design    United Arab Emirates    ERA Franchise Systems, Inc.    56783    48078
ERA    United Kingdom    ERA Franchise Systems, Inc.    1584675    1584675
ERA    United Kingdom    ERA Franchise Systems, Inc.    2165216    2165216
ERA & New House Design (color)    United Kingdom    ERA Franchise Systems, Inc.    2393362    2393362
ERA & New House Design (series of 3)    United Kingdom    ERA Franchise Systems, Inc.    2132336    2132336
ERA & Old House, Circle Design    United Kingdom    ERA Franchise Systems, Inc.    1430366    1430366
ERA & Design    Uruguay    ERA Franchise Systems, Inc.    288730    288730
ERA- ELECTRONIC REALTY ASSOCIATES    Uruguay    ERA Franchise Systems, Inc.    251848    251848

 

12


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ERA    Viet Nam    ERA Franchise Systems, Inc.    43364    38625
ERA & New House Design (black on white)    Viet Nam    ERA Franchise Systems, Inc.    43365    38627
ERA    Virgin Islands (British)    ERA Franchise Systems, Inc.    1684    1684
ERA & New House Design (series of 3)    Virgin Islands (British)    ERA Franchise Systems, Inc.    1685    1685

 

13


SCHEDULE II

Oncor International LLC

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

ONCOR    Austria    ONCOR INTERNATIONAL LLC    AM1732/91    138698
ONCOR    Benelux    ONCOR INTERNATIONAL LLC    0762072    494820
ONCOR    Canada    ONCOR INTERNATIONAL LLC    0679560    TMA402851
ONCOR    Denmark    ONCOR INTERNATIONAL LLC    VA025851991    VR 1992-2228
ONCOR    France    ONCOR INTERNATIONAL LLC    279319    1654955
ONCOR    Germany    ONCOR INTERNATIONAL LLC    014895/36    2014339
ONCOR    Spain    ONCOR INTERNATIONAL LLC    1629294    1690794
ONCOR    Switzerland    ONCOR INTERNATIONAL LLC    51639/2007   
ONCOR    United Kingdom    ONCOR INTERNATIONAL LLC    1460939    1460939
ONCOR    United States    ONCOR INTERNATIONAL LLC    74106241    1702621
ONCOR INTERNATIONAL & Design    United States    ONCOR INTERNATIONAL LLC    74172070    1703690
ONCOR Logo    United States    ONCOR INTERNATIONAL LLC    78372985    2966768


SCHEDULE II

The DeWolfe Company, Inc.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

DEWOLFE.COM    United States    THE DEWOLFE COMPANY, INC.    78029624    2602889
DEWOLFE HOMEMOVE and Design    United States    THE DEWOLFE COMPANY, INC.    78009680    2498453


SCHEDULE II

Sotheby’s International Realty Licensee Corp.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

RESIDE    United States    Sotheby’s International Realty Licensee Corp    77089845   
FOR THE ONGOING COLLECTION OF LIFE    United States    Sotheby’s International Realty Licensee Corp    78490698    3069400
DBL REALTORS DELIVERING MORE (Stylized)    United States    Sotheby’s International Realty Licensee Corp    76298683    2892287
DBL REALTORS - EXCEPTIONAL HOMES    United States    Sotheby’s International Realty Licensee Corp    76364261    2892353


SCHEDULE II

Coldwell Banker Residential Brokerage, Inc.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

LEADING AGENTS, LEADING THE WAY    United States    Coldwell Banker Residential Brokerage, Inc.    77022828   


SCHEDULE II

Title Resource Group LLC

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

MARDAN SETTLEMENT SERVICES & Design    United States    Title Resource Group LLC    78814998   
Circle Logo (TRG)    United States    Title Resource Group LLC    78869716   
Circle Logo (TRG)    United States    Title Resource Group LLC    78869726   
REAL GENIUS    United States    Title Resource Group LLC    77108269   
MAKING HOUSES INTO HOMES    United States    Title Resource Group LLC    78466961   
DON’T SETTLE FOR COMPLICATED, SETTLE FOR CONVENIENCE    United States    Title Resource Group LLC    78484489   
IN HOUSE    United States    Title Resource Group LLC    78626295   
GATEWAY SETTLEMENT SERVICES & Design    United States    Title Resource Group LLC    78768106   
COUNT ON OUR EXCELLENCE    United States    Title Resource Group LLC    78783827   
L LANDWAY SETTLEMENT SERVICES & Design    United States    Title Resource Group LLC    78815007    3219806
SOUTHERN EQUITY SERVICES & Design    United States    Title Resource Group LLC    78815000    3219805
CENSTAR    United States    Title Resource Group LLC    78439772    3213898


SCHEDULE II

C21 TM Corp.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

1-800-4-HOUSES    United States    C21 TM Corp    74469574    2376323
2&1    United States    C21 TM Corp    73735837    1526181
21 ONLINE & Design    United States    C21 TM Corp    75099281    2113555
21ST CENTURY    United States    C21 TM Corp    75436943    2300743
21ST CENTURY    United States    C21 TM Corp    78565509    3116448
21ST CENTURY CASUALTY    United States    C21 TM Corp    78565519    3055063
21ST CENTURY INSURANCE    United States    C21 TM Corp    78565505    3106265
21ST CENTURY NEWS    United States    C21 TM Corp    76279430    2685577
AD/PAC    United States    C21 TM Corp    73260228    1212383
AGENTS OF CHANGE    United States    C21 TM Corp    78815003   
AT HOME WITH CENTURY 21    United States    C21 TM Corp    78195146    2960793
BUYER SERVICE PLEDGE    United States    C21 TM Corp    74122856    1812377
C-21    United States    C21 TM Corp    73368407    1268185
C 21    United States    C21 TM Corp    78427047    2933408
C21 TALK RADIO FOR THE REAL WORLD    United States    C21 TM Corp    78061343    2809296
CENTURION    United States    C21 TM Corp    73754544    1563740
CENTURION    United States    C21 TM Corp    73754545    1553298
CENTURION & Design    United States    C21 TM Corp    73754547    1563741
CENTURION Design    United States    C21 TM Corp    73754543    1553297
CENTURION HONOR SOCIETY    United States    C21 TM Corp    78302129    2981964
CENTURY 21    United States    C21 TM Corp    73608730    1429531
CENTURY 21    United States    C21 TM Corp    73072695    1063488
CENTURY 21    United States    C21 TM Corp    73133892    1085039
CENTURY 21    United States    C21 TM Corp    73421810    1304095
CENTURY 21    United States    C21 TM Corp    75071763    2178970
CENTURY 21    United States    C21 TM Corp    78008646    2762774
CENTURY 21    United States    C21 TM Corp    76279429    2662159
CENTURY 21 & Jacket Design    United States    C21 TM Corp    73774121    1631850
CENTURY 21 & New House Design    United States    C21 TM Corp    73138501    1104464
CENTURY 21 & New House Design    United States    C21 TM Corp    73133894    1085040
CENTURY 21 & New House Design    United States    C21 TM Corp    74142432    1771535
CENTURY 21 & Sign & Post Design    United States    C21 TM Corp    73262350    1263774
CENTURY 21 & Sign Design    United States    C21 TM Corp    73783422    1576475
CENTURY 21 & Sign Design    United States    C21 TM Corp    74631924    2027670
CENTURY 21 (New House Design with Floor)    United States    C21 TM Corp    78852446    3219883
CENTURY 21 (New House Design)    United States    C21 TM Corp    78852448    3219884


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CENTURY 21 BUILDER CONNECTIONS & Design    United States    C21 TM Corp    75906666    2656899
CENTURY 21 COMMERCIAL    United States    C21 TM Corp    78827023    3219828
CENTURY 21 COMMERCIAL & Design    United States    C21 TM Corp    78815005   
CENTURY 21 COMMERCIAL INVESTMENT NETWORK & Design    United States    C21 TM Corp    75193702    2158319
CENTURY 21 CONNECTIONS REAL CONVENIENCE REAL VALUE & Design    United States    C21 TM Corp    75651790    2378922
CENTURY 21 FINE HOMES & ESTATES    United States    C21 TM Corp    76581393    3007069
CENTURY 21 FINE HOMES & ESTATES & New Gate Design    United States    C21 TM Corp    78785304    3154137
CENTURY 21 FINE HOMES & ESTATES & Old Gate Design    United States    C21 TM Corp    78011431    2612738
CENTURY 21 GLOBAL REFERRAL NETWORK & Design    United States    C21 TM Corp    78047046    2725830
CENTURY 21 LEARNING SYSTEM    United States    C21 TM Corp    78051378    2585459
CENTURY 21 MATURE MOVES    United States    C21 TM Corp    78032288    2633322
CENTURY 21 MATURE MOVES & Design    United States    C21 TM Corp    78036319    2633331
CENTURY 21 MILITARY RELOCATION NETWORK & Design    United States    C21 TM Corp    73681961    1526059
CENTURY 21 MORTGAGE    United States    C21 TM Corp    78051978    2615437
CENTURY 21 MORTGAGE & Design    United States    C21 TM Corp    73421809    1307407
CENTURY 21 NEW CONSTRUCTION    United States    C21 TM Corp    78827028    3219829
CENTURY 21 NEW CONSTRUCTION & Design    United States    C21 TM Corp    78816057    3219808
CENTURY 21 RECREATIONAL PROPERTIES    United States    C21 TM Corp    78827022    3219827
CENTURY 21 RECREATIONAL PROPERTIES & Design    United States    C21 TM Corp    74536797    1950262
CENTURY 21 SALES EDGE    United States    C21 TM Corp    75408410    2409744
CENTURY 21 SEARCHROUTER    United States    C21 TM Corp    78568316   
CENTURY 21 STAR    United States    C21 TM Corp    73763539    1551266
CENTURY 22    United States    C21 TM Corp    78072436    2585495
CENTURY21.COM & Design    United States    C21 TM Corp    76279428    2544997
CENTURYNET    United States    C21 TM Corp    73681978    1486479
CENTURYNET    United States    C21 TM Corp    73681974    1486511
CENTURYNET    United States    C21 TM Corp    73681976    1486554
CENTURYNET    United States    C21 TM Corp    73681970    1515199
CENTURYNET    United States    C21 TM Corp    73681972    1493084
CENTURYNET & Design    United States    C21 TM Corp    73681969    1497505
CENTURYNET & Design    United States    C21 TM Corp    73681975    1486553
CENTURYNET & Design    United States    C21 TM Corp    73681977    1486478
CENTURYNET & Design    United States    C21 TM Corp    73681973    1486510
CENTURYNET & Design    United States    C21 TM Corp    73681971    1492190
CENTURYWRITER    United States    C21 TM Corp    73732302    1551675

 

2


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

CLS CENTURY 21 LEARNING SYSTEM & Design    United States    C21 TM Corp    78029441    2720034
COMPLIMENTS OF THE HOUSE    United States    C21 TM Corp    78010783    2589921
COMPLIMENTS OF THE HOUSE & Design    United States    C21 TM Corp    78010787    2596006
CREATE 21    United States    C21 TM Corp    78021324    2622290
ES TU SUENO. CONFIEMOS EN EL    United States    C21 TM Corp    78908677   
GOLD MEDALLION    United States    C21 TM Corp    74090920    1681402
GOLD MEDALLION    United States    C21 TM Corp    74090919    1747396
HOME BUYER’S KIT    United States    C21 TM Corp    73735836    1594520
NEW CENTURY TITLE COMPANY    United States    C21 TM Corp    75485913    2983399
NEWSCENTER 21    United States    C21 TM Corp    73619359    1470480
OPERATION ORBIT    United States    C21 TM Corp    74040345    1662428
ORBIT    United States    C21 TM Corp    74401367    1835425
PROFESIONALES, REALIZANDO TU SUENO    United States    C21 TM Corp    78908678   
PUT NUMBER 1 TO WORK FOR YOU    United States    C21 TM Corp    73494432    1367039
PUT YOUR TRUST IN NUMBER ONE    United States    C21 TM Corp    73727081    1530053
Q (stylized)    United States    C21 TM Corp    76282440    2614917
Q.S.P.D.    United States    C21 TM Corp    74128727    1711604
QUALITY SERVICE IN EVERY CUSTOMER CONTACT PROFITABLE DOMINANCE IN THE PRIMARY MARKETPLACE    United States    C21 TM Corp    74128781    1713518
REAL ESTATE FOR THE REAL WORLD    United States    C21 TM Corp    75614226    2398595
REAL ESTATE FOR YOUR WORLD    United States    C21 TM Corp    78226832    2815094
SELLER SERVICE PLEDGE    United States    C21 TM Corp    74122857    1750374
SUENA. CONFIA. VIVA.    United States    C21 TM Corp    78908670   
SYSTEM 21    United States    C21 TM Corp    78605777   
TECH SMARTS    United States    C21 TM Corp    78393421   
THE CENTURY 21 HOME PROTECTION PLAN    United States    C21 TM Corp    73241780    1161341
THE REAL ESTATE INVESTMENT JOURNAL    United States    C21 TM Corp    73158117    1153864
VIP    United States    C21 TM Corp    73165161    1151216
VIRTUAL SOLUTION SERIES    United States    C21 TM Corp    76429198    2807918
WEEKLY WIRE    United States    C21 TM Corp    75301778    2207667
WE’RE THE NEIGHBORHOOD PROFESSIONALS    United States    C21 TM Corp    73735838    1526116

 

3


SCHEDULE II

NRT Utah, Inc.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

UTAH REAL ESTATE SCHOOL NRT and Design    United States    NRT Utah, Inc.    78/883,366    3,222,469

 


SCHEDULE II

Burnet Realty Inc.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

MAKING DREAMS COME HOME    United States    Burnet Realty Inc.    78/486,327    3,127,865
WE’RE INTO THIS    United States    Burnet Realty Inc.    76/400,114    2,801,084
DISTINCTIVE HOMES*    United States    Burnet Realty Inc.    74/085,862    1,712,157

 

* The USPTO records for the trademark marked with a * show three outstanding security interest recordals, for which releases have not been publicly recorded (security holders: Norwest Bank of Minnesota, N.A.; Northwest Bank of Minnesota, National Association as Administrative Bank; and Norwest Bank Minnesota, National Association as Administrative Bank). Burnet Realty Inc. will use commercially reasonable efforts to file appropriate release documentation with the USPTO within 90 calendar days of the Closing Date.


SCHEDULE II

Century 21 Real Estate, LLC

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

21ST CENTURY INSURANCE & Design    United States    Century 21 Real Estate LLC    76181517    3060562
21ST CENTURY CASUALTY & Design    United States    Century 21 Real Estate LLC    75721880    2700705
21ST CENTURY INSURANCE COMPANY & Design    United States    Century 21 Real Estate LLC    75721881   

On January 19, 2005, the marks referenced above were assigned by 21 st Century Insurance Group to Century 21 Real Estate Corporation. In addition, 21 st Century Insurance Group assigned only its rights to the word portion of the mark, retaining its rights in the separate Roman Column design shown in the applications. At the time of assignment in January 2005, the pending applications were based on an intent-to-use and Century 21 Real Estate LLC chose to wait to record the assignment until it was able to file Statements of Use for all three trademark applications and thereby convert the basis of the applications to one of use. Century 21 Real Estate Corporation subsequently changed its name to Century 21 Real Estate LLC. Century 21 Real Estate LLC will use commercially reasonable efforts to file appropriate assignment and change of name documentation with the USPTO no more than 90 calendar days after the Statement of Use for application 75/721,881 is filed with, and accepted by, the USPTO (or such longer period as the Administrative Agent may determine). Should a Statement of Use not be filed for application 75/721,881, or should application 75/721,881 be abandoned for any reason, Century 21 Real Estate LLC will use commercially reasonable efforts to file appropriate assignment and change of name documentation with respect to trademarks 3,060,562 and 2,700,705 with the USPTO no more than 90 calendar days after such decision is made, or after such abandonment occurs (or such longer period as the Administrative Agent may determine).


SCHEDULE II

CB TM Corp.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

@ Symbol & Stick Man Design    United States    CB TM Corp.    78578972    3063270
BLUE EDGE MORTGAGE    United States    CB TM Corp.    78033537    2541806
BLUE EDGE REALTY    United States    CB TM Corp.    78029778    2605955
CB & Design*    United States    CB TM Corp.    73210971    1153366
CB COLDWELL BANKER COMMERCIAL & Design    United States    CB TM Corp.    78655402    3179803
CBC    United States    CB TM Corp.    78235734    3030080
CEO SERIES & Design    United States    CB TM Corp.    78330003    3038517
COLDWELL BANKER    United States    CB TM Corp.    78655395    3100659
COLDWELL BANKER    United States    CB TM Corp.    78008563    2453334
COLDWELL BANKER    United States    CB TM Corp.    75152362    2057608
COLDWELL BANKER*    United States    CB TM Corp.    73211116    1154155
COLDWELL BANKER CB & Design    United States    CB TM Corp.    78655400    3179802
COLDWELL BANKER CB & Design    United States    CB TM Corp.    75152363    2059501
COLDWELL BANKER CB & Design*    United States    CB TM Corp.    73346790    1215241
COLDWELL BANKER COMMERCIAL    United States    CB TM Corp.    75120713    2059364
COLDWELL BANKER COMMERCIAL*    United States    CB TM Corp.    73787763    1598908
COLDWELL BANKER COMMERCIAL    United States    CB TM Corp.    78655398   
COLDWELL BANKER COMMERCIAL CB & Design    United States    CB TM Corp.    75629004    2331890
CB COLDWELL BANKER COMMERCIAL & Design    United States    CB TM Corp.    78080719    2745034
COLDWELL BANKER COMMERCIAL MARKETCONNECT & Design    United States    CB TM Corp.    78677295    3191841
COLDWELL BANKER COMMERCIAL SEARCHROUTER    United States    CB TM Corp.    78568310   
COLDWELL BANKER CONCIERGE    United States    CB TM Corp.    75630167    2576448
COLDWELL BANKER CONCIERGE    United States    CB TM Corp.    75588856    2472004
COLDWELL BANKER PREVIEWS INTERNATIONAL    United States    CB TM Corp.    78655389    3093311
COLDWELL BANKER PREVIEWS INTERNATIONAL    United States    CB TM Corp.    78032990    2529955
COLDWELL BANKER PREVIEWS INTERNATIONAL & Design    United States    CB TM Corp.    78655792    3093312
COLDWELL BANKER PREVIEWS INTERNATIONAL & Sunburst Design    United States    CB TM Corp.    78638810    3170029
COLDWELL BANKER RESIDENTIAL BROKERAGE ACCREDITED REAL ESTATE PROFESSIONAL    United States    CB TM Corp.    78641891   
COLDWELL BANKER SEARCHROUTER    United States    CB TM Corp.    78546326   
COLDWELL BANKER UNIVERSITY    United States    CB TM Corp.    74425646    1842126


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

COLDWELL BANKER UNIVERSITY & New Seal Design    United States    CB TM Corp.    78783829   
COLDWELL BANKER UNIVERSITY & Old Book, Seal Design    United States    CB TM Corp.    74421411    1876968
GUARDIAN*    United States    CB TM Corp.    74102195    1823333
HELPING OTHERS THROUGHOUT THE HOLIDAY SEASON    United States    CB TM Corp.    74561955    1959391
HOMEMATCH    United States    CB TM Corp.    74535397    2034125
MAKING REAL ESTATE REAL EASY    United States    CB TM Corp.    75229942    2173895
MARKETCONNECT    United States    CB TM Corp.    78677274   
MYCONNECT1    United States    CB TM Corp.    78745689    3151006
PERFORMANCE PERKS. TAKE ACTION. GET REWARDS.    United States    CB TM Corp.    78449625   
PERSONAL RETRIEVER    United States    CB TM Corp.    75380191    2235393
PERSONAL RETRIEVER Sign Rider Design    United States    CB TM Corp.    78182148    3102893
PRESERVING THE TRUST*    United States    CB TM Corp.    74393851    1823177
PREVIEWS    United States    CB TM Corp.    78768439    3219716
PREVIEWS (Stylized)#    United States    CB TM Corp.    71620930    565757
TECHEASE    United States    CB TM Corp.    78466926    3011158
THE CONDO STORE    United States    CB TM Corp.    75358857    2217143
THE HOME SELLERS*    United States    CB TM Corp.    73525527    1450200
THE HOME TEAM    United States    CB TM Corp.    73488934    1428703
THE ULTIMATE SERVICE    United States    CB TM Corp.    75042307    2211401
TRUE BLUE    United States    CB TM Corp.    78802985   
WE ARE FLORIDA    United States    CB TM Corp.    76530140    2850620
YOUR PERFECT PARTNER    United States    CB TM Corp.    78278195    2865193

 

* The USPTO records for the trademarks marked with a * are missing a transaction between Coldwell Banker Residential Holding Company and Coldwell Banker & Company. Corrective documentation will be filed with the USPTO within 30 calendar days of the Closing Date or such longer period as the Administrative Agent may determine.
# The USPTO records for the trademark marked with a # appear to be missing a transaction between Coldwell Banker Residential Real Estate and Coldwell Banker & Company and a transaction between Coldwell Banker Corporation and Coldwell Banker Residential Holding Company. Corrective documentation will be filed within 30 calendar days of the Closing Date or such longer period as the Administrative Agent may determine.

 

2


SCHEDULE II

ERA TM Corp.

Trademark Applications and Registrations

 

Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

1ST IN CUSTOMER SATISFACTION    United States    ERA TM Corp    75555625    2386946
1ST IN SERVICE    United States    ERA TM Corp    78710978    3192163
ALL YOU NEED TO KNOW    United States    ERA TM Corp.    78397567   
ALWAYS THERE FOR YOU    United States    ERA TM Corp    75746258    2477197
ANSWERS^    United States    ERA TM Corp    74185466    1756219
BLUEPRINT FOR SUCCESS    United States    ERA TM Corp    77015719   
CIBN    United States    ERA TM Corp    73734151    1527348
DIRECT ACCESS    United States    ERA TM Corp    78729761   
ERA    United States    ERA TM Corp    73113461    1078060
ERA    United States    ERA TM Corp    73388791    1251827
ERA    United States    ERA TM Corp    78008652    2691643
ERA    United States    ERA TM Corp    78599896    3073417
ERA & New House Design (black on white)    United States    ERA TM Corp    75269373    2875845
ERA & New House Design (black on white)    United States    ERA TM Corp    78599899    3073418
ERA & New House Design (in color)    United States    ERA TM Corp    77093228   
ERA & New House Design (white on black)    United States    ERA TM Corp    75250116    2121860
ERA (New House Design)    United States    ERA TM Corp    78641980    3135362
ERA 1ST IN SERVICE JIM JACKSON MEMORIAL AWARD & Design    United States    ERA TM Corp    76284300    2594245
ERA ALL YOU NEED TO KNOW IN REAL ESTATE & Old House Design    United States    ERA TM Corp    73173490    1434190
ERA HOME PROTECTION PLAN    United States    ERA TM Corp    78018755    2576242
ERA ONLINE    United States    ERA TM Corp    75104694    2049139
ERA REAL ESTATE & New House Design    United States    ERA TM Corp    78575216    3082137
ERA REAL ESTATE HOME PROTECTION PLAN & Design    United States    ERA TM Corp    78035233    2612765
ERA REAL ESTATE NATIONAL MILITARY BROKER NETWORK & Design    United States    ERA TM Corp    78058980    2635317
ERA REAL ESTATE RESORT PROPERTIES INTERNATIONAL & Design    United States    ERA TM Corp    76243766    2563583
ERA SEARCHROUTER    United States    ERA TM Corp    78550994   
ERA SELECT SERVICES    United States    ERA TM Corp    75809994    2737148
I WILL SELL YOUR HOUSE OR ERA WILL BUY IT    United States    ERA TM Corp    78293264    2958388
IF WE DON’T SELL YOUR HOUSE, ERA WILL BUY IT!    United States    ERA TM Corp    74073209    1646268


Trademark

  

Country Name

  

Owner Name

  

Application No.

  

Registration No.

IF WE DON’T SELL YOUR HOUSE, WE’LL BUY IT    United States    ERA TM Corp    76075358   
IT’S THE LITTLE THINGS WE DO    United States    ERA TM Corp    78915320   
NMBN^ *    United States    ERA TM Corp    74183282    1753385
SELLERS SECURITY    United States    ERA TM Corp    78425874    2983252
SELLERS SECURITY (Stylized)    United States    ERA TM Corp    73261423    1196433
SIEMPRE CONTIGO    United States    ERA TM Corp    78445125    3080693
TEAM ERA    United States    ERA TM Corp    74073379    1645223
THERE REALLY IS A DIFFERENCE IN REAL ESTATE COMPANIES    United States    ERA TM Corp    73699645    1499909
TOP GUN^    United States    ERA TM Corp    74153559    1757264
TOP TEAM    United States    ERA TM Corp    76243776    2706182
VISIONS OF LUXURY    United States    ERA TM Corp    78764214   
WE WILL SELL YOUR HOUSE OR ERA WILL BUY IT+    United States    ERA TM Corp    75483140    2464187
WE’LL HELP MAKE YOUR AMERICAN DREAM COME TRUE    United States    ERA TM Corp    73658557    1501591

 

^ The USPTO records for the trademarks marked with a ^ are showing an outstanding security interest granted by Electric Realty Associates, L.P. to Heller Financial in March 1992. ERA TM Corp. will use commercially reasonable efforts to file appropriate release documentation with the USPTO within 90 calendar days of the Closing Date.
* The USPTO record for the trademark marked with a * is missing a merger transaction between CTM Holding Corp. and TM Acquisition Corp. This documentation will be filed with the USPTO within 30 calendar days of the Closing Date or such longer period as the Administrative Agent may determine.
+ The USPTO records for the trademark marked with a + shows, as the first post-issuance transaction, an assignment from Earl M. Barker to EB Associates Inc., which was inadvertently recorded in November 1999. The appropriate corrective documentation will be filed with the USPTO within 30 calendar days of the Closing Date or such longer period as the Administrative Agent may determine.

 

2


Schedule III to the

Collateral Agreement

COMMERCIAL TORT CLAIMS

ERA Franchise Systems, Inc. v. TMG Real Estate Services, L.L.C., Michael Herman Levitin, Sandra Morgan Levitin, Sandra J. Holmes, and H-Towne Realty.com, L.L.C. - The amount at issue is $8,295,429, as ERA seeks past due and other fees resulting from to defendants’ breaches of the Franchise Agreement. The case is venued in the United States District Court for the Southern District of Texas, Case No.: H-06-cv-02765.

Century 21 Real Estate LLC f/k/a Century 21 Real Estate Corporation v. Heritage Real Estate, Inc. Century 21 Heritage Real Estate and Heritage Real Estate, John W. Schlendorf, Jr., Susanna Schlendorf and Sereta Churchill – The amount at issue is $6,998,826.80, as Century 21 seeks past due and other fees resulting from defendants’ breaches of the Franchise Agreement. The case is venued in the United States District Court, Northern District of California, Case No.: C067809

In re: Timothy Robert For and Patti Jo Fore (a/k/a Patti Jo Veneklase-Fore). Debtors Century 21 Real Estate LLC v. Timothy R. Fore and Patti Jo Fore – The amount at issue is $5,230,489.05, as Century 21 seeks past due and other fees resulting from defendants’ breaches of the Franchise Agreement. The case is venued in the Unites States Bankruptcy Court for the Western District of Michigan, Case No.: 06-05482 (JRH)


Schedule IV to the

Collateral Agreement

FILING OFFICES

 

Grantor

  

Location of Filing Office

Domus Intermediate Holdings Corp.    Delaware
Domus Acquisition Corp.    Delaware
Realogy Corporation    Delaware
AFS Mortgage    California
C21 TM Corp.    California
CB TM Corp.    California
Century 21 Real Estate LLC    Delaware
CGRN, Inc.    Delaware
Coldwell Banker Corporation    Delaware
Coldwell Banker Real Estate Corporation    California
ERA Franchise Systems, Inc.    Delaware
ERA General Agency Corporation    Missouri
ERA General Agency of New Jersey, Inc.    Delaware
ERA TM Corp.    California
FedState Strategic Consulting, Incorporated    Delaware
FSA Membership Services, LLC    Delaware
Oncor International LLC    Delaware
Realogy Franchise Finance, Inc.    Delaware
Realogy Franchise Group, Inc.    Delaware
Realogy Global Services, Inc.    Delaware
Realogy Intellectual Property Holdings I, Inc.    Delaware
Realogy Intellectual Property Holdings II, Inc.    Delaware
Realogy Licensing, Inc.    Delaware
Realogy Operations, Inc.    California
Realogy Services Group LLC    Delaware
Realogy Services Venture Partner, Inc.    Delaware
Sotheby’s International Realty Affiliates, Inc.    Delaware
Sotheby’s International Realty Licensee Corporation    Delaware
Cartus Corporation    Delaware


Grantor

  

Location of Filing Office

Cartus Partner Corporation    Delaware
A Market Place, Inc.    California
Allmon, Tiernan & Ely, Inc.    Florida
Alpha Referral Network, Inc.    Texas
Associated Client Referral Corp.    Pennsylvania
Associates Investments    California
Associates Realty Network    California
Associates Realty, Inc.    California
Batjac Real Estate Corp.    New York
Bob Tendler Real Estate, Inc.    Connecticut
Burgdorff Referral Associates, Inc.    New Jersey
Burnet Realty Inc.    Minnesota
Burnet Realty, Inc.    Wisconsin
Career Development Center, LLC    Delaware
CDRE TM Corp.    Delaware
Coldwell Banker Commercial Pacific Properties, Ltd.    Hawaii
Coldwell Banker King Thompson Auction Services, Inc.    Delaware
Coldwell Banker Pacific Properties, Ltd.    Hawaii
Coldwell Banker Real Estate Services, Inc.    New Jersey
Coldwell Banker Real Estate, Inc.    Pennsylvania
Coldwell Banker Residential Brokerage Company    California
Coldwell Banker Residential Brokerage Corporation    Delaware
Coldwell Banker Residential Brokerage Insurance Agency of Maine, Inc.    Maine
Coldwell Banker Residential Brokerage Pardoe, Inc.    Delaware
Coldwell Banker Residential Brokerage, Inc.    Delaware
Coldwell Banker Residential Real Estate Services of Wisconsin, Inc.    Wisconsin
Coldwell Banker Residential Real Estate, Inc.    California
Coldwell Banker Residential Referral Network    California
Coldwell Banker Residential Referral Network, Inc.    Pennsylvania
Colorado Commercial, LLC    Colorado
Cook—Pony Farm Real Estate, Inc.    New York
Corcoran Group – Brooklyn Landmark, LLC    New York
Corcoran MLS Holdings, LLC    Delaware


Grantor

  

Location of Filing Office

Cosby-Tipton Real Estate, Inc.    California
Cotton Real Estate, Inc.    Massachusetts
DeWolfe Realty Affiliates    Maine
DeWolfe Relocation Services, Inc.    Massachusetts
Douglas and Jean Burgdorff, Inc.    New Jersey
Florida’s Preferred School of Real Estate, Inc.    Florida
Fred Sands School of Real Estate    California
Hillshire House, Incorporated    Connecticut
Home Referral Network Inc.    Minnesota
J. W. Riker - Northern R. I., Inc.    Rhode Island
Jack Gaughen, Inc.    Pennsylvania
Kendall, Potter and Mann, Realtors, Inc.    California
LMS (Delaware) Corp.    Delaware
NRT Arizona Commercial, Inc.    Delaware
NRT Arizona Exito, Inc.    Delaware
NRT Arizona Referral, Inc.    Delaware
NRT Arizona, Inc.    Delaware
NRT Chicago LLC    Delaware
NRT Colorado, Inc.    Colorado
NRT Columbus, Inc.    Delaware
NRT Commercial Ohio Incorporated    Ohio
NRT Commercial Utah, Inc.    Delaware
NRT Commercial, Inc.    Delaware
NRT Hawaii Referral, LLC    Delaware
NRT Incorporated    Delaware
NRT Insurance Agency, Inc.    Massachusetts
NRT Mid-Atlantic, Inc.    Maryland
NRT Missouri Referral Network, Inc.    Missouri
NRT Missouri, Inc.    Missouri
NRT New England Incorporated    Delaware
NRT New York, Inc.    Delaware
NRT Relocation LLC    Delaware
NRT Sunshine Inc.    Delaware
NRT Texas Real Estate Services, Inc.    Texas


Grantor

  

Location of Filing Office

NRT Texas, Inc.    Texas
NRT The Condo Store Incorporated    Delaware
NRT Utah, Inc.    Delaware
Pacesetter Nevada, Inc.    Nevada
Pacific Properties Referrals, Inc.    Hawaii
R.J. Young Co.    California
Real Estate Referral, Inc.    Connecticut
Real Estate Referrals, Inc.    Maryland
Real Estate Services, Inc.    Delaware
Referral Associates of Florida, Inc.    Florida
Referral Associates of New England, Inc.    Massachusetts
Referral Network, Inc.    Texas
Referral Network, Inc.    Florida
Referral Network, LLC    Colorado
Signature Properties, Inc.    Florida
Soleil Florida Corp.    Florida
Sotheby’s International Realty Referral Company, LLC    Delaware
Sotheby’s International Realty, Inc.    Michigan
St. Joe Real Estate Services, Inc.    Florida
The Corcoran Group Eastside, Inc.    New York
The DeWolfe Companies, Inc.    Massachusetts
The DeWolfe Company, Inc.    Massachusetts
The Four Star Corp.    Connecticut
The Miller Group, Inc.    Maryland
The Sunshine Group Limited Partnership    Delaware
The Sunshine Group, Ltd.    New York
Trust of New England, Inc.    Massachusetts
Valley of California, Inc.    California
William Orange Realty, Inc.    Connecticut
Advantage Title & Insurance, LLC    Delaware
American Title Company of Houston    Texas
APEX Real Estate Information Services, LLC    Pennsylvania
APEX Real Estate Information Services LLP    Pennsylvania
ATCOH Holding Company    Texas


Grantor

  

Location of Filing Office

Burnet Title L.L.C.    Minnesota
Burnet Title of Ohio, LLC    Ohio
Burnet Title, Inc.    Minnesota
Burrow Escrow Services, Inc.    California
Central Florida Title Company    Florida
Charter Title, LLC    Delaware
Equity Title Company    California
Equity Title Messenger Service Holding Company    Delaware
First California Escrow Corporation    Delaware
Franchise Settlement Services, Inc.    Delaware
Grand Title, LLC    Delaware
Guardian Holding Company    Delaware
Guardian Title Agency, LLC    Colorado
Guardian Title Company    California
Gulf South Settlement Services, LLC    Delaware
Hickory Title, LLC    Delaware
Keystone Closing Services LLC    Delaware
Lincoln Settlement Services, LLC    Delaware
Market Street Settlement Group, Inc.    New Hampshire
Mid-Exchange, Inc.    California
Mid-State Escrow Corporation    Delaware
National Coordination Alliance, Inc.    California
NRT Mid-Atlantic Title Services, LLC    Maryland
NRT Settlement Services of Missouri, Inc.    Delaware
NRT Settlement Services of Texas, Inc.    Delaware
Pacific Access Holding Company, LLC    Delaware
Patriot Settlement Services, LLC    Delaware
Premier Settlement Services, LLC    Delaware
Processing Solutions, Incorporated    Texas
Rocky Mountain Settlement Services, LLC    Delaware
Scranton Abstract, LLC    Delaware
Secured Land Transfers, Inc.    Pennsylvania
South Land Title Co., Inc.    Texas
South-Land Title of Montgomery County, Inc.    Texas


Grantor

  

Location of Filing Office

St. Joe Title Services, Inc.    Florida
St. Joe Title Services, LLC    Delaware
Summit Escrow    California
TAW Holding Inc.    Texas
TBR Settlement Services, LLC    Delaware
Terramar Guaranty Title & Trust, Inc.    Florida
Texas American Title Company    Texas
Texas American Title Company of Austin    Texas
Texas American Title Company of Corpus Christi    Delaware
Title Resource Group Affiliates Holdings, Inc.    Delaware
Title Resource Group Holdings, Inc.    Delaware
Title Resource Group LLC    Delaware
Title Resource Group Services Corporation    Delaware
Title Resources Incorporated    Delaware
West Coast Escrow Closing Co.    California
West Coast Escrow Company    California


Schedule V to the

Collateral Agreement

EXCLUDED PLEDGES

Equity interests in the majority-owned joint ventures (as listed below):

 

Joint Venture

  

Jurisdiction of
Organization

  

Ownership

Atlantic Title & Trust, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%
Associates Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 73%
Baldwin County Settlement Services, LLC    Alabama    Titles Resource Group Affiliates Holdings, Inc. – 55%
Burnet Title of Indiana, LLC    Indiana    Burnet Title L.L.C. – 75%
Cambridge Settlement Services.Com, LLC    Alabama    Title Resource Group Affiliates Holdings, Inc. – 51%
First Advantage Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%
First Place Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 51%
Island Settlement Services, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 60%
Keystone Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 51%
King Title Services, LLC    Alabama    Title Resource Group Affiliates Holdings, Inc. – 51%
Lehigh Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 51%
Lincoln Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%
Mercury Settlement Services, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%


Joint Venture

  

Jurisdiction of
Organization

  

Ownership

Metro Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%
NRT Title Agency, LLC    Delaware    Title Resource Group LLC – 60%
NRT Title Services of Maryland, LLC    Delaware    NRT Mid-Atlantic Title Services, LLC – 51%
Platinum Title & Settlement Services, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 51%
Professionals’ Title Company, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%
Quality Title, LLC    Ohio    Title Resource Group Holdings, Inc. – 51%
Residential Title Agency, LLC    Ohio    Burnet Title of Ohio, LLC – 51%
Riverbend Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 51%
Security Settlement Services, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 51%
Skyline Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 60%
St. Mary’s Title Services, LLC    New Hampshire    Market Street Settlement Group, Inc. – 55%
Sunland Title, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 51%
Susquehanna Land Transfers, LLC    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%
The Masiello Group Closing Services, LLC    New Hampshire    Market Street Settlement Group, Inc. – 55%


Joint Venture

  

Jurisdiction of
Organization

  

Ownership

The Sunshine Group (Florida) Ltd. Corp.    Florida    NRT Sunshine Inc. – 90%
The Sunshine Group (Florida) Limited Partnership    Delaware   

The Sunshine Group (Florida) Ltd. Corp. – 75%

 

Soleil Florida Corp. – 25%

West Coast Valencia Escrow Company, Inc.    Delaware    Title Resource Group Affiliates Holdings, Inc. – 55%


Schedule VI to the

Collateral Agreement

SIGNIFICANT SUBSIDIARIES

Realogy Services Group LLC

Realogy Operations, Inc.

Coldwell Banker Corporation

Coldwell Banker Real Estate Corporation

Realogy Intellectual Property Holdings I, Inc.

Realogy Intellectual Property Holdings II, Inc.

CB TM Corp.

C21 TM Corp.

NRT Incorporated

Cartus Corporation

Exhibit 10.4

 

  

EMPLOYMENT AGREEMENT (this

Agreement ”) dated as of April 10, 2007, between

REALOGY CORPORATION , a Delaware

corporation, (the “ Company ”) and RICHARD A.

SMITH (“ Executive ”).

WHEREAS, pursuant to the Agreement and Plan of Merger, made and entered into as of the 15th day of December, 2006, by and among Domus Holdings Corp. (the “ Parent ”), the Company and Domus Acquisition Corp. (the “ Merger Agreement ”), Domus Acquisition Corp. will be merged with and into the Company (the “ Transaction ”), and the Company will be the surviving corporation in the Transaction;

WHEREAS, in connection with the Transaction, the Company desires to employ Executive and Executive desires to be employed by the Company;

WHEREAS, the Company and Executive are parties to that certain employment agreement dated as of the effective date of the spin-off of the Company from Cendant Corporation, a Delaware corporation, as such employment agreement has been amended or supplemented through the Effective Date (as defined in Section 1) (the “ Prior Agreement ”); and

WHEREAS, Executive, as a condition of his employment, will make a substantial investment in the Parent concurrently with the closing of the Transaction by purchasing 830,000 shares of common stock of the Parent, par value $0.01 (“ Common Stock ”), at a price of $10.00 per share;

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Employment Period .

The initial term of Executive’s employment hereunder shall be for a period of five (5) years (the “ Initial Term ”) commencing on the closing of the Transaction (the “ Effective Date ”) and ending on the fifth anniversary of the Effective Date, unless terminated earlier pursuant to Section 3 (the “ Employment Period ”); provided , however , that the Employment Period shall automatically be renewed for an additional period of one (1) year upon the expiration of the Initial Term unless either party gives at least ninety (90) days’ written notice of its intention not to renew the Employment Period. Upon Executive’s termination of employment with the Company for any reason, he shall immediately resign all positions with the Company or any of its subsidiaries or affiliates, including any position as a member of the Parent’s Board of Directors and a member of the Company’s Board of Directors (the “ Board ”).

Section 2. Terms of Employment .

(a) Position . During the term of Executive’s employment under this Agreement, Executive shall serve as Vice Chairman and President of the Company and, effective as of January 1, 2008 (or such earlier date as the Company’s current Chief Executive Officer


ceases serving in such position), Chief Executive Officer of the Company and shall have such duties and responsibilities as shall be assigned to Executive by the Board. In performing his duties hereunder, Executive shall report directly to the Board. Executive shall also serve as a member of the Board during the Employment Period. At the request of the Company, Executive shall also serve as an officer of any of its subsidiaries or affiliates without additional compensation.

(b) Duties . During the Employment Period, Executive agrees to devote all of his business time to the business and affairs of the Company and to use Executive’s reasonable best efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) serving on civic or charitable boards or committees and (ii) managing personal investments, so long as such activities do not materially interfere with the performance of Executive’s responsibilities hereunder.

(c) Compensation .

(i) Base Salary . During the Employment Period, Executive shall receive an initial annual base salary in an amount equal to $1,000,000.00, which shall be paid in accordance with the customary payroll practices of the Company (the “ Annual Base Salary ”). Executive’s Annual Base Salary shall be reviewed at least annually by the Board but may not be reduced.

(ii) Bonuses . The Company shall establish a performance-based bonus plan (the “ Plan ”) to be applicable for each fiscal year of the Company (a “ Fiscal Year ”) ending during the Employment Period pursuant to which Executive will be eligible to receive an annual bonus (the “ Bonus ”) with respect to each Fiscal Year of the Company ending during the Employment Period (each, a “ Bonus Year ”). The Board or the Compensation Committee of the Board (the “ Compensation Committee ”) will administer the Plan and, in consultation with Executive, shall establish performance objectives for each Fiscal Year, which performance objectives shall be reasonably related to the Company’s business objectives. In the event that, with respect to the applicable Fiscal Year of the Company ending during the Employment Period, the Company achieves the pre-established target performance goals based on actual performance, Executive shall be entitled to receive a Bonus in an amount equal to 200% of Executive’s Annual Base Salary (“ Target Bonus ”). Subject to Section 4, Executive will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Executive is employed on the last day of the applicable Bonus Year. The Bonus shall become payable on March 15 of the year following the end of the applicable Bonus Year, provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of the bonus that shall be paid to each executive entitled to receive a bonus for the applicable Bonus Year. If the Board or Compensation Committee has not made such final determination by March 15 of such year, the Bonus (if any) shall instead be paid as soon as practicable thereafter during such year.

 

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(iii) Benefits .

(1) During the Employment Period, Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other senior executives of the Company and shall be eligible for participation in, and shall receive all benefits under, welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other senior executives of the Company (“ Benefit Plans ”). The benefits provided to Executive shall be, in the aggregate, comparable to those benefits that Executive was receiving at the Company immediately prior to the Effective Date, but excluding those benefits under any nonqualified deferred compensation plans that are being amended or terminated in connection with the Transaction or that relate to or provide benefits or compensation measured with respect to the Company’s common stock. In addition to the foregoing, the Company shall continue to maintain the life insurance policy arrangement (pursuant to which the Company issues Executive a bonus payment, the net- after-tax proceeds of which are sufficient to pay the amount of the premiums due on such policy) on the same terms and conditions under which the Company maintains this arrangement prior to the Effective Date.

(2) The Company (and any successor to the business of the Company) acknowledges and agrees to provide Executive the following benefits notwithstanding anything in this Agreement to the contrary, and further acknowledges and agrees that this provision shall survive any termination of Executive’s employment or any termination of this Agreement. In addition to any payments or benefits under the applicable provisions of Section 4 of this Agreement, upon Executive’s termination of employment from the Company and its subsidiaries for any reason, including, without limitation, due to or following any non-renewal of this Agreement, resignation, or termination by the Company with or without Cause, Executive and each person who is his covered dependent at such time under each applicable Welfare Benefit Plan (defined below), shall remain eligible to continue to participate in all of such plans (as they may be modified from time to time with respect to all senior executive officers), or such other welfare benefit plans subsequently made available to senior executive officers of the Company or any successor Company (the “ Post-Employment Plans ”) until the end of the plan year in which Executive reaches, or would have reached, age seventy-five (75) (such benefits, the “ Post-Employment Benefits ”). Executive is currently eligible to participate in the following plans: Executive Physical Exams, Medical Expense Reimbursement Plan (MERP), Medical Insurance, Dental Insurance, Group Life Insurance (up to $1 million coverage on Executive’s life), Vision Service Plan (collectively, the “ Welfare Benefit Plans ”). Coverage under such Post-Employment Plans shall be subject to Executive and/or such dependents, as applicable, continuing to pay the applicable employee portion of any premiums, co-payments, deductibles and similar costs (as if Executive was still an employee of the Company). Solely with respect to Executive’s dependents, such coverage shall terminate upon such earlier date if and when they become ineligible for any such benefits under the terms of such Welfare Benefit Plans or Post-Employment Plans, as applicable, and provided , that once Executive or his dependents become eligible for Medicare or any other government-sponsored medical insurance plan, or if Executive is eligible to participate in any other company’s medical insurance plan as an employee after the termination of his employment, Executive or his dependents shall utilize such government plan or other company plan, and the Company’s insurance obligations as part of the Post-Employment Benefits hereunder shall become secondary to such government plan or other company plan. Notwithstanding the foregoing, the Company may meet any of its foregoing obligations under the Post-Employment Plans by paying for, or providing for the payment of, such benefits directly

 

-3-


or through alternative plans or individual policies which are no less favorable in all material respects (with respect to both coverage and cost to Executive) to the Post-Employment Plans, provided that the Company shall use its best efforts to assure that provision of the Post-Employments Benefits complies with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”).

(iv) Expenses . During the term of Executive’s employment, Executive shall be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in performance of his duties hereunder, provided that Executive provides all necessary documentation in accordance with Company policy.

(v) Stock Options . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a stock option (the “ Option Grant ”) to purchase 3,112,500 shares of Common Stock, at an exercise price of $10.00 per share. The Option Grant will be pursuant and subject to the terms and conditions set forth in the Parent’s 2007 Stock Incentive Plan (the “ Stock Incentive Plan ”) and Executive’s option agreement associated with the Option Grant (the “ Option Agreement ”, which is attached hereto as Appendix [    ]), and Executive’s purchase of the Purchased Shares as provided in Section 2(c)(vii) below.

(vi) Restricted Stock . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a grant (the “ Restricted Stock Grant ”) of restricted shares of Common Stock (“ Restricted Shares ”). The Restricted Stock Grant will be pursuant and subject to the terms and conditions set forth in the Stock Incentive Plan and the restricted stock agreement evidencing such grant (the “ Restricted Stock Agreement ”, which is attached hereto as Appendix [    ]). The Restricted Stock Grant will be comprised of 100,000 Restricted Shares and shall be subject to the vesting, termination and other terms set forth in the Restricted Stock Agreement.

(vii) Investment . Concurrent with the closing of the Transaction, Executive shall purchase 830,000 shares of Common Stock, at a price of $10.00 per share (the “ Purchased Shares ”). The Purchased Shares shall be subject to the terms of the Stock Incentive Plan and Executive’s Subscription Agreement (attached hereto as Appendix [    ]) and Executive’s Contribution Agreements (attached hereto as Appendix [    ]). All of the Purchased Shares will be fully vested at the Effective Date.

(viii) Investment Bonus . The Company acknowledges that, in connection with the consummation of the Transaction, Executive is entitled to receive a one-time bonus in an amount equal to (i) $5 million, less (ii) applicable withholding taxes (such amount, less such taxes, the “ Investment Bonus ”). Executive hereby elects to receive the Investment Bonus in the form of fully vested shares of Common Stock (using a per share price equal to $10.00 for purposes of determining the number of such shares), which the Company will deliver to Executive no later than five days after the Effective Date. Executive acknowledges and agrees that the Common Stock that Executive receives pursuant to the Investment Bonus is in addition to any other purchase of Common Stock that Executive has agreed to make, including without limitation, any such purchase pursuant to the Subscription Agreement; provided however that the amount invested pursuant to the Investment Bonus shall offset the amounts that Executive is

 

-4-


otherwise required to invest. The Investment Bonus shall not be taken into account in computing any benefits or entitlements under any benefit or incentive plan of the Company or its affiliates or agreement between the Company or any of its affiliates and Executive, including, without limitation, this Agreement, and shall not be subject to deferral.

(ix) Management Investor Rights Agreement . All Purchased Shares, shares purchased pursuant to the Investment Bonus, Restricted Shares, the Option Grant and Common Stock held by Executive pursuant to the vesting of Restricted Shares and the exercise of the Option Grant will be subject to the terms and conditions of the Management Investor Rights Agreement by and among the Parent, Executive, and other signatories thereto (the “ Management Investor Rights Agreement ”), including the restrictive covenants contained in Annex I to Section 8 thereof. The Option Agreement, Stock Incentive Plan, Restricted Stock Agreement, Management Investor Rights Agreement, Subscription Agreement and any other stock or stock-based award agreement entered into by and between the Company and Executive after the date hereof, collectively, (the “ Equity Documents ”).

Section 3. Termination of Employment .

(a) Death or Disability . Executive’s employment hereunder shall terminate automatically upon Executive’s death. If Executive becomes subject to a Disability during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give Executive written notice in accordance with Sections 3(e) and 10(h) of its intention to terminate Executive’s employment. For purposes of this Agreement, “ Disability ” means (i) Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable physical of mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company. Whether Executive has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers.

(b) Cause . Executive’s employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “ Cause ” shall mean (i) Executive’s willful failure to substantially perform his duties as an employee of the Company or any subsidiary (other than any such failure resulting from incapacity due to physical or mental illness), (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company or any subsidiary, (iii) Executive’s conviction of, or plea of guilty or nolo contendere to a charge of commission of, a felony or crime involving moral turpitude, (iv) Executive’s indictment for a charge of commission of a felony or any crime involving moral turpitude, provided that the Board determines in good faith that such indictment would result in a material adverse impact to the business or reputation of the Company, (v) Executive’s gross negligence in the performance of his duties, or (vi) Executive purposefully or negligently makes (or has been found to have made) a false certification to the Company pertaining to its financial statements; a termination will not be for “Cause” pursuant to clause (i), (ii) or (v), to the extent such conduct is curable, unless the Company shall have notified Executive in writing describing such conduct and Executive shall have failed to cure such conduct within ten (10) business days after his receipt of such written notice.

 

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(c) Termination Without Cause . The Company may terminate Executive’s employment hereunder without Cause at any time.

(d) Good Reason . Executive’s employment may be terminated at any time by Executive for Good Reason or without Good Reason upon 90 days’ prior written notice, provided, in the case of a termination for Good Reason, that Executive provides such notice within 60 days after the occurrence of the event giving rise to the termination for Good Reason. For purposes of this Agreement, “ Good Reason ” means voluntary resignation after any of the following actions taken by the Company or any of its subsidiaries without Executive’s consent: (i) removal from, or failure to be elected or re-elected to, the Board; (ii) a material reduction of Executive’s duties and responsibilities to the Company, (iii) a reduction in Executive’s Annual Base Salary or Target Bonus (not including any diminution related to a broader compensation reduction that (A) is made in consultation with Executive and (B) is applied to all senior executives of the Company in a relatively proportionate matter); (iv) the relocation of Executive’s primary office to a location more than 30 miles from the prior location; (v) delivery of notice of non-renewal of the Employment Period by the Company (other than non-renewal by the Company due to Executive’s Disability, termination for Cause or termination by Executive); or (vi) a material breach by the Company of a material provision of this Agreement (which for the avoidance of doubt includes Section 2(a) of this Agreement); a termination shall not be for “Good Reason” pursuant to clause (i), (ii), (iii) or (iv), unless Executive shall have given written notice of his intention to resign for Good Reason and the Company shall have failed to cure the event giving rise to Good Reason within ten (10 ) business days after the Company’s receipt of such written notice.

(e) Notice of Termination . Any termination by the Company for Cause or without Cause, or by Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(h). For purposes of this Agreement, a “ Notice of Termination ” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

(f) Date of Termination . “ Date of Termination ” means (i) if Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination (in the case of a termination with or without Good Reason, provided such notice is in accordance with Section 3(d)) or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if Executive’s employment is terminated by reason of death, the date of death.

 

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Section 4. Obligations of the Company upon Termination .

(a) With Good Reason; Without Cause . If during the Employment Period, the Company shall terminate Executive’s employment without Cause or Executive shall terminate his employment for Good Reason, then the Company will provide Executive with the following severance payments and/or benefits:

(i) Prior to the thirtieth day following the Date of Termination, the Company shall pay to Executive in a lump sum, to the extent not previously paid, (i) the Annual Base Salary through the Date of Termination, and (ii) the Bonus earned for any Bonus Year ended prior to the year in which the Date of Termination occurs, provided that Executive was employed on the last day of such Bonus Year (the “ Accrued Obligations ”); and

(ii) The Company will pay Executive an aggregate sum of 300% of Executive’s Annual Base Salary and Target Bonus (such amount, the “ Cash Severance ”) as follows: (i) one-half of the Cash Severance shall be payable to Executive in a lump sum, within 30 business days of the Date of Termination and (ii) 1/72 of the Cash Severance will be payable to Executive in thirty-six (36) equal monthly installments commencing as of the first day of the calendar month following the month in which the Date of Termination occurs.

Notwithstanding the foregoing provisions of this Section 4(a), to the extent required in order to comply with Section 409A of the Code, amounts to be paid under this Section 4(a) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code.

(b) Death or Disability . If Executive’s employment shall be terminated by reason of Executive’s death or Disability, then the Company will provide Executive (or his estate or legal representative) with the following severance payments and/or benefits: (A) the Accrued Obligations; (B) a lump sum equal to 100% of Executive’s Annual Base Salary; and (C) the Welfare Benefits. Notwithstanding the foregoing provisions of this Section 4(b), to the extent required in order to comply with Section 409A of Code, amounts to be paid under this Section 4(b) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code. Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement and any rights he may have under the Equity Documents.

(c) Cause; Other than for Good Reason . If Executive’s employment shall be terminated by the Company for Cause or by Executive without Good Reason, then the Company shall have no further payment obligations to Executive other than the Accrued Obligations.

 

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Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement, and any rights he may have under the Equity Documents.

(d) General Release . The Company’s obligations to make payments under Sections 4(a) and in the case of Disability under Section 4(b) are conditioned on Executive’s or his legal representative’s (as applicable) executing a general release of claims against the Company and its subsidiaries and affiliates and their successors and assigns (and the officers and directors of such entities) substantially in the form attached hereto as Exhibit A (the “ Release ”). For the avoidance of doubt, the Company’s obligations under Section 2(c)(iii)(2), 7 and 9 of this Agreement, the Benefit Plans, and the Equity Documents shall not be subject to Executive’s execution of the Release nor to Executive’s obligations under Section 5 of this Agreement, unless otherwise specifically provided in such other arrangements.

Section 5. Restrictive Covenants . Executive shall be subject to the restrictive covenants set forth in Annex I to Section 8 of the Management Investor Rights Agreement in accordance with its terms, provided that the restrictive periods set forth in Sections 1 and 2 of such Annex I shall in each case be three years.

Section 6. Severance Payments. In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the Company, if the Board reasonably and in good faith believes Executive has violated or is in violation of any provision of Annex I of the Management Investor Rights Agreement (as modified by Section 5 hereof), the Board may unilaterally suspend Executive’s right to receive any Cash Severance then or thereafter due from the Company to Executive, provided that the Board (a) gives Executive advance written notice of such suspension and (b) initiates an action or claim to enforce the Company’s rights in respect of such restrictive covenants promptly after such suspension. In the event that the Company prevails on such action or claim, Executive’s right to receive, and the Company’s obligation to pay, any additional Cash Severance, including any previously suspended amounts, shall be terminated immediately, and Executive shall have no further rights to Cash Severance. In the event that Executive prevails on such action or claim, the Company shall be required to pay to Executive in a lump sum within thirty (30) days of such adjudication (or, to the extent required in order to comply with Section 409A of the Code on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code) any Cash Severance the payment of which was delayed due to such suspension, plus interest for any period during which the payment of the Cash Severance was suspended at the prime rate, as published in the Wall Street Journal on the date of such suspension, and to commence payment of future installments of Cash Severance in accordance with Section 4(a)(ii).

Section 7. Excess Parachute Payments . The provisions of Section X of the Prior Agreement are hereby incorporated by reference and made a part of this Agreement; provided , however , that the references to Section VII contained therein shall be references to Section 4(a) of this Agreement; provided , further that, in the event that the payments and benefits payable or provided by the Company are eligible for exemption from the definition of “parachute payment” under Q&A 5 and/or Q&A 6 of Section 1.280G-1 of the Department of Treasury Regulations under the Code (the “ 280G Regulations ”), Executive shall cooperate in good faith with the

 

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Company to satisfy such exemptions, which shall include taking such actions as are necessary so that the Company may satisfy the shareholder approval requirements under Q&A 7 of the 280G Regulations, provided that this shall not require Executive to waive his rights to any payments or benefits that he is entitled to receive pursuant to the Equity Documents.

Section 8. Executive’s Representations, Warranties and Covenants .

(a) Executive hereby represents and warrants to the Company and its subsidiaries that:

(1) Executive has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Executive;

(2) the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

(3) Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, fee for services agreement, confidentiality agreement or similar agreement with any other Person other than the Company;

(4) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms;

(5) Executive understands that Parent and the Company will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance; and

(6) as of the date of execution of this Agreement, Executive is not in breach of any of its terms, including having committed any acts that would form the basis for a Cause termination if such act had occurred after the Effective Date.

(b) The Company and its subsidiaries hereby represent and warrant to Executive that:

(1) the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

(2) the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

 

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(3) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

(4) the Company understands that Executive will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

Section 9. Indemnification .

The Company shall indemnify Executive to the maximum extent permitted under the General Corporate Law of Delaware for acts taken within the scope of his employment. To the extent that the Company obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company.

Section 10. General Provisions .

(a) Severability . It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(b) Entire Agreement . This Agreement and the Equity Documents embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way (including, without limitation, any other employment, severance or change-in-control agreement or understanding). For the avoidance of doubt, Executive, the Company and the Subsidiaries acknowledge that any agreement between Executive and the Company or Cendant Corporation or any subsidiary or affiliate of any of the foregoing, entered into prior to the Effective Date, including without limitation, the Prior Agreement, shall be void ab initio as of immediately before the Effective Date.

 

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(c) Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d) Successors and Assigns .

(i) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(ii) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

(e) Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

(f) Enforcement .

(i) Arbitration . Except for the Company or its Affiliate’s right to obtain injunctive relief for violation of Section 5 of this Agreement or in Annex I to Section 8 of the Management Investor Rights Agreement, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. Each party shall bear its or his costs and expenses in any such arbitration and one-half of the arbitrator’s fees and costs; provided , however , if Executive prevails on substantially all material claims, the Company shall reimburse Executive for all of his reasonable attorney’s fees and costs.

 

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(ii) Remedies . All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy.

(iii) Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(g) Amendment and Waiver . The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(h) Notices . Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit for overnight delivery with a reputable overnight courier service.

If to the Company, to:

Realogy Corporation

c/o Apollo Management VI, L.P.

9 West 57th Street

New York, New York 10019

Facsimile: (212) 515-3288

Attention: Marc Becker

with a copy (which shall not constitute notice) to:

Wachtell, Lipton, Rosen & Katz

51 West 52 nd Street

New York, NY 10019

  Attention:   Steven A. Cohen, Esq.
    Igor Kirman, Esq.
  Facsimile:   212.403.2000

If to Executive, to:

Executive’s home address most recently on file with the Company.

 

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with a copy (which shall not constitute notice) to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Attention: Andrea K. Wahlquist, Esq.

(i) Withholding . The Company may withhold from any amounts payable or benefits to be provided to Executive under this Agreement or otherwise all Federal, state, city or other taxes and other amounts that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation.

(j) Survival of Representations, Warranties and Agreements . All representations, warranties and agreements contained herein shall survive this Agreement and the Employment Period indefinitely.

(k) Effectiveness . Notwithstanding the foregoing, none of Parent, the Company or its subsidiaries shall have any obligations to Executive or his beneficiaries under this Agreement, in the event Executive is unable to perform his duties hereunder, including due to death or Disability or Executive commits an act that would constitute Cause, in each case prior to the closing of the Transaction, in which case this Agreement shall be of no force and effect. Further, this Agreement shall be null and void and of no further effect in the event that the Merger Agreement is terminated or the Effective Date does not occur.

(l) Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. All references to a “Section” in this Agreement are to a section of the Agreement unless otherwise noted.

(m) Construction . Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(n) Code Section 409A . Notwithstanding anything herein or elsewhere to the contrary, to the extent Executive or the Company notifies the other that this Agreement may result in Executive being subject to the penalties of Section 409A of the Code, Executive and the Company agree to negotiate (and the Company shall cause any affiliate to negotiate), in good faith alternatives to avoid such penalties.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

REALOGY CORPORATION
By:  

/s/ David J. Weaving

Name:   David J. Weaving
Title:  

Executive Vice President and

Chief Administrative Officer

RICHARD A. SMITH
Signature:  

/s/ Richard A. Smith


Exhibit A

Form of Release

THIS RELEASE (the “ Release ”) is entered into between Richard A. Smith (“ Executive ”) and Realogy Corporation, a Delaware corporation (“ Realogy ”), for the benefit of Realogy. The entering into and non-revocation of this Release is a condition to Executive’s right to receive the payments under Section 4 [(a)][(b)] of the employment agreement entered into by and between Executive and Realogy, dated as of April 10, 2007 (the “ Employment Agreement ”). Capitalized terms used and not defined herein shall have the meaning provided in the Employment Agreement.

Accordingly, Executive and Realogy agree as follows.

1. In consideration for the payments and other benefits provided to Executive by the Employment Agreement, to which Executive is not otherwise entitled, and the sufficiency of which Executive acknowledges, Executive represents and agrees, as follows:

(a) Executive, for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “ Releasers ”), hereby irrevocably and unconditionally releases, acquits and forever discharges and agrees not to sue Realogy or any of its parents, subsidiaries, divisions, affiliates and related entities and its current and former directors, officers, shareholders, trustees, employees, consultants, independent contractors, representatives, agents, servants, successors and assigns and all persons acting by, through or under or in concert with any of them (collectively “ Releasees ”), from all claims, rights and liabilities up to and including the date of this Release arising from or relating to Executive’s employment with, or termination of employment from, the Company, under the Employment Agreement and from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of actions, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected and any claims of wrongful discharge, breach of contract, implied contract, promissory estoppel, defamation, slander, libel, tortious conduct, employment discrimination or claims under any federal, state or local employment statute, law, order or ordinance, including any rights or claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq. (“ ADEA ”), or any other federal, state or municipal ordinance relating to discrimination in employment. Nothing contained herein shall restrict the parties’ rights to enforce the terms of this Release.

(b) To the maximum extent permitted by law, Executive agrees that he has not filed, nor will he ever file, a lawsuit asserting any claims which are released by this Release, or to accept any benefit from any lawsuit which might be filed by another person or government entity based in whole or in part on any event, act, or omission which is the subject of this Release.

(c) This Release specifically excludes Executive’s rights and Realogy’s obligations under Section 8 of the Employment Agreement, the Benefit Plans, and the Equity Documents. Executive’s entitlement to vested benefits under the Benefit Plans and the Equity


Documents shall be determined in accordance with the provisions of the Benefit Plans or Equity Documents, as the case may be. Nothing contained in this Release shall release Executive from his obligations, including any obligations to abide by restrictive covenants, under the Employment Agreement, the Equity Documents or the Benefit Plans that continue or are to be performed following termination of employment.

(d) Executive represents that he is not aware of any facts or circumstances that would give rise, based on his actions, to any claims or lawsuits against Realogy or any Releasee.

(e) The parties agree that this Release shall not affect the rights and responsibilities of the US Equal Employment Opportunity Commission (hereinafter “ EEOC ”) to enforce ADEA and other laws. In addition, the parties agree that this Release shall not be used to justify interfering with Executive’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC. The parties further agree that Executive knowingly and voluntarily waives all rights or claims (that arose prior to Executive’s execution of this Release) the Releasers may have against the Releasees, or any of them, to receive any benefit or remedial relief (including, but not limited to, reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by the EEOC.

2. Executive acknowledges that Realogy has specifically advised him of the right to seek the advice of an attorney concerning the terms and conditions of this Release. Executive further acknowledges that he has been furnished with a copy of this Release, and he has been afforded twenty-one (21) days in which to consider the terms and conditions set forth above prior to this Release. By executing this Release, Executive affirmatively states that he has had sufficient and reasonable time to review this Release and to consult with an attorney concerning his legal rights prior to the final execution of this Release. Executive further agrees that he has carefully read this Release and fully understands its terms. Executive understands that he may revoke this Release within seven (7) days after signing this Release. Revocation of this Release must be made in writing and must be received by Marc Becker at Apollo Management, L.P., 9 West 57th Street, 43rd Floor, New York, NY 10019 within the time period set forth above.

3. This Release will be governed by and construed in accordance with the laws of the state of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the state of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the state of Delaware to be applied. In furtherance of the foregoing, the internal law of the state of Delaware will control the interpretation and construction of this agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. The provisions of this Release are severable, and if any part or portion of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Release shall become effective and enforceable on the eighth day following its execution by Executive, provided he does not exercise his right of revocation as described above. If Executive fails to sign and deliver this Release or revokes his signature, this Release will be without force or effect, and Executive shall not be entitled to the payment under Section 4 [(a)][(b)] of the Employment Agreement.

Exhibit 10.5

 

  

EMPLOYMENT AGREEMENT (this

Agreement ”) dated as of April 10, 2007, between

REALOGY CORPORATION , a Delaware

corporation, (the “ Company ”) and ANTHONY E.

HULL (“ Executive ”).

WHEREAS, pursuant to the Agreement and Plan of Merger, made and entered into as of the 15th day of December, 2006, by and among Domus Holdings Corp. (the “ Parent ”), the Company and Domus Acquisition Corp. (the “ Merger Agreement ”), Domus Acquisition Corp. will be merged with and into the Company (the “ Transaction ”), and the Company will be the surviving corporation in the Transaction;

WHEREAS, in connection with the Transaction, the Company desires to employ Executive and Executive desires to be employed by the Company;

WHEREAS, the Company and Executive are parties to that certain employment agreement dated as of the effective date of the spin-off of the Company from Cendant Corporation, a Delaware corporation, as such employment agreement has been amended or supplemented through the Effective Date (as defined in Section 1)] (the “ Prior Agreement ”); and

WHEREAS, Executive, as a condition of his employment, will make a substantial investment in the Parent concurrently with the closing of the Transaction by purchasing 200,000 shares of common stock of the Parent, par value $0.01 (“ Common Stock ”), at a price of $10.00 per share;

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Employment Period .

The initial term of Executive’s employment hereunder shall be for a period of five (5) years (the “ Initial Term ”) commencing on the closing of the Transaction (the “ Effective Date ”) and ending on the fifth anniversary of the Effective Date, unless terminated earlier pursuant to Section 3 (the “ Employment Period ”); provided , however , that the Employment Period shall automatically be renewed for an additional period of one (1) year upon the expiration of the Initial Term unless either party gives at least ninety (90) days’ written notice of its intention not to renew the Employment Period. Upon Executive’s termination of employment with the Company for any reason, he shall immediately resign all positions with the Company or any of its subsidiaries or affiliates, including any position as a member of the Parent’s Board of Directors and a member of the Company’s Board of Directors (the “ Board ”).

Section 2. Terms of Employment .

(a) Position . During the term of Executive’s employment under this Agreement, Executive shall serve as Executive Vice President, Chief Financial Officer and Treasurer of the Company and shall have such duties and responsibilities as shall be assigned to


Executive by the President of the Company (or, if the President of the Company as of the Effective Date is no longer serving in such position, the Chief Executive Officer of the Company) (such individual, the “ Reporting Person ”). In performing his duties hereunder, Executive shall report directly to the Reporting Person. At the request of the Company, Executive shall also serve as an officer of any of its subsidiaries or affiliates without additional compensation.

(b) Duties . During the Employment Period, Executive agrees to devote all of his business time to the business and affairs of the Company and to use Executive’s reasonable best efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) serving on civic or charitable boards or committees and (ii) managing personal investments, so long as such activities do not materially interfere with the performance of Executive’s responsibilities hereunder.

(c) Compensation .

(i) Base Salary . During the Employment Period, Executive shall receive an initial annual base salary in an amount equal to $475,000, which shall be paid in accordance with the customary payroll practices of the Company (the “ Annual Base Salary ”). Executive’s Annual Base Salary shall be reviewed at least annually by the Board but may not be reduced.

(ii) Bonuses . The Company shall establish a performance-based bonus plan (the “ Plan ”) to be applicable for each fiscal year of the Company (a “ Fiscal Year ”) ending during the Employment Period pursuant to which Executive will be eligible to receive an annual bonus (the “ Bonus ”) with respect to each Fiscal Year of the Company ending during the Employment Period (each, a “ Bonus Year ”). The Board or the Compensation Committee of the Board (the “ Compensation Committee ”) will administer the Plan and shall establish performance objectives for each Fiscal Year, which performance objectives shall be reasonably related to the Company’s business objectives. In the event that, with respect to the applicable Fiscal Year of the Company ending during the Employment Period, the Company achieves the pre-established target performance goals based on actual performance, Executive shall be entitled to receive a Bonus in an amount equal to 100% of Executive’s Annual Base Salary (“ Target Bonus ”). Subject to Section 4, Executive will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Executive is employed on the last day of the applicable Bonus Year. The Bonus shall become payable on March 15 of the year following the end of the applicable Bonus Year, provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of the bonus that shall be paid to each executive entitled to receive a bonus for the applicable Bonus Year. If the Board or Compensation Committee has not made such final determination by March 15 of such year, the Bonus (if any) shall instead be paid as soon as practicable thereafter during such year.

(iii) Benefits . During the Employment Period, Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other senior executives of the Company and shall be eligible for

 

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participation in, and shall receive all benefits under, welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other senior executives of the Company (“ Benefit Plans ”). The benefits provided to Executive shall be, in the aggregate, comparable to those benefits that Executive was receiving at the Company immediately prior to the Effective Date, but excluding those benefits under any nonqualified deferred compensation plans that are being amended or terminated in connection with the Transaction or that relate to or provide benefits or compensation measured with respect to the Company’s common stock.

(iv) Expenses . During the term of Executive’s employment, Executive shall be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in performance of his duties hereunder, provided that Executive provides all necessary documentation in accordance with Company policy.

(v) Stock Options . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a stock option (the “ Option Grant ”) to purchase 750,000 shares of Common Stock, at an exercise price of $10.00 per share. The Option Grant will be pursuant and subject to the terms and conditions set forth in the Parent’s 2007 Stock Incentive Plan (the “ Stock Incentive Plan ”) and Executive’s option agreement associated with the Option Grant (the “ Option Agreement ”, which is attached hereto as Appendix [ ]), and Executive’s purchase of the Purchased Shares as provided in Section 2(c)(vii) below.

(vi) Restricted Stock . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a grant (the “ Restricted Stock Grant ”) of restricted shares of Common Stock (“ Restricted Shares ”). The Restricted Stock Grant will be pursuant and subject to the terms and conditions set forth in the Stock Incentive Plan and the restricted stock agreement evidencing such grant (the “ Restricted Stock Agreement ”, which is attached hereto as Appendix [    ]). The Restricted Stock Grant will be comprised of 100,000 Restricted Shares and shall be subject to the vesting, termination and other terms set forth in the Restricted Stock Agreement.

(vii) Investment . Concurrent with the closing of the Transaction, Executive shall purchase 200,000 shares of Common Stock, at a price of $10.00 per share (the “ Purchased Shares ”). The Purchased Shares shall be subject to the terms of the Stock Incentive Plan and Executive’s Subscription Agreement (attached hereto as Appendix [    ]) and Executive’s Contribution Agreement (attached hereto as Appendix [ ]). All of the Purchased Shares will be fully vested at the Effective Date.

(viii) Management Investor Rights Agreement . All Purchased Shares, shares purchased pursuant to the Investment Bonus, Restricted Shares, the Option Grant and Common Stock held by Executive pursuant to the vesting of Restricted Shares and the exercise of the Option Grant will be subject to the terms and conditions of the Management Investor Rights Agreement by and among the Parent, Executive, and other signatories thereto (the “ Management Investor Rights Agreement ”), including the restrictive covenants contained in Annex I to Section 8 thereof. The Option Agreement, Stock Incentive Plan, Restricted Stock Agreement, Management Investor Rights Agreement, Subscription Agreement and any other stock or stock-based award agreement entered into by and between the Company and Executive after the date hereof, collectively, the “ Equity Documents ”.

 

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Section 3. Termination of Employment .

(a) Death or Disability . Executive’s employment hereunder shall terminate automatically upon Executive’s death. If Executive becomes subject to a Disability during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give Executive written notice in accordance with Sections 3(e) and 9(h) of its intention to terminate Executive’s employment. For purposes of this Agreement, “ Disability ” means (i) Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable physical of mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company. Whether Executive has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers.

(b) Cause . Executive’s employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “ Cause ” shall mean (i) Executive’s willful failure to substantially perform his duties as an employee of the Company or any subsidiary (other than any such failure resulting from incapacity due to physical or mental illness), (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company or any subsidiary, (iii) Executive’s conviction of, or plea of guilty or nolo contendere to a charge of commission of, a felony or crime involving moral turpitude, (iv) Executive’s indictment for a charge of commission of a felony or any crime involving moral turpitude, provided that the Board determines in good faith that such indictment would result in a material adverse impact to the business or reputation of the Company, (v) Executive’s gross negligence in the performance of his duties, or (vi) Executive purposefully or negligently makes (or has been found to have made) a false certification to the Company pertaining to its financial statements; a termination will not be for “Cause” pursuant to clause (i), (ii) or (v), to the extent such conduct is curable, unless the Company shall have notified Executive in writing describing such conduct and Executive shall have failed to cure such conduct within ten (10) business days after his receipt of such written notice.

(c) Termination Without Cause . The Company may terminate Executive’s employment hereunder without Cause at any time.

(d) Good Reason . Executive’s employment may be terminated at any time by Executive for Good Reason or without Good Reason upon 90 days’ prior written notice, provided, in the case of a termination for Good Reason, that Executive provides such notice within 60 days after the occurrence of the event giving rise to the termination for Good Reason. For purposes of this Agreement, “ Good Reason ” means voluntary resignation after any of the following actions taken by the Company or any of its subsidiaries without Executive’s consent: (i) removal from, or failure to be elected or re-elected to, the Board; (ii) a material reduction of Executive’s duties and responsibilities to the Company, (iii) a reduction in Executive’s Annual Base Salary or Target Bonus (not including any diminution related to a broader compensation reduction that (A) is made in consultation with the Reporting Person and (B) is applied to all senior executives of the Company in a relatively proportionate matter); (iv) the relocation of

 

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Executive’s primary office to a location more than 30 miles from the prior location; (v) delivery of notice of non-renewal of the Employment Period by the Company (other than non-renewal by the Company due to Executive’s Disability, termination for Cause or termination by Executive); or (vi) a material breach by the Company of a material provision of this Agreement (which for the avoidance of doubt includes Section 2(a) of this Agreement); a termination shall not be for “Good Reason” pursuant to clause (i), (ii), (iii) or (iv), unless Executive shall have given written notice of his intention to resign for Good Reason and the Company shall have failed to cure the event giving rise to Good Reason within ten (10 ) business days after the Company’s receipt of such written notice.

(e) Notice of Termination . Any termination by the Company for Cause or without Cause, or by Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(h). For purposes of this Agreement, a “ Notice of Termination ” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

(f) Date of Termination . “ Date of Termination ” means (i) if Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination (in the case of a termination with or without Good Reason, provided such notice is in accordance with Section 3(d)) or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if Executive’s employment is terminated by reason of death, the date of death.

Section 4. Obligations of the Company upon Termination .

(a) With Good Reason; Without Cause . If during the Employment Period, the Company shall terminate Executive’s employment without Cause or Executive shall terminate his employment for Good Reason, then the Company will provide Executive with the following severance payments and/or benefits:

(i) Prior to the thirtieth day following the Date of Termination, the Company shall pay to Executive in a lump sum, to the extent not previously paid, (i) the Annual Base Salary through the Date of Termination, and (ii) the Bonus earned for any Bonus Year ended prior to the year in which the Date of Termination occurs, provided that Executive was employed on the last day of such Bonus Year (the “ Accrued Obligations ”); and

(ii) The Company will pay Executive an aggregate sum of 200% of Executive’s Annual Base Salary and Target Bonus (such amount, the “ Cash Severance ”) as

 

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follows: (i) one-half of the Cash Severance shall be payable to Executive in a lump sum, within 30 business days of the Date of Termination and (ii) 1/24 of the Cash Severance will be payable to Executive in twenty-four (24) equal monthly installments commencing as of the first day of the calendar month following the month in which the Date of Termination occurs.

Notwithstanding the foregoing provisions of this Section 4(a), to the extent required in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), amounts to be paid under this Section 4(a) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code.

(b) Death or Disability . If Executive’s employment shall be terminated by reason of Executive’s death or Disability, then the Company will provide Executive (or his estate or legal representative) with the following severance payments and/or benefits: (A) the Accrued Obligations; (B) a lump sum equal to 100% of Executive’s Annual Base Salary; and (C) the Welfare Benefits. Notwithstanding the foregoing provisions of this Section 4(b), to the extent required in order to comply with Section 409A of Code, amounts to be paid under this Section 4(b) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code. Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement and any rights he may have under the Equity Documents.

(c) Cause; Other than for Good Reason . If Executive’s employment shall be terminated by the Company for Cause or by Executive without Good Reason, then the Company shall have no further payment obligations to Executive other than the Accrued Obligations. Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement, and any rights he may have under the Equity Documents.

(d) General Release . The Company’s obligations to make payments under Sections 4(a) and in the case of Disability under Section 4(b) are conditioned on Executive’s or his legal representative’s (as applicable) executing a general release of claims against the Company and its subsidiaries and affiliates and their successors and assigns (and the officers and directors of such entities) substantially in the form attached hereto as Exhibit A (the “ Release ”). For the avoidance of doubt, the Company’s obligations under Section 8 of this Agreement, the Benefit Plans, and the Equity Documents shall not be subject to Executive’s execution of the Release nor to Executive’s obligations under Section 5 of this Agreement, unless otherwise specifically provided in such other arrangements.

Section 5. Restrictive Covenants . Executive shall be subject to the restrictive covenants set forth in Annex I to Section 8 of the Management Investor Rights Agreement in accordance with its terms.

Section 6. Severance Payments. In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the Company, if the Board reasonably

 

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and in good faith believes Executive has violated or is in violation of any provision of Annex I of the Management Investor Rights Agreement, the Board may unilaterally suspend Executive’s right to receive any Cash Severance then or thereafter due from the Company to Executive, provided that the Board (a) gives Executive advance written notice of such suspension and (b) initiates an action or claim to enforce the Company’s rights in respect of such restrictive covenants promptly after such suspension. In the event that the Company prevails on such action or claim, Executive’s right to receive, and the Company’s obligation to pay, any additional Cash Severance, including any previously suspended amounts, shall be terminated immediately, and Executive shall have no further rights to Cash Severance. In the event that Executive prevails on such action or claim, the Company shall be required to pay to Executive in a lump sum within thirty (30) days of such adjudication (or, to the extent required in order to comply with Section 409A of the Code on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code) any Cash Severance the payment of which was delayed due to such suspension, plus interest for any period during which the payment of the Cash Severance was suspended at the prime rate, as published in the Wall Street Journal on the date of such suspension, and to commence payment of future installments of Cash Severance in accordance with Section 4(a)(ii).

Section 7. Executive’s Representations, Warranties and Covenants .

(a) Executive hereby represents and warrants to the Company and its subsidiaries that:

(1) Executive has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Executive;

(2) the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

(3) Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, fee for services agreement, confidentiality agreement or similar agreement with any other Person other than the Company;

(4) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms;

(5) Executive understands that Parent and the Company will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance; and

(6) as of the date of execution of this Agreement, Executive is not in breach of any of its terms, including having committed any acts that would form the basis for a Cause termination if such act had occurred after the Effective Date.

 

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(b) The Company and its subsidiaries hereby represent and warrant to Executive that:

(1) the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

(2) the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

(3) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

(4) the Company understands that Executive will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

Section 8. Indemnification .

The Company shall indemnify Executive to the maximum extent permitted under the General Corporate Law of Delaware for acts taken within the scope of his employment. To the extent that the Company obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company.

Section 9. General Provisions .

(a) Severability . It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(b) Entire Agreement . This Agreement and the Equity Documents embody the complete agreement and understanding among the parties hereto with respect to the subject

 

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matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way (including, without limitation, any other employment, severance or change-in-control agreement or understanding). For the avoidance of doubt, Executive, the Company and the Subsidiaries acknowledge that any agreement between Executive and the Company or Cendant Corporation or any subsidiary or affiliate of any of the foregoing, entered into prior to the Effective Date, including without limitation, the Prior Agreement, shall be void ab initio as of immediately before the Effective Date.

(c) Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d) Successors and Assigns .

(i) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(ii) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

(e) Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

(f) Enforcement .

(i) Arbitration . Except for the Company or its Affiliate’s right to obtain injunctive relief for violation of Section 5 of this Agreement or in Annex I to Section 8 of the Management Investor Rights Agreement, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or

 

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enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. Each party shall bear its or his costs and expenses in any such arbitration and one-half of the arbitrator’s fees and costs; provided , however , if Executive prevails on substantially all material claims, the Company shall reimburse Executive for all of his reasonable attorney’s fees and costs.

(ii) Remedies . All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy.

(iii) Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(g) Amendment and Waiver . The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(h) Notices . Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit for overnight delivery with a reputable overnight courier service.

If to the Company, to:

Realogy Corporation

c/o Apollo Management VI, L.P.

9 West 57th Street

New York, New York 10019

Facsimile: (212) 515-3288

Attention: Marc Becker

 

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with a copy (which shall not constitute notice) to:

Wachtell, Lipton, Rosen & Katz

51 West 52 nd Street

New York, NY 10019

  Attention:   Steven A. Cohen, Esq.
    Igor Kirman, Esq.
  Facsimile:   212.403.2000

If to Executive, to:

Executive’s home address most recently on file with the Company.

with a copy (which shall not constitute notice) to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Attention: Andrea K. Wahlquist, Esq.

(i) Withholding . The Company may withhold from any amounts payable or benefits to be provided to Executive under this Agreement or otherwise all Federal, state, city or other taxes and other amounts that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation.

(j) Survival of Representations, Warranties and Agreements . All representations, warranties and agreements contained herein shall survive this Agreement and the Employment Period indefinitely.

(k) Effectiveness . Notwithstanding the foregoing, none of Parent, the Company or its subsidiaries shall have any obligations to Executive or his beneficiaries under this Agreement, in the event Executive is unable to perform his duties hereunder, including due to death or Disability or Executive commits an act that would constitute Cause, in each case prior to the closing of the Transaction, in which case this Agreement shall be of no force and effect. Further, this Agreement shall be null and void and of no further effect in the event that the Merger Agreement is terminated or the Effective Date does not occur.

(l) Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. All references to a “Section” in this Agreement are to a section of the Agreement unless otherwise noted.

(m) Construction . Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(n) Code Section 409A . Notwithstanding anything herein or elsewhere to the contrary, to the extent Executive or the Company notifies the other that this Agreement may

 

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result in Executive being subject to the penalties of Section 409A of the Code, Executive and the Company agree to negotiate (and the Company shall cause any affiliate to negotiate), in good faith alternatives to avoid such penalties.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

REALOGY CORPORATION
By:  

/s/ David J. Weaving

Name:   David J. Weaving
Title:  

Executive Vice President and

Chief Executive Officer

ANTHONY E. HULL
Signature:  

/s/ Anthony E. Hull


Exhibit A

Form of Release

THIS RELEASE (the “ Release ”) is entered into between Anthony E. Hull (“ Executive ”) and Realogy Corporation, a Delaware corporation (“ Realogy ”), for the benefit of Realogy. The entering into and non-revocation of this Release is a condition to Executive’s right to receive the payments under Section 4 [(a)][(b)] of the employment agreement entered into by and between Executive and Realogy, dated as of April 10, 2007 (the “ Employment Agreement ”). Capitalized terms used and not defined herein shall have the meaning provided in the Employment Agreement.

Accordingly, Executive and Realogy agree as follows.

1. In consideration for the payments and other benefits provided to Executive by the Employment Agreement, to which Executive is not otherwise entitled, and the sufficiency of which Executive acknowledges, Executive represents and agrees, as follows:

(a) Executive, for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “ Releasers ”), hereby irrevocably and unconditionally releases, acquits and forever discharges and agrees not to sue Realogy or any of its parents, subsidiaries, divisions, affiliates and related entities and its current and former directors, officers, shareholders, trustees, employees, consultants, independent contractors, representatives, agents, servants, successors and assigns and all persons acting by, through or under or in concert with any of them (collectively “ Releasees ”), from all claims, rights and liabilities up to and including the date of this Release arising from or relating to Executive’s employment with, or termination of employment from, the Company, under the Employment Agreement and from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of actions, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected and any claims of wrongful discharge, breach of contract, implied contract, promissory estoppel, defamation, slander, libel, tortious conduct, employment discrimination or claims under any federal, state or local employment statute, law, order or ordinance, including any rights or claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq. (“ ADEA ”), or any other federal, state or municipal ordinance relating to discrimination in employment. Nothing contained herein shall restrict the parties’ rights to enforce the terms of this Release.

(b) To the maximum extent permitted by law, Executive agrees that he has not filed, nor will he ever file, a lawsuit asserting any claims which are released by this Release, or to accept any benefit from any lawsuit which might be filed by another person or government entity based in whole or in part on any event, act, or omission which is the subject of this Release.

(c) This Release specifically excludes Executive’s rights and Realogy’s obligations under Section 8 of the Employment Agreement, the Benefit Plans, and the Equity Documents. Executive’s entitlement to vested benefits under the Benefit Plans and the Equity


Documents shall be determined in accordance with the provisions of the Benefit Plans or Equity Documents, as the case may be. Nothing contained in this Release shall release Executive from his obligations, including any obligations to abide by restrictive covenants, under the Employment Agreement, the Equity Documents or the Benefit Plans that continue or are to be performed following termination of employment.

(d) Executive represents that he is not aware of any facts or circumstances that would give rise, based on his actions, to any claims or lawsuits against Realogy or any Releasee.

(e) The parties agree that this Release shall not affect the rights and responsibilities of the US Equal Employment Opportunity Commission (hereinafter “ EEOC ”) to enforce ADEA and other laws. In addition, the parties agree that this Release shall not be used to justify interfering with Executive’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC. The parties further agree that Executive knowingly and voluntarily waives all rights or claims (that arose prior to Executive’s execution of this Release) the Releasers may have against the Releasees, or any of them, to receive any benefit or remedial relief (including, but not limited to, reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by the EEOC.

2. Executive acknowledges that Realogy has specifically advised him of the right to seek the advice of an attorney concerning the terms and conditions of this Release. Executive further acknowledges that he has been furnished with a copy of this Release, and he has been afforded twenty-one (21) days in which to consider the terms and conditions set forth above prior to this Release. By executing this Release, Executive affirmatively states that he has had sufficient and reasonable time to review this Release and to consult with an attorney concerning his legal rights prior to the final execution of this Release. Executive further agrees that he has carefully read this Release and fully understands its terms. Executive understands that he may revoke this Release within seven (7) days after signing this Release. Revocation of this Release must be made in writing and must be received by Marc Becker at Apollo Management, L.P., 9 West 57th Street, 43rd Floor, New York, NY 10019 within the time period set forth above.

3. This Release will be governed by and construed in accordance with the laws of the state of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the state of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the state of Delaware to be applied. In furtherance of the foregoing, the internal law of the state of Delaware will control the interpretation and construction of this agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. The provisions of this Release are severable, and if any part or portion of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Release shall become effective and enforceable on the eighth day following its execution by Executive, provided he does not exercise his right of revocation as described above. If Executive fails to sign and deliver this Release or revokes his signature, this Release will be without force or effect, and Executive shall not be entitled to the payment under Section 4 [(a)][(b)] of the Employment Agreement.

Exhibit 10.6

 

 

EMPLOYMENT AGREEMENT (this

Agreement ”) dated as of April 10, 2007, between

REALOGY CORPORATION , a Delaware

corporation, (the “ Company ”) and ALEXANDER

E. PERRIELLO (“ Executive ”).

WHEREAS, pursuant to the Agreement and Plan of Merger, made and entered into as of the 15th day of December, 2006, by and among Domus Holdings Corp. (the “ Parent ”), the Company and Domus Acquisition Corp. (the “ Merger Agreement ”), Domus Acquisition Corp. will be merged with and into the Company (the “ Transaction ”), and the Company will be the surviving corporation in the Transaction;

WHEREAS, in connection with the Transaction, the Company desires to employ Executive and Executive desires to be employed by the Company;

WHEREAS, the Company and Executive are parties to that letter agreement dated as of November 7, 2006, as such letter agreement has been amended or supplemented through the Effective Date (as defined in Section 1) (the “ Prior Agreement ”); and

WHEREAS, Executive, as a condition of his employment, will make a substantial investment in the Parent concurrently with the closing of the Transaction by purchasing 200,000 shares of common stock of the Parent, par value $0.01 (“ Common Stock ”), at a price of $10.00 per share;

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Employment Period .

The initial term of Executive’s employment hereunder shall be for a period of five (5) years (the “ Initial Term ”) commencing on the closing of the Transaction (the “ Effective Date ”) and ending on the fifth anniversary of the Effective Date, unless terminated earlier pursuant to Section 3 (the “ Employment Period ”); provided , however , that the Employment Period shall automatically be renewed for an additional period of one (1) year upon the expiration of the Initial Term unless either party gives at least ninety (90) days’ written notice of its intention not to renew the Employment Period. Upon Executive’s termination of employment with the Company for any reason, he shall immediately resign all positions with the Company or any of its subsidiaries or affiliates, including any position as a member of the Parent’s Board of Directors and a member of the Company’s Board of Directors (the “ Board ”).

Section 2. Terms of Employment .

(a) Position . During the term of Executive’s employment under this Agreement, Executive shall serve as President and CEO of President & CEO of the Realogy Franchise Group and shall have such duties and responsibilities as shall be assigned to Executive by the President of the Company (or, if the President of the Company as of the Effective Date is


no longer serving in such position, the Chief Executive Officer of the Company) (such individual, the “ Reporting Person ”). In performing his duties hereunder, Executive shall report directly to the Reporting Person. At the request of the Company, Executive shall also serve as an officer of any of its subsidiaries or affiliates without additional compensation.

(b) Duties . During the Employment Period, Executive agrees to devote all of his business time to the business and affairs of the Company and to use Executive’s reasonable best efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) serving on civic or charitable boards or committees and (ii) managing personal investments, so long as such activities do not materially interfere with the performance of Executive’s responsibilities hereunder.

(c) Compensation .

(i) Base Salary . During the Employment Period, Executive shall receive an initial annual base salary in an amount equal to $500,000, which shall be paid in accordance with the customary payroll practices of the Company (the “ Annual Base Salary ”). Executive’s Annual Base Salary shall be reviewed at least annually by the Board but may not be reduced.

(ii) Bonuses . The Company shall establish a performance-based bonus plan (the “ Plan ”) to be applicable for each fiscal year of the Company (a “ Fiscal Year ”) ending during the Employment Period pursuant to which Executive will be eligible to receive an annual bonus (the “ Bonus ”) with respect to each Fiscal Year of the Company ending during the Employment Period (each, a “ Bonus Year ”). The Board or the Compensation Committee of the Board (the “ Compensation Committee ”) will administer the Plan and shall establish performance objectives for each Fiscal Year, which performance objectives shall be reasonably related to the Company’s business objectives. In the event that, with respect to the applicable Fiscal Year of the Company ending during the Employment Period, the Company achieves the pre-established target performance goals based on actual performance, Executive shall be entitled to receive a Bonus in an amount equal to 100% of Executive’s Annual Base Salary (“ Target Bonus ”). Subject to Section 4, Executive will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Executive is employed on the last day of the applicable Bonus Year. The Bonus shall become payable on March 15 of the year following the end of the applicable Bonus Year, provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of the bonus that shall be paid to each executive entitled to receive a bonus for the applicable Bonus Year. If the Board or Compensation Committee has not made such final determination by March 15 of such year, the Bonus (if any) shall instead be paid as soon as practicable thereafter during such year.

(iii) Benefits . During the Employment Period, Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other senior executives of the Company and shall be eligible for participation in, and shall receive all benefits under, welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other senior executives

 

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of the Company (“ Benefit Plans ”). The benefits provided to Executive shall be, in the aggregate, comparable to those benefits that Executive was receiving at the Company immediately prior to the Effective Date, but excluding those benefits under any nonqualified deferred compensation plans that are being amended or terminated in connection with the Transaction or that relate to or provide benefits or compensation measured with respect to the Company’s common stock.

(iv) Expenses . During the term of Executive’s employment, Executive shall be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in performance of his duties hereunder, provided that Executive provides all necessary documentation in accordance with Company policy.

(v) Stock Options . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a stock option (the “ Option Grant ”) to purchase 750,000 shares of Common Stock, at an exercise price of $10.00 per share. The Option Grant will be pursuant and subject to the terms and conditions set forth in the Parent’s 2007 Stock Incentive Plan (the “ Stock Incentive Plan ”) and Executive’s option agreement associated with the Option Grant (the “ Option Agreement ”, which is attached hereto as Appendix [    ]), and Executive’s purchase of the Purchased Shares as provided in Section 2(c)(vii) below.

(vi) Restricted Stock . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a grant (the “ Restricted Stock Grant ”) of restricted shares of Common Stock (“ Restricted Shares ”). The Restricted Stock Grant will be pursuant and subject to the terms and conditions set forth in the Stock Incentive Plan and the restricted stock agreement evidencing such grant (the “ Restricted Stock Agreement ”, which is attached hereto as Appendix [    ]). The Restricted Stock Grant will be comprised of 50,000 Restricted Shares and shall be subject to the vesting, termination and other terms set forth in the Restricted Stock Agreement.

(vii) Investment . Concurrent with the closing of the Transaction, Executive shall purchase 200,000 shares of Common Stock, at a price of $10.00 per share (the “ Purchased Shares ”). The Purchased Shares shall be subject to the terms of the Stock Incentive Plan and Executive’s Subscription Agreement (attached hereto as Appendix [    ]) and Executive’s Contribution Agreement (attached hereto as Appendix [    ]). All of the Purchased Shares will be fully vested at the Effective Date.

(viii) Management Investor Rights Agreement . All Purchased Shares, shares purchased pursuant to the Investment Bonus, Restricted Shares, the Option Grant and Common Stock held by Executive pursuant to the vesting of Restricted Shares and the exercise of the Option Grant will be subject to the terms and conditions of the Management Investor Rights Agreement by and among the Parent, Executive, and other signatories thereto (the “ Management Investor Rights Agreement ”), including the restrictive covenants contained in Annex I to Section 8 thereof. The Option Agreement, Stock Incentive Plan, Restricted Stock Agreement, Management Investor Rights Agreement, Subscription Agreement and any other stock or stock-based award agreement entered into by and between the Company and Executive after the date hereof, collectively, the “ Equity Documents ”.

 

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Section 3. Termination of Employment .

(a) Death or Disability . Executive’s employment hereunder shall terminate automatically upon Executive’s death. If Executive becomes subject to a Disability during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give Executive written notice in accordance with Sections 3(e) and 9(h) of its intention to terminate Executive’s employment. For purposes of this Agreement, “ Disability ” means (i) Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable physical of mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company. Whether Executive has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers.

(b) Cause . Executive’s employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “ Cause ” shall mean (i) Executive’s willful failure to substantially perform his duties as an employee of the Company or any subsidiary (other than any such failure resulting from incapacity due to physical or mental illness), (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company or any subsidiary, (iii) Executive’s conviction of, or plea of guilty or nolo contendere to a charge of commission of, a felony or crime involving moral turpitude, (iv) Executive’s indictment for a charge of commission of a felony or any crime involving moral turpitude, provided that the Board determines in good faith that such indictment would result in a material adverse impact to the business or reputation of the Company, (v) Executive’s gross negligence in the performance of his duties, or (vi) Executive purposefully or negligently makes (or has been found to have made) a false certification to the Company pertaining to its financial statements; a termination will not be for “Cause” pursuant to clause (i), (ii) or (v), to the extent such conduct is curable, unless the Company shall have notified Executive in writing describing such conduct and Executive shall have failed to cure such conduct within ten (10) business days after his receipt of such written notice.

(c) Termination Without Cause . The Company may terminate Executive’s employment hereunder without Cause at any time.

(d) Good Reason . Executive’s employment may be terminated at any time by Executive for Good Reason or without Good Reason upon 90 days’ prior written notice, provided, in the case of a termination for Good Reason, that Executive provides such notice within 60 days after the occurrence of the event giving rise to the termination for Good Reason. For purposes of this Agreement, “ Good Reason ” means voluntary resignation after any of the following actions taken by the Company or any of its subsidiaries without Executive’s consent: (i) removal from, or failure to be elected or re-elected to, the Board; (ii) a material reduction of Executive’s duties and responsibilities to the Company, (iii) a reduction in Executive’s Annual Base Salary or Target Bonus (not including any diminution related to a broader compensation reduction that (A) is made in consultation with the Reporting Person and (B) is applied to all senior executives of the Company in a relatively proportionate matter); (iv) the relocation of

 

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Executive’s primary office to a location more than 30 miles from the prior location; (v) delivery of notice of non-renewal of the Employment Period by the Company (other than non-renewal by the Company due to Executive’s Disability, termination for Cause or termination by Executive); or (vi) a material breach by the Company of a material provision of this Agreement (which for the avoidance of doubt includes Section 2(a) of this Agreement); a termination shall not be for “Good Reason” pursuant to clause (i), (ii), (iii) or (iv), unless Executive shall have given written notice of his intention to resign for Good Reason and the Company shall have failed to cure the event giving rise to Good Reason within ten (10) business days after the Company’s receipt of such written notice.

(e) Notice of Termination . Any termination by the Company for Cause or without Cause, or by Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(h). For purposes of this Agreement, a “ Notice of Termination ” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

(f) Date of Termination . “ Date of Termination ” means (i) if Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination (in the case of a termination with or without Good Reason, provided such notice is in accordance with Section 3(d)) or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if Executive’s employment is terminated by reason of death, the date of death.

Section 4. Obligations of the Company upon Termination .

(a) With Good Reason; Without Cause . If during the Employment Period, the Company shall terminate Executive’s employment without Cause or Executive shall terminate his employment for Good Reason, then the Company will provide Executive with the following severance payments and/or benefits:

(i) Prior to the thirtieth day following the Date of Termination, the Company shall pay to Executive in a lump sum, to the extent not previously paid, (i) the Annual Base Salary through the Date of Termination, and (ii) the Bonus earned for any Bonus Year ended prior to the year in which the Date of Termination occurs, provided that Executive was employed on the last day of such Bonus Year (the “ Accrued Obligations ”); and

(ii) The Company will pay Executive an aggregate sum of 100% of Executive’s Annual Base Salary and Target Bonus (such amount, the “ Cash Severance ”) as

 

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follows: (i) one-half of the Cash Severance shall be payable to Executive in a lump sum, within 30 business days of the Date of Termination and (ii) 1/12 of the Cash Severance will be payable to Executive in twelve (12) equal monthly installments commencing as of the first day of the calendar month following the month in which the Date of Termination occurs.

Notwithstanding the foregoing provisions of this Section 4(a), to the extent required in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), amounts to be paid under this Section 4(a) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code.

(b) Death or Disability . If Executive’s employment shall be terminated by reason of Executive’s death or Disability, then the Company will provide Executive (or his estate or legal representative) with the following severance payments and/or benefits: (A) the Accrued Obligations; (B) a lump sum equal to 100% of Executive’s Annual Base Salary; and (C) the Welfare Benefits. Notwithstanding the foregoing provisions of this Section 4(b), to the extent required in order to comply with Section 409A of Code, amounts to be paid under this Section 4(b) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code. Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement and any rights he may have under the Equity Documents.

(c) Cause; Other than for Good Reason . If Executive’s employment shall be terminated by the Company for Cause or by Executive without Good Reason, then the Company shall have no further payment obligations to Executive other than the Accrued Obligations. Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement, and any rights he may have under the Equity Documents.

(d) General Release . The Company’s obligations to make payments under Sections 4(a) and in the case of Disability under Section 4(b) are conditioned on Executive’s or his legal representative’s (as applicable) executing a general release of claims against the Company and its subsidiaries and affiliates and their successors and assigns (and the officers and directors of such entities) substantially in the form attached hereto as Exhibit A (the “ Release ”). For the avoidance of doubt, the Company’s obligations under Section 8 of this Agreement, the Benefit Plans, and the Equity Documents shall not be subject to Executive’s execution of the Release nor to Executive’s obligations under Section 5 of this Agreement, unless otherwise specifically provided in such other arrangements.

Section 5. Restrictive Covenants . Executive shall be subject to the restrictive covenants set forth in Annex I to Section 8 of the Management Investor Rights Agreement in accordance with its terms.

Section 6. Severance Payments . In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the Company, if the Board reasonably

 

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and in good faith believes Executive has violated or is in violation of any provision of Annex I of the Management Investor Rights Agreement, the Board may unilaterally suspend Executive’s right to receive any Cash Severance then or thereafter due from the Company to Executive, provided that the Board (a) gives Executive advance written notice of such suspension and (b) initiates an action or claim to enforce the Company’s rights in respect of such restrictive covenants promptly after such suspension. In the event that the Company prevails on such action or claim, Executive’s right to receive, and the Company’s obligation to pay, any additional Cash Severance, including any previously suspended amounts, shall be terminated immediately, and Executive shall have no further rights to Cash Severance. In the event that Executive prevails on such action or claim, the Company shall be required to pay to Executive in a lump sum within thirty (30) days of such adjudication (or, to the extent required in order to comply with Section 409A of the Code on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code) any Cash Severance the payment of which was delayed due to such suspension, plus interest for any period during which the payment of the Cash Severance was suspended at the prime rate, as published in the Wall Street Journal on the date of such suspension, and to commence payment of future installments of Cash Severance in accordance with Section 4(a)(ii).

Section 7. Executive’s Representations, Warranties and Covenants .

(a) Executive hereby represents and warrants to the Company and its subsidiaries that:

(1) Executive has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Executive;

(2) the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

(3) Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, fee for services agreement, confidentiality agreement or similar agreement with any other Person other than the Company;

(4) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms;

(5) Executive understands that Parent and the Company will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance; and

(6) as of the date of execution of this Agreement, Executive is not in breach of any of its terms, including having committed any acts that would form the basis for a Cause termination if such act had occurred after the Effective Date.

 

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(b) The Company and its subsidiaries hereby represent and warrant to Executive that:

(1) the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

(2) the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

(3) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

(4) the Company understands that Executive will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

Section 8. Indemnification .

The Company shall indemnify Executive to the maximum extent permitted under the General Corporate Law of Delaware for acts taken within the scope of his employment. To the extent that the Company obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company.

Section 9. General Provisions .

(a) Severability . It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(b) Entire Agreement . This Agreement and the Equity Documents embody the complete agreement and understanding among the parties hereto with respect to the subject

 

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matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way (including, without limitation, any other employment, severance or change-in-control agreement or understanding). For the avoidance of doubt, Executive, the Company and the Subsidiaries acknowledge that any agreement between Executive and the Company or Cendant Corporation or any subsidiary or affiliate of any of the foregoing, entered into prior to the Effective Date, including without limitation, the Prior Agreement, shall be void ab initio as of immediately before the Effective Date.

(c) Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d) Successors and Assigns .

(i) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(ii) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

(e) Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

(f) Enforcement .

(i) Arbitration . Except for the Company or its Affiliate’s right to obtain injunctive relief for violation of Section 5 of this Agreement or in Annex I to Section 8 of the Management Investor Rights Agreement, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or

 

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enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. Each party shall bear its or his costs and expenses in any such arbitration and one-half of the arbitrator’s fees and costs; provided , however , if Executive prevails on substantially all material claims, the Company shall reimburse Executive for all of his reasonable attorney’s fees and costs.

(ii) Remedies . All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy.

(iii) Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(g) Amendment and Waiver . The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(h) Notices . Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit for overnight delivery with a reputable overnight courier service.

 

If to the Company, to:
  Realogy Corporation
  c/o Apollo Management VI, L.P.
  9 West 57th Street
  New York, New York 10019
  Facsimile:   (212) 515-3288
  Attention:   Marc Becker

 

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with a copy (which shall not constitute notice) to:
  Wachtell, Lipton, Rosen & Katz
  51 West 52 nd Street
  New York, NY 10019
  Attention:   Steven A. Cohen, Esq.
    Igor Kirman, Esq.
  Facsimile:   212.403.2000
If to Executive, to:
  Executive’s home address most recently on file with the Company.
with a copy (which shall not constitute notice) to:
  Simpson Thacher & Bartlett LLP
  425 Lexington Avenue
  New York, NY 10017
  Attention:   Andrea K. Wahlquist, Esq.

(i) Withholding . The Company may withhold from any amounts payable or benefits to be provided to Executive under this Agreement or otherwise all Federal, state, city or other taxes and other amounts that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation.

(j) Survival of Representations, Warranties and Agreements . All representations, warranties and agreements contained herein shall survive this Agreement and the Employment Period indefinitely.

(k) Effectiveness . Notwithstanding the foregoing, none of Parent, the Company or its subsidiaries shall have any obligations to Executive or his beneficiaries under this Agreement, in the event Executive is unable to perform his duties hereunder, including due to death or Disability or Executive commits an act that would constitute Cause, in each case prior to the closing of the Transaction, in which case this Agreement shall be of no force and effect. Further, this Agreement shall be null and void and of no further effect in the event that the Merger Agreement is terminated or the Effective Date does not occur.

(l) Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. All references to a “Section” in this Agreement are to a section of the Agreement unless otherwise noted.

(m) Construction . Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(n) Code Section 409A . Notwithstanding anything herein or elsewhere to the contrary, to the extent Executive or the Company notifies the other that this Agreement may

 

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result in Executive being subject to the penalties of Section 409A of the Code, Executive and the Company agree to negotiate (and the Company shall cause any affiliate to negotiate), in good faith alternatives to avoid such penalties.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

REALOGY CORPORATION
By:  

/s/ David J. Weaving

Name:   David J. Weaving
Title:  

Executive Vice President and

Chief Executive Officer

ALEXANDER E. PERRIELLO
Signature:  

/s/ Alexander E. Perriello


Exhibit A

Form of Release

THIS RELEASE (the “ Release ”) is entered into between Alexander E. Perriello (“ Executive ”) and Realogy Corporation, a Delaware corporation (“ Realogy ”), for the benefit of Realogy. The entering into and non-revocation of this Release is a condition to Executive’s right to receive the payments under Section 4 [(a)][(b)] of the employment agreement entered into by and between Executive and Realogy, dated as of April 10, 2007 (the “ Employment Agreement ”). Capitalized terms used and not defined herein shall have the meaning provided in the Employment Agreement.

Accordingly, Executive and Realogy agree as follows.

1. In consideration for the payments and other benefits provided to Executive by the Employment Agreement, to which Executive is not otherwise entitled, and the sufficiency of which Executive acknowledges, Executive represents and agrees, as follows:

(a) Executive, for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “ Releasers ”), hereby irrevocably and unconditionally releases, acquits and forever discharges and agrees not to sue Realogy or any of its parents, subsidiaries, divisions, affiliates and related entities and its current and former directors, officers, shareholders, trustees, employees, consultants, independent contractors, representatives, agents, servants, successors and assigns and all persons acting by, through or under or in concert with any of them (collectively “ Releasees ”), from all claims, rights and liabilities up to and including the date of this Release arising from or relating to Executive’s employment with, or termination of employment from, the Company, under the Employment Agreement and from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of actions, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected and any claims of wrongful discharge, breach of contract, implied contract, promissory estoppel, defamation, slander, libel, tortious conduct, employment discrimination or claims under any federal, state or local employment statute, law, order or ordinance, including any rights or claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq. (“ ADEA ”), or any other federal, state or municipal ordinance relating to discrimination in employment. Nothing contained herein shall restrict the parties’ rights to enforce the terms of this Release.

(b) To the maximum extent permitted by law, Executive agrees that he has not filed, nor will he ever file, a lawsuit asserting any claims which are released by this Release, or to accept any benefit from any lawsuit which might be filed by another person or government entity based in whole or in part on any event, act, or omission which is the subject of this Release.

(c) This Release specifically excludes Executive’s rights and Realogy’s obligations under Section 8 of the Employment Agreement, the Benefit Plans, and the Equity Documents. Executive’s entitlement to vested benefits under the Benefit Plans and the Equity


Documents shall be determined in accordance with the provisions of the Benefit Plans or Equity Documents, as the case may be. Nothing contained in this Release shall release Executive from his obligations, including any obligations to abide by restrictive covenants, under the Employment Agreement, the Equity Documents or the Benefit Plans that continue or are to be performed following termination of employment.

(d) Executive represents that he is not aware of any facts or circumstances that would give rise, based on his actions, to any claims or lawsuits against Realogy or any Releasee.

(e) The parties agree that this Release shall not affect the rights and responsibilities of the US Equal Employment Opportunity Commission (hereinafter “ EEOC ”) to enforce ADEA and other laws. In addition, the parties agree that this Release shall not be used to justify interfering with Executive’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC. The parties further agree that Executive knowingly and voluntarily waives all rights or claims (that arose prior to Executive’s execution of this Release) the Releasers may have against the Releasees, or any of them, to receive any benefit or remedial relief (including, but not limited to, reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by the EEOC.

2. Executive acknowledges that Realogy has specifically advised him of the right to seek the advice of an attorney concerning the terms and conditions of this Release. Executive further acknowledges that he has been furnished with a copy of this Release, and he has been afforded twenty-one (21) days in which to consider the terms and conditions set forth above prior to this Release. By executing this Release, Executive affirmatively states that he has had sufficient and reasonable time to review this Release and to consult with an attorney concerning his legal rights prior to the final execution of this Release. Executive further agrees that he has carefully read this Release and fully understands its terms. Executive understands that he may revoke this Release within seven (7) days after signing this Release. Revocation of this Release must be made in writing and must be received by Marc Becker at Apollo Management, L.P., 9 West 57th Street, 43rd Floor, New York, NY 10019 within the time period set forth above.

3. This Release will be governed by and construed in accordance with the laws of the state of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the state of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the state of Delaware to be applied. In furtherance of the foregoing, the internal law of the state of Delaware will control the interpretation and construction of this agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. The provisions of this Release are severable, and if any part or portion of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Release shall become effective and enforceable on the eighth day following its execution by Executive, provided he does not exercise his right of revocation as described above. If Executive fails to sign and deliver this Release or revokes his signature, this Release will be without force or effect, and Executive shall not be entitled to the payment under Section 4 [(a)][(b)] of the Employment Agreement.

Exhibit 10.7

 

 

EMPLOYMENT AGREEMENT (this

Agreement ”) dated as of April 10, 2007, between

REALOGY CORPORATION , a Delaware

corporation, (the “ Company ”) and BRUCE G.

ZIPF (“ Executive ”).

WHEREAS, pursuant to the Agreement and Plan of Merger, made and entered into as of the 15th day of December, 2006, by and among Domus Holdings Corp. (the “ Parent ”), the Company and Domus Acquisition Corp. (the “ Merger Agreement ”), Domus Acquisition Corp. will be merged with and into the Company (the “ Transaction ”), and the Company will be the surviving corporation in the Transaction;

WHEREAS, in connection with the Transaction, the Company desires to employ Executive and Executive desires to be employed by the Company;

WHEREAS, the Company and Executive are parties to that letter agreement dated as of November 7, 2006, as such letter agreement has been amended or supplemented through the Effective Date (as defined in Section 1) (the “ Prior Agreement ”); and

WHEREAS, Executive, as a condition of his employment, will make a substantial investment in the Parent concurrently with the closing of the Transaction by purchasing 160,000 shares of common stock of the Parent, par value $0.01 (“ Common Stock ”), at a price of $10.00 per share;

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Employment Period .

The initial term of Executive’s employment hereunder shall be for a period of five (5) years (the “ Initial Term ”) commencing on the closing of the Transaction (the “ Effective Date ”) and ending on the fifth anniversary of the Effective Date, unless terminated earlier pursuant to Section 3 (the “ Employment Period ”); provided , however , that the Employment Period shall automatically be renewed for an additional period of one (1) year upon the expiration of the Initial Term unless either party gives at least ninety (90) days’ written notice of its intention not to renew the Employment Period. Upon Executive’s termination of employment with the Company for any reason, he shall immediately resign all positions with the Company or any of its subsidiaries or affiliates, including any position as a member of the Parent’s Board of Directors and a member of the Company’s Board of Directors (the “ Board ”).

Section 2. Terms of Employment .

(a) Position . During the term of Executive’s employment under this Agreement, Executive shall serve as President and CEO, NRT Incorporated and shall have such duties and responsibilities as shall be assigned to Executive by the President of the Company (or, if the President of the Company as of the Effective Date is no longer serving in such position, the


Chief Executive Officer of the Company) (such individual, the “ Reporting Person ”). In performing his duties hereunder, Executive shall report directly to the Reporting Person. At the request of the Company, Executive shall also serve as an officer of any of its subsidiaries or affiliates without additional compensation.

(b) Duties . During the Employment Period, Executive agrees to devote all of his business time to the business and affairs of the Company and to use Executive’s reasonable best efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) serving on civic or charitable boards or committees and (ii) managing personal investments, so long as such activities do not materially interfere with the performance of Executive’s responsibilities hereunder.

(c) Compensation .

(i) Base Salary . During the Employment Period, Executive shall receive an initial annual base salary in an amount equal to $500,000, which shall be paid in accordance with the customary payroll practices of the Company (the “ Annual Base Salary ”). Executive’s Annual Base Salary shall be reviewed at least annually by the Board but may not be reduced.

(ii) Bonuses . The Company shall establish a performance-based bonus plan (the “ Plan ”) to be applicable for each fiscal year of the Company (a “ Fiscal Year ”) ending during the Employment Period pursuant to which Executive will be eligible to receive an annual bonus (the “ Bonus ”) with respect to each Fiscal Year of the Company ending during the Employment Period (each, a “ Bonus Year ”). The Board or the Compensation Committee of the Board (the “ Compensation Committee ”) will administer the Plan and shall establish performance objectives for each Fiscal Year, which performance objectives shall be reasonably related to the Company’s business objectives. In the event that, with respect to the applicable Fiscal Year of the Company ending during the Employment Period, the Company achieves the pre-established target performance goals based on actual performance, Executive shall be entitled to receive a Bonus in an amount equal to 100% of Executive’s Annual Base Salary (“ Target Bonus ”). Subject to Section 4, Executive will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Executive is employed on the last day of the applicable Bonus Year. The Bonus shall become payable on March 15 of the year following the end of the applicable Bonus Year, provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of the bonus that shall be paid to each executive entitled to receive a bonus for the applicable Bonus Year. If the Board or Compensation Committee has not made such final determination by March 15 of such year, the Bonus (if any) shall instead be paid as soon as practicable thereafter during such year.

(iii) Benefits . During the Employment Period, Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other senior executives of the Company and shall be eligible for participation in, and shall receive all benefits under, welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other senior executives

 

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of the Company (“ Benefit Plans ”). The benefits provided to Executive shall be, in the aggregate, comparable to those benefits that Executive was receiving at the Company immediately prior to the Effective Date, but excluding those benefits under any nonqualified deferred compensation plans that are being amended or terminated in connection with the Transaction or that relate to or provide benefits or compensation measured with respect to the Company’s common stock.

(iv) Expenses . During the term of Executive’s employment, Executive shall be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in performance of his duties hereunder, provided that Executive provides all necessary documentation in accordance with Company policy.

(v) Stock Options . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a stock option (the “ Option Grant ”) to purchase 600,000 shares of Common Stock, at an exercise price of $10.00 per share. The Option Grant will be pursuant and subject to the terms and conditions set forth in the Parent’s 2007 Stock Incentive Plan (the “ Stock Incentive Plan ”) and Executive’s option agreement associated with the Option Grant (the “ Option Agreement ”, which is attached hereto as Appendix [    ]), and Executive’s purchase of the Purchased Shares as provided in Section 2(c)(vii) below.

(vi) Restricted Stock . Concurrent with the closing of the Transaction, the Company shall cause the Parent to grant Executive a grant (the “ Restricted Stock Grant ”) of restricted shares of Common Stock (“ Restricted Shares ”). The Restricted Stock Grant will be pursuant and subject to the terms and conditions set forth in the Stock Incentive Plan and the restricted stock agreement evidencing such grant (the “ Restricted Stock Agreement ”, which is attached hereto as Appendix [    ]). The Restricted Stock Grant will be comprised of 100,000 Restricted Shares and shall be subject to the vesting, termination and other terms set forth in the Restricted Stock Agreement.

(vii) Investment . Concurrent with the closing of the Transaction, Executive shall purchase 160,000 shares of Common Stock, at a price of $10.00 per share (the “ Purchased Shares ”). The Purchased Shares shall be subject to the terms of the Stock Incentive Plan and Executive’s Subscription Agreement (attached hereto as Appendix [    ]) and Executive’s Contribution Agreement (attached hereto as Appendix [    ]). All of the Purchased Shares will be fully vested at the Effective Date.

(viii) Management Investor Rights Agreement . All Purchased Shares, shares purchased pursuant to the Investment Bonus, Restricted Shares, the Option Grant and Common Stock held by Executive pursuant to the vesting of Restricted Shares and the exercise of the Option Grant will be subject to the terms and conditions of the Management Investor Rights Agreement by and among the Parent, Executive, and other signatories thereto (the “ Management Investor Rights Agreement ”), including the restrictive covenants contained in Annex I to Section 8 thereof. The Option Agreement, Stock Incentive Plan, Restricted Stock Agreement, Management Investor Rights Agreement, Subscription Agreement and any other stock or stock-based award agreement entered into by and between the Company and Executive after the date hereof, collectively, the “ Equity Documents ”.

 

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Section 3. Termination of Employment .

(a) Death or Disability . Executive’s employment hereunder shall terminate automatically upon Executive’s death. If Executive becomes subject to a Disability during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give Executive written notice in accordance with Sections 3(e) and 9(h) of its intention to terminate Executive’s employment. For purposes of this Agreement, “ Disability ” means (i) Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable physical of mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company. Whether Executive has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers.

(b) Cause . Executive’s employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “ Cause ” shall mean (i) Executive’s willful failure to substantially perform his duties as an employee of the Company or any subsidiary (other than any such failure resulting from incapacity due to physical or mental illness), (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company or any subsidiary, (iii) Executive’s conviction of, or plea of guilty or nolo contendere to a charge of commission of, a felony or crime involving moral turpitude, (iv) Executive’s indictment for a charge of commission of a felony or any crime involving moral turpitude, provided that the Board determines in good faith that such indictment would result in a material adverse impact to the business or reputation of the Company, (v) Executive’s gross negligence in the performance of his duties, or (vi) Executive purposefully or negligently makes (or has been found to have made) a false certification to the Company pertaining to its financial statements; a termination will not be for “Cause” pursuant to clause (i), (ii) or (v), to the extent such conduct is curable, unless the Company shall have notified Executive in writing describing such conduct and Executive shall have failed to cure such conduct within ten (10) business days after his receipt of such written notice.

(c) Termination Without Cause . The Company may terminate Executive’s employment hereunder without Cause at any time.

(d) Good Reason . Executive’s employment may be terminated at any time by Executive for Good Reason or without Good Reason upon 90 days’ prior written notice, provided, in the case of a termination for Good Reason, that Executive provides such notice within 60 days after the occurrence of the event giving rise to the termination for Good Reason. For purposes of this Agreement, “ Good Reason ” means voluntary resignation after any of the following actions taken by the Company or any of its subsidiaries without Executive’s consent: (i) removal from, or failure to be elected or re-elected to, the Board; (ii) a material reduction of Executive’s duties and responsibilities to the Company, (iii) a reduction in Executive’s Annual Base Salary or Target Bonus (not including any diminution related to a broader compensation reduction that (A) is made in consultation with the Reporting Person and (B) is applied to all senior executives of the Company in a relatively proportionate matter); (iv) the relocation of

 

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Executive’s primary office to a location more than 30 miles from the prior location; (v) delivery of notice of non-renewal of the Employment Period by the Company (other than non-renewal by the Company due to Executive’s Disability, termination for Cause or termination by Executive); or (vi) a material breach by the Company of a material provision of this Agreement (which for the avoidance of doubt includes Section 2(a) of this Agreement); a termination shall not be for “Good Reason” pursuant to clause (i), (ii), (iii) or (iv), unless Executive shall have given written notice of his intention to resign for Good Reason and the Company shall have failed to cure the event giving rise to Good Reason within ten (10 ) business days after the Company’s receipt of such written notice.

(e) Notice of Termination . Any termination by the Company for Cause or without Cause, or by Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(h). For purposes of this Agreement, a “ Notice of Termination ” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

(f) Date of Termination . “ Date of Termination ” means (i) if Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination (in the case of a termination with or without Good Reason, provided such notice is in accordance with Section 3(d)) or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if Executive’s employment is terminated by reason of death, the date of death.

Section 4. Obligations of the Company upon Termination .

(a) With Good Reason; Without Cause . If during the Employment Period, the Company shall terminate Executive’s employment without Cause or Executive shall terminate his employment for Good Reason, then the Company will provide Executive with the following severance payments and/or benefits:

(i) Prior to the thirtieth day following the Date of Termination, the Company shall pay to Executive in a lump sum, to the extent not previously paid, (i) the Annual Base Salary through the Date of Termination, and (ii) the Bonus earned for any Bonus Year ended prior to the year in which the Date of Termination occurs, provided that Executive was employed on the last day of such Bonus Year (the “ Accrued Obligations ”); and

(ii) The Company will pay Executive an aggregate sum of 100% of Executive’s Annual Base Salary and Target Bonus (such amount, the “ Cash Severance ”) as

 

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follows: (i) one-half of the Cash Severance shall be payable to Executive in a lump sum, within 30 business days of the Date of Termination and (ii) 1/12 of the Cash Severance will be payable to Executive in twelve (12) equal monthly installments commencing as of the first day of the calendar month following the month in which the Date of Termination occurs.

Notwithstanding the foregoing provisions of this Section 4(a), to the extent required in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), amounts to be paid under this Section 4(a) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code.

(b) Death or Disability . If Executive’s employment shall be terminated by reason of Executive’s death or Disability, then the Company will provide Executive (or his estate or legal representative) with the following severance payments and/or benefits: (A) the Accrued Obligations; (B) a lump sum equal to 100% of Executive’s Annual Base Salary; and (C) the Welfare Benefits. Notwithstanding the foregoing provisions of this Section 4(b), to the extent required in order to comply with Section 409A of Code, amounts to be paid under this Section 4(b) shall be paid to Executive on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code. Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement and any rights he may have under the Equity Documents.

(c) Cause; Other than for Good Reason . If Executive’s employment shall be terminated by the Company for Cause or by Executive without Good Reason, then the Company shall have no further payment obligations to Executive other than the Accrued Obligations. Thereafter, the Company shall have no further obligation to Executive or his legal representatives, other than any rights to vested benefits under any Benefit Plans, indemnification rights he may have under this Agreement, and any rights he may have under the Equity Documents.

(d) General Release . The Company’s obligations to make payments under Sections 4(a) and in the case of Disability under Section 4(b) are conditioned on Executive’s or his legal representative’s (as applicable) executing a general release of claims against the Company and its subsidiaries and affiliates and their successors and assigns (and the officers and directors of such entities) substantially in the form attached hereto as Exhibit A (the “ Release ”). For the avoidance of doubt, the Company’s obligations under Section 8 of this Agreement, the Benefit Plans, and the Equity Documents shall not be subject to Executive’s execution of the Release nor to Executive’s obligations under Section 5 of this Agreement, unless otherwise specifically provided in such other arrangements.

Section 5. Restrictive Covenants . Executive shall be subject to the restrictive covenants set forth in Annex I to Section 8 of the Management Investor Rights Agreement in accordance with its terms.

Section 6. Severance Payments. In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the Company, if the Board reasonably

 

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and in good faith believes Executive has violated or is in violation of any provision of Annex I of the Management Investor Rights Agreement, the Board may unilaterally suspend Executive’s right to receive any Cash Severance then or thereafter due from the Company to Executive, provided that the Board (a) gives Executive advance written notice of such suspension and (b) initiates an action or claim to enforce the Company’s rights in respect of such restrictive covenants promptly after such suspension. In the event that the Company prevails on such action or claim, Executive’s right to receive, and the Company’s obligation to pay, any additional Cash Severance, including any previously suspended amounts, shall be terminated immediately, and Executive shall have no further rights to Cash Severance. In the event that Executive prevails on such action or claim, the Company shall be required to pay to Executive in a lump sum within thirty (30) days of such adjudication (or, to the extent required in order to comply with Section 409A of the Code on the first business day after the date that is six months following Executive’s “separation from service” within the meaning of Section 409A of the Code) any Cash Severance the payment of which was delayed due to such suspension, plus interest for any period during which the payment of the Cash Severance was suspended at the prime rate, as published in the Wall Street Journal on the date of such suspension, and to commence payment of future installments of Cash Severance in accordance with Section 4(a)(ii).

Section 7. Executive’s Representations, Warranties and Covenants .

(a) Executive hereby represents and warrants to the Company and its subsidiaries that:

(1) Executive has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Executive;

(2) the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

(3) Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, fee for services agreement, confidentiality agreement or similar agreement with any other Person other than the Company;

(4) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms;

(5) Executive understands that Parent and the Company will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance; and

(6) as of the date of execution of this Agreement, Executive is not in breach of any of its terms, including having committed any acts that would form the basis for a Cause termination if such act had occurred after the Effective Date.

 

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(b) The Company and its subsidiaries hereby represent and warrant to Executive that:

(1) the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

(2) the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

(3) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

(4) the Company understands that Executive will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

Section 8. Indemnification .

The Company shall indemnify Executive to the maximum extent permitted under the General Corporate Law of Delaware for acts taken within the scope of his employment. To the extent that the Company obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company.

Section 9. General Provisions .

(a) Severability . It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(b) Entire Agreement . This Agreement and the Equity Documents embody the complete agreement and understanding among the parties hereto with respect to the subject

 

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matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way (including, without limitation, any other employment, severance or change-in-control agreement or understanding). For the avoidance of doubt, Executive, the Company and the Subsidiaries acknowledge that any agreement between Executive and the Company or Cendant Corporation or any subsidiary or affiliate of any of the foregoing, entered into prior to the Effective Date, including without limitation, the Prior Agreement, shall be void ab initio as of immediately before the Effective Date.

(c) Counterparts . This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d) Successors and Assigns .

(i) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(ii) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

(e) Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

(f) Enforcement .

(i) Arbitration . Except for the Company or its Affiliate’s right to obtain injunctive relief for violation of Section 5 of this Agreement or in Annex I to Section 8 of the Management Investor Rights Agreement, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or

 

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enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. Each party shall bear its or his costs and expenses in any such arbitration and one-half of the arbitrator’s fees and costs; provided , however , if Executive prevails on substantially all material claims, the Company shall reimburse Executive for all of his reasonable attorney’s fees and costs.

(ii) Remedies . All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy.

(iii) Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(g) Amendment and Waiver . The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(h) Notices . Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit for overnight delivery with a reputable overnight courier service.

 

If to the Company, to:
  Realogy Corporation
  c/o Apollo Management VI, L.P.
  9 West 57th Street
  New York, New York 10019
  Facsimile:   (212) 515-3288
  Attention:   Marc Becker

 

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with a copy (which shall not constitute notice) to:
  Wachtell, Lipton, Rosen & Katz
  51 West 52 nd Street
  New York, NY 10019
  Attention:   Steven A. Cohen, Esq.
    Igor Kirman, Esq.
  Facsimile:   212.403.2000
If to Executive, to:
  Executive’s home address most recently on file with the Company.
with a copy (which shall not constitute notice) to:
  Simpson Thacher & Bartlett LLP
  425 Lexington Avenue
  New York, NY 10017
  Attention:   Andrea K. Wahlquist, Esq.

(i) Withholding . The Company may withhold from any amounts payable or benefits to be provided to Executive under this Agreement or otherwise all Federal, state, city or other taxes and other amounts that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation.

(j) Survival of Representations, Warranties and Agreements . All representations, warranties and agreements contained herein shall survive this Agreement and the Employment Period indefinitely.

(k) Effectiveness . Notwithstanding the foregoing, none of Parent, the Company or its subsidiaries shall have any obligations to Executive or his beneficiaries under this Agreement, in the event Executive is unable to perform his duties hereunder, including due to death or Disability or Executive commits an act that would constitute Cause, in each case prior to the closing of the Transaction, in which case this Agreement shall be of no force and effect. Further, this Agreement shall be null and void and of no further effect in the event that the Merger Agreement is terminated or the Effective Date does not occur.

(l) Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. All references to a “Section” in this Agreement are to a section of the Agreement unless otherwise noted.

(m) Construction . Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(n) Code Section 409A . Notwithstanding anything herein or elsewhere to the contrary, to the extent Executive or the Company notifies the other that this Agreement may

 

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result in Executive being subject to the penalties of Section 409A of the Code, Executive and the Company agree to negotiate (and the Company shall cause any affiliate to negotiate), in good faith alternatives to avoid such penalties.

 

-12-


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

REALOGY CORPORATION
By:  

/s/ David J. Weaving

Name:   David J. Weaving
Title:  

Executive Vice President and

Chief Administrative Officer

BRUCE G. ZIPF
Signature:  

/s/ Bruce G. Zipf


Exhibit A

Form of Release

THIS RELEASE (the “ Release ”) is entered into between Bruce G. Zipf (“ Executive ”) and Realogy Corporation, a Delaware corporation (“ Realogy ”), for the benefit of Realogy. The entering into and non-revocation of this Release is a condition to Executive’s right to receive the payments under Section 4 [(a)][(b)] of the employment agreement entered into by and between Executive and Realogy, dated as of April 10, 2007 (the “ Employment Agreement ”). Capitalized terms used and not defined herein shall have the meaning provided in the Employment Agreement.

Accordingly, Executive and Realogy agree as follows.

1. In consideration for the payments and other benefits provided to Executive by the Employment Agreement, to which Executive is not otherwise entitled, and the sufficiency of which Executive acknowledges, Executive represents and agrees, as follows:

(a) Executive, for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “ Releasers ”), hereby irrevocably and unconditionally releases, acquits and forever discharges and agrees not to sue Realogy or any of its parents, subsidiaries, divisions, affiliates and related entities and its current and former directors, officers, shareholders, trustees, employees, consultants, independent contractors, representatives, agents, servants, successors and assigns and all persons acting by, through or under or in concert with any of them (collectively “ Releasees ”), from all claims, rights and liabilities up to and including the date of this Release arising from or relating to Executive’s employment with, or termination of employment from, the Company, under the Employment Agreement and from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of actions, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected and any claims of wrongful discharge, breach of contract, implied contract, promissory estoppel, defamation, slander, libel, tortious conduct, employment discrimination or claims under any federal, state or local employment statute, law, order or ordinance, including any rights or claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq. (“ ADEA ”), or any other federal, state or municipal ordinance relating to discrimination in employment. Nothing contained herein shall restrict the parties’ rights to enforce the terms of this Release.

(b) To the maximum extent permitted by law, Executive agrees that he has not filed, nor will he ever file, a lawsuit asserting any claims which are released by this Release, or to accept any benefit from any lawsuit which might be filed by another person or government entity based in whole or in part on any event, act, or omission which is the subject of this Release.

(c) This Release specifically excludes Executive’s rights and Realogy’s obligations under Section 8 of the Employment Agreement, the Benefit Plans, and the Equity Documents. Executive’s entitlement to vested benefits under the Benefit Plans and the Equity


Documents shall be determined in accordance with the provisions of the Benefit Plans or Equity Documents, as the case may be. Nothing contained in this Release shall release Executive from his obligations, including any obligations to abide by restrictive covenants, under the Employment Agreement, the Equity Documents or the Benefit Plans that continue or are to be performed following termination of employment.

(d) Executive represents that he is not aware of any facts or circumstances that would give rise, based on his actions, to any claims or lawsuits against Realogy or any Releasee.

(e) The parties agree that this Release shall not affect the rights and responsibilities of the US Equal Employment Opportunity Commission (hereinafter “ EEOC ”) to enforce ADEA and other laws. In addition, the parties agree that this Release shall not be used to justify interfering with Executive’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC. The parties further agree that Executive knowingly and voluntarily waives all rights or claims (that arose prior to Executive’s execution of this Release) the Releasers may have against the Releasees, or any of them, to receive any benefit or remedial relief (including, but not limited to, reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by the EEOC.

2. Executive acknowledges that Realogy has specifically advised him of the right to seek the advice of an attorney concerning the terms and conditions of this Release. Executive further acknowledges that he has been furnished with a copy of this Release, and he has been afforded twenty-one (21) days in which to consider the terms and conditions set forth above prior to this Release. By executing this Release, Executive affirmatively states that he has had sufficient and reasonable time to review this Release and to consult with an attorney concerning his legal rights prior to the final execution of this Release. Executive further agrees that he has carefully read this Release and fully understands its terms. Executive understands that he may revoke this Release within seven (7) days after signing this Release. Revocation of this Release must be made in writing and must be received by Marc Becker at Apollo Management, L.P., 9 West 57th Street, 43rd Floor, New York, NY 10019 within the time period set forth above.

3. This Release will be governed by and construed in accordance with the laws of the state of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the state of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the state of Delaware to be applied. In furtherance of the foregoing, the internal law of the state of Delaware will control the interpretation and construction of this agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. The provisions of this Release are severable, and if any part or portion of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Release shall become effective and enforceable on the eighth day following its execution by Executive, provided he does not exercise his right of revocation as described above. If Executive fails to sign and deliver this Release or revokes his signature, this Release will be without force or effect, and Executive shall not be entitled to the payment under Section 4 [(a)][(b)] of the Employment Agreement.

Exhibit 10.8

 

  FORM OF RESTRICTED STOCK AGREEMENT (this “Agreement”) dated as of [ l ], 2007, between DOMUS HOLDINGS CORP., a Delaware corporation, (the “ Company ”) and [ l ] (the “ Purchaser ”).

WHEREAS, pursuant to the Agreement and Plan of Merger, made and entered into as of the 15th day of December, 2006, by and among the Company, Realogy Corporation (“ Realogy ”) and Domus Acquisition Corp., Domus Acquisition Corp. will be merged with and into Realogy (the “ Transaction ”), and Realogy will be the surviving corporation in the Transaction and will be a subsidiary of the Company;

WHEREAS, the Company, acting through the Committee with the consent of the Company’s Board of Directors (the “ Board ”) will grant to the Purchaser, effective as of the date the Transaction closes (the “ Grant Date ”), under the Domus Holdings Corp. 2007 Stock Incentive Plan (the “ Plan ”) a number of shares of Common Stock (“ Shares ”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, Realogy and the Purchaser have executed an Employment Agreement of even date herewith (the “ Employment Agreement ”);

WHEREAS, the Company, the Purchaser and certain other holders of Shares have entered into a Management Investor Rights Agreement of even date herewith (the “ Management Investor Rights Agreement ”);

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1. The Plan . The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Plan shall control. A copy of the Plan may be obtained from the Company by the Purchaser upon request. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan.

Section 2. Grant . Subject to the terms of this Agreement, the Company hereby grants to the Purchaser an Award of Restricted Stock with respect to an aggregate of [•] restricted shares of Common Stock of the Company (subject to adjustment as provided in Article X of the Plan) (the “Restricted Shares”) at a purchase price of $ [•] per share (the “Unvested RS Purchase Price”). The Purchaser agrees to promptly pay to the Company the amount of the aggregate Unvested RS Purchase Price for the Restricted Shares.

Section 3. Vesting . The Restricted Shares shall vest, and the restrictions imposed on the Restricted Shares pursuant to this Section 3 shall lapse as follows: (i) one-half of the Restricted Shares shall vest on the 18-month anniversary of the Grant Date and (ii) one-half of the Restricted Shares shall vest on the third anniversary of the Grant Date, provided that, in each case, the Purchaser has not incurred a Termination of Relationship prior to the applicable vesting date. The Restricted Shares shall accelerate and vest in full upon a Sale of the Company (provided the Purchaser has not incurred a Termination of Relationship before such time). Prior to vesting, the Restricted Shares, any interest therein, any amount payable in respect thereof, and


any consideration or other securities received therefor pursuant to Article X of the Plan (such consideration or other securities, the “Restricted Property”), may not be sold or transferred by the Purchaser. After vesting, the Restricted Shares shall have the same attributes as other Shares, as set forth in the Management Investor Rights Agreement and shall be subject to repurchase as set forth in the Management Investor Rights Agreement; provided, however, that Restricted Shares that have not yet vested shall be subject to repurchase at the Unvested RS Purchase Price.

Section 4. Purchaser’s Service . Nothing in this Agreement shall confer upon the Purchaser any right to continue as an employee of, or other service provider to, the Company or any of its Subsidiaries or Affiliates or interfere in any way with the right of the Company, its Subsidiaries or its Affiliates, as the case may be, in their respective sole discretion, to terminate the Purchaser’s employment or service relationship or to increase or decrease the Purchaser’s compensation at any time.

Section 5. Securities Law Representations . The Purchaser acknowledges that the Restricted Shares are not being registered under the Securities Act, based, in part, in reliance upon an exemption from registration under Rule 701 promulgated under the Securities Act, and a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Purchaser, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

 

   

The Purchaser is acquiring the Restricted Shares solely for the Purchaser’s own account, for investment purposes only, and not with a view or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the shares within the meaning of the Securities Act and/or any applicable state securities laws.

 

   

The Purchaser is an “accredited investor”, as that term is defined in Rule 501(a)(1), (2) or (3) of Regulation D promulgated under the Securities Act.

 

   

The Purchaser has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Restricted Shares. The Purchaser has been furnished with, and/or has access to, such information as the Purchaser considers necessary or appropriate for deciding whether to purchase the Restricted Shares. However, in evaluating the merits and risks of an investment in the Restricted Shares, the Purchaser has and will rely only upon the advice of the Purchaser’s own legal counsel, tax advisors, and/or investment advisors.

 

   

The Purchaser is aware that any value the Restricted Shares may have depends on their vesting and certain other factors, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could acquire capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.


   

The Purchaser understands that the Restricted Shares will be characterized as “restricted securities” under the federal securities laws, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act, as presently in effect. The Purchaser acknowledges receiving a copy of Rule 144 promulgated under the Securities Act, as presently in effect, and represents that the Purchaser is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

 

   

The Purchaser has read and understands the restrictions, limitations and the Company’s rights set forth in the Management Investor Rights Agreement, the Plan and this Agreement that will be imposed on the Restricted Shares (including those restrictions and limitations which will continue after the Shares have vested). The Purchaser acknowledges that to the extent the Purchaser is not a party to the Management Investor Rights Agreement at the time that the Purchaser purchases the Restricted Shares, such purchase shall be treated for all purposes as effecting the Purchaser’s simultaneous execution of the Management Investor Rights Agreement and the Purchaser shall be bound thereby.

 

   

The Purchaser has not relied upon any oral representation made to the Purchaser relating to the Restricted Shares or upon information presented in any promotional meeting or material relating to the Restricted Shares.

 

   

The Purchaser understands and acknowledges that (a) any certificate evidencing the Restricted Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws or the Management Investor Rights Agreement or the Plan, and (b) except as otherwise provided under the Management Investor Rights agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws. The Committee reserves the right to account for Shares through book entry or other electronic means rather than the issuance of stock certificates.

Section 6. Designation of Beneficiary . The Purchaser may appoint any individual or legal entity in writing as his beneficiary to receive any Shares (to the extent not previously terminated or forfeited) under this Agreement upon the Purchaser’s death or becoming subject to a Disability. The Purchaser may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Purchaser must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 8 of this Agreement before the date of the Purchaser’s death. In the absence of a beneficiary designation, the legal representative of the Purchaser’s estate shall be deemed the Purchaser’s beneficiary.

Section 7. Condition Precedent . If the Transaction is not consummated, the Company will not grant the Purchaser the Restricted Shares and this Agreement shall become null and void.


Section 8. Notices . All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to it at:

Domus Holdings Corp.

c/o Apollo Management VI, L.P.

9 West 57th Street

New York, New York 10019

Facsimile: (212) 515-3264

Attention: Ali Rashid

With a copy to (which copy will not constitute notice):

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Telecopy: (212) 326-2061

Attention: Steven A. Cohen, Esq.

                   Igor Kirman, Esq.

Facsimile: 212.403.2000

If to the Purchaser, at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.

Any of the foregoing notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 9. Waiver of Breach . The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 10. Purchaser’s Undertaking . The Purchaser hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Purchaser pursuant to the express provisions of this Agreement and the Plan.


Section 11. Modification of Rights . The rights of the Purchaser are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Restricted Shares granted hereby). Notwithstanding the foregoing, the Purchaser’s rights under this Agreement and the Plan may not be materially impaired without the Purchaser’s prior written consent.

Section 12. Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 13. Restrictive Covenants . The purchase, grant and vesting of the Restricted Shares pursuant to this Agreement shall be subject to the Purchaser’s continued compliance with the restrictive covenants in Annex I to Section 8 of the Management Investor Rights Agreement.

Section 14. Counterparts . This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 15. Entire Agreement . This Agreement, the Plan, the Employment Agreement, the Management Investor Rights Agreement and the other writings referred to herein constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.

Section 16. Severability . It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.


Section 17. Waiver of Jury Trial . Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

Section 18. Dividend and Voting Rights . After the Grant Date, the Purchaser shall be entitled to cash dividends that are payable on the same number of Shares as the Restricted Shares, except that such dividends shall vest only and be payable as and when the underlying Restricted Shares become vested. In addition, the Purchaser shall have voting rights with respect to the Restricted Shares subject to the Award, provided that such rights shall terminate immediately as to any Restricted Shares that are repurchased by the Company or that are otherwise forfeited.

Section 19. Tax Withholding . The Company shall reasonably determine the amount of any Federal, state, local or other income, employment, or other taxes which the Company or any of its subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting, making of an election under Section 83(b) of the Code or other event with respect to the Restricted Shares. The Company’s obligation to deliver the Restricted Shares or any certificates evidencing the Restricted Shares (or to make a book entry or other electronic notation indicating ownership of the Restricted Shares), or otherwise remove the restrictive notations or legends on such shares or certificates that refer to nontransferability as set forth in Section 3 of this Agreement, is subject to the condition precedent that the Purchaser either pay or provide for the amount of any such withholding obligations in such manner as may be authorized by the Committee under, or as may otherwise be permitted under, Article XV of the Plan (which for the avoidance of doubt shall include the right of the Purchaser to elect to have a number of Restricted Shares that are otherwise vesting under Section 3 above and have a Fair Market Value equal to the minimum amount of withholding taxes, withheld from such delivery to the Purchaser in order to satisfy the payment of such taxes, pursuant to Article XV, clause (iii) of the Plan).

Section 20. Stock Power; Power of Attorney . Concurrent with the execution and delivery of this Agreement, the Purchaser shall deliver to the Company an executed stock power in the form attached hereto as Exhibit A, in blank, with respect to the Restricted Shares and any related Restricted Property. The Purchaser, by acceptance of the Award, shall be deemed to appoint, and does so appoint by execution of this Agreement, the Company and each of its authorized representatives as the Purchaser’s attorney(s)-in-fact to (1) effect any transfer to the Company (or other purchaser, as the case may be) of the Restricted Shares acquired pursuant to this Agreement (including any related Restricted Property) that are repurchased by the Company (or other permitted purchaser), and (2) execute such documents as the Company or such representatives deem necessary or advisable in connection with any such transfer.

Section 21. Adjustment . In the event of any event described in Article X of the Plan occurring after the Grant Date, the adjustment provisions (including the right to substitute cash payments) as provided for under Article X of the Plan shall apply. Notwithstanding Article X of the Plan, if a Sale of the Company shall occur prior to the Restricted Shares otherwise becoming vested under Section 3 above, the Restricted Shares shall vest upon such event in accordance with Section 3 and shall be treated in the same manner as any Shares held by the Purchaser.


[Signature Pages Follow]


IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock Agreement as of the date first written above.

 

DOMUS HOLDINGS CORP.
By:    
  Name:
  Title:
PURCHASER
See attached signature page


PURCHASER
Name:    
Residence Address:

 

Number of Restricted Shares:       [•]
Unvested RS Purchase Price per Share:    $ [•]

Restricted Stock Agreement Signature Page


Exhibit A

STOCK POWER

FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Agreement between Domus Holdings Corp., a Delaware corporation (the “ Company ”), and the individual named below (the “ Individual ”) dated as of             ,            , the Individual hereby sells, assigns and transfers to the Company, an aggregate of             shares of Common Stock of the Company, standing in the Individual’s name on the books of the Company and represented by stock certificate number(s)                                                 to which this instrument is attached, and hereby irrevocably constitutes and appoints                                                                                  as his or her attorney in fact and agent to transfer such shares in the books of the Company, with full power of substitution in the premises.

Dated                        ,             

 

 
Signature
Print Name

(Instruction: Please do not full in any blanks other than the signature line. The purpose of the assignment is to enable the Company to exercise its sale/purchase option set forth in the Restricted Stock Agreement without requiring additional signatures on the part of the Individual.)

Exhibit 10.9

EXECUTION COPY

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

PHH HOME LOANS, LLC

January 31, 2005

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Table of Contents

 

          Page
ARTICLE I Definitions

Section 1.1

   Definitions    2

Section 1.2

   Interpretation    13
ARTICLE II General Provisions

Section 2.1

   Form    14

Section 2.2

   Company Name    14

Section 2.3

   Registered Office; Registered Agent    14

Section 2.4

   Place of Business    14

Section 2.5

   Purpose; Nature of Business Permitted; Powers    14

Section 2.6

   Business Transactions of a Member with the Company    16

Section 2.7

   No State-Law Partnership    16

Section 2.8

   Authorized Representatives    16

Section 2.9

   Term    16

Section 2.10

   D/B/As, Fictitious Names, Licenses and Regulatory Approvals    16

Section 2.11

   Subsequent Capital Contributions    17
ARTICLE III Members

Section 3.1

   Members    21

Section 3.2

   Admission of New Members    21

Section 3.3

   Representations    21

Section 3.4

   No Liability of Members    22

Section 3.5

   Company Property    23

Section 3.6

   Confidentiality    23
ARTICLE IV Capital Contributions

Section 4.1

   Capital Structure    24

Section 4.2

   Capital Contributions    24

Section 4.3

   Additional Provisions Concerning Capital Contributions    24

Section 4.4

   Capital Accounts    25


Section 4.5

   Return of Capital Contributions    26

Section 4.6

   Loans From Members    26
ARTICLE V Allocations and Distributions

Section 5.1

   Allocations of Net Income and Net Loss    26

Section 5.2

   Adjustments and Special Allocations    27

Section 5.3

   Net Loss Limitation    28

Section 5.4

   Other Allocation Rules    29

Section 5.5

   Tax Allocations; Code Section 704(c)    29

Section 5.6

   Distributions    30
ARTICLE VI Management

Section 6.1

   Managing Member    30

Section 6.2

   Board of Advisors    32

Section 6.3

   Actions Requiring Board Approval    34

Section 6.4

   Company Resources    37

Section 6.5

   Advisors Have No Managerial Authority    37

Section 6.6

   Devotion of Time    37

Section 6.7

   Officers    38

Section 6.8

   Remuneration; Reimbursement    38

Section 6.9

   Approval of Annual Business Plan    38

Section 6.10

   Reports    38
ARTICLE VII Changes in Law; Financial Reporting

Section 7.1

   Compliance with Law; Changes in Law    39

Section 7.2

   Consolidation    41

Section 7.3

   Certain Actions    41
ARTICLE VIII Termination of Relationship

Section 8.1

   Cendant Termination Events    42

Section 8.2

   Effects of a Cendant Termination Event    43

Section 8.3

   PHH Termination Event    46

Section 8.4

   Two Year Termination, Special Termination Event and 25-Year Termination    47

 

ii


Section 8.5

   Effect of Termination Events    51
ARTICLE IX Dissolution and Winding Up

Section 9.1

   Events Causing Dissolution    51

Section 9.2

   Winding Up    52

Section 9.3

   Compensation of Liquidating Trustee    54

Section 9.4

   Distribution of Company Property and Proceeds of Sale Thereof    54

Section 9.5

   Company Termination    54

Section 9.6

   Final Audit    55
ARTICLE X Transfers and Assignment of Interests

Section 10.1

   Consent Required for Transfer    55

Section 10.2

   Withdrawal    56
ARTICLE XI Fiscal Matters; Books and Records

Section 11.1

   Bank Accounts; Investments    56

Section 11.2

   Records Required by Act; Right of Inspection    56

Section 11.3

   Books and Records of Account    57

Section 11.4

   Expenses    57

Section 11.5

   Tax Returns and Information    57

Section 11.6

   Delivery of Audited Financial Statements to Members    58

Section 11.7

   Audits    58

Section 11.8

   Fiscal Year    58

Section 11.9

   Tax Elections    58

Section 11.10

   Tax Matters Member    59
ARTICLE XII Indemnification and Insurance

Section 12.1

   Indemnification and Advancement of Expenses    59

Section 12.2

   Insurance    60

Section 12.3

   Limit on Liability of Members    61

Section 12.4

   Indemnification by Managing Member    61

Section 12.5

   No Additional Indemnification Rights    62
ARTICLE XIII Miscellaneous Provisions

Section 13.1

   Counterparts    62

 

iii


Section 13.2

   Entire Agreement    62

Section 13.3

   Partial Invalidity    62

Section 13.4

   Amendment    63

Section 13.5

   Binding Effect    63

Section 13.6

   Negotiation and Mediation    63

Section 13.7

   Governing Law    64

Section 13.8

   Offset    64

Section 13.9

   Effect of Waiver or Consent    64

Section 13.10

   Notices    64

Section 13.11

   No Consequential Damages    66

Section 13.12

   Most Favored Nation    66

Section 13.13

   Impossibility of Performance    67

 

iv


Index of Defined Terms

 

     Page

Act

   1

Additional Capital Determination

   26

Adjusted Capital Account

   2

Advisor

   34

Affiliate

   2

Agreement

   1, 2

Annual Business Plan

   40

Assignment

   2

Authorized Representatives

   17

Bankruptcy

   2

Bankruptcy Event

   45

Beneficial Owner

   3

Board

   34

Business Day

   3

Capital Account

   26

Capital Contribution

   3

Cendant

   3

Cendant Advisors

   34

Cendant Designated Buyer

   45, 50

Cendant List

   45

Cendant Member

   1

Cendant Mobility

   3

Cendant Mobility Offices

   3

Cendant Owned Real Estate Offices

   3

Cendant Put

   45

Cendant Put Notice

   46

Cendant Real Estate

   3

Cendant Termination Event

   44

Certificate of Formation

   1

Change of Control

   3

Closing Date

   4

Code

   4

Common Interest Percentage

   25

Common Interests

   25

Company

   1

Company Expenses

   60

Company Minimum Gain

   4

 

v


Company Property or Properties

   4

Company Regulatory Event

   5

Confidential Information

   24

Contributed Property

   5

Contribution Agreement

   5

Contribution Date

   19

Contribution Notice

   18

Control

   5

Controlling Person

   5

Customer

   5

Depreciation

   5

Dispute

   67

Disputing Member

   67

Distributable Net Income

   6

Event of Dissolution

   54

Fair Market Value

   6

FHA

   6

Fiscal Period

   6

Fiscal Quarter

   6

GAAP

   6

Governmental Entity

   6

Gross Asset Value

   7

HUD

   8

HUD-Manager

   34

Indemnified Parties

   62

Initial Capital Contribution

   25

Initial Officers

   40

Initial Operating Agreement

   1

Insolvency

   8

Interest

   8

Investor Commitments

   8

Lease

   8

License Agreement

   8

Liquidating Trustee

   55

Loan Funding Facility

   8

Losses

   8

LTM Net Income

   46

Major Action

   36

Management Services Agreement

   8

Managing Member

   9

Master Sublease Agreement

   9

Mediation Request

   67

 

vi


Member

   1, 9

Member Nonrecourse Debt

   9

Member Nonrecourse Debt Minimum Gain

   9

Member Nonrecourse Deductions

   9

Members

   1

Minimum Capital Requirements

   38

Mobility Interim MSA

   9

Mortgage Instrument

   10

Mortgage Loan

   10

Mortgage Loan Disclosure

   10

Mortgage Loan Documents

   10

Mortgage Loan Sale Agreement

   10

Mortgage Note

   10

Mortgaged Property

   10

MSA

   10

Net Income

   10

Net Loss

   10

New Member

   12

Nonrecourse Deductions

   12

Nonrecourse Liability

   12

Non-Renewal Notice

   53

Non-Renewal PHH Sale

   53

Non-Renewal Put

   53

NRT Interim MSA

   12

Origination Channels

   12

Other Indemnified Parties

   64

Person

   12

PHH

   12

PHH Advisors

   34

PHH Change of Control

   13

PHH Interests

   47

PHH Material Breach

   44

PHH Member

   1

PHH Regulatory Event

   12

PHH Sale

   45

PHH Sale Notice

   47

PHH Termination Event

   48

PIMI Contributed Assets

   19

PMC

   12

Proceeding

   13

Purchase Notice

   49

Purchase Price

   48

 

vii


Purchase Right

   48

Put Date

   46

Put Price

   45

Regulatory Event Fee

   44

Regulatory Order

   13

Related Transaction

   33

RESPA

   13

Rules

   67

Sale Date

   48

Sale Price

   47

Securities Act

   13

Small Corps

   13

Special Termination Event

   42

Special Termination Notice

   42

Special Termination Put

   53

SRA

   1

State Agency

   13

Subsequent Capital Contributions

   19

Subsidiary

   13

Tax Matters Member

   62

Termination Payment

   46

Transaction Documents

   13

Transfer

   14

Treasury Regulations

   14

Two Year PHH Sale

   50

Two Year Put

   50

Two Year Put Closing Date

   51

Two Year Put Date

   50

Two Year Put Price

   50

Two Year Sale Date

   50

Two Year Sale Price

   51

Two-Year Termination Notice

   50

Venture License Agreement

   14

 

viii


This AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT, dated as of January 31, 2005 (this “ Agreement ”), of PHH Home Loans, LLC (the “ Company ”), a Delaware limited liability company, is by and between PHH Broker Partner Corporation, a Maryland corporation (the “ PHH Member ”), and Cendant Real Estate Services Venture Partner, Inc., a Delaware corporation (the “ Cendant Member ”) and each Person (as hereinafter defined) subsequently admitted as a member of the Company (individually, a “ Member ” and, collectively, the “ Members ”).

W I T N E S S E T H :

WHEREAS, the PHH Member and the Cendant Member entered into a Limited Liability Company Operating Agreement, effective as of November 3, 2004 (the “ Initial Operating Agreement ”) and formed the Company pursuant to and in accordance with the Limited Liability Company Act of the State of Delaware (the “ Act ”) by filing the Certificate of Formation of the Company (the “ Certificate of Formation ”) in accordance with the Act;

WHEREAS, the Members desire to amend and restate the Initial Operating Agreement;

WHEREAS, the Members intend that hereafter the principal purpose of the Company shall be to originate and sell mortgage loans sourced through Cendant’s owned residential real estate brokerage and corporate relocations businesses and from all U.S.-based employees of Cendant and its Subsidiaries, in accordance with the terms and provisions of this Agreement;

WHEREAS, this Agreement sets forth, among other things, the agreement among the Members as to the governance of the affairs of the Company and the conduct of its business; and

WHEREAS, concurrently with the execution of this Agreement, Cendant Real Estate, PHH, the Cendant Member, PMC, the PHH Member and the Company have entered into a Strategic Relationship Agreement (as amended from time to time, the “ SRA ”) which sets forth certain matters related to the business relationship among the parties thereto during the term of this Agreement.


NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants, promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members agree as follows:

ARTICLE I

Definitions

Section 1.1 Definitions . As used in this Agreement, the following terms shall each have the meaning set forth in this Article (unless the context otherwise requires).

Adjusted Capital Account ” means, with respect to any Member, the balance, if any, in such Member’s Capital Account as of the end of the relevant Fiscal Period, after: (i) crediting to such Capital Account any amounts that such Member is obligated to restore pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5)) and (ii) debiting to such Capital Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

Affiliate ” means, when used with reference to a specific Person, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specific Person. For the avoidance of doubt, neither the Company nor any of the Brand Franchisees, as defined in the SRA, shall be deemed to be an Affiliate of Cendant or any of Cendant’s Affiliates for any purpose hereunder or under any of the other Transaction Documents.

Agreement ” means this Agreement, including the Schedules and Exhibits hereto, as originally executed and as subsequently amended from time to time in accordance with the provisions hereof.

Assignment ” shall mean a document, sufficient under the laws of the jurisdiction where the related Mortgaged Property is located, to reflect all transfers of the applicable Mortgage Instrument and the Mortgage Note.

Bankruptcy ” means, with respect to any Person, the happening of any one or more of the following events: (a) such Person (or, in the case of any Person which is a partnership, any general partner thereof): (i) makes an assignment for the benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii) is adjudged bankrupt or insolvent, or there has been entered against such Person (or general partner) an order for relief, in any bankruptcy or insolvency proceeding; (iv) files a petition or answer seeking in respect of such Person (or general partner) any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person (or such general partner) in any proceeding of a nature described above; or (vi) seeks, consents or acquiesces in the appointment of a trustee, receiver or liquidator of such Person (or such general partner) or of all or any substantial part of such Person’s (or such general partner’s) properties; or (b) 120 days after the commencement of any proceeding against any such Person (or such general partner) seeking reorganization, arrangement, composition, readjustment,

 

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liquidation, dissolution or similar relief under any statute, law or regulation, if such proceeding has not been dismissed, or within 90 days after the appointment without such Person’s (or such general partner’s) consent or acquiescence of a trustee, receiver or liquidator of the Person (or such general partner) or of all or any substantial part of such Person’s (or such general partner’s) properties, if such appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, if such appointment is not vacated.

Beneficial Owner ” shall, with respect to any Person, be determined as set forth in Rule 13d-3 of the General Rules and Regulations of the Securities Exchange Act of 1934, as in effect on the date hereof.

Business Day ” means any day other than a Saturday, Sunday or a holiday on which commercial banks in the State of New York are closed.

Cendant ” means Cendant Corporation, a Delaware corporation.

Capital Contribution ” means, with respect to any Member, the amount of cash and the initial Gross Asset Value of any asset (other than cash) contributed to the capital of the Company pursuant to Article IV hereof.

Cendant Mobility Office ” means any office comprising part of Cendant’s corporate relocation business, including, without limitation, any office of Cendant Mobility Services Corporation (“ Cendant Mobility ”) or any of its Subsidiaries, whether owned as of the date hereof or acquired or opened hereafter by Cendant Mobility or one of its Subsidiaries.

Cendant Owned Real Estate Office ” means any residential real estate brokerage office owned as of the date hereof or acquired or opened hereafter by Cendant Real Estate or one of its Subsidiaries, including NRT Incorporated.

Cendant Real Estate ” means Cendant Real Estate Services Group, LLC, a Delaware limited liability company.

Change of Control ” means, with respect to any Person, the occurrence of any event set forth in one of the following paragraphs:

 

  (a) any “person” or “group” (as such terms are used in Section 13(d)(3) of the Exchange Act) is or becomes the Beneficial Owner, directly or indirectly, of securities of such Person representing greater than one-third of the combined voting power of such Person’s outstanding securities;

 

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  (b) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of such Person (together with any new directors whose election or appointment by such Board or whose nomination for election by the stockholders of such Person was approved by a vote of not less than a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least two-thirds of the Board of Directors of such Person;

 

  (c) there is consummated a merger, consolidation or similar transaction (including a recapitalization) of such Person with any other Person, other than a merger or consolidation immediately following which the stockholders of such Person immediately prior thereto own in the aggregate not less than two-thirds of the combined voting power of the entity surviving such merger, consolidation or similar transaction or the Controlling Person thereof; or

 

  (d) there is consummated a sale or disposition by such Person of all or a substantial portion of such Person’s assets to another Person, other than a sale or disposition immediately following which the stockholders of such Person immediately prior thereto own in the aggregate not less than two-thirds of the combined voting power of such other Person or the Controlling Person thereof.

Closing Date ” means January 31, 2005.

Code ” means the Internal Revenue Code of 1986.

Company Minimum Gain ” means “partnership minimum gain” as set forth in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).

Company Property or Properties ” means all interests, properties, whether real or personal, and rights of any type owned or held by the Company, whether owned or held by the Company at the date of its formation or thereafter acquired.

Company Regulatory Event ” means a situation in which (i) the Company becomes subject to any Regulatory Order, or any Governmental Entity initiates a Proceeding with respect to the Company, and (ii) such Regulatory Order or Proceeding prevents or materially impairs the Company’s ability to originate loans for any period of time in a manner that adversely affects the value of one or more of the quarterly distributions to be paid by the Company pursuant to Section 5.6 of this Agreement; provided , however , that Company Regulatory Event shall not include (1) any order,

 

4


directive or interpretation or change in law, rule or regulation, in any such case that is applicable generally to companies engaged in the mortgage lending business such that the Company is unable to cure the resulting circumstances described in (ii) above, or (2) any Regulatory Order or Proceeding that results solely from acts or omissions on the part of the Cendant Entities or their Affiliates.

Contributed Property ” means property or other consideration (other than cash) contributed to the Company in exchange for Interests.

Contribution Agreement ” means the Contribution Agreement to be entered into by and among the Cendant Member, the Company and the PHH Member pursuant to Section 2.11 hereof.

Control ” shall mean, with regard to any Person, the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative with the foregoing.

Controlling Person ” means a Person who controls another Person.

Customer ” means any individual who contacts the Company, whether in person or by mail, phone, via the Internet (including by electronic mail), or otherwise, or who is so contacted by the Company, about the possibility of obtaining a Mortgage Loan through the Company, or who otherwise obtains a Mortgage Loan from or through the Company.

Depreciation ” means, for each Fiscal Period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Period; provided , however , that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Period, Depreciation shall be an amount that bears the same ratio to such Gross Asset Value which the asset had when its value was last adjusted, as the federal income tax depreciation, amortization or other cost recovery deduction with respect to such asset for such Fiscal Period bears to the adjusted tax basis which the asset had when its value was last adjusted; and provided , further , that if the federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Period is zero, then, subject to Section 6.3(a)(xiv), Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member.

Distributable Net Income ” shall mean, for each Fiscal Quarter, an amount equal to the net income of the Company and its Subsidiaries, on a consolidated basis, determined in accordance with GAAP, less any amounts retained by the Company as shall be necessary to meet the Minimum Capital Requirements (which requirements shall be approved by the Board pursuant to Section 6.3).

 

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Fair Market Value ” means the fair market value of an asset, as determined by the Managing Member using any reasonable method of valuation, except as otherwise provided herein; provided , however , that such fair market value shall be approved by the Board as provided in Section 6.3(a)(xvii).

FHA ” means the Federal Housing Administration of HUD or any successor thereto.

Fiscal Period ” means the period (i) commencing (w) at the beginning of each Fiscal Quarter, (x) the date of any acquisition of Interests by any new or existing Member in exchange for a Capital Contribution, or (y) on each date following the effective date of any distribution to a Member of any property as consideration for an Interest in the Company, and (ii) ending on the date immediately preceding the first day of the next Fiscal Period; provided , that the last Fiscal Period shall end on the date on which all assets of the Company are distributed to the Members pursuant to Section 9.4 hereof.

Fiscal Quarter ” means (i) the period commencing on the date of this Agreement and ending on March 31, 2005, or (ii) any subsequent three (3) month period commencing on January 1, April 1, July 1 and October 1 and ending on March 31, June 30, September 30 and December 31, respectively; provided , that the last Fiscal Quarter shall end on the date on which all assets of the Company are distributed to the Members pursuant to Section 9.4 hereof.

GAAP ” means generally accepted accounting principles in the United States.

Governmental Entity ” means any court, agency or commission or other governmental or regulatory authority.

Gross Asset Value ” means, with respect to any asset, such asset’s adjusted basis for federal income tax purposes, except as follows:

(i) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Fair Market Value of such asset;

(ii) the Gross Asset Value of all Company assets shall be adjusted to equal their respective Fair Market Values, as of the following times: (a) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital

 

6


Contribution, (b) the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an interest in the Company and (c) the liquidation of the Company, within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g); provided , however , that, with approval of the Board pursuant to Section 6.3(a)(xiv) hereof, adjustments pursuant to clause (ii)(a) or (ii)(b) of this definition shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(iii) the Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the Fair Market Value of such asset on the date of such distribution, unreduced by any liability secured by such asset; and

(iv) the Gross Asset Value of Company assets will be increased or decreased to reflect any adjustment to the adjusted basis of such assets under Sections 734(b) or 743(b) of the Code, but only to the extent that the adjustment is taken into account in determining Capital Accounts under Treasury Regulation Section 1.704-1(b)(2)(iv)(m) and paragraph (f) of the definition of Net Income and Net Loss or Section 5.2(f), provided , however , that Gross Asset Values shall not be adjusted pursuant to this paragraph (iv) to the extent the Managing Member determines that an adjustment pursuant to paragraph (ii) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (iv) and the Board authorizes such paragraph (ii) adjustment pursuant to Section 6.3(a)(xiv) hereof.

If the Gross Asset Value of an asset has been determined or adjusted pursuant to paragraph (i), paragraph (ii) or paragraph (iv) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Loss.

HUD ” means the United States Department of Housing and Urban Development or any successor thereto.

Interest ” means (i) a Member’s share of Net Income (and items of income and gain) and Net Loss (and items of loss and deduction) of the Company and a Member’s right to receive distributions from the Company in accordance with the provisions of this Agreement and the Act and (ii) such Member’s other rights and privileges as herein provided, including, without limitation, voting privileges.

 

7


Insolvency ” means , when used with respect to any Person, such Person is unable to pay its debts and obligations as they become due, or has incurred debts beyond its ability to pay such debts as they mature.

Investor Commitments ” means any agreement, contract or arrangement pursuant to which any Person purchases or agrees to purchase Mortgage Loans from the Company or any Subsidiary of the Company.

Lease ” means the Bishop’s Gate Sublease, substantially in the form of Exhibit A hereto, to be entered into between the Company and PMC on the Contribution Date, pursuant to which the Company will lease space from PMC at 3000 Leadenhall Road, Mt. Laurel, NJ 08054.

License Agreement ” means the Trademark License Agreement, dated as of the date of this Agreement, between PMC and TM Acquisition Corp., Coldwell Banker Real Estate Corporation and ERA Franchise Systems, Inc., pursuant to which PMC has been granted a license to use the Cendant Real Estate Franchisee Brands (as defined in the SRA) in connection with its business, on the terms set forth therein.

Loan Funding Facility ” means a credit or loan agreement or other funding arrangement, approved by the Board pursuant to Section 6.3 hereof, pursuant to which the Company and/or its Subsidiaries borrows money for the purpose of funding Mortgage Loan originations.

Losses ” means any and all losses, damages, disbursements, suits, claims, liabilities, obligations, judgments, fines, penalties, charges, amounts paid in settlement, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses), and shall specifically include, but only for purposes of Section 12.4 hereof, any indirect, special, incidental or consequential damages (including lost profits and lost cash distributions).

Management Services Agreement ” means the Management Services Agreement, substantially in the form attached hereto as Exhibit B , to be entered into by the Company and PMC in accordance with Section 2.11 of this Agreement.

Managing Member ” means the PHH Member, or such other Member as may replace the PHH Member as Managing Member pursuant to Section 8.2 or 8.4 hereof.

Master Sublease Agreement ” means the Master Shared Office Space Agreement, substantially in the form attached hereto as Exhibit C , to be entered into between the Company and NRT on the Contribution Date, pursuant to which the Company will sublease from NRT office space utilized by field personnel of the Company who are co-located in a Cendant Owned Real Estate Office.

 

8


Member ” means, at any time, a Person admitted as a member of the Company pursuant to Section 3.2 hereof and listed on Schedule I hereto. If a Member Transfers its Interest or any portion thereof to a Person who is not a Member, reference in this Agreement to a “Member” or such Member’s Capital Account in connection with such Transferred Interest or portion thereof shall be deemed to be a reference to the record holder of such Transferred Interest or portion thereof for the purpose of calculating the economic interest and Capital Account balances and adjustments represented by such Transferred Interest or portion thereof until such record holder of such Transferred Interest or portion thereof is admitted as a Member.

Member Nonrecourse Debt ” means “partner nonrecourse debt” as set forth in Treasury Regulation Section 1.704-2(b)(4).

Member Nonrecourse Debt Minimum Gain ” means an amount with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury Regulation Section 1.704-2(i)(3).

Member Nonrecourse Deductions ” means “partner nonrecourse deductions” as set forth in Treasury Regulation Section 1.704-2(i)(2), and the amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a Fiscal Period shall be determined in accordance with the rules of Treasury Regulation Section 1.704-2(i)(2).

Mobility Interim MSA ” means the Marketing Agreement, by and between Cendant Mobility and PMC, dated as of January 31, 2005.

Mortgage Instrument ” means any deed of trust, security deed, mortgage, or other instrument which constitutes a first lien or second lien on the Mortgaged Property securing payment by a mortgagor of a Mortgage Note.

Mortgage Loan ” means a mortgage loan (including a home equity line of credit) evidenced by one or more promissory notes and secured by a mortgage or deed of trust on one or more residential real estate properties.

Mortgage Loan Disclosure ” shall mean any disclosure, notice or other document or statement that, pursuant to applicable law, must be provided to a Customer by or on behalf of the Company in connection with the origination, closing and funding of a Mortgage Loan or an application for a Mortgage Loan.

 

9


Mortgage Loan Documents ” means the Mortgage Instruments, Mortgage Notes and Assignments.

Mortgage Loan Sale Agreement ” means a Mortgage Loan Sale Agreement to be entered into by and between the Company and PMC in accordance with Section 2.11 hereof.

Mortgage Note ” means the mortgage note, deed of trust note, security deed note or other form of promissory note executed by a mortgagor and secured by a Mortgage Instrument evidencing the indebtedness of the mortgagor under a Mortgage Loan.

Mortgaged Property ” means the interest in real property pledged to secure a Mortgage Note, as evidenced by one or more Mortgage Instruments.

MSA ” means the Marketing Services Agreement, dated as of the date of this Agreement, by and between PMC and certain Subsidiaries of Cendant Real Estate.

Net Income ” and “ Net Loss ” shall mean, for each Fiscal Period, an amount equal to the Company’s items of taxable income or loss for such Fiscal Period, determined in accordance with Section 703 of the Code (for this purpose all items of income, gain, loss and deduction required to be separately stated pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments (without duplication):

(a) any income that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss shall be added to taxable income or loss;

(b) any expenditures of the Company described in Section 705(a)(2)(B) or that are treated as Section 705(a)(2)(B) expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss, shall be subtracted from such taxable income or loss;

(c) in the event that the Gross Asset Value of any Company asset is adjusted pursuant to the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as an item of gain (if the adjustment increases the Gross Asset Value of the asset) or an item of loss (if the adjustment decreases the Gross Asset Value of the asset) from the disposition of such asset and shall be taken into account for purposes of computing Net Income or Net Loss;

 

10


(d) gain or loss resulting from the disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e) in lieu of the depreciation, amortization, and other costs recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation with respect to each asset of the Company for such Fiscal Period computed in accordance with the definition of Depreciation;

(f) to the extent an adjustment to the adjusted basis of any Company asset pursuant to Section 734(b) or 743(b) of the Code is required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in complete liquidation of a Member’s Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account in computing Net Income or Net Loss; and

(g) notwithstanding any other provision of this definition, any items specially allocated pursuant to Section 5.2 shall not be considered in determining Net Income or Net Loss.

New Member ” means any Person not listed on Schedule I as of the date hereof who has been admitted as a Member to the Company pursuant to Section 3.2 hereof.

Nonrecourse Deductions ” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(1), and the amount of the Nonrecourse Deductions for a Fiscal Period shall be determined in accordance with Treasury Regulation Section 1.704-2(c).

Nonrecourse Liability ” means a liability (or that portion of a liability) with respect to which no Member bears the economic risk of loss as determined under Treasury Regulation Section 1.704-2(b)(3).

NRT Interim MSA ” means the Marketing Agreement, by and between NRT Incorporated and PMC, dated as of January 31, 2005.

Origination Channels ” has the meaning assigned to such term in the SRA.

 

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Person ” means any individual, general partnership, limited partnership, corporation, limited liability company, joint venture, trust, business trust, governmental agency, cooperative, association, or other entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such person, as the context may require.

PHH ” means PHH Corporation, a Maryland corporation.

PHH Regulatory Event ” means a situation in which (i) PMC or any of its Affiliates (other than the Company) becomes subject to any Regulatory Order, or any Governmental Entity initiates a Proceeding with respect to PMC or any of its Affiliates (other than the Company), and (ii) such Regulatory Order or Proceeding prevents or materially impairs the Company’s ability to originate loans for any period of time in a manner that adversely affects the value of one or more quarterly distributions to be paid by the Company pursuant to Section 5.6 of this Agreement; provided , however , that PHH Regulatory Event shall not include (1) any order, directive or interpretation or change in law, rule or regulation, in any such case that is applicable generally to companies engaged in the mortgage lending business such that PMC or such Affiliate or the Company is unable to cure the resulting circumstances described in (ii) above, or (2) any Regulatory Order or Proceeding that results solely from acts or omissions on the part of Cendant or its Affiliates.

PMC ” means PHH Mortgage Corporation, a New Jersey corporation.

PHH Change of Control ” means a Change of Control of PHH, or the Managing Member or any other Affiliate of PHH that beneficially owns, directly or indirectly, any Interest of the Company.

Proceeding ” means any legal, administrative, arbitral or other proceeding, claim, action or governmental or regulatory investigation of any nature.

Regulatory Order ” means any injunction, order, judgment, decree, memorandum of understanding, consent decree, directive or regulatory restriction, or any change in or interpretation of any law, rule or regulation, imposed by a Governmental Entity.

RESPA ” means the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq., and the Department of Housing and Urban Development’s implementing regulation, Regulation X, 24 C.F.R. § 3500 et seq.

Securities Act ” means the Securities Act of 1933.

Small Corps ” means, collectively, the companies listed in Exhibit D .

 

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State Agency ” means any agency or other Governmental Entity of any of the fifty states of the United States or of the District of Columbia, in each case having authority to regulate the mortgage-related activities of the Company or any of its Subsidiaries or to determine the investment requirements with regard to mortgage loan originations performed by the Company or any of its Subsidiaries.

Subsidiary ” means, when used with respect to any party, any corporation, partnership, limited liability company or other organization, whether incorporated or unincorporated, which is consolidated with such party for financial reporting purposes under GAAP, and, when used with respect to the Company, shall include, without limitation, those Small Corps that will become Subsidiaries of the Company following the completion of the Subsequent Capital Contributions in accordance with Section 2.11 hereof.

Transaction Documents ” means, collectively, this Agreement, the SRA, the MSA, the NRT Interim MSA, the Mobility Interim MSA, the License Agreement, the Venture License Agreement, the Management Services Agreement, the Lease Agreement, the Master Sublease Agreement, the Contribution Agreement and the Mortgage Loan Sale Agreement.

Transfer ” means any change in the record or beneficial ownership of an Interest, whether made voluntarily or involuntarily by operation of law.

Treasury Regulations ” means the regulations promulgated by the U.S. Treasury Department pursuant to the Code.

Venture License Agreement ” means the Trademark License Agreement, by and among TM Acquisition Corp., Coldwell Banker Real Estate Corporation, ERA Franchise Systems, Inc. and the Company, dated as of January 31, 2005.

Section 1.2 Interpretation . Each definition in this Agreement includes the singular and the plural, and reference to the neuter gender includes the masculine and feminine where appropriate. References to any statute or Treasury Regulations means such statute or regulations as amended at the time and include any successor legislation or regulations. The headings to the Articles and Sections are for convenience of reference and shall not affect the meaning or interpretation of this Agreement. Except as otherwise stated, reference to Articles, Exhibits, Sections and Schedules mean the Articles, Exhibits, Sections and Schedules of this Agreement. The Exhibits and Schedules are hereby incorporated by reference into and shall be deemed a part of this Agreement.

 

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ARTICLE II

General Provisions

Section 2.1 Form . The Members hereby agree to operate the Company as a limited liability company pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. Except as expressly provided herein to the contrary, the rights and obligations of the Members and the administration and termination of the Company shall be governed by the Act.

Section 2.2 Company Name . The name of the Company is “PHH Home Loans, LLC” or such other name or names as may be selected by a unanimous vote of the Members from time to time, and its business shall be carried on in such name and in the other names listed on Schedule 2.2 hereto, with such variations and changes thereto as the Members shall deem necessary to comply with requirements of the jurisdictions in which the Company’s operations are conducted.

Section 2.3 Registered Office; Registered Agent . The Company shall maintain a registered office in the State of Delaware at 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, and the name of the Company’s registered agent in the State of Delaware is, Corporation Service Company.

Section 2.4 Place of Business . The business address of the Company is 3000 Leadenhall Road, Mt. Laurel, New Jersey 08054, or such other place as the Members shall designate by unanimous vote.

Section 2.5 Purpose; Nature of Business Permitted; Powers .

(a) The Company is formed for the purposes of (1) originating Mortgage Loans that are sourced through any Cendant Owned Real Estate Office and fulfilled through any of the Origination Channels, (2) originating Mortgage Loans that are sourced through any Cendant Mobility Office and fulfilled through any of the Origination Channels, (3) originating Mortgage Loans for U.S.-based employees of Cendant and its Subsidiaries and fulfilled through any of the Origination Channels, (4) originating Mortgage Loans sourced by any loan officer of the Company, either through any Cendant Owned Real Estate Office or through any Cendant Mobility Office, (5) selling all Mortgage Loans originated by the Company on a servicing-released basis on terms consistent with the provisions of Section 6.1(b) below, and (6) any other purpose agreed to unanimously by the Members in writing. For the avoidance of doubt, the purposes for which the Company is formed shall not include, and without the prior unanimous written consent of all Members the Company shall not engage in, (i) originating, purchasing or otherwise acquiring and holding Mortgage Loans for investment purposes, or (ii) servicing Mortgage Loans or retaining servicing rights with respect to any Mortgage Loans originated and sold by the Company.

 

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(b) Subject to the other provisions of this Agreement, the Company shall possess and may exercise all of the powers and privileges granted by the Act or by any other law or by this Agreement, together with any powers incidental thereto, but only in so far as such powers and privileges are necessary to the conduct, promotion or attainment of the business purposes of the Company specified in Section 2.5(a) hereof, including, without limitation, the power:

(i) to acquire, hold, manage, own, sell, transfer, convey, assign, exchange, license, pledge or otherwise dispose of the Company’s interest in assets or any property held by the Company, including, without limitation, interests in technology, intellectual property rights and other proprietary processes, products or services;

(ii) to establish, have, maintain or close one or more offices within or without the State of Delaware and in connection therewith to rent or acquire office space and to engage personnel;

(iii) to open, maintain and close bank and brokerage accounts, including the power to draw checks or other orders for the payment of moneys, and to invest such funds as are temporarily not otherwise required for Company purposes;

(iv) to bring and defend actions and proceedings at law or in equity or before any Governmental Entity, including any State Agency;

(v) to hire consultants, custodians, attorneys, accountants and such other agents, officers and employees of the Company as it may deem necessary or advisable, and to authorize each such agent and employee to act for and on behalf of the Company;

(vi) to enter into, perform and carry out contracts and agreements of every kind necessary or incidental to the accomplishment of the Company’s business purposes, and to take or omit to take such other action in connection with the business of the Company as may be necessary or desirable to further the business purposes of the Company;

(vii) to obtain and hold any and all permits, licenses, consents, authorizations and approvals as the Managing Member may from time to time deem necessary or appropriate for the conduct of the business of the Company and its Subsidiaries, including, without limitation, any such licenses and authorizations as may be required pursuant to the rules and regulations of any State Agency; and

(viii) to carry on any other activities necessary or incidental to any of the foregoing.

 

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Section 2.6 Business Transactions of a Member with the Company . In accordance with Section 18-107 of the Act and subject to the requirements of Section 6.1(e) and Section 6.3 hereof, a Member may lend money to, borrow money from, act as surety, guarantor or endorser for, guarantee or assume one or more specific obligations of, provide collateral for, and transact other business with, the Company and, subject to applicable law, shall have the same rights and obligations with respect to any such matter as a Person who is not a Member.

Section 2.7 No State-Law Partnership . No provisions of this Agreement shall be deemed or construed to constitute the Company a partnership (including, without limitation, a limited partnership), or any Member a partner of a partnership or a partner with any other Member, for any purpose other than, in each case, federal and state income tax purposes.

Section 2.8 Authorized Representatives . The “Authorized Representatives” of each Member shall be those Persons appointed from time to time as Advisors by such Member in accordance with Section 6.2 hereof. The written statements and representations of an Authorized Representative on behalf of a Member shall be the only authorized statements and representations of such Member with respect to the matters specifically covered by this Agreement. The term “approved by” or “consented to by” or “consent of” or “satisfactory to” with respect to a Member means a decision or action which has been consented to in writing by an Authorized Representative of such Member.

Section 2.9 Term . The existence of the Company commenced on the date of the filing of the Certificate of Formation in the Office of the Secretary of State of the State of Delaware, and shall continue until January 31, 2055, unless earlier dissolved pursuant to the provisions of Article IX hereof. Upon the occurrence of an Event of Dissolution, all FHA-insured loans held by the Company shall be transferred to an approved mortgagee or lender prior to dissolution of the Company.

Section 2.10 D/B/As, Fictitious Names, Licenses and Regulatory Approvals .

(a) The Company and its Subsidiaries shall make all d/b/a, fictitious name and similar filings as are listed on Schedule 2.10(a) hereto and shall obtain all licenses and regulatory approvals in each of the fifty (50) states and in the District of Columbia as shall be necessary to conduct its loan origination, loan sales and related operations as contemplated by this Agreement and the other Transaction Documents in all such jurisdictions. The Cendant Member shall be responsible for

 

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making all such d/b/a, fictitious name and similar filings, and the PHH Member shall be responsible for obtaining all such licenses and regulatory approvals. On the fifteenth (15 th ) of February, 2005 and on the first (1 st ) and fifteenth (15 th ) of each month thereafter, the PHH Member shall provide to the Cendant Member a detailed report on the status of all licenses and regulatory approvals necessary to operate the Company and its Subsidiaries.

(b) Not more than forty-five (45) days after the PHH Member receives all of the requisite d/b/a, fictitious name and other similar approvals for filings made by the Cendant Member in accordance with Section 2.10(a) above in any state, the PHH Member shall cause the Company to file with the appropriate regulatory authorities in such state all applications for the requisite licenses and regulatory approvals with respect to the business to be conducted by the Company and any of its Subsidiaries in such state; provided , however , that for purposes of counting the forty-five day period herein, no such approvals shall be deemed received by the PHH Member prior to February 15, 2005. The PHH Member shall pay to the Cendant Member a cash payment of $50,000 per month with respect to each state for which the Company shall not have met such forty-five (45) day deadline, with such payment being due and payable on the day of such deadline and again every thirty (30) days thereafter until such filing has been made.

(c) The PHH Member shall cause the Company to diligently pursue and use its reasonable best efforts to obtain all such licenses and regulatory approvals described above not later than July 31, 2005. Without limiting the foregoing, the PHH Member shall comply in a timely manner with all requests for information received from any State Agency (provided that the PHH Member shall not be responsible for any failure or refusal by Cendant to provide any information so requested) and shall cause representatives of the Company to meet in person with the requisite regulatory authorities in any state where such authorities have so requested or where receipt of approval from such authorities has been delayed and the Cendant Member so reasonably requests.

Section 2.11 Subsequent Capital Contributions .

(a) At any time after the Company shall have obtained all requisite licenses and approvals and made all other filings necessary to enable it to operate its business both (1) in not less than 25 states and (2) in each of those states listed on Schedule 2.11(a) hereto or any subset thereof approved by the Cendant Member in writing, the Cendant Member shall have the right to deliver to the PHH Member a written notice (the “ Contribution Notice ”) containing the Cendant Member’s election to cause the Subsequent Capital Contributions (as defined below) to occur. The Parties shall consummate the transactions constituting the Subsequent Capital Contributions on the date specified by the Cendant Member in the Contribution Notice, which date (the

 

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Contribution Date ”) shall be no earlier than the seventh (7 th ) day following the date of delivery of such notice to the PHH Member. On the Contribution Date, the Parties shall take the following actions:

(i) the PHH Member shall contribute, or cause to be contributed, to the Company, (A) substantially all of the assets constituting the businesses of each of the companies constituting the Small Corps (with the form of the transaction in which such transfer shall occur being determined pursuant to subparagraph (b) below), and (B) those separately identifiable assets that comprise part of PMC’s “phone-in, move-in” origination channel and that will be utilized by the Company and its employees in the operation of its loan origination business (as identified and scheduled by the Parties in accordance with subparagraph (b) below) (the “ PIMI Contributed Assets ”);

(ii) the Cendant Member shall contribute, or cause to be contributed, to the Company (A) the right to use those tradenames and marks specified in the Venture License Agreement, on a royalty-free basis and otherwise on the terms set forth in such agreement, and (B) an amount of cash determined in accordance with subparagraph (b) below;

(iii) the parties shall execute the Contribution Agreement, the Management Services Agreement, the Mortgage Loan Sale Agreement, the Lease and the Master Sublease Agreement;

(iv) the PHH Member shall cause the Company to offer employment to (A) such employees of PMC as shall be reasonably necessary to enable the Company to perform its obligations pursuant to the terms of the SRA, and (B) all of the employees of the Small Corps (other than those Small Corps that will become Subsidiaries of the Company upon being contributed to the Company); and

(v) the PHH Member shall cause the Company to sponsor and maintain its own employee benefit plans (including, but not limited to welfare benefit plans and tax-qualified pension and retirement plans) for the benefit of the employees of the Company and its Subsidiaries.

The actions contemplated by subparagraphs (i) through (v) above are referred to herein as the “ Subsequent Capital Contributions .”

 

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(b) As soon as practicable after the date of this Agreement, in preparation for the Subsequent Capital Contributions, the Parties shall cooperate in good faith to do each of the following as promptly as practicable following the date hereof and in any event within such time as shall be necessary to enable the Subsequent Capital Contributions to occur by mid-year 2005:

(i) Determine the form of the transaction (merger, asset transfer, transfer of equity interests or other) pursuant to which the businesses of the Small Corps will be contributed to the Company (including, among other things, determining the consents and approvals and d/b/a and other filings, qualifications and notices required to be obtained or made in connection with such transaction and the expected timing thereof), it being understood that the final determination regarding the form of such transaction shall be made by the Cendant Member in its sole discretion, and that the Parties will work together with a view toward structuring the contributions so that the loans originated by the Small Corps whose businesses will be combined directly with the Company’s (rather than becoming Subsidiaries of the Company) will constitute not less than 15% of all loans originated directly by the Company;

(ii) Obtain all such consents and approvals and make all such d/b/a and other filings, qualifications and notices as shall be necessary to complete the contribution of the businesses of the Small Corps to the Company pursuant to the form of transaction determined in accordance with subparagraph (b)(i) above;

(iii) Prepare detailed and complete schedules identifying all of the PIMI Contributed Assets, all of the employees of PMC and its Subsidiaries who will be offered employment with the Company on the Contribution Date, and, if the form of transaction determined pursuant to subparagraph (i) above contemplates one or more asset transfer transactions, all of the assets, contracts and other rights constituting the businesses of the applicable Small Corps to be contributed to the Company pursuant to such transactions;

(iv) Obtain valuations (which in the case of subclauses (A) and (C) below shall be performed by an unaffiliated third party selected by the Cendant Member) for (A) the businesses of the Small Corps to be contributed to the Company pursuant to Section 2.11(a)(i)(A) above, (B) the PIMI Contributed Assets to be contributed to the Company pursuant to Section 2.11(a)(i)(B) above, and (C) the Venture Trademark License to be contributed to the Company pursuant to Section 2.11(a)(ii)(A) (it being understood that the amount of cash to be contributed to the Company by the Cendant Member pursuant to Section 2.11(a)(ii)(B) shall equal the difference between the total of the amounts determined pursuant to subclauses (A) and (B) above and the amount determined pursuant to subclause (C) above), and finalize Schedule II to this Agreement to reflect the updated Gross Asset Values for such assets based upon such valuations;

 

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(v) Prepare all agreements, instruments and other documents necessary or appropriate to effect the transactions constituting the Subsequent Capital Contributions (including without limitation a Contribution Agreement), which agreements shall include provisions for, among other things, (A) customary representations from the PHH Member with respect to the assets to be contributed by it to the Company, the consents and approvals necessary to effect such contributions, compliance with law and other regulatory matters with respect to the businesses of the Small Corps and employee matters with respect to the period prior to the Contribution Date, and (B) indemnification of the Company by the PHH Member with respect to Losses arising out of or resulting from any matter, circumstance or event occurring prior to the Contribution Date with respect to or affecting the business, assets or employees of the Small Corps contributed by or on behalf of the PHH Member; and

(vi) Prepare a Mortgage Loan Sale Agreement having terms consistent with Section 6.1(b) of this Agreement.

(c) Prior to making the Subsequent Capital Contributions contemplated by subparagraph (a) above, if the form of transaction involves any of the companies comprising the Small Corps being merged into the Company or being contributed to the Company and becoming a Subsidiary of the Company as a result thereof, the PHH Member shall (i) settle and eliminate all intercompany accounts receivable, accounts payable or other arrangements and obligations between PHH or any of its Subsidiaries, on the one hand, and each such company, on the other, (ii) cause all of the ownership interests in Landover Mortgage LLC held by any such company to be distributed by such company to PMC, and (iii) in the case of any such company that will become a Subsidiary of the Company following the contribution, convert such company to a limited liability company pursuant to a transaction acceptable in form and substance to tax counsel for the Cendant Member prior to the Contribution Date.

(d) The PHH Member and its Affiliates (other than the Company and any of the Small Corps (or any successor thereto) that is merged into the Company or contributed as a Subsidiary of the Company) shall bear and pay all costs and expenses (including Taxes) associated with the contribution of the businesses of the Small Corps contemplated by Section 2.11(a) hereof, all of the transactions contemplated by Section 2.11(c) hereof, and obtaining the consents and approvals required in connection with the contribution of the Small Corps contemplated by Section 2.11(b)(ii) above. Each Member shall bear and pay its own costs in connection with the other transactions contemplated by this Section 2.11.

 

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ARTICLE III

Members

Section 3.1 Members . The Company shall consist of the Members executing this Agreement and any New Members admitted to the Company by the Members in accordance with terms hereof. The Members of the Company, together with the Common Interest Percentages and addresses of such Members, are listed on Schedule I of this Agreement. As of the date hereof, there are no other Members of the Company and no other Person has any right to take part in the ownership or share in the profits of the Company. The Managing Member shall have the authority, without the consent of the Members, but subject to the limitations contained in Article VI hereof and otherwise in accordance with the terms of this Agreement, to amend Schedule I in connection with any Transfer or other change in ownership of Interests permitted hereunder and to reflect (a) the admission of any New Member, (b) the removal, expulsion, retirement or death of any Member, in each case, in accordance with the terms of this Agreement and (c) any change in the Interests of any Member effected in accordance with the terms of this Agreement (including Section 4.3 or 10.1 hereof). No Person shall be deemed to be a Member unless such Person has executed and delivered to the Company a copy of this Agreement. Each New Member shall be deemed to have a fully executed copy of this Agreement if such Member is delivered a copy of this Agreement which (a) has been executed by such Member and (b) is countersigned on the same page by an authorized officer of the Company.

Section 3.2 Admission of New Members . New Members of the Company may only be added if the addition of any such proposed New Member is approved, prior to such admission, by the unanimous consent of all Members and if such proposed New Member executes this Agreement and makes the representations and warranties set forth in Section 3.3 hereof. Notwithstanding the foregoing, a Person that (a) is an Affiliate of a Member and to whom such Member has Transferred all or any portion of its Interest in accordance with Section 10.1 hereof or (b) is a transferee of all or a portion of the Cendant Member’s Interest as permitted by Section 10.1 hereof shall be admitted as a New Member without the consent of the other Members, provided that such New Member executes this Agreement and makes the representations and warranties set forth in Section 3.3 hereof.

Section 3.3 Representations . Each Member hereby represents and warrants to the Company as follows:

(a) Such Member is a corporation, limited liability company, partnership or business trust duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. Such Member has full right, power and authority to execute and deliver this Agreement and to perform each of its obligations hereunder.

 

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(b) All necessary action, corporate or otherwise, on the part of such Member necessary to authorize the execution and delivery by such Member of this Agreement and the performance by such Member of its obligations hereunder has been taken, and no further action on the part of such Member is necessary for such authorization. This Agreement has been duly authorized, executed and delivered by such Member and (assuming due authorization, execution and delivery by the other Members), constitutes a legal, valid and binding obligation of such Member enforceable against such Member in accordance with its terms.

(c) Except as otherwise set forth in or contemplated by this Agreement with respect to the Company, no consent, approval or authorization of, or filing or registration with, any governmental or regulatory authority or any other Person (other than such as have been obtained or made by such Member) is required to be made or obtained by such Member in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement.

(d) Neither the execution and delivery of this Agreement by such Member nor the consummation by such Member of the transactions contemplated hereby, nor compliance by such Member with any of the terms or provisions hereof, will (i) conflict with or result in a breach of any provision of the certificate of incorporation, by-laws or similar governing documents of such Member or (ii) assuming the consents, permits, authorizations, approvals, filings and registrations previously disclosed in writing by such Member to the other Members are obtained or made (x) violate any statute, code, ordinance, rule, regulation, judgment, order, write, decree or injunction applicable to such Member or any of its properties or assets or (y) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any encumbrance upon any of the properties or assets of such Member under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which such Member is a party, or by which its properties or assets may be bound or affected, except, in the case of clause (ii), for such violations, conflicts, breaches or defaults which, either individually or in the aggregate, would not prevent or materially hinder or delay such Member’s ability to consummate the transactions contemplated hereby or perform its obligations hereunder.

Section 3.4 No Liability of Members . All debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member.

 

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Section 3.5 Company Property . No real or other property of the Company shall be deemed to be owned by any Member individually but shall be owned by and title shall be vested solely in the Company. The Interests of the Members in the Company shall constitute personal property.

Section 3.6 Confidentiality .

(a) Each Member agrees not to disclose, communicate, use to the detriment of the Company or for the benefit of any other Person, or misuse in any way, any confidential information or trade secrets of the Company or any Subsidiary or any other Member or its Affiliates, including personnel information, secret processes, know-how, customer lists, formulas or other technical data (“ Confidential Information ”), except as may be required by law; provided , however , that (i) this prohibition shall not apply to (x) any information which, through no improper action of such Member, is publicly available or generally known in the industry or (y) any information which is disclosed upon the approval of all of the Members and (ii) such information may be disclosed to the extent required by law, legal process or applicable stock exchange rule. Each Member acknowledges and agrees that any information or data such Member has acquired on any of these matters or items were received in confidence and as fiduciary of the Company.

(b) It is agreed between the parties that the Company would be irreparably damaged by reason of any violation of the provisions of this Section 3.6 and that any remedy at law for a breach of such provisions would be inadequate. Therefore, the Company shall be entitled to seek and obtain injunctive or other equitable relief (including, but not limited to, a temporary restraining order, a temporary injunction or a permanent injunction) against any Member, such Member’s agents, assigns or successors for a breach or threatened breach of such provisions and without the necessity of proving actual monetary loss. It is expressly understood among the parties that this injunctive or other equitable relief shall not be the Company’s exclusive remedy for any breach of this Section 3.6 and that the Company shall be entitled to seek any other relief or remedy that it may have by contract, statute, law or otherwise for any breach hereof, and it is agreed that the Company shall also be entitled to recover its attorneys’ fees and expenses in any successful action or suit against any Member relating to any such breach. It is also expressly agreed that any Member shall have the right to enforce this Section 3.6 on behalf of the Company against the other Members.

(c) Notwithstanding the foregoing, the participation or involvement of any Member in the Company shall not confer upon the Company or otherwise entitle the Company or any other Member thereof to use or otherwise disclose in connection with the Company and its business and affairs the name of such Member without such Member’s prior consent.

 

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(d) Except as otherwise agreed by the Members, in the event of a PHH Change of Control or anticipated PHH Change of Control, the PHH Member shall implement reasonable internal access controls and other restrictions on the use and disclosure of Confidential Information to prevent any directors, officers, employees, agents, consultants or contractors of a third party from having access to such Confidential Information.

ARTICLE IV

Capital Contributions

Section 4.1 Capital Structure . The capital structure of the Company shall consist of one class of Interests (“ Common Interests ”). Except as otherwise set forth herein, each of the Common Interests shall be identical.

Section 4.2 Capital Contributions .

(a) Each Member has contributed, as an initial capital contribution (“ Initial Capital Contribution ”) to the Company, the amount set forth opposite such Member’s name on Schedule I hereto, and hereby agrees to contribute, in accordance with the provisions of Section 2.11 of this Agreement, all of its right, title and interest (whether now held or hereafter acquired) in and to the assets described in Section 2.11(a) hereto having the estimated Gross Asset Values as are reflected on Schedule II hereto (with the final Gross Asset Values for such assets to be determined for purposes of this Agreement in accordance with Section 2.11).

(b) In exchange for the Initial Capital Contributions, each Member has received an Interest in the Company in proportion to the Interest percentage (“ Common Interest Percentage ”) set forth opposite the name of such Member on Schedule I hereto.

Section 4.3 Additional Provisions Concerning Capital Contributions .

(a) Capital Contributions . Other than as set forth in Section 4.2, no Member shall be permitted to make additional Capital Contributions to the Company except upon the prior written approval of all the other Members; provided , however , that notwithstanding anything to the contrary contained herein, in the event of an Additional Capital Determination (as defined below), then additional Capital Contributions shall be made by each Member in an amount equal to the product of (x) the Additional Capital Amount with respect to such Additional Capital Determination and (y) such Member’s Common Interest Percentage. An “ Additional Capital Determination ” shall mean a determination made by the Managing Member (which determination, if

 

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made, shall be immediately notified in writing to the Board), and approved by the Board pursuant to Section 6.3, that the Company requires additional Capital Contributions from the Members to satisfy the Minimum Capital Requirements, as defined in Section 6.3(a)(xviii) herein. The “Additional Capital Amount” with respect to any Additional Capital Determination shall mean the aggregate additional Capital Contributions required from all Members in connection therewith, as approved by the Board pursuant to Section 6.3.

(b) Interest . Interest, if any, earned on funds contributed or held by the Company shall inure to the benefit of the Company; the Members shall not be entitled to receive interest or any other payments from the Company with respect to their Capital Contributions or Capital Accounts.

Section 4.4 Capital Accounts .

(a) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv), a capital account (a “ Capital Account ”) shall be established and maintained for each Member throughout the full term of the Company. A Member’s Capital Account (i) shall be increased by (A) the amount of cash and the Fair Market Value of property (other than cash) contributed by such Member and (B) such Member’s allocable share of the Company’s Net Income (and items of income and gain) for each Fiscal Period; and (ii) shall be decreased by (A) the amount of cash and the Fair Market Value of property (other than cash) distributed to such Member and (B) such Member’s allocable share of the Company’s Net Loss (and items of deduction and loss) for each Fiscal Period.

(b) In addition to the adjustments specified by Section 4.4(a), each Member’s Capital Account shall also be adjusted for any other increases or decreases that are made to Capital Accounts pursuant to Section 704(b) of the Code and Treasury Regulation Section 1.704-1(b)(2)(iv).

(c) In the event any Interest or portion thereof is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account or ratable portion thereof of the transferor to the extent such Capital Account relates to the Interest or portion thereof so transferred, except to the extent provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m).

(d) It is the intention of the Members that Capital Accounts shall be maintained in accordance with Section 704(b) of the Code and with the Treasury Regulations promulgated thereunder so that the allocations of items of income, gain, loss, deduction and credit provided herein have substantial economic effect thereunder.

(e) Except as may be required by the provisions of the Act or to the extent of any withdrawal of capital in contravention of this Agreement or any

 

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distribution in contravention of this Agreement, at no time during the term of the Company or upon dissolution and liquidation thereof shall a Member with a negative balance in his Capital Account have any obligation to the Company or the other Members to restore such negative balance, and such negative balance shall not be treated as an asset of the Company. Notwithstanding whether a Member has a positive or a negative balance in its Capital Account, a Member shall be obligated to restore to the Company the amount of any withdrawal of capital in contravention of this Agreement or any distribution in contravention of this Agreement.

Section 4.5 Return of Capital Contributions . Except as otherwise provided herein or in the Act, no Member shall have the right to withdraw, or receive any return of, all or any portion of such Member’s Capital Contribution.

Section 4.6 Loans From Members . Loans by a Member to the Company shall not be considered Capital Contributions. If any Member shall advance funds to the Company in excess of the amounts contributed by such Member to the capital of the Company, the making of such advances shall not result in any increase in the amount of the Capital Account of such Member. The amounts of any such advances shall be a debt of the Company to such Member and shall be payable or collectible only out of the Company assets in accordance with the terms and conditions upon which such advances are made. The repayment of loans from a Member to the Company upon liquidation shall be subject to the order of priority set forth in Section 9.4 hereof. Notwithstanding anything to the contrary in this Agreement, any Loan by a Member to the Company shall be subject to the provisions of Section 6.1(e) and shall be on arm’s-length market terms.

ARTICLE V

Allocations and Distributions

Section 5.1 Allocations of Net Income and Net Loss . This Section 5.1 sets forth the rules for both the book allocations of Net Income (and items of income and gain) and Net Loss (and items of loss and deduction), to reflect the economic arrangements of the Members and, subject to Section 5.5, for the tax allocations for United States federal income tax purposes, pursuant to Section 704 of the Code and the Treasury Regulations promulgated thereunder.

(a) Except as otherwise provided in this Article V, Net Loss shall be allocated among the Members with respect to each Fiscal Period as of the end of such Fiscal Period pro rata based upon their respective Common Interest Percentages.

 

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(b) Except as otherwise provided in this Article V, Net Income shall be allocated among the Members with respect to each Fiscal Period as of the end of such Fiscal Period pro rata based upon their respective Common Interest Percentages.

Section 5.2 Adjustments and Special Allocations .

The following special allocations shall be made in the following order and prior to any other allocations under this Agreement:

(a) Minimum Gain Chargeback . Notwithstanding any other provision of this Article V and except as otherwise provided in Treasury Regulation Section 1.704-2(f), if there is a net decrease in Company Minimum Gain during any Fiscal Period of the Company, each Member shall be specially allocated items of Company income and gain for such Fiscal Period (and, if necessary, subsequent Fiscal Periods) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, as determined under Treasury Regulation Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(f)(6) and (j)(2). This Section 5.2(a) is intended to comply with the minimum gain chargeback requirement in such Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(b) Member Minimum Gain Chargeback . Notwithstanding any other provision of this Article V, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt, then, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i), shall be specially allocated items of Company income and gain for such Fiscal Period (and, if necessary, subsequent Fiscal Periods) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(i)(4) and (j)(2). This Section 5.2(b) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(c) Qualified Income Offset . Pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(d), in the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be specially

 

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allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, any Adjusted Capital Account Deficit as quickly as possible, provided that an allocation pursuant to this Section 5.2(c) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section have been tentatively made as if this Section 5.2(c) were not in the Agreement. This Section 5.2(c) is intended to satisfy the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistent therewith.

(d) Nonrecourse Deductions . Nonrecourse Deductions for any Fiscal Period shall be allocated among the Members in accordance with their respective Common Interest Percentage.

(e) Member Nonrecourse Deductions . Any Member Nonrecourse Deductions for any Fiscal Period of the Company or portion thereof shall be allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable, in accordance with Treasury Regulation Section 1.704-2(i)(1).

(f) Section 754 Adjustments . To the extent an adjustment to the adjusted tax basis of any Company asset is required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m) (2) or (4) to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such sections of the Treasury Regulations.

Section 5.3 Net Loss Limitation .

Notwithstanding the provisions of Section 5.1(a), the Net Losses (or items of deduction or loss) allocated pursuant to Section 5.1(a) hereof shall not exceed the maximum amount of Net Losses (or items of deduction or loss) that can be so allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Period. In the event that some but not all Members would have Adjusted Capital Account Deficits as a consequence of the allocation of Net Losses (or items of deduction or loss) pursuant to Section 5.1 hereof, the limitation set forth in this Section 5.3 shall be applied on a Member by Member basis and Net Losses (or items of deduction or loss) not allocable to any Member as a result of such limitation shall be allocated to the other Members in accordance with the respective positive balances in such Members’ Capital Accounts so as to allocate the maximum permissible Net Losses (or items of deduction or loss) to each Member under Treasury Regulation Section 1.704-1(b)(2)(ii)(d).

 

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Section 5.4 Other Allocation Rules .

(a) For purposes of determining the Net Income, Net Loss or other items allocable to any Fiscal Period, subject to approval by the Board pursuant to Section 6.3(a)(xiv) hereof, Net Income, Net Losses and such other items shall be determined on a daily, monthly or other basis as determined by the Managing Member using any permissible method under Section 706 of the Code and the Treasury Regulations thereunder. Without limiting the generality of the foregoing, the Managing Member shall, subject to approval by the Board pursuant to Section 6.3(a)(xiv), allocate items of Net Income (and items of income or gain) and Net Loss (and items of deduction or loss) between a Member and any Person who has acquired an Interest in the Company from such Member (including as a result of the provisions of Article VIII) using any permissible method under Section 706 of the Code and the Treasury Regulations there under.

(b) “Excess nonrecourse liabilities” of the Company, within the meaning of Treasury Regulation Section 1.752-3(a)(3), shall, subject to Section 6.3(a)(xiv) hereof, be allocated to the Members in any permissible method as determined by the Managing Member.

Section 5.5 Tax Allocations; Code Section 704(c) .

(a) Except as otherwise provided for in this Agreement, each item of income, gain, loss, deduction and credit shall be allocated among the Members in the same manner for U.S. federal income tax purposes as the correlative item of book income, gain, loss, deduction and credit is allocated pursuant to Sections 5.1, 5.2, 5.3 and 5.4. In addition, in accordance with Code Section 704(c) and the Treasury Regulations thereunder, items of income, gain, loss, deduction and credit with respect to any property contributed to the capital of the Company shall, solely for U.S. federal income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted tax basis of such property at the time of contribution to the Company for U.S. federal income tax purposes and its initial Gross Asset Value at the time of contribution using the “traditional method” as set forth in Treasury Regulation Section 1.704-3(b).

(b) In the event the Gross Asset Value of any Company asset is adjusted in accordance with the definition of Gross Asset Value hereof, subsequent allocations of items of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted tax basis of such asset for U.S. federal income tax purposes and its adjusted Gross Asset Value in a manner consistent with the principles of Code Section 704(c) and the Treasury Regulations promulgated thereunder.

 

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(c) Any elections or other decisions relating to such allocations shall, subject to Section 6.3(a)(xiv) hereof, be made by the Managing Member in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section are solely for purposes of U.S. federal, state, and local income taxes and shall not affect, or in any way be taken into account in computing, any Members’ Capital Account or share of Net Income (or items of income or gain) or Net Loss (or items of loss or deduction), other items, or distributions pursuant to any provision of this Agreement.

Section 5.6 Distributions .

Within thirty (30) days following the completion of each Fiscal Quarter, the Managing Member shall cause the Company to distribute to all Members an amount equal to the Distributable Net Income for such Fiscal Quarter pro rata based upon their respective Common Interest Percentages.

ARTICLE VI

Management

Section 6.1 Managing Member .

(a) General . The PHH Member shall be the Managing Member of the Company, and shall manage the Company in accordance with this Agreement. The actions of the Managing Member taken in such capacity and in accordance with this Agreement shall bind the Company.

(b) Powers and Duties . Except for circumstances in which the approval of the Board is required by this Agreement pursuant to Section 6.3, the Managing Member shall have full, exclusive and complete discretion to manage the business and affairs of the Company in the ordinary course. Notwithstanding the foregoing, the Managing Member covenants and agrees to manage the business and affairs of the Company in accordance with the following terms and provisions:

(i) The Managing Member shall manage the business and affairs of the Company only in a manner consistent with and in furtherance of the purposes set forth in Section 2.5(a) of this Agreement. The Managing Member shall not cause or permit the Company or any of its Subsidiaries to engage in any business or activity other than that permitted to be conducted by the Company or any of its Subsidiaries pursuant to Section 2.5(a) of this Agreement, or take or fail to take any action that would prevent or preclude the Company from carrying on its business as contemplated in this Agreement.

 

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(ii) The Managing Member shall cause the Company and its Subsidiaries to sell any and all Mortgage Loans it originates as promptly as practicable, but in no event earlier than three (3) Business Days following the closing and funding of such Mortgage Loan, and at no time shall the Managing Member cause or permit the Company or any of its Subsidiaries to hold any Mortgage Loans for investment purposes (it being the Members’ intent that at least 15% of the total number of all loans originated by the Company be sold to unaffiliated Persons pursuant to Investor Commitments or other sale arrangements entered into on terms consistent with the provisions of Section 6.1(b)(iii) below).

(iii) In connection with any sales of Mortgage Loans by the Company or any Subsidiary of the Company, whether to the Managing Member or any of its Affiliates or to Persons that are not Affiliates of any Member, the Managing Member shall cause the Company or such Subsidiary to sell such Mortgage Loans only on arm’s-length terms pursuant to industry-standard loan sale documentation and on industry-standard terms for best efforts execution inclusive for servicing released sales.

Such duties may be delegated by the Managing Member to such officers, agents or employees of the Company as the Managing Member may deem appropriate from time to time.

(c) Fiduciary Duties of Managing Member . The Managing Member, in the performance of its duties as such, shall owe to the Members duties of loyalty and due care of the type owed by the general partner of a limited partnership to its limited partners under the laws of the State of Delaware.

(d) Compliance with Transaction Documents . Without limiting the provisions of Section 6.1(b), the Managing Member shall cause the Company to operate its business at all times in a manner consistent with the SRA, this Agreement and all the other Transaction Documents.

(e) Transactions With Affiliates . Any transactions between the Company, on the one hand, and the Managing Member or any Affiliate thereof, on the other hand (any such transaction, a “ Related Transaction ”), including without limitation any arrangements for sale of Mortgage Loans (including the Mortgage Loan Sale Agreement), shall be approved by the Board in accordance with Section 6.3 prior to the time that the Company engages or agrees or commits to engage in any such Related Transaction. Notwithstanding the fact that the terms of a Related Transaction have been previously approved by the Board, the Managing Member shall not permit the Company to enter into a Related Transaction unless the transaction is entered into on an arm’s length basis on terms no less favorable to the Company than the terms that the Company could obtain from an independent third party.

 

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(f) Status of Managing Member . The Managing Member shall be the sole “manager” (as that term is used in the Act) of the Company. Neither the Advisors nor the officers of the Company, in such capacity, shall be “managers.” No Person who is not also a Member may be appointed or serve as the Managing Member.

(g) Reliance by Third Parties . Third parties dealing with the Company may rely conclusively upon any certificate of the Managing Member to the effect that it (or its designee) is acting on behalf of the Company. Subject to the provisions of this Agreement, the signature of an authorized officer of the Managing Member shall be sufficient to bind the Company in every manner to any agreement or on any document.

(h) HUD Manager . Notwithstanding any other provisions of this Agreement, however, for the purposes of complying with the regulations of the HUD only, a separate person shall be designated by the Managing Member (upon prior written consent of the Cendant Member) as the HUD-Manager, who will have as his/her principal activity the management of the Company as it relates to the origination of FHA-insured mortgages and shall have exclusive authority to deal with HUD/FHA on behalf of the Company (the “ HUD-Manager ”). If the HUD-Manager withdraws or is removed, a new HUD-Manager shall be designated by the Managing Member, and HUD shall be notified of the change. Upon admission of any new Member, such new Member shall be deemed to agree that the HUD-Manager shall have exclusive authority to deal with HUD/FHA on behalf of the Company.

Section 6.2 Board of Advisors .

(a) Establishment . There is hereby established a committee (the “ Board ”) comprised of natural persons (the “ Advisor s”), whose primary purpose shall be to provide a means for the Cendant Member to exercise its approval rights over certain actions of the Company, as set forth in Section 6.3 below.

(b) Number of Advisors . The authorized number of Advisors shall be five (5) and the Board shall be designated as set forth in paragraphs (c) and (d) below. No Member may appoint any Advisor except as expressly set forth in paragraphs (c) and (d) below.

(c) Appointment by the PHH Member . The PHH Member shall have the right to designate (and to remove and/or designate successive replacements for) three (3) Advisors (“ PHH Advisors ”). Each PHH Advisor shall have one (1) vote with respect to any matter to be voted on by the Board. The initial PHH Advisors shall be Donna Van Osten, Marshall Gayden and Robert Groody.

 

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(d) Appointment by Cendant . The Cendant Member shall have the right to designate (and to remove and/or designate successive replacements for) two (2) Advisors (“ Cendant Advisors ”). Each Cendant Advisor shall have one (1) vote with respect to any matter to be voted on by the Board. The initial Cendant Advisors shall be Dave Weaving and Judy Reeves.

(e) Term of Office . Once designated, an Advisor shall continue in office until such Advisor’s removal in accordance with this Agreement or such Advisor’s earlier death or resignation. Any Advisor may resign at any time by giving written notice to that effect to the Board and the Managing Member. Any such resignation shall take effect at the time of the receipt of that notice or any later effective time specified in that notice, and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective.

(f) Meetings of the Board . The Board shall meet regularly at least once each Fiscal Quarter, at such time and at such place as the Board may designate. Special meetings of the Board shall be held on the call of any Advisor upon at least five (5) Business Days (if the meeting is to be held in person) or two (2) Business Days (if the meeting is held by telephone communications) notice to each of the other Advisors, or upon such shorter notice as may be approved by the Advisors (including at least one PHH Advisor and at least one Cendant Advisor), and such notice may be delivered personally or by telephone, electronic mail, facsimile transmission, United States mail or courier to each Advisor at his or her business or residence address, provided that notice shall be deemed given when actually delivered to the Advisor. Any Advisor may waive such notice as to himself or herself.

(g) Conduct of Meeting . Any meeting of the Advisors may be held in person or telephonically.

(h) Quorum . A majority of the Advisors which have been designated and who are then in office shall constitute a quorum of the Board for purposes of conducting business, provided that such quorum shall include at least one Cendant Advisor, and provided further that proper notice of such meeting was delivered pursuant to paragraph (f) above.

(i) Voting . The effectiveness of any vote, consent or other action of the Board in respect of any matter set forth in Section 6.3 shall require a majority vote of the entire Board (at least three Advisors voting in favor of such consent or other action), provided that such majority must include the affirmative vote of at least one Cendant Advisor. No Advisor shall be disqualified from voting on, or shall be required to recuse himself or herself from the consideration of or voting on, any matter by reason of such Advisor’s or any related Person’s interest in such matter (it being understood that in approving or disapproving any matter an Advisor may act to protect

 

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the interests of such Advisor or related Person, as the Managing Member, a Member, or in any other capacity), so long as such Advisor discloses such interest to, or such interest is reasonably apparent to, the other Advisors. Only the Advisors in attendance at (or participating by telephone in) any meeting of the Board may vote on any matter as to which a vote is taken during such meeting, and no Advisor may vote by proxy, absentee ballot or any other means.

(j) Action Without Meeting . Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all of the Advisors consent thereto in writing, and such writing is filed with the minutes of proceedings of the Board.

Section 6.3 Actions Requiring Board Approval .

(a) It is hereby understood and agreed by the Members that (x) the Company shall not take, nor shall the Managing Member and/or any officer of the Company cause the Company to take, nor shall the Company authorize or permit any of its Subsidiaries to take, any of the following actions (in each case, the taking of which shall be hereinafter referred to as a “ Major Action ”) without first obtaining approval thereof by the Board in accordance with Section 6.2, in each case:

(i) Accounting . (a) Except as otherwise may be mandated by GAAP, change any of the accounting principles or practices used by the Company or (b) change the independent auditors of the Company;

(ii) Acquisitions and Dispositions . Other than as specifically contemplated by this Agreement or any other Transaction Document or the then-current Annual Business Plan approved in accordance with Section 6.9 of this Agreement, (a)(1) purchase or acquire any assets or property (including real property or capital stock of a business) or (2) make any capital expenditures in excess of $100,000, or (b) sell, option, convey, exchange, lease (as lessor), license or otherwise dispose of or transfer any portion of or any interest in any property of the Company, other than sales of Mortgage Loans made in accordance with Section 6.1(b)(iii);

(iii) Advisors . Employ accountants, legal counsel, investment bankers or other experts, other than those currently used by PHH or Cendant, to perform services for the Company;

(iv) Bankruptcy . Make, execute or deliver on behalf of the Company an assignment for the benefit of creditors; or cause the Company, or any part thereof or interest therein to be subject to the authority of any trustee, custodian or receiver or to be subject to any proceeding for bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, relief of debtors, dissolution or liquidation, or similar proceedings with respect to the Company;

 

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(v) Distributions or Capital Returns . Declare, set aside, or pay any dividend or make any distribution of assets (whether in cash, securities, property, or any combination thereof), or return to a Member any amount of its Capital Contribution, except, in each case, as expressly provided herein;

(vi) Indebtedness . Obligate the Company, any Subsidiary of the Company or any Member as a surety, guarantor, or accommodation party to any obligation; incur any indebtedness for borrowed money (other than pursuant to the Loan Funding Facility and trade payables incurred in the ordinary course of business); or impose upon any Member any personal liability in respect of any indebtedness of the Company, except as and to the extent agreed in writing by such Member;

(vii) Issuances or Repurchases of Interests . (a) sell or issue, or enter into any agreement to sell or issue, to any Person any Interest in the Company or option or other right to acquire any Interest or any other equity interest or quasi equity interest in the Company; (b) repurchase any Interest or any other equity interest in the Company, in each case other than as specifically contemplated by this Agreement; or (c) admit any Person as a Member;

(viii) Joint Ventures . Enter into any joint venture, joint operating or similar arrangement;

(ix) Judgments . (1) Confess a judgment against the Company, or settle or adjust any claims against the Company, resulting in either (A) the payment or transfer of consideration of more than $150,000 for a single judgment or claim or more than $500,000 in the aggregate during any 12-month period, (B) any material or significant restriction on the ability of the Company to conduct its business as contemplated by this Agreement and the other Transaction Documents, or (C) that otherwise causes a significant change in the business operations of the Company; or (2) commence any legal action or proceeding involving the Company where the amount exceeds $300,000;

(x) Liens or Encumbrances . Grant any lien or encumbrance on any property of the Company (other than the interest of any lessor in property leased by the Company as lessee under a capitalized lease or operating lease entered into in accordance with this Agreement), other than as specifically contemplated by this Agreement or the Loan Funding Facility;

 

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(xi) Material Contracts . Enter into any new contract, or modify any existing contract, if such contract is a Transaction Document or is otherwise material to the business, results of operations or financial condition of the Company and its Subsidiaries taken as a whole;

(xii) Related Transactions . Enter into, modify or amend the terms of in any material manner, make any material waiver on behalf of the Company under, or terminate any Related Transaction, including any Transaction Document to which the Company, on the one hand, and PHH or any of its Subsidiaries (other than the Company), on the other, are parties;

(xiii) Mergers . Directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire all or substantially all of the assets or capital stock of, or otherwise combine with, any Person, other than as specifically contemplated by this Agreement;

(xiv) Tax Matters . Take any action to the extent that this Agreement provides that such action is subject to the provisions of this Section 6.3(a)(xiv), make any election under the Code and other relevant tax laws as to the status of the Company, the treatment of items of income, gain, loss, deduction and expense, and as to all other relevant matters, including, without limitation, elections referred to in Section 754 of the Code, determine which items of cash outlay are to be capitalized or treated as current expenses, or select the method of accounting and bookkeeping procedures to be used by the Company;

(xv) Annual Business Plan . Approve each Annual Business Plan and any material changes thereto or deviations therefrom;

(xvi) Chief Executive Officer . Appointment of the president and/or chief executive officer of the Company;

(xvii) Fair Market Value . Make any determination of Fair Market Value required to be made under this Agreement;

(xviii) Minimum Capital Requirements . Make any final Additional Capital Determination or any determination regarding the respective Additional Capital Amounts required to be made by Members in connection therewith; or approve the amount of cash or cash equivalents that should be retained by the Company in order to meet minimum regulatory capital and reserve requirements imposed by any Governmental Entity, whether in connection with retaining the licenses and registrations necessary for the Company to originate Mortgage Loans or otherwise, or by any creditor of the Company or any of its Subsidiaries, including any lender under the Loan Funding Facility (the “ Minimum Capital Requirements ”);

 

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(xix) Liquidating Trustee . The appointment of a Liquidating Trustee that is a Person other than the Managing Member; or

(xx) Agree to do any of the foregoing.

The Managing Member shall cause the governing documents of each of the Company’s Subsidiaries to provide that such Subsidiary must obtain the approval of the Company, as outlined pursuant to this Section 6.3, prior to taking any action set forth in this Section 6.3.

Section 6.4 Company Resources . Except as specifically provided in this Agreement or any other Transaction Document, or with the prior approval of the Board, the Company shall not pay to or use for the benefit of any Member, funds, assets, credit or other resources of any kind or description of the Company. Funds of the Company shall be deposited only in the accounts of the Company in the Company’s name, shall not be commingled with funds of any Member, and shall be withdrawn only upon such signature or signatures as may be designated in writing from time to time by the Managing Member.

Section 6.5 Advisors Have No Managerial Authority .

(a) Neither the Board nor the Advisors (individually or together with one or more other Advisors) shall have power to direct or participate in the management of the Company; provided , however , that nothing contained in this Section 6.5(a) shall adversely affect or impair the authority and obligations of the Board and the Advisors pursuant to Sections 6.2 and 6.3 hereof.

(b) The Advisors (acting in their individual capacity as such) shall owe no fiduciary or other duties to the Company or any Member.

(c) Unless expressly and duly authorized in writing to do so by the Managing Member and the Board, no other Member and no Advisor shall have any power or authority to bind or act on behalf of the Company in any way, to pledge its credit, or to render it liable for any purpose.

Section 6.6 Devotion of Time . The Advisors (in their capacity as Advisors) shall not be obligated to devote all of their time or business efforts to the affairs of the Company, and shall devote such time, effort, and skill as they deem appropriate for the execution of their duties and responsibilities under this Agreement.

 

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Section 6.7 Officers . The initial executive officers of the Company shall be the individuals set forth in Schedule 6.7 hereto (the “ Initial Officers ”). Successors to the Initial Officers, and such other executive officers as may be necessary to conduct the business of the Company, shall be chosen by the Managing Member, subject to the approval of the Board if required pursuant to Section 6.3 hereof.

Section 6.8 Remuneration; Reimbursement . Neither the Managing Member nor any Advisor or officer shall be entitled to remuneration in its capacity as such.

Section 6.9 Approval of Annual Business Plan . Not less than seventy-five (75) days prior to the end of each fiscal year, the Managing Member shall submit to the Board the business plan of operations for the Company for the upcoming fiscal year, which shall contain detailed budget, planning, projection and profitability information (the “ Annual Business Plan ”). Each Annual Business Plan shall be subject to approval of the Board in accordance with Section 6.3.

Section 6.10 Reports .

(a) No later than the sixth (6 th ) Business Day following the end of each calendar month, the PHH Member shall, in its capacity as Managing Member on an outsourced basis, deliver to the Cendant Member:

(i) those surveys and reports listed and described in Schedule 6.10(a)(i) hereto to verify compliance with the covenant contained in Section 6.1(d); and

(ii) a copy of (a) the balance sheet of the Company as of the end of the month, (b) an income statement of the Company for such month, and (c) reports reflecting other financial and statistical information with respect to the Company, prepared substantially in the form of the report set forth in Schedule 6.10(a)(ii) .

(b) No later than the tenth (10 th ) Business Day following the end of each calendar month, the PHH Member shall, in its capacity as Managing Member on an outsourced basis, deliver to the Cendant Member such forward-looking financial information about the Company and the Company’s operations as the Cendant Member may reasonably request (i.e., that is capable of being obtained, produced, or generated without undue effort by the Company and the Managing Member) from time to time (the “ Monthly Forecasts ”). The Managing Member shall (i) provide the Monthly Forecasts to the Cendant Member in the format requested by the Cendant Member and on a timely basis and (ii) make members of its management and the Company’s management reasonably available for discussion relating to such Monthly Forecasts. The Managing

 

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Member acknowledges that the Cendant Member and any Affiliate thereof may use the Monthly Forecasts for the purpose of developing projections of the Company’s future financial performance and may include such projections in reports and other documents filed with Governmental Entities, and as such, the Managing Member represents and warrants to Cendant that the Managing Member shall prepare the Monthly Forecasts in good faith and shall use its reasonable best efforts to ensure that the Monthly Forecasts provide the most accurate estimate of the Company’s future results.

(c) No later than the tenth (10 th ) Business Day following the completion of each Fiscal Quarter, the PHH Member shall, in its capacity as Managing Member on an outsourced basis, deliver to the Cendant Member all statements, reports and other documents reasonably requested by the Cendant Member that may be necessary or appropriate for the Cendant Member or any Controlling Person thereof (including, without limitation, Cendant) to satisfy all its reporting requirements pursuant to the Securities Exchange Act of 1934.

(d) The Managing Member shall cause the Company to deliver to the Cendant Member the financial reports and other information described in Sections 11.5 and 11.6 hereof.

ARTICLE VII

Changes in Law; Financial Reporting

Section 7.1 Compliance with Law; Changes in Law .

(a) The Members shall use commercially reasonable efforts to ensure that the Company’s business and operations comply at all times with all applicable laws, including RESPA.

(b) In the event that, as a result of any change in law, rule or regulation or interpretation thereof after the date hereof, as set forth in a written document by a Governmental Entity of competent jurisdiction, (i) any term or provision of this Agreement or any of the other Transaction Documents, in the written opinion of nationally-recognized counsel of either party, is not compliant in any material respect with any applicable law, including RESPA, or (ii) the financial terms of this Agreement and the other Transaction Documents, taken as a whole, become materially inconsistent with the then-current market, the Members shall use commercially reasonable efforts to restructure the business and operations of the Company and amend the relevant provisions of this Agreement and the other Transaction Documents to the extent necessary to achieve as closely as possible the intention of the parties with respect to the economics of the relationships provided for in this Agreement and the other Transaction Documents in a manner that complies with such law, and, in the case of a change in law, rule or regulation described in (ii) above, the Cendant Member shall have the right, by

 

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providing written notice to the PHH Member, to cause PMC and the PHH Member to enter into good faith discussions to renegotiate the economic terms provided for in this Agreement and the other Transaction Documents. In the event the Members fail to reach agreement regarding any such restructuring and renegotiation on terms that are reasonably satisfactory to the Cendant Member within thirty (30) days following the date on which written notice is provided by the Cendant Member, the existing financial terms shall remain in full force and effect; provided , however , that in such case the Cendant Member may elect to solicit from the PHH Member and from other Persons a request for proposals for the provision of mortgage services substantially similar to those provided for in this Agreement and the other Transaction Documents. In the event that any proposal received by the Cendant Member contains financial and other terms that, taken as a whole, are reasonably determined by the Cendant Member to be superior to those set forth in the PHH Member’s proposal, and the Cendant Member notifies the PHH Member of its intent to accept such proposal, the PHH Member shall have thirty (30) days from the date of such notification to review and determine whether to accept all of the terms of such proposal, so long as such proposal complies with all applicable laws and regulations (it being understood that the Cendant Member shall have no obligation to accept any proposal at all). In the event that the PHH Member agrees to the terms of such proposal within such thirty (30) day period, such terms shall be incorporated into this Agreement and the other Transaction Documents effective as of a date not later than ten (10) days following such agreement. In the event the PHH Member fails to accept the terms of such proposal, then the Cendant Member, at its option, shall have the right to terminate its relationship as set forth in this Agreement by providing written notice (the “ Special Termination Notice ”) to the PHH Member and through completion of the transaction contemplated by Section 8.4(b) (a “ Special Termination Event ”). In the event that the proposal submitted by the PHH Member is selected by the Cendant Member, the terms of such proposal shall be incorporated into this Agreement and the other Transaction Documents effective as of a date not later than 20 days following the Cendant Member’s selection of such proposal.

(c) If any change in law, rule or regulation described in (b) above involves a change in RESPA that would permit Cendant or an Affiliate of Cendant to be paid directly for loan referrals to the Company, then in lieu of the provisions described in (b) above, the Members shall revise the structure and terms of this Agreement and the other Transaction Documents so that, in lieu of the distributions provided for in this Agreement, the Company shall pay a fee to the Cendant Member in respect of each Mortgage Loan referred to the Company by Cendant or an Affiliate of Cendant in an amount not less than, at Cendant’s option, (i) 10 basis points over the average return to the Cendant Member with respect to its interest in the Company, computed as basis points per loan, over the immediately preceding six Quarterly Periods and (ii) the price the Cendant Member could obtain in the then-current market on substantially similar terms, based upon a survey of the market by Cendant and PMC with the highest and lowest bids being discounted.

 

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Section 7.2 Consolidation .

(a) The PHH Member hereby represents and warrants to the Cendant Member that the Company will be consolidated on the books of PHH for financial reporting purposes, and that PHH has undertaken and completed prior to date hereof all analyses and investigations as shall be necessary and appropriate to support such position.

(b) The Members shall use commercially reasonable efforts to take all such actions as shall be necessary to ensure that the Company is consolidated on the books of PHH for financial reporting purposes. Without limiting the foregoing, in the event that, as a result of a change or interpretation in United States generally accepted accounting principles after the date hereof, the Company is required to be consolidated on the balance sheet of Cendant, the Members shall use commercially reasonable efforts to make such changes to the business relationship between the parties and to the provisions of this Agreement as are requested by the Cendant Member to mitigate the effects to Cendant of such change.

Section 7.3 Certain Actions .

The Managing Member shall (i) promptly notify the Cendant Member in writing of any claim or action, or any inquiry or investigation that could result in a claim or action, initiated by any Person (including any Governmental Entity) that, if adversely resolved, would result in a material or significant restriction on the ability of the Company to conduct its business as contemplated by this Agreement and the other Transaction Documents, or that would otherwise cause a significant change in the business operations of the Company, and (ii) keep the Cendant Member actively involved in the settlement or other resolution of any such claim, action, inquiry or investigation; provided , however , that such claim, action, inquiry or investigation shall not be settled or adjusted, and the Company shall not confess a judgment against it in connection therewith, without the approval of the Board pursuant to Section 6.3 hereof.

 

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ARTICLE VIII

Termination of Relationship

Section 8.1 Cendant Termination Events . For purposes of this Agreement, “Cendant Termination Event” means the occurrence of any of the following events:

(a) A PHH Regulatory Event occurs and is continuing for a period of six consecutive months or more; provided , however , that the PHH Member may elect to defer a termination pursuant to this Section 8.1(a) for up to six (6) additional one-month periods following the time that such termination event shall have first occurred if, no later than the second Business Day prior to the commencement of each such additional one-month period the PHH Member pays the Cendant Member in cash, by wire transfer of immediately available funds to an account designated in writing by the Cendant Member, one million dollars ($1,000,000) (the “ Regulatory Event Fee ”);

(b) A Company Regulatory Event occurs and is continuing for a period of six consecutive months or more; provided , however , that the PHH Member may elect to defer a termination pursuant to this Section 8.1(b) for up to six (6) additional one-month periods following the time that such termination event shall have first occurred if, no later than the second Business Day prior to the commencement of each such additional one-month period the PHH Member pays the Cendant Member in cash, by wire transfer of immediately available funds to an account designated in writing by the Cendant Member, an amount equal to the Regulatory Event Fee;

(c) There is a material violation or breach by the PHH Member (acting in any capacity whatsoever, including as Managing Member) of any representation, warranty, covenant or other agreement contained in this Agreement or any other Transaction Document (a “ PHH Material Breach ”), which violation or breach is not cured by the PHH Member or the other relevant PHH party, in a manner reasonably satisfactory to the Cendant Member, within thirty (30) days after written notice relating to such PHH Material Breach has been delivered by the Cendant Member to the PHH Member;

(d) The Company fails to make a distribution for any Fiscal Quarter in accordance with the provisions of Section 5.6 hereof within ten (10) Business Days after the date on which the Cendant Member first provides notice to the Company of such failure; provided , however , that any payment of a distribution to the Cendant Member after the due date provided for under Section 5.6 shall include interest from the due date through the payment date at the prime rate;

(e) (i) The occurrence of a PHH Change of Control involving any entity on the Cendant List attached hereto as Schedule 8.1(e) or any other entity that directly or indirectly conducts or engages in any business covered by the non-competition provisions set forth in Article X of the SRA. The Cendant List shall contain up to ten companies and may be refreshed by the Cendant Member no more frequently than once

 

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every two years beginning from the date of this Agreement; provided , however , that if any Person on the Cendant List enters into a merger, consolidation or similar business combination transaction with another Person on the Cendant List, then Cendant may add another Person to the Cendant List to replace such Person within sixty (60) days after the announcement of such transaction, and such addition shall not constitute a refreshing of the Cendant List as discussed above;

(f) The occurrence of any event or circumstance constituting Insolvency or Bankruptcy with respect to PHH or PMC (a “ Bankruptcy Event ”); or

(g) The occurrence of any act or omission by PHH or any of its Subsidiaries that causes or would reasonably be expected to cause material harm to the reputation of Cendant or any of its Subsidiaries.

Section 8.2 Effects of a Cendant Termination Event . Upon the occurrence of a Cendant Termination Event during the term of the Company, the Cendant Member shall have the right to either (i) cause PMC or the PHH Member to purchase (the “ Cendant Put ”) all of the Interests then held by the Cendant Member or any of its Affiliates or (ii) cause the PHH Member to sell (the “ PHH Sale ”) all of the Interests then held by the PHH Member or any of its Affiliates to a Person not affiliated with Cendant (any such Person, for purposes of this Section 8.2, the “ Cendant Designated Buyer ”).

(a) Cendant Put .

(i) The exercise price of the Cendant Put (the “ Put Price ”) shall be an amount equal to the sum of (A) the then-current Capital Account balance of the Cendant Member plus the then-current Capital Account balance of any other Affiliate of Cendant holding an Interest, in each case, as of the Put Date, plus (B) the aggregate amount of all past due quarterly distributions to the Cendant Member and to any other Affiliate of Cendant and any unpaid distribution in respect of the most recently completed Fiscal Quarter pursuant to Section 5.6 hereof, in each case as of the Put Date, plus (C) liquidated damages in an amount equal to the Termination Payment (as defined below), calculated as of the Put Date, plus (D) an amount equal to 49.9% of the Net Income, if any, realized by the Company at any time after the end of the Fiscal Quarter most recently completed as of the Put Date attributable to Mortgage Loans in process at any time prior to the Put Date. In the event that the Cendant Member elects to exercise the Cendant Put, the Cendant Member shall provide written notice (the “ Cendant Put Notice ”) to the PHH Member. The Cendant Put Notice shall set forth the Cendant Member’s calculation of the Put Price and the basis for such calculation. Any disagreement regarding the Put Price or any other matter related to the exercise of the Cendant Put shall be resolved in accordance with the provisions of Section 13.6 hereof. In the event that the Cendant Member elects to

 

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exercise the Cendant Put, the PHH Member and the Cendant Member shall, and shall cause their respective Affiliates to, cooperate as fully as reasonably practicable with one another to consummate the Cendant Put transaction as soon as reasonably practicable following the receipt of the Cendant Put Notice by the PHH Member. Concurrently with the consummation of the Cendant Put transaction, the PHH Member shall pay or cause to be paid the Put Price to the Cendant Member in cash by wire transfer of immediately available funds to an account or accounts designated in writing by the Cendant Member. The “ Put Date ” shall be the date on which the Cendant Put is consummated.

(ii) Upon the consummation of a Cendant Put, (A) all of the other Transaction Documents shall automatically terminate (except as otherwise provided in any such Transaction Document), (B) neither the Cendant Member nor any Affiliate thereof shall be subject to any restriction under this Agreement or any other Transaction Document to pursue a partnership, joint venture or other arrangement with any third party mortgage operation, and (C) the PHH Member shall, and shall cause the Company to, cause all loan officers employed by PMC or any of its Subsidiaries (including the Company) that are located in any of Cendant’s Owned Real Estate Offices to vacate those offices promptly following the Cendant Member’s request.

(iii) “ Termination Payment ” means an amount equal to (A) the product of (x) two (2) and (y) the actual Net Income of the Company for the trailing twelve months (“ LTM Net Income ”), plus (B) all costs reasonably incurred by Cendant in unwinding its relationship with PHH pursuant to this Agreement and the other Transaction Documents and transitioning to a new mortgage venture partner; provided , however , that in the case of a Cendant Termination Event pursuant to a PHH Change in Control, in calculating the Termination Payment, the LTM Net Income shall instead be multiplied by the number of years (including fractions thereof) remaining until the tenth (10 th ) anniversary of the Closing Date; provided further , however , that if such PHH Change in Control termination occurs on or after the eighth (8 th ) anniversary of the Closing Date, the LTM Net Income shall be multiplied by two (2).

(b) PHH Sale .

(i) If the Cendant Member elects to cause the PHH Sale, it shall deliver written notice (the “ PHH Sale Notice ”) to the PHH Member. The Cendant Member shall provide written notice to the PHH Member of the identity of the Cendant Designated Buyer as promptly as reasonably practicable after delivery of the PHH Sale Notice.

 

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(ii) The sale price (the “ Sale Price ”) of the Interests then held by the PHH Member and any of its Affiliates (the “ PHH Interests ”) to the Cendant Designated Buyer shall be an amount equal to the sum of (A) the fair value of the Interests of the PHH Member and any Affiliate thereof as of the date that the PHH Sale Notice is delivered, which value shall be determined by multiplying the PHH Member’s then-current proportionate membership interest by the Company’s EBITDA for the trailing twelve months, multiplied by a then-current average market EBITDA multiple for mortgage banking companies, plus (B) the aggregate amount of all past due quarterly distributions to the PHH Member and any Affiliate thereof and any unpaid distribution in respect of the most recently completed Fiscal Quarter pursuant to Section 5.6 hereof, plus (C) an amount equal to 50.1% of the Net Income realized by the Company at any time after the end of the Fiscal Quarter most recently completed as of the Sale Date attributable to Mortgage Loans in process prior to the Sale Date. The PHH Sale Notice shall set forth the Cendant Member’s calculation of the Sale Price and the basis for such calculation. Any disagreement regarding the Sale Price or any other matter related to the PHH Sale shall be resolved in accordance with the provisions of Section 13.6 hereof.

(iii) If the Cendant Member delivers a PHH Sale Notice, then promptly thereafter the Cendant Member and the PHH Member shall work together to effect the sale by the PHH Member and its Affiliates of the PHH Interests to the Cendant Designated Buyer, and the PHH Member shall use its reasonable best efforts to complete such sale as promptly as practicable thereafter. The PHH Member shall cooperate with and assist the Cendant Member and the Cendant Designated Buyer in obtaining all consents and approvals of, making all filings and registrations with and providing all notices to, such Governmental Entities or third parties as shall be necessary or advisable to consummate such sale. At the time agreed upon for the closing of the PHH Sale (the “ Sale Date ”), (i) the Cendant Designated Buyer shall pay to the PHH Member (and/or, as directed by the PHH Member, to any of its Affiliates) the Sale Price, by wire transfer of immediately available funds, in consideration for the PHH Interests, and (ii) the PHH Member shall pay to the Cendant Member liquidated damages in an amount equal to the Termination Payment as of the Sale Date.

(iv) Upon consummation of the PHH Sale, (A) the other Transaction Documents (except as otherwise provided in any such Transaction Document) shall automatically terminate, (B) neither Cendant nor any Affiliate thereof shall be subject to any restriction under this Agreement or any other Transaction Document to pursue a partnership, joint venture or another arrangement with any third party mortgage operation, (C) the PHH Member shall cause all loan officers employed by PMC or any of its Subsidiaries that are located in any of Cendant’s Owned Real Estate Offices to vacate those offices

 

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promptly following the Cendant Member’s request, and (D) the Cendant Designated Buyer or an Affiliate thereof shall become a Member and the sole Managing Member of the Company. The PHH Member shall, and shall cause its Affiliates to, execute any agreement or document necessary to effectuate the provisions of this paragraph (iv).

Section 8.3 PHH Termination Event .

For purposes of this Agreement, a “ PHH Termination Event ” means the occurrence of any of the following events: (i) a material violation or breach by Cendant or any Subsidiary thereof of any material covenant, agreement or obligation set forth in this Agreement or any other Transaction Document, which violation or breach is not cured and is continuing within sixty (60) days following written notice to the Cendant Member; provided , however , that the PHH Member shall have no right pursuant to this Section 8.3 or otherwise to terminate this Agreement as a result of a breach by any Affiliate of Cendant of the covenant set forth in Section 3.13(b) of the SRA; or (ii) the Bankruptcy of Cendant.

(a) In the event that a PHH Termination Event shall have occurred, the PHH Member shall have the right to purchase (the “ Purchase Right ”) all of the Interests then held by the Cendant Member and any of its Affiliates. The exercise price of the Purchase Right (the “ Purchase Price ”) shall be an amount equal to the sum of (i) the fair value of the Interests then held by the Cendant Member and by any of its Affiliates as of the date that the Purchase Right is exercised, which value shall be determined by multiplying the Cendant Member’s then-current proportionate membership interest by the Company’s EBITDA for the trailing twelve months, multiplied by a then-current average market EBITDA multiple for mortgage banking companies, plus (ii) the aggregate amount of all past due quarterly distributions to the Cendant Member and any Affiliate thereof and any unpaid distribution in respect of the most recently completed Fiscal Quarter pursuant to Section 5.6 hereof, plus (iii) an amount equal to 49.9% of the Net Income realized by the Company at any time after the end of the Fiscal Quarter most recently completed as of the date of purchase attributable to Mortgage Loans in process at any time prior to completion of the Purchase Right transaction. The Purchase Right shall remain exercisable for a period of two (2) months following the occurrence of a PHH Termination Event. In the event that the PHH Member elects to exercise the Purchase Right, the PHH Member shall provide written notice (the “ Purchase Notice ”) to the Cendant Member prior to the expiration of such two-month period. The Purchase Notice shall set forth the PHH Member’s calculation of the Purchase Price and the basis for such calculation. Any disagreement regarding the Purchase Price or any other matter related to the exercise of the Purchase Right shall be resolved in accordance with the provisions of Section 13.6 hereof. In the event that the PHH Member elects to exercise the Purchase Right, the PHH Member and the Cendant Member shall, and shall cause their respective Affiliates to, cooperate as fully as reasonably practicable with one another to

 

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consummate the Purchase Right transaction; provided , however , that the Purchase Right transaction shall not be consummated earlier than the one-year anniversary of delivery of the Purchase Notice. Concurrently with the consummation of the Purchase Right transaction, the PHH Member shall pay or cause to be paid the Purchase Price to the Cendant Member in cash by wire transfer of immediately available funds to an account or accounts designated in writing by the Cendant Member.

(b) Upon consummation of the Purchase Right transaction, (i) all other Transaction Documents shall automatically terminate (except as otherwise provided in any such Transaction Document), (ii) neither the Cendant Member nor any Affiliate thereof shall be subject to any restriction under this Agreement or any other Transaction Document to pursue a partnership, joint venture or another arrangement with any third party mortgage operation and (iii) the PHH Member shall, and shall cause the Company to, cause all loan officers employed by PMC or any of its Subsidiaries (including the Company) that are located in any of Cendant’s Owned Real Estate Offices to vacate those offices promptly following the Cendant Member’s request.

(c) The PHH Member’s sole remedy hereunder or under any other Transaction Document with respect to a breach of the covenant set forth in Section 3.13(b) of the SRA shall be the right to receive from the Cendant Entities liquidated damages in an amount equal to the aggregate amount of all documented out-of-pocket costs actually incurred and paid by the PHH Member or any of its Affiliates to one or more third parties as a direct result of such breach.

Section 8.4 Two Year Termination, Special Termination Event and 25-Year Termination .

(a) Two-Year Termination . At any time after the eighth (8 th ) anniversary of the Closing Date, the Cendant Member may deliver to the PHH Member a written notice (the “ Two-Year Termination Notice ”) requesting that the PHH Member either (i) purchase or cause to be purchased (the “ Two Year Put ”) all of the Interests held by the Cendant Member or any of its Affiliates on a date no earlier than two years after such Two-Year Termination Notice is delivered to the PHH Member (“ Two Year Put Date ”) or (ii) sell (the “ Two Year PHH Sale ”) all of the Interests then held by the PHH Member and/or any of its Affiliates to a Person that is not affiliated with Cendant (any such Person, for purposes of this Section 8.4, the “ Cendant Designated Buyer ”) on a date no earlier than two years after such Two-Year Termination Notice is delivered to the PHH Member (“ Two Year Sale Date ”).

(i) Two Year Put .

(1) The exercise price of the Two Year Put (the “ Two Year Put Price ”) shall be an amount equal to the sum of (A)

 

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the fair value of the Interests of the Cendant Member and any Affiliate thereof as of the Two Year Put Closing Date, which value shall be determined by multiplying the Cendant Member’s then-current proportionate membership interest by the Company’s EBITDA for the trailing twelve months, multiplied by a then-current average market EBITDA multiple for mortgage banking companies, plus (B) the aggregate amount of all past due quarterly distributions to the Cendant Member and any Affiliate thereof and any unpaid distribution in respect of the most recently completed Fiscal Quarter pursuant to Section 5.6 hereof as of the Two Year Put Closing Date, plus (C) an amount equal to 49.9% of the Net Income realized by the Company at any time after the end of the Fiscal Quarter most recently completed as of the Two Year Put Closing Date attributable to Mortgage Loans in process at any time prior to the Two Year Put Closing Date. No later than sixty (60) days prior to the Two Year Put Date, the Cendant Member shall deliver to the PHH Member a written notice setting forth the Cendant Member’s calculation of the Two Year Put Price and the basis for such calculation. Any disagreement regarding the Two Year Put Price or any other matter related to the exercise of the Two Year Put shall be resolved in accordance with the provisions of Section 13.6 hereof. In the event that the Cendant Member elects to exercise the Two Year Put, the PHH Member and the Cendant Member shall, and shall cause their respective Affiliates to, cooperate as fully as reasonably practicable with one another to consummate the Two Year Put transaction on the Two Year Put Date. Concurrently with the consummation of the Two Year Put transaction, the PHH Member shall pay or cause to be paid the Two Year Put Price to the Cendant Member in cash by wire transfer of immediately available funds to an account or accounts designated in writing by the Cendant Member. The “ Two Year Put Closing Date ” shall be the date on which the Two Year Cendant Put is consummated.

(2) On the Two Year Put Closing Date, (A) all other Transaction Documents shall automatically terminate (except as otherwise provided in any such Transaction Document), (B) neither Cendant nor any Affiliate thereof shall be subject to any restriction under this Agreement or any other Transaction Document to pursue a partnership, joint venture or another arrangement with any third party mortgage operation, and (C) the PHH Member shall, and shall cause the Company to, cause all loan officers employed by PMC or any of its Subsidiaries (including the Company) that are located in any of Cendant’s Owned Real Estate Offices to vacate those offices promptly following the Cendant Member’s request.

 

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(ii) Two Year PHH Sale .

(1) If the Cendant Member elects to cause the Two Year PHH Sale, it shall provide written notice to the PHH Member of the identity of the Cendant Designated Buyer no later than 180 days before the Two Year Sale Date.

(2) The sale price (the “ Two Year Sale Price ”) of the PHH Member’s Interest to the Cendant Designated Buyer shall be an amount equal to the sum of (A) the fair value of the PHH Member’s Interest, which value shall be determined by multiplying the PHH Member’s then-current proportionate membership interest by the Company’s EBITDA for the trailing twelve months, multiplied by a then-current average market EBITDA multiple for mortgage banking companies, plus (B) the aggregate amount of all past due quarterly distributions to the PHH Member and any Affiliate thereof and any unpaid distribution in respect of the most recently completed Fiscal Quarter pursuant to Section 5.6 hereof as of such date, plus (C) an amount equal to 50.1% of the Net Income realized by the Company at any time after the end of the Fiscal Quarter most recently completed on or after the Two Year Sale Date attributable to Mortgage Loans in process at any time prior to the Two Year Sale Date. No later than sixty (60) days prior to the Two Year Sale Date, the Cendant Member shall deliver to PMC or the PHH Member a notice that sets forth the Cendant Member’s calculation of the Two Year Sale Price and the basis for such calculation. Any disagreement regarding the Two Year Sale Price or any other matter related to the Two Year PHH Sale shall be resolved in accordance with the provisions of Section 13.6 hereof.

(3) The Cendant Member, PMC and the PHH Member shall work together to effect the sale by the PHH Member or its Affiliates of the PHH Interests to the Cendant Designated Buyer, and the PHH Member shall use its reasonable best efforts to complete such sale on the Two Year Sale Date. PMC and the PHH Member shall cooperate with and assist the Cendant Member and the Cendant Designated Buyer in obtaining all consents and approvals of, making all filings and registrations with and providing all notices to, such Governmental Entities or third parties as shall be necessary or advisable to consummate such sale. At the time agreed upon for the closing of the Two Year PHH Sale, the Cendant Designated Buyer shall pay to the PHH Member (or, as directed by the PHH Member, any of its Affiliates) the Two Year Sale Price, by wire transfer of immediately available funds, in consideration for the PHH Interests.

 

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(4) Upon consummation of the Two Year PHH Sale, (A) the other Transaction Documents shall automatically terminate (other than as set forth in any such Transaction Document), (B) neither Cendant nor any Affiliate thereof shall be subject to any restriction under this Agreement or any other Transaction Document to pursue a partnership, joint venture or another arrangement with any third party mortgage operation, (C) the PHH Member shall, and shall cause the Company to, cause all loan officers employed by PMC or any of its Subsidiaries (including the Company) that are located in any of Cendant’s Owned Real Estate Offices to vacate those offices promptly following the Cendant Member’s request, and (D) the Cendant Designated Buyer or an Affiliate thereof shall become a Member and the sole Managing Member of the Company. The PHH Member shall, and shall cause its Affiliates, to execute any agreement or document necessary to effectuate the provisions of this paragraph (iv).

(b) Special Termination Event . Upon the occurrence of a Special Termination Event, the Members shall as promptly as practicable take all such actions necessary to consummate a transaction identical in all material respects to a Two Year Put (a “ Special Termination Put ”), except that (1) the purchase price shall be calculated as of the date the Special Termination Put is completed, and (2) such transaction shall be completed not later than ninety (90) days following the delivery by the Cendant Member of the Special Termination Notice pursuant to Section 7.1(b). On the date of completion of the Special Termination Put, (A) all other Transaction Documents shall automatically terminate (except as otherwise provided in any such Transaction Document), (B) neither Cendant nor any Affiliate thereof shall be subject to any restriction under this Agreement or any other Transaction Document to pursue a partnership, joint venture or another arrangement with any third party mortgage operation, and (C) the PHH Member shall, and shall cause the Company to, cause all loan officers employed by PMC or any of its Subsidiaries (including the Company) that are located in any of Cendant’s Owned Real Estate Offices to vacate those offices promptly following the Cendant Member’s request.

(c) PHH 25-Year Termination . The PHH Member may terminate the relationship between the Parties to this Agreement, effective as of January 31, 2030, by delivering written notice thereof to the Cendant Member (a “ Non-Renewal Notice ”), which notice shall be delivered no earlier than January 31, 2027 and not later than January 31, 2028. Upon delivery of a Non-Renewal Notice, PMC and the PHH Member shall work together with the Cendant Member to consummate a transaction identical in all material respects to, at the election of the PHH Member, either the Two Year Put (a “ Non-Renewal Put ”) or Two Year PHH Sale (a “ Non-Renewal PHH Sale ”), except that (1) the purchase price for such transaction shall be calculated as of the date of completion of such transaction, and (2) such transaction shall be completed no earlier

 

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than January 31, 2030. Upon consummation of the Non-Renewal Put or the Non-Renewal PHH Sale, (A) the other Transaction Documents shall automatically terminate (other than as set forth in any such Transaction Document), (B) neither Cendant nor any Affiliate thereof shall be subject to any restriction under this Agreement or any other Transaction Document to pursue a partnership, joint venture or another arrangement with any third party mortgage operation, (C) the PHH Member shall, and shall cause the Company to, cause all loan officers employed by PMC or any of its Subsidiaries (including the Company) that are located in any of Cendant’s Owned Real Estate Offices to vacate those offices promptly following the Cendant Member’s request, and (D) in the case of a Non-Renewal PHH Sale, the Cendant Designated Buyer or an Affiliate thereof shall become a Member and the sole Managing Member of the Company. The PHH Member shall, and shall cause its Affiliates, to execute any agreement or document necessary to effectuate the provisions of this paragraph (c).

Section 8.5 Effect of Termination Events .

(a) Notwithstanding anything to the contrary set forth in this Agreement, upon the consummation of a Cendant Put, a Two Year Put, a Purchase Right, a Special Termination Event Put or a Non-Renewal Put, the Cendant Member and each of its Affiliates that is a Member shall cease to be a Member and to have any obligations pursuant to this Agreement.

(b) Notwithstanding anything to the contrary set forth in this Agreement, upon the consummation of a PHH Sale, a Two Year PHH Sale or a Non-Renewal PHH Sale, the PHH Member and each of its Affiliates that is a Member shall cease to be a Member and to have any obligations pursuant to this Agreement.

ARTICLE IX

Dissolution and Winding Up

Section 9.1 Events Causing Dissolution .

(a) The Company shall be dissolved upon the first of the following events to occur (an “ Event of Dissolution ”):

(i) The written consent all Members at any time to dissolve and wind up the affairs of the Company; or

(ii) The entry of a decree of judicial dissolution under Section 18-802 of the Act.

 

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No other event, including the retirement, insolvency, liquidation, dissolution, expulsion, bankruptcy, death, incapacity or adjudication of incompetence of a Member, shall cause the existence of the Company to terminate.

(b) Except as otherwise set forth in this Section 9.1, dissolution shall be effective on the effective date of the Event of Dissolution, but the Company shall not terminate until the assets thereof have been distributed in accordance with the provisions of Section 9.4 hereof and all other provisions of the Act with respect to the dissolution of a limited liability company have been complied with. Notwithstanding the dissolution of the Company, prior to the termination of the Company, the business, assets and affairs of the Company shall continue to be governed by this Agreement.

Section 9.2 Winding Up . If the Company is dissolved pursuant to Section 9.1, the Company’s affairs shall be wound up as soon as reasonably practicable in the manner set forth below.

(a) Upon the occurrence of an Event of Dissolution, sole and plenary authority to effectuate the liquidation of the Company shall be vested in the Managing Member or a Person designated by the Managing Member (subject to the approval of the Board pursuant to Section 6.3 hereof) to effectuate the liquidation of the Company or if the Managing Member elects not to effectuate such liquidation and fails to designate a liquidator, such Person as is selected by the Members (the Managing Member or any such liquidating trustee who assumes such responsibility being referred to herein as the “ Liquidating Trustee ”). The Liquidating Trustee shall proceed diligently to wind up the affairs of the Company, liquidate the assets of the Company in an orderly and businesslike manner consistent with obtaining the fair value thereof and distribute the assets of the Company in accordance with the provisions of Section 9.4 hereof. A reasonable amount of time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Liquidating Trustee to minimize the losses attendant upon such liquidation. All FHA-insured loans held by the Company shall be transferred to an approved mortgagee or lender prior to dissolution of the Company. Prior to such distribution of the Company’s assets, the Liquidating Trustee shall continue to exploit the rights, activities and properties of the Company consistent with the sale or liquidation thereof, exercising in connection therewith all of the power and authority of the Managing Member as herein set forth.

(b) In winding up the affairs of the Company, the Liquidator shall have full right and unlimited discretion, in the name of and for and on behalf of the Company to:

(i) Prosecute and defend civil, criminal or administrative suits;

 

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(ii) Collect Company assets, including obligations owed to the Company;

(iii) Settle and close the Company’s business;

(iv) Dispose of and convey all Company Property for cash, and in connection therewith to determine the time, manner and terms of any sale or sales of Company Property, having due regard for the activity and condition of the relevant market and general financial and economic conditions;

(v) Pay all reasonable selling costs and other expenses incurred in connection with the winding up out of the proceeds of the disposition of Company Property;

(vi) Discharge the Company’s known liabilities and, if necessary, to set up, for a period not to exceed five (5) years after the date of dissolution, such cash reserves as the Liquidator may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company;

(vii) Distribute any remaining proceeds from the sale of Company Property to the Members;

(viii) Prepare, execute, acknowledge and file articles of dissolution under the Act and any other certificates, tax returns or instruments necessary or advisable under any applicable law to effect the winding up and termination of the Company;

(ix) Upon the distribution of the assets of the Company in accordance with the provisions of Section 9.4 hereof, the Liquidating Trustee shall cause the Company’s accountants to make a full and proper accounting of the assets, liabilities and operations of the Company, as of and through the date on which such distribution occurs; and

(x) Exercise, without further authorization or consent of any of the parties hereto or their legal representatives or successors in interest, all of the powers conferred upon the Members under the terms of this Agreement to the extent necessary or desirable in the good faith judgment of the Liquidating Trustee to perform its duties and functions. The Liquidating Trustee (unless such Liquidating Trustee is the Managing Member or an Affiliate thereof) shall, while acting in such capacity on behalf of the Company, be entitled to the indemnification rights set forth in Section 12.1 hereof.

 

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Section 9.3 Compensation of Liquidating Trustee . The Liquidating Trustee appointed as provided herein shall be entitled to receive such reasonable compensation for its services as shall be agreed upon by the Liquidating Trustee and the Managing Member.

Section 9.4 Distribution of Company Property and Proceeds of Sale Thereof .

(a) Upon completion of all desired sales of Company Property, and after payment of all selling costs and expenses, the Liquidating Trustee shall distribute the proceeds of such sales, and any Company Property that is to be distributed in kind, to the following groups in the following order of priority:

(i) to satisfy Company liabilities to creditors, including Members who are creditors, to the extent otherwise permitted by law (other than for past due Company distributions), whether by payment or establishment of reserves;

(ii) to satisfy Company obligations to Members and former Members to pay past due Company distributions;

(iii) pro rata among the Members who have made Capital Contributions to the extent of their Capital Contributions; and

(iv) to the Members pro rata in accordance with their positive Capital Account balances, taking into account all Capital Account adjustments for the Fiscal Period in which the liquidation occurs and any distributions to such Member pursuant to Section 9.4(a)(iii).

All distributions required under this Section 9.4 shall be made to the Members by the end of the taxable year in which the liquidation occurs or, if later, within 90 days after the date of such liquidation.

(b) The claims of each priority group specified above shall be satisfied in full before satisfying any claims of a lower priority group. If the assets available for disposition are insufficient to dispose of all of the claims of a priority group, the available assets shall be distributed in proportion to the amounts owed to each creditor or the respective Capital Account balances or Interests of each Member in such group.

Section 9.5 Company Termination . Upon compliance with the foregoing distribution plan, the Company shall cease to be such, and the Liquidating Trustee shall execute, acknowledge and cause to be filed with the Secretary of State of the State of Delaware articles of dissolution of the Company.

 

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Section 9.6 Final Audit . Within a reasonable time following the completion of the liquidation, the Liquidating Trustee shall supply to each of the Members a statement that shall set forth the assets and the liabilities of the Company as of the date of complete liquidation and each Member’s pro rata portion of distributions pursuant to Section 9.4.

ARTICLE X

Transfers and Assignment of Interests

Section 10.1 Consent Required for Transfer .

(a) No Member shall be entitled to directly or indirectly sell, assign, Transfer or otherwise dispose of all or any portion of his Interest, involuntarily or voluntarily, without the written consent of all the other Members, which consent may be given or withheld in each such other Member’s sole and absolute discretion; provided , however , that notwithstanding the foregoing any Member may sell, assign, Transfer or otherwise dispose of all or any portion of such Member’s Interest to an Affiliate of such Member without the written consent of the other Members; provided further , however , that the Cendant Member may at its election Transfer a portion of its Interest to any Person that acquires or otherwise succeeds to a portion of the business of Cendant Real Estate, and shall transfer (i) its entire Interest to any Person that acquires or otherwise succeeds to substantially all of the business of Cendant Real Estate, or (ii) an appropriate portion of its Interest to any Person that acquires or otherwise succeeds to substantially all of the business of NRT, in each case, whether by merger, asset sale, stock sale, or otherwise (it being understood that in the case of any transfer of a portion of the Cendant Member’s Interest contemplated by this second proviso, the percentage represented by the portion of the Interest so transferred shall be determined based upon the percentage of the Company’s revenue for the then-current trailing twelve months represented by the portion of the business of Cendant Real Estate so transferred in the transaction).

(b) It shall be a condition to any Transfer of all or a portion of the Cendant Member’s Interest permitted by Section 10.1(a) that any Person acquiring such Interest or portion thereof shall agree in writing to be bound by this Agreement and all of the other Transaction Documents with respect to the portion of the business of Cendant Real Estate acquired by such Person, to the same extent that Cendant Real Estate and the Cendant Member were so bound prior to such transfer (other than as set forth in any such other Transaction Document). In the event of consummation of any such Transfer in accordance with Section 10.1(a), the Managing Member shall amend Schedule I to reflect such Transfer.

 

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(c) It shall be a condition to any Transfer by a Member which may be permitted under Section 10.1(a) that the transferee assume by written agreement all of the obligations of the transferor under this Agreement with respect to such transferred Interests and make the representations in Section 3.3 hereof. Any attempted or purported Transfer in violation of this Article X shall be null and void ab initio.

Section 10.2 Withdrawal . No Member may withdraw from the Company without the prior written consent of all Members, which consent may be given or withheld for any reason.

ARTICLE XI

Fiscal Matters; Books and Records

Section 11.1 Bank Accounts; Investments . Capital Contributions, revenues and any other Company funds shall be deposited by the Company in a bank account established in the name of the Company, or shall be invested by the Company, at the direction of the Managing Member, in time deposits, short-term governmental obligations, commercial paper or other short-term money market instruments in furtherance of the purposes of the Company. No other funds shall be deposited into Company bank accounts or commingled with Company investments. Funds deposited in the Company’s bank accounts may be withdrawn only to be invested in time deposits, short-term governmental obligations, commercial paper or other short-term money market instruments in furtherance of the Company’s purposes, to pay Company debts or obligations or to be distributed to the Members pursuant to this Agreement.

Section 11.2 Records Required by Act; Right of Inspection .

(a) During the term of the Company’s existence and for a period of four (4) years thereafter, there shall be maintained in the Company’s principal office specified pursuant to Section 2.4 all records required to be kept pursuant to Section 18-305(a) of the Act, including, without limitation, a current list of the names, addresses and Common Interest Percentage held by each of the Members (including the dates on which each of the Members became a Member), copies of federal, state and local information or income tax returns for each of the Company’s tax years, copies of this Agreement and the Certificate of Formation, including all amendments or restatements, and correct and complete books and records of account of the Company for all periods of operations.

(b) Each of the Company and the Managing Member shall, at their sole cost and expense, make available, or cause to be made available, to the Cendant Member or any person designated by the Cendant Member, in a timely manner, all documents or materials in the possession of, or available to, the Company or the

 

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Managing Member that the Cendant Member may reasonably request for any business purpose (including, without limitation, any such documents and materials the Cendant Member may request to verify the accuracy of the calculation of Distributable Net Income for any Fiscal Quarter). In furtherance of the foregoing, each of the Company and the Managing Member shall, at its sole cost and expense, make available, or cause to be made available, during normal business hours and with reasonable advance notice, to the Cendant Member or any Person designated by the Cendant Member, resources, including, but not limited to, access to employees, sufficient to respond adequately to any issue or concern raised by the Cendant Member.

Section 11.3 Books and Records of Account . The Company shall maintain books and records in such a manner as to enable the preparation of the Company’s U.S. federal information tax return in compliance with Section 6031 of the Code, and such other records as may be required in connection with the preparation and filing of the Company’s required U.S. federal, state and local income tax returns or other tax returns or reports of foreign jurisdictions, including, without limitation, the records reflecting the Capital Accounts and adjustments thereto specified in Article V hereof. Subject to Section 3.6, all such books and records shall at all times be made available at the principal office of the Company and shall be open to the reasonable inspection and examination by the Members or their duly authorized representatives during normal business hours. Notwithstanding the definition of “Members” herein, only Members admitted as such to the Company shall have the inspection rights provided in the preceding sentence.

Section 11.4 Expenses . The Company will be responsible for all expenses (“ Company Expenses ”), including, without limitation, (i) all reasonable accounting and legal expenses incurred in connection with Company operations, (ii) all reasonable costs incurred in connection with the preparation of or relating to reports made to the Members, (iii) all reasonable costs related to litigation involving the Company, directly or indirectly, including, without limitation, attorneys’ fees incurred in connection therewith and (iv) all reasonable costs related to the Company’s obligations set forth in Sections 11.10 and 12.1; provided , however , that any Company Expenses must be attributable solely to the operations of the Company, and that any expenses relating to, resulting from or in connection with any other Person, including without limitation any other Person who is an Affiliate of the Managing Member, shall not be Company Expenses.

Section 11.5 Tax Returns and Information . The Members intend for the Company to be treated as a partnership for tax purposes. The Company shall prepare or cause to be prepared all federal, state and local income and other tax returns that the Company is required to file. After the end of each fiscal year of the Company, the Company shall prepare and transmit to each Member a report (i.e., Schedule K-1) that shall include all necessary tax reporting information required by Members for preparation of their federal, state and local income or franchise tax returns, including the amount of income, gain, loss, deduction and credit allocated to each Member for such fiscal year.

 

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Section 11.6 Delivery of Audited Financial Statements to Members . As to each fiscal year of the Company, the Company shall send to each Member a copy of (a) the balance sheet of the Company as of the end of the fiscal year, (b) an income statement of the Company for such year, and (c) a statement showing the Net Income distributed by the Company to Members in respect of such year. Such financial statements shall be delivered sixty (60) days following the end of such fiscal year. The Company shall send to each Member all other reports or statements prepared by the Company’s accountants promptly after receipt thereof.

Section 11.7 Audits . The fiscal year-end financial statements to be delivered pursuant to Section 11.6 shall be audited and prepared in accordance with GAAP. The audit shall be performed by an accounting firm selected pursuant to Section 6.3(a)(iii).

Section 11.8 Fiscal Year . The Company’s fiscal year shall end on December 31 of each calendar year.

Section 11.9 Tax Elections . The Company shall, subject to approval of the Board pursuant to Section 6.3(a)(xiv) hereof, make the following elections on the appropriate tax returns:

(a) to adopt the calendar year as the Company’s fiscal year, if permitted by the Code;

(b) to elect to amortize the organizational expenses of the Company ratably over a period of sixty (60) months as permitted by Section 709(b) of the Code; and

(c) any other election the Managing Member determines is in the best interests of the Members, including an election pursuant to Section 754 of the Code to adjust Company Properties upon a distribution of Company Property as described in Section 734 of the Code or a transfer of any Interests as described in Section 743 of the Code.

Neither the Company nor any Member may make an election for the Company to be (i) excluded from the application of the provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar provisions of applicable state law or (ii) classified as a corporation for income tax purposes.

 

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Section 11.10 Tax Matters Member . The PHH Member shall be designated as the “tax matters partner” (the “ Tax Matters Member ”) of the Company pursuant to Section 6231(a)(7) of the Code or corresponding provisions of state or local law, to manage administrative tax proceedings conducted at the Company level by the Internal Revenue Service or the state or local taxing authority with respect to Company matters. The Tax Matters Member is, subject to Section 6.3(a)(xiv) directed and authorized to take whatever steps it, in its reasonable judgment, determines is necessary or desirable to perfect such designation, including, without limitation, filing any forms or documents with the Internal Revenue Service or any state or local taxing authority and taking such other action as may from time to time be required under Treasury Regulations and corresponding provisions of state or local law. Expenses of administrative proceedings relating to the determination of Company items at the Company level undertaken by the Tax Matters Member shall be expenses of the Company. The Tax Matters Member shall inform each Member of the commencement of any audit of the Company by the Internal Revenue Service or any other taxing authority.

ARTICLE XII

Indemnification and Insurance

Section 12.1 Indemnification and Advancement of Expenses .

(a) In General . The Company shall, to the maximum extent permitted by applicable law, indemnify and hold harmless all Advisors and officers of the Company (“ Indemnified Parties ”), to the fullest extent permitted by law, from and against any and all Losses, including, without limitation, Losses incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from any of the foregoing by or before any court or governmental, administrative or other regulatory agency, body or commission, whether pending or threatened, whether or not an Indemnified Party is or may be a party thereto, which arises out of, relates to or is in connection with this Agreement or the management or conduct of the business or affairs of the Company, except for any such Losses that are found, pursuant to a final and nonappealable judgment of a court of competent jurisdiction, to have resulted from the gross negligence, bad faith, fraud or willful misconduct of, or breach of this Agreement or knowing violation of law by, the Indemnified Party seeking indemnification. The termination of any proceeding by settlement shall not be deemed to create a presumption that the Indemnified Party involved in such settlement acted in a manner which constituted gross negligence, bad faith, fraud or willful misconduct or a knowing violation of law. All judgments against an Indemnified Party wherein such Indemnified Party is entitled to indemnification shall, to the extent available, be satisfied from Company assets. The provisions of this Section 12.1 shall survive any termination or expiration of this Agreement. Expenses incurred by an Indemnified Party in defense or settlement of any claim that may be subject to a right of indemnification hereunder

 

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may be advanced (and must be advanced to Advisors) by the Company prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the Indemnified Party to repay such amount if it shall ultimately be determined that the Indemnified Party is not entitled to be indemnified by the Company. The right of any Indemnified Party to the indemnification and advancement of expenses provided herein shall be cumulative of and in addition to any and all rights to which such Indemnified Party may otherwise be entitled by contract or as a matter of law or equity and shall extend to such Indemnified Party’s successors, assigns and legal representatives.

(b) Any indemnification under paragraph (a) of this Section 12.1 (unless ordered by a court of competent jurisdiction) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the Indemnified Party is proper in the circumstances because he or she has met the applicable standard of conduct set forth in paragraph (a) of this Section 12.1. Such determination shall be made (i) by a four-fifths vote of the Board, or (ii) if a four-fifths vote of the Board so directs, by independent legal counsel in a written opinion.

(c) For purposes of this Section 12.1, any reference to the “Company” shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any Person who is or was a director or officer of such constituent entity, or is or was serving at the request of such constituent entity as a director, officer or manager of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section 12.1 with respect to the resulting or surviving entity as he or she would have with respect to such constituent entity if its separate existence had continued.

(d) Notwithstanding anything in this Article XII to the contrary, the Company will not have the obligation of indemnifying any Person with respect to proceedings, claims or actions initiated or brought voluntarily by such Person and not by way of defense.

(e) Any indemnification or advancement of expenses provided by, or granted pursuant to, this Section 12.1 shall be considered retroactive to the date upon which the Certificate of Formation was filed with the State of Delaware.

Section 12.2 Insurance . The Company may purchase and maintain insurance or another arrangement on behalf of any Person who is or was an Advisor or officer identified in Section 12.1 against any liability asserted against such Person or incurred by such Person in such a capacity or arising out of the status of such a Person, whether or not the Company would have the power to indemnify such Person against that liability under Section 12.1 or otherwise.

 

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Section 12.3 Limit on Liability of Members . The indemnification set forth in this Article XII shall in no event cause the Members to incur any personal liability beyond their total Capital Contributions, nor shall it result in any liability of the Members to any third party.

Section 12.4 Indemnification by Managing Member .

(a) The Managing Member shall indemnify and hold harmless the Company and all other Members and their respective Affiliates (“ Other Indemnified Parties ”), to the fullest extent permitted by law, from and against any and all Losses, including, without limitation, Losses incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from any of the foregoing by or before any court or governmental, administrative or other regulatory agency, body or commission, whether pending or threatened, whether or not an Other Indemnified Party is or may be a party thereto, arising out of or resulting from (i) the negligence, willful misconduct or violation of law or erroneous acts of or by the Managing Member or any of its officers or employees in connection with the management of the business and affairs of the Company, and (ii) any breach or violation by PMC or any of its Affiliates of any representation, warranty, covenant or other agreement contained in this Agreement or any other Transaction Document (including, without limitation, any indemnification payment made to an Advisor or officer under this Article XII hereof as a result of such breach or violation), it being understood that the Company shall retain all risk with respect to, and the Managing Member shall have no indemnification obligations hereunder with respect to, loan level origination defects not otherwise resulting from any of the circumstances described in clause (i) or (ii) of this Section 12.4(a). The provisions of this Section 12.4 shall survive any termination or expiration of this Agreement or any other Transaction Document. The right of any Other Indemnified Party to the indemnification and advancement of expenses provided herein shall be cumulative of and in addition to any and all rights to which such Other Indemnified Party may otherwise be entitled by contract or as a matter of law or equity and shall extend to such Other Indemnified Party’s successors, assigns and legal representatives.

(b) In the case of a PHH Regulatory Event, the PHH Member shall indemnify and hold harmless the Company from and against all Losses incurred by it arising out of or resulting from such PHH Regulatory Event, except, in any such case, to the extent that the Regulatory Order or Proceeding or Losses leading to such PHH Regulatory Event are caused solely by Cendant or any of its Affiliates or any of their respective directors, officers, advisors or employees.

 

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(c) In the case of a Company Regulatory Event, the PHH Member shall indemnify and hold harmless the Company from and against all Losses incurred or sustained by it arising out of or resulting from such Company Regulatory Event, except, in any case, to the extent that the Regulatory Order or Proceeding or Losses leading to such Company Regulatory Event are caused solely by Cendant or any of its Affiliates or any of their respective directors, officers, advisors or employees.

(d) In the event there is a breach or violation by PMC or its Affiliates (excluding the Company), on the one hand, or by Cendant or its Affiliates, on the other hand, of any representation, warranty, covenant or other agreement contained in this Agreement or any other Transaction Document, then the breaching Party shall give prompt written notice thereof to the other Party and each Advisor.

Section 12.5 No Additional Indemnification Rights .

Except as set forth herein, no Person (including, without limitation, any Member and any officer, director or agent of any Member) shall have indemnification rights against the Company.

ARTICLE XIII

Miscellaneous Provisions

Section 13.1 Counterparts . This Agreement may be executed in several counterparts, each of which will be deemed an original but all of which will constitute one and the same.

Section 13.2 Entire Agreement . This Agreement and the other Transaction Documents constitute the entire agreement among the parties hereto and contains all of the agreements among such parties with respect to the subject matter hereof and thereof. This Agreement and the other Transaction Documents supersede any and all other agreements, either oral or written, between such parties with respect to the subject matter hereof and thereof.

Section 13.3 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such invalid, illegal or unenforceable provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.

 

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Section 13.4 Amendment . Except as expressly provided herein (including Section 10.1 hereof), this Agreement may be amended only by a written agreement executed by all the Members. Following such amendment, the Agreement, as amended, shall be binding upon all Members. The Company shall notify the Secretary of HUD of any amendments to this Agreement which would affect the Company’s action under any HUD/FHA administered mortgage insurance program.

Section 13.5 Binding Effect . Subject to the provisions of this Agreement relating to transferability, this Agreement will be binding upon and shall inure to the benefit of the parties, and their respective distributees, heirs, successors and assigns.

Section 13.6 Negotiation and Mediation .

(a) Negotiation . In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or validity thereof, or the transactions contemplated hereby (a “ Dispute ”), upon the written notice of any Member hereto, the Members shall attempt in good faith to negotiate a resolution of the Dispute. If the Members are unable for any reason to resolve a Dispute within 30 days after the receipt of such notice, the Dispute shall be submitted to mediation in accordance with Section 13.6(b) hereof.

(b) Mediation . Any Dispute not resolved pursuant to Section 13.6(a) hereof shall, at the request (the “ Mediation Request ”) of any Member (the “ Disputing Member ”), be submitted to mediation in accordance with the then-prevailing Commercial Mediation Rules of the American Arbitration Association, as modified herein (the “ Rules ”). The mediation shall be held in New York, New York. The Members shall have twenty (20) days from receipt by a party of a Mediation Request to agree on a mediator. If no mediator has been agreed upon by the Members within twenty (20) days of receipt by a Member (or Members) of a Mediation Request, then any Member may request (on written notice to the other Member or Members), that the American Arbitration Association appoint a mediator in accordance with the Rules. All mediation pursuant to this Section 13.6(b) shall be confidential and shall be treated as compromise and settlement negotiations, and no oral or documentary representations made by the Members during such mediation shall be admissible for any purpose in any subsequent proceedings. No Member shall disclose or permit the disclosure of any information about the evidence adduced or the documents produced by another Member in the mediation proceedings or about the existence, contents or results of the mediation award without the prior written consent of such other Member except in the course of a judicial or regulatory proceeding or as may be required by law, rule or regulation or requested by a governmental authority or securities exchange. Before making any disclosure permitted by the preceding sentence, the Member intending to make such disclosure shall give the other Member a reasonable opportunity to protect its interests. If the Dispute has not been resolved within sixty (60) days of the appointment of a Mediator,

 

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or within ninety (90) days of delivery by a Disputing Member of notice in accordance with Section 13.10 (whichever occurs sooner) or within such longer period as the Members may agree to in writing, then any Member may file an action on the Dispute in any court having jurisdiction in accordance with Section 13.7 herein.

Section 13.7 Governing Law . THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CHOICE OF LAWS RULES THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE MEMBERS HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Any legal suit, action or proceeding against any of the Parties hereto arising out of or relating to this Agreement shall only be instituted in any federal or state court in New York, New York, pursuant to Section 5-1402 of the New York General Obligations Law, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of any such court in any such suit, action or proceeding. The Parties hereby agree to venue in such courts and hereby waive, to the fullest extent permitted by law, any claim that any such action or proceeding was brought in an inconvenient forum. Each of the Parties hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

Section 13.8 Offset . Whenever the Company is to pay any sum to any Member, any amounts that Member owes the Company may be deducted from that sum before payment.

Section 13.9 Effect of Waiver or Consent . No provision of this Agreement shall be deemed to have been waived unless such waiver is contained in a written notice given to the party claiming such waiver has occurred. A waiver or consent, express or implied, to or of any breach or default by any Person in the performance by that Person of its obligations with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person with respect to the Company. Failure on the part of a Person to complain of any act of any Person or to declare any Person in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that default until the applicable statute-of-limitations period has run.

Section 13.10 Notices . To be effective, unless otherwise specified in this Agreement, all notices and demands, consents and other communications under this Agreement must be in writing and must be given (a) by depositing the same in the United States mail, postage prepaid, certified or registered, return receipt requested, (b) by delivering the same in person and receiving a signed receipt therefore, (c) by sending the

 

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same by a nationally recognized overnight delivery service or (d) by telecopy (promptly confirmed by telephone and followed by personal or nationally recognized overnight delivery). For purposes of notices, demands, consents and other communications under this Agreement, the addresses of the Members (and their respective counsel, if applicable) shall be as follows:

If to the PHH Member, addressed to:

PHH Broker Partner Corporation

3000 Leadenhall Road

Mt. Laurel, NJ 08054

Attn: William F. Brown

With a copy to:

PHH Mortgage Corporation

3000 Leadenhall Road

Mt. Laurel, NJ 08054

Attn: William F. Brown

If to the Cendant Member, addressed to:

Cendant Real Estate Services Venture Partner, Inc.

1 Campus Drive

Parsippany, NJ 07054

Attn: Eric Bock

With a copy to:

Cendant Corporation

9 West 57 th Street, 37 th Floor

New York, NY 10019

Attn: Eric Bock

Notices, demands, consents and other communications mailed in accordance with the foregoing clause (a) shall be deemed to have been given, made and received three (3) Business Days following the date so mailed. Notices, demands, consents and other communications given in accordance with the foregoing clauses (b) and (d) shall be deemed to have been given, made and received when sent on a Business Day or, if not sent on a Business Day, then the next succeeding Business Day. Notices,

 

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demands, consents and other communications given in accordance with the foregoing clause (c) shall be deemed to have been given, made and received when delivered or refused on a Business Day or, if not delivered or refused on a Business Day, then the next succeeding Business Day. Any Member or its assignee may designate a different address to which notices or demands shall thereafter be directed and such designation shall be made by written notice given in the manner hereinabove required, provided, that at all times each Member shall be required to maintain a notice address in the continental United States.

Section 13.11 No Consequential Damages .

In no event shall the Cendant Member or any of its Affiliates have any liability to the PHH Member or any of its Affiliates for any indirect, consequential, incidental, collateral, exemplary, punitive, enhanced, special or other similar damages of any kind or nature whatsoever, including, without limitation, lost profits to the PHH Member or any of its Affiliates from past, present or future business opportunities, loss of use or revenue, loss of savings or losses by reason of cost of capital, arising out of or in any manner relating to this Agreement or any other Transaction Document, the performance or breach thereof or the subject matter thereof, whether or not the Cendant Member or any of its Affiliates have been advised of, or otherwise might or should have anticipated, the possibility or likelihood of such damages. The limitations of liability set forth in this Section 13.11 shall apply regardless of the form of action in which a claim is brought, whether in contract, tort (including negligence of any kind, whether active or passive), warranty, strict liability or any other legal or equitable grounds, and shall survive failure of an exclusive remedy.

Section 13.12 Most Favored Nation .

If during the term of this Agreement PMC or any of its Affiliates enters into any agreement, arrangement or understanding with a third party whereby PMC or such Affiliate (or any other entity formed in connection with such agreement, arrangement or understanding) agrees to provide substantially the same Mortgage Loan origination services to such third party, and such agreement, arrangement or understanding contains pricing (other than the pricing of loans) or servicing terms or conditions that, taken as a whole, are more favorable to such third party than the comparable terms of this Agreement and the related Transaction Documents, taken as a whole, are to Cendant, then the Company shall offer such favorable terms and conditions to the Cendant Member with respect to Mortgage Loans originated by the Company pursuant to this Agreement and amend this Agreement and any other Transaction Documents, as applicable, to the extent necessary so that such terms and conditions are incorporated in a manner reasonably acceptable to the Cendant Member.

 

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Section 13.13 Impossibility of Performance .

If during the term of this Agreement, without any change in applicable law, rule or regulation and through no fault or breach of any Party hereto, it shall have become impossible for the Parties to fulfill the objectives of the Company and to perform their obligations hereunder, then the Parties shall proceed with an orderly liquidation and dissolution of the Company in accordance with Article IX hereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written.

 

CENDANT REAL ESTATE SERVICES
VENTURE PARTNER, INC.

By:  

/s/    Eric J. Bock

Name:   Eric J. Bock
Title:   Executive Vice President and Secretary

PHH BROKER PARTNER CORPORATION

By:  

/s/    Terence W. Edwards

Name:   Terence W. Edwards
Title:   President

 

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Exhibit A

SUBLEASE

THIS SUBLEASE is made as of January 31, 2005, by and between Cendant Mortgage Corporation , a New Jersey corporation (“Sublessor”), and PHH Home Loans, LLC , a Delaware limited liability company (“Sublessee”).

R E C I T A L S

A. iStar Bishops Gate LLC (“Landlord”), and Sublessor are the landlord and tenant, respectively, under that certain lease (attached hereto as Exhibit “A” and incorporated herein by reference) dated as of December 9, 2002 (the lease, as same may have been or may hereafter be modified, is herein referred to as the “Master Lease”) for certain premises described in the Master Lease (the “Master Lease Premises”). The common address of the building in which the Master Lease Premises are located is 3000-5000 Leadenhall Road, Mount Laurel, New Jersey;

B. Sublessor has agreed to sublet to Sublessee a portion of the Master Lease Premises (the “Premises”) consisting of approximately             rentable square feet as set forth in Exhibit “B” attached hereto, and Sublessee has agreed to hire and take the Premises from Sublessor, on the terms and conditions set forth herein.

NOW, THEREFORE, Sublessor and Sublessee agree as follows:

1. Term .

Subject to the Contingencies, as defined in Section 31 hereof, including receipt of Landlord’s Consent to this Sublease, Sublessor sublets the Premises to Sublessee and Sublessee hires and takes the Premises from Sublessor for a term commencing on             (the “Sublease Commencement Date”) and ending on             (the “Expiration Date”), unless terminated earlier in accordance with the provisions hereinafter set forth (the period commencing on the Sublease Commencement Date and ending on the Expiration Date is herein referred to as the “Term”). The date upon which Sublessee shall commence paying rent hereunder is the Sublease Commencement Date. Such subletting shall be in all respects subject and subordinate to the terms, covenants and conditions of the Master Lease. Sublessor and Sublessee acknowledge and agree that Sublessor’s right, if any, to extend the term of the Master Lease, or to exercise any other options contained in the Master Lease, including any option to purchase, shall not be exercisable by Sublessee and, on the Expiration Date, Sublessee’s right to possess the Premises under this Sublease shall terminate and no longer be of any force or effect.

2. Possession .

a) Delivery of Possession. Sublessor agrees to deliver possession of the Premises to Sublessee upon the Sublease Commencement Date.

b) Condition of Premises. Sublessee’s taking possession of the Premises shall be conclusive evidence that the Premises were in good order and satisfactory condition when Sublessee took possession. No promise of Sublessor to alter, remodel, repair or improve the Premises or the Building in which the Premises may be situated have been made by Sublessor to Sublessee. Sublessee, at its cost and expense, shall perform all work necessary to prepare the Premises for Sublessee’s occupancy thereof. At the termination of this Sublease, Sublessee shall return the Premises broom-clean and in as good condition as when Sublessee took possession, ordinary wear and tear excepted. Sublessee shall remove any improvements or alterations made to the Premises by or on Sublessee’s behalf and restore the Premises to the original condition prior to installation of such improvements or alterations; provided, however that Sublessee shall only be required to remove such improvements or alterations and restore the Premises to the extent that Sublessor is required to remove and restore the same under the Master Lease, failing which Sublessor may restore the Premises to such condition and Sublessee shall pay the cost thereof on demand.


3. Incorporation of Master Lease.

The terms, covenants, conditions and respective obligations of Sublessor and Sublessee to each other under this Sublease shall be the terms and conditions of the Master Lease (which terms and conditions are incorporated herein by reference as though fully set forth), except as otherwise expressly provided in this Sublease. To the extent any terms or provisions of this Sublease contradict or conflict with any of the terms or provisions of the Master Lease, the terms and provisions of this Sublease shall control as between Sublessor and Sublesee only. Sublessor and Sublessee expressly agree, however, that Sublessor assumes none of the Landlord’s obligations as set forth in the Master Lease. Sublessee agrees to look solely to Landlord for performance of those obligations and to forever hold Sublessor harmless from any claim arising from Landlord’s failure to perform its obligations, unless such failure is due to Sublessor’s breach of the Master Lease.

4. Sublessee’s Assumption of Master Lease Obligations and Benefits.

Except as otherwise expressly provided in this Sublease, (a) Sublessee expressly assumes and agrees to perform and comply with all of the terms, covenants and conditions of the Master Lease that are to be observed and performed thereunder by Sublessor for the benefit of Landlord with respect to the Premises, and (b) Sublessee shall indemnify, defend and save Sublessor harmless from and against any loss, damage, cost or expense which Sublessor may sustain or incur by reason of any failure on the part of Sublessee so to observe and perform the same.

5. Rental .

As base rental (“Base Rent”) for the Premises during the Term, Sublessee covenants and agrees to pay to Sublessor $            , in advance by the first day of each month, without demand, deduction, offset or notice, at the address of Sublessor identified in the “Notices” section of this Sublease (or some other place as Sublessor shall have designated in writing). It is understood that Base Rent shall be net to Sublessor, and any other charges that Sublessor may incur on account of the Premises on account of services to Sublessee in excess of the services provided to Sublessor under the Master Lease or on account of the negligence or willful misconduct of Sublessee shall be the sole responsibility of Sublessee, and such other charges shall be in addition to the Base Rent due hereunder (such other charges are herein referred to as “Additional Rent”). The Base Rent shall be subject to any Base Rent increases set forth in the Master Lease.

If Sublessee fails to pay when due any Base Rent or Additional Rent that Sublessee is obligated to pay under the terms of this Sublease, the unpaid amounts shall bear interest at the maximum rate then allowed by law. Sublessee acknowledges that the late payment of all or any portion of Base Rent or Additional Rent will cause Sublessor to lose the use of that money and incur costs and expenses not contemplated under this Sublease, including without limitation, administrative and collection costs and processing and accounting expenses, the exact amount of which is extremely difficult to ascertain. Therefore, in addition to interest, if Sublessor does not receive the entire amount payable within ten (10) days from the date it is due, Sublessee shall pay Sublessor a late charge equal to ten percent (10%) of outstanding amount. Sublessor and Sublessee agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Sublessor for the loss suffered from such nonpayment by Sublessee. Acceptance of any interest or late charge shall not constitute a waiver of Sublessee’s default with respect to such nonpayment by Sublessee nor prevent Sublessor from exercising any other rights or remedies available to Sublessor under this Sublease. Any payment of any kind returned for insufficient funds will be subject to an additional handling charge of $25.00.

6. Expense Pass-throughs .

It is understood that Base Rent shall be net to Sublessor, and any other charges that Sublessor may incur per the Master Lease shall be the sole responsibility of Sublessee, and shall be in addition to

 

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the Base Rent due. Sublessee shall pay monthly installments to Sublessor which shall be an estimate of charges due under the Master Lease. Upon final billing for each calendar year from the Landlord, Sublessor shall submit the same billing to Sublessee, and any overpayments or underpayments shall be ameliorated at that time.

7. Utilities .

Sublessee shall pay for all water, gas, heat, power, and other utilities and services supplied to the Premises.

8. Use of the Premises.

Sublessee, along with its successors or assigns, shall be limited in use of the Premises to that use specified in the Master Lease. Sublessee shall not conduct any activity or perform any act prohibited by the laws of the United States of America or the state in which the building and property are located or the ordinances of the city or county in which the Premises is situated and shall not commit waste nor suffer waste to be committed, nor permit any nuisance on or in the Premises. Sublessee shall not utilize any unethical method of business operation, nor shall any space in the Premises be used for living quarters, whether temporary or permanent. Sublessee shall not do anything, or permit anything to be done, in or about the Premises, or bring or keep anything therein, that will in any way increase the possibility of fire or other casualty or do anything in conflict with the pertinent laws, rules or regulations of any governmental authority. Sublessee shall not use or keep in, on or about the Premises or the property upon which the Premises may be situated, any hazardous, flammable or explosive fluid or substance or any illuminating material, unless it is battery powered or UL approved. Sublessee shall at all times maintain an adequate number of suitable fire extinguishers on the Premises for use in case of local fires, including electrical or chemical fires.

9. Hazardous Materials.

Sublessee, including its agents, employees, contractors and invitees, shall not cause nor permit the presence, release, storage, use or handling of any toxic substances or hazardous materials in, about or under the Premises, nor the Building nor the real property of which the Premises may be a part. If Sublessee breaches the obligations stated in the preceding sentence, or if the presence of any such toxic substances or hazardous materials on or about the Premises caused or permitted by Sublessee results in contamination of the Premises, the real property of which the Premises may be a part, or any adjacent property, then Sublessee shall indemnify, defend and hold Sublessor and Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation, diminution in value of the Premises and/or adjacent property, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises and/or adjacent property, damages arising from any adverse impact on marketing of the Premises and/or adjacent property, costs incurred in connection with any cleanup, remedial, removal or restoration work, and sums paid in settlement of claims, attorney’s fees, consultant fees and expert fees) which arise during or after the Term hereof, as a result of such contamination. Nothing contained herein shall be deemed or construed to limit the liability of Sublessee to Sublessor or Landlord hereunder for the breach of any covenant of Sublessee under this Section. The provisions of this Section shall survive the expiration or earlier termination of this Sublease and Sublessee’s surrender of the Premises to Sublessor.

10. Intentionally Omitted.

11. Insurance .

At all times while this Sublease is in effect, Sublessee agrees to maintain at its expense, with an insurance carrier satisfactory to Sublessor the insurance required to be maintained by Sublessor under the Master Lease.

 

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12. Waiver of Subrogation.

Sublessee hereby waives any and all rights of recovery against Sublessor and Landlord and their respective subsidiaries and affiliates, and their respective officers, directors, stockholders, agents and employees relating to the Premises or property damage and any resulting business interruption losses, occurring on or arising out of the use, maintenance or occupancy of the Premises, the Master Lease Premises or the building whether or not such loss or damage is insured.

13. Termination of Master Lease .

In the event that during the Term of this Sublease the Master Lease is terminated or comes to an end for any reason, then this Sublease and any assignments of this Sublease shall terminate on the effective date of such termination of the Master Lease. Notwithstanding the foregoing provisions of this Section, if the reason for such termination of the Master Lease shall be a default on the part of Sublessee with respect to any of the terms or conditions of this Sublease or of the Master Lease, Sublessor shall be entitled to recover from Sublessee as liquidated damages at least an amount equal to the damages which Landlord shall be entitled to recover from Sublessor in connection with such termination of the Master Lease.

14. Repairs and Alterations.

There shall be no obligation on the part of Landlord or Sublessor to make any repairs, alterations or improvements in order to make the Premises ready for occupancy by Sublessee. Prior to making any repairs, alterations or improvements on the Premises, Sublessee shall obtain the prior written consent thereto of both Landlord and Sublessor. Any alterations, additions, or improvements made to the Premises, or Sublessee’s behalf, whether at the expense of Sublessee or Sublessor, including but not limited to, wall covering, carpeting, or other floor covering, paneling and built-in cabinets shall be deemed a part of the real estate and the property of Sublessor and shall be surrendered with the Premises unless Landlord or Sublessor, by notice given to Sublessee no later than thirty (30) days prior to the end of the Term, shall elect to have Sublessee remove such alterations, additions, or improvements. Sublessee shall thereupon accomplish such removal at its sole cost and repair any damage to the Premises caused by such removal. In the event that Sublessor consents in writing to any alterations, additions, or improvements to the Premises by Sublessee, they shall be made at the sole cost of Sublessee by licensed contractors or workmen approved by Sublessor. Sublessee shall secure all appropriate governmental approvals and permits and shall complete such alterations with due diligence. Any consent or approval given by Landlord or Sublessor hereunder shall not give rise to rights to third parties to file mechanic’s or materialman’s liens, nor waive Sublessor’s prohibition against such liens, nor in any manner abrogate that Section of this Sublease requiring Sublessee to keep Premises free of liens.

15. Sublessee to Keep Premises Free of Liens.

Sublessee shall keep the Premises and the property on which the Premises is situated free from any liens arising out of any work performed, materials furnished, or obligations incurred by Sublessee. Sublessee shall indemnify, hold harmless, and defend Landlord and Sublessor from any liens and encumbrances arising out of any work performed or materials furnished by or at the direction of Sublessee. Such indemnity shall include, without limitation, all attorneys’ fees and costs incurred by Landlord or Sublessor due to the filing of such mechanic’s or materialman’s lien or notice thereof. In the event that Sublessee, within twenty (20) days following the imposition of any such lien, shall not cause such lien to be released of record by payment or posting of a proper bond, in addition to all other remedies provided herein and by law, Landlord or Sublessor shall have the right (but not the obligation) to cause the same to be released by such means as it shall deem proper, including bonding or payment of the claim giving rise to such lien. All such sums paid by Landlord or Sublessor and all expenses incurred by it in connection therewith, including attorneys’ fees and costs, shall be payable to Landlord or Sublessor by Sublessee on demand with the highest legal interest rate. Landlord or Sublessor shall have the right at all times to give notice or to post and keep posted on Premises any notice permitted or

 

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required by law which Landlord or Sublessor shall deem proper for the protection of Sublessor, Landlord and the Premises or any other party having an interest therein from mechanic’s and materialman’s liens.

Sublessee shall give written notice to Landlord and Sublessor at least ten (10) business days prior to the commencement of any work relating to the alterations or additions to the Premises and shall post the Premises giving all such persons notice of Sublessor’s and Landlord’s non-liability for work performed or materials supplied. Failure to provide Landlord and Sublessor such notice or post the Premises shall be deemed a material breach of this Sublease.

16. Assignment and Subletting.

Sublessee may not assign, sublease, transfer, sell, encumber or otherwise convey its interest in this Sublease, or any portion thereof, or its interest in the Premises, or any portion thereof, without the prior written consent of Sublessor, which consent may be granted or withheld in the sole discretion of Sublessor and the prior written consent of Landlord to the degree that such consent is required under the terms of the Master Lease. Any such attempted purported assignment, subletting, transfer, sale, encumbrance or other conveyance obtained without first obtaining such prior written consent shall be void and of no force or effect, and shall not confer any interest or estate in the purported transferee and shall, at Sublessor’s option, constitute an incurable default under this Sublease.

17. Continuing Liability of Sublessor.

Notwithstanding anything to the contrary contained elsewhere in this Sublease, nothing contained in this Sublease shall be deemed or construed as relieving Sublessor from any of its duties, responsibilities or obligations under the Master Lease, and Sublessor shall in all events be and remain primarily liable under the Master Lease as a principal, and not as a guarantor or surety, for all duties, responsibilities and obligations (monetary or otherwise) contained in the Master Lease, to the same extent as though no subletting by Sublessor had been made.

18. Notices.

Any notice, demand, consent, payment or communication given hereunder shall be in writing and shall be given by personal delivery, by commercial overnight delivery service or by certified mail, postage prepaid, return receipt requested, at the following addresses:

 

If to Sublessor:   Cendant Mortgage Corporation
  3000 Leadenhall Road
  Mt Laurel, New Jersey 08054
  Attention: General Counsel
If to Sublessee:   PHH Home Loans, LLC
 

 

 
 

 

 
  Attn:  

 

 
If to Landlord:   iStar Bishops Gate LLC
  c/o iStar Financial Inc.
  114 Avenue of the Americas
  27 th Floor
  New York, New York 10036
  Attn: Chief Financial Officer
with a copy to:   iStar Financial Inc.
  114 Avenue of the Americas
  27 th Floor
  New York, New York 10036
  Attn: General Counsel

 

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  and
  Katten Muchin Zavis Rosenman
  525 West Monroe Street
  16 th Floor
  Chicago, Illinois 60661-3693
  Attn: Gregory P.L. Pierce, Esq.

Any of the above Parties may, by like notice at any time and from time to time, designate a different address to which such notice shall be sent. Such notices, requests, consents, payments or communications shall be deemed sufficiently given (a) if personally served, upon such service (b) if sent by commercial overnight delivery service, upon the next business day following such sending, or (c) if mailed, forty-eight (48) hours following the first attempt of the postal service to deliver same.

19. Notice of Default.

Sublessor and Sublessee each agree to give to the other, forthwith upon receipt thereof, a copy of any notice (including notice of default) under the Master Lease.

20. Sublessee Defaults and Remedies.

Defaults . The occurrence of any one or more of the following events shall constitute a default and breach of this Sublease by Sublessee:

a) If Sublessee shall fail to make any payment of any Rent or Additional Rent when due and payable, and such default shall continue for a period of three (3) days; or

b) If Sublessee shall be in default in the performance of any of the other terms, covenants and conditions of this Sublease and (i) such default shall not have been remedied within ten (10) days after written notice by Sublessor to Sublessee specifying such default and requiring it to be remedied; or (ii) where such default reasonably cannot be remedied within such period of ten (10) days, if Sublessee shall not have commenced the remedying thereof within such period of time and shall not be proceeding with due diligence to remedy it; or

c) If Sublessee shall desert or abandon the Premises and such desertion or abandonment shall continue for a period of ten (10) days; or

d) The making by Sublessee of any general assignment or general arrangement for the benefit of creditors; or the filing by or against Sublessee of a petition to have Sublessee adjudged a bankrupt, or a petition of reorganization or arrangement under any law relating to bankruptcy unless, in the case of a petition filed against Sublessee, the same is dismissed within sixty (60) days; or the appointment of a trustee or a receiver to take possession of substantially all of Sublessee’s assets located at the Premises or of Sublessee’s interest in this Sublease where possession is not restored to Sublessee within thirty (30) days; or the attachment, execution, or judicial seizure of substantially all of Sublessee’s assets located at the Premises or of Sublessee’s interest in this Sublease, where such seizure is not discharged within thirty (30) days after the levy thereof.

Remedies. In the event of any default or breach of Sublessee, Sublessor may at any time thereafter, with or without notice or demand and without limiting Sublessor in the exercise of a right which Sublessor may have by reason of such default or breach, proceed as follows:

a) Without terminating this Sublease, re-enter and take possession of the Premises or any part thereof and repossess same as Sublessor’s former estate and expel Sublessee and those claiming through or under Sublessee, and remove the effects of both or either with force, if necessary, without being deemed guilty in trespass or of a forcible entry or detainer and without prejudice to any remedies

 

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for arrears of rent or preceding breach of covenants. In such event, Sublessor shall be entitled to recover from Sublessee all damages incurred by Sublessor by reason of Sublessee’s default, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, any real estate commission actually paid, the worth at the time of the unpaid rent for the balance of the Term, and that portion of the leasing sums payable. Such damages shall bear interest from the date due at the highest legal interest rate.

b) Terminate this Sublease by express notice to that effect.

c) Pursue any other remedy now or hereafter available to Sublessor under the laws or judicial decisions of the state where the Premises is located.

d) Should Sublessor elect to re-enter as above provided, or should Sublessor take possession pursuant to legal proceedings or pursuant to any notice provided by law or otherwise, Sublessor may from time to time, without terminating this Sublease or Sublessee’s obligations to pay rent hereunder, relet the Premises or any part thereof for such terms, at such rentals, and upon such other terms and conditions as Sublessor in its sole discretion may deem advisable, with the right to make alterations and repairs to the Premises, all at Sublessee’s expense. No such re-entry or taking of possession shall be construed as an election on Sublessor’s part to terminate this Sublease unless a written notice of such express intention is given to Sublessee.

If this Sublease shall be terminated as provided in this Section, Sublessor may:

a) Re-enter and resume possession of the Premises and remove all persons and property therefrom, either by summary dispossess proceedings or by a suitable action or proceeding, at law or in equity, or otherwise, without being liable for any damages therefor; and

b) Relet the whole or any part of the Premises for a period equal to, greater, or less than the remainder of the then-Term of this Sublease, at such rental and upon such terms and conditions as are acceptable to Sublessor, to any sublessee it may deem suitable and for any use and purpose it may deem appropriate. Sublessor shall not be liable in any respect for failure to relet the Premises, or in any event of such reletting, for failure to collect the rent thereunder, and any sums received by Sublessor on a reletting in excess of the Rent reserved in this Sublease shall belong to Sublessor.

Sublessee shall pay to Sublessor, upon default of this Sublease, in accordance with the provisions hereof, or upon the abandonment of said Premises by Sublessee, a sum of money equal to the entire amount of Rent by this Sublease provided to be paid and at that time remaining unpaid, whether or not presently due, and upon making such payment, Sublessee shall be entitled to receive from Sublessor all rents received by Sublessor from other tenants on account of said Premises during the Term originally demised by this Sublease, less the expenses which Sublessor may have incurred in connection with said resumption of possession and reletting, including (without limitation) attorneys’ fees, brokerage, cleaning, repairs, and decoration, provided, however, that the moneys to which Sublessee shall so become entitled shall in no event exceed the amount so paid by Sublessee to Sublessor.

Sublessee agrees to pay the costs and expenses, including reasonable attorneys’ fees, incurred by Sublessor in the enforcement of any of the terms of this Sublease as a result of default by Sublessee.

The words “re-enter” and “re-entry,” as used in this Section are not restricted to their technical legal meaning.

Sublessee hereby waives the service of any notice in writing by Sublessor of its intention to re-enter.

 

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If this Sublease shall be terminated as provided in this Section or by summary proceedings or otherwise, Sublessor, in addition to any other rights under this Section, shall be entitled to recover as damages (a) the cost of performing any work required to be done by Sublessee under this Sublease, and all damages resulting from Sublessee’s default in performing such work; and (b) the cost of placing the Premises in the same condition as that in which Sublessee is required to surrender them to Sublessor under this Sublease.

21. Counterparts .

This Sublease may be executed in counterparts, each of which shall be deemed to be an original hereof.

22. Brokers and Commissions.

The parties acknowledge that no broker or agent was involved in the negotiations related to, or consummation of, this Sublease. If Sublessee has dealt with any other person or real estate broker with respect to subleasing or renting space in the Building of which the Premises may be a part, Sublessee shall be solely responsible for the payment of any fee due said person or firm and Sublessee shall hold Sublessor free and harmless against any liability in respect thereto, including attorneys’ fees and costs.

23. Choice of Law.

This Sublease and the transaction contemplated hereunder shall be governed by and construed in accordance with the laws of the state where the property is located.

24. Observance of Law.

Sublessee shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or governmental or environmental rule or regulation now in force or which may hereafter be enacted or promulgated. Sublessee shall, as its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental or environmental rules, regulations or requirements now in force or which may hereafter be in force, and with the requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, relating to, or affecting the condition, use or occupancy of the Premises. The judgment of any tribunal of competent jurisdiction or the admission of Sublessee in any action against Sublessee, whether Sublessor is a party thereto or not, that Sublessee has violated any law, ordinance or governmental rule, regulation or requirement, shall be conclusive of that fact as between Sublessor and Sublessee.

25. Attorney’s Fees.

If either party brings an action to enforce the terms hereof, the prevailing party shall be entitled to receive reasonable attorney’s fees and court costs from the other party.

26. Consents .

Notwithstanding anything contained in this Sublease to the contrary, Sublessee shall have no claim, and hereby waives the right to any claim against Sublessor for money damages by reason of any refusal, withholding or delaying by Sublessor of any consent, approval or statement of satisfaction, and in such event, Sublessee’s only remedies therefor shall be an action for specific performance, injunction or declaratory judgment to enforce any right to such consent, etc.

27. Force Majeure.

Sublessor shall have no liability whatsoever to Sublessee on account of (a) the inability or delay of Sublessor in fulfilling any of Sublessor’s obligations under this Sublease by reason of war, strike, other labor trouble, riots, civil unrest, governmental controls in connection with a national or other public emergency, or shortages of fuel, supplies or labor resulting therefrom or any other cause, whether similar or dissimilar to the above, beyond Sublessor’s reasonable control; or (b) any failure or defect in the

 

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supply, quantity or character of electricity or water furnished to the Premises, by reason of any requirement, act or omission of the public utility or others furnishing the Premises with electricity or water, or for any reason, whether similar or dissimilar to the above, beyond Sublessor’s reasonable control. If this Sublease specifies a time period for performance of an obligation of Sublessor, that time period shall be extended by the period of any delay in Sublessor’s performance caused by any of the events of force majeure described above.

28. Severability .

If any clause or provision of this Sublease is or becomes illegal, invalid, or unenforceable because of present or future laws or any rule or regulation or any governmental body or entity, effective during its Term, the intention of the parties hereto is that the remaining parts of this Sublease shall not be affected thereby unless such invalidity is, in the sole determination of Sublessor, essential to the rights of both parties in which event Sublessor has the right to terminate this Sublease on written notice to Sublessee.

29. Titles and Headings.

The titles and headings of sections of this Sublease are intended for convenience only and shall not in any way affect the meaning or construction of any provision of this Sublease.

30. Changes, Waivers, Discharge and Modifications in Writing.

No provision of this Sublease may be changed, waived, discharged or terminated except by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.

31. Contingencies.

Sublessee hereby acknowledges that this Sublease is contingent upon receipt by Sublessor and Sublessee of all necessary consents or approvals, including, without limitation, Landlord’s Consent to this Sublease.

IN WITNESS WHEREOF , the Sublessor and Sublessee have executed, and Sublessor has consented to, this Sublease as of the day and year first above written.

 

SUBLESSOR:
Cendant Mortgage Corporation
By:  

 

Name:   Terence W. Edwards
Title:   President and Chief Executive Officer
SUBLESSEE:
PHH Home Loans, LLC
By:  

 

Name:   Terence W. Edwards
Title:   President and Chief Executive Officer

 

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CONSENT TO SUBLEASE

The undersigned is the Landlord in the Master Lease described in the Sublease to which this Consent is appended, and Landlord consents to the said Sublease without waiver of restrictions, if any, against further assignments and subletting.

 

iStar Bishops Gate LLC
By:  

 

Name:  

 

Title:  

 

 

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Exhibit B

MANAGEMENT SERVICES AGREEMENT

THIS MANAGEMENT SERVICES AGREEMENT (“Services Agreement”) effective as of             , 2005 (“Effective Date”), is entered into by and between PHH HOME LOANS, LLC , a limited liability company formed under Delaware law (the “Company”), and PHH MORTGAGE CORPORATION (“PMC”), a corporation organized under the laws of the State of New Jersey (collectively, the “Parties”).

The Parties hereto agree as follows:

1. Capitalized Terms . Capitalized terms not otherwise defined in this Services Agreement shall have the meaning described in the Strategic Relationship Agreement, dated as of January 31, 2005 (the “SRA”).

2. Representations and Warranties of Company . The Company represents and warrants to PMC that:

(a) It is duly organized and existing, and in good standing, pursuant to the laws of the State of Delaware;

(b) It has the requisite limited liability company authority to enter into this Services Agreement and to perform its obligations hereunder; and


(c) The terms and conditions of this Services Agreement do not violate any provision of its Certificate of Formation, Operating Agreement or any other agreement to which it is a party.

3. Representations and Warranties of PMC . PMC represents and warrants to the Company that:

(a) It is duly organized and existing, and in good standing, pursuant to the laws of the State of New Jersey;

(b) It has the requisite corporate authority to enter into this Services Agreement and to perform its obligations hereunder; and

(c) The terms and conditions of this Services Agreement do not violate any provision of its Articles of Incorporation, Bylaws or any other agreement to which it is a party.

4. Seasonal Staffing Services . PMC shall provide to the Company the seasonal staffing services described in Exhibit 4.1 attached hereto, on and pursuant to the terms set forth therein. In consideration for performing the services described in Exhibit 4.1 hereto, the Company shall pay to PMC a cash fee calculated and payable in the manner set forth in Exhibit 4.1 .

5. Product Support Services . PMC shall provide to the Company the product support services described in Exhibit 5.1 attached hereto, on and pursuant to the terms set forth therein. In consideration for performing the services described in Exhibit 5.1 hereto, the Company shall pay to PMC monthly, in advance, a cash fee calculated as set forth in Exhibit 5.1 .

 

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6. General Administrative Services . PMC shall provide to the Company the general administrative services described in Exhibit 6.1 attached hereto, on and pursuant to the terms set forth therein. In consideration for performing the services described in Exhibit 6.1 hereto, the Company shall pay to PMC the cash fee or cash fees calculated and payable in the manner set forth in Exhibit 6.1 .

7. IT Administrative Services . PMC shall provide to the Company the IT administrative services described in Exhibit 7.1 attached hereto, on and pursuant to the terms set forth therein. In consideration for performing the services described in Exhibit 7.1 hereto, the Company shall pay to PMC monthly, in advance, a cash fee calculated as set forth in Exhibit 7.1 .

8. Required Disclosures . The amount, payor and payee of the fees incurred in connection with the product support services pursuant to Exhibit 5.1 shall be described in the Mortgage Loan Disclosures, to the extent required by law.

9. Standard of Care . PMC shall perform the services provided pursuant to this Services Agreement with no less degree of care than PMC or any of its Affiliates exercises in providing such services for its own account or the account of any third party with a similar regulatory profile, provided , that in no event shall PMC exercise a lesser degree of care than that exercised by PMC prior to the date of the SRA.

10. Compliance with Laws . Actions taken or not taken by PMC and its Affiliates, and all communications made when performing its obligations under this Services Agreement shall comply in all material respects with the requirements of all applicable laws. PMC shall

 

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promptly inform the Company in writing of any notices, inquiries or other communications, written or oral, received by PMC or any Affiliate thereof with respect to any material legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations or findings with respect to any of the services provided pursuant to this Services Agreement.

11. Records Preservation and Retention .

(a) PMC acknowledges that all Mortgage Loan Documents are the property of the Company. PMC shall use its reasonable best efforts to safeguard the Mortgage Loan Documents that it may hold or retain. PMC may enter into an arrangement with a third party agent to maintain the Mortgage Loan Documents with the reasonable consent of the Company.

(b) PMC agrees that it or its agent will hold and be responsible for such Mortgage Loan Documents within a secure and controlled environment to include, but not be limited to, fireproof vaults. PMC agrees that it or its agent will use its reasonable best efforts to protect such Mortgage Loan Documents from destruction or loss and from the unauthorized divulgence of confidential information. PMC shall, if such Mortgage Loan Documents are lost or destroyed, replace such Mortgage Loan Documents in all necessary respects. Further, such Mortgage Loan Documents will be maintained under such conditions as to have them readily available for use and examination by the Company, upon its reasonable request therefor.

 

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(c) Upon request by the Company, PMC will forward any and all of the Company’s records and the Company Mortgage Loan Documents in its possession that the Company reasonably may seek.

(d) PMC shall maintain all such Mortgage Loan Documents and other records relating to the services provided by it hereunder in accordance with all applicable federal, state and local laws and regulations, as well as Mortgage Loan investor and insurer requirements and reasonable Company requirements, as provided to PMC.

12. Right to Audit . The Company and its officers, employees and agents, including third party attorneys and accountants and auditors shall have full and complete access to PMC’s records and operations at reasonable times to monitor PMC’s performance on behalf of the Company pursuant to this Services Agreement, and all audit, inspection and review rights that the Cendant Member has with respect to the Company as provided in the Operating Agreement.

13. Termination . This Services Agreement shall terminate automatically upon the effective date of any termination of the SRA in accordance with its terms; provided that such termination shall have no effect on the Parties’ obligations with respect to Mortgage Loans in the process of origination at the time of such termination; and further provided that the representations, warranties and covenants of the Parties contained herein and the respective obligations of each Party hereunder to indemnify and hold harmless the other Party set forth in Section 14 below shall survive the termination of this Services Agreement (i) for a period of one (1) year thereafter, in the event of a Cendant Put, a Two Year Put, a Purchase Right transaction, a

 

5


Special Termination Put or a Non-Renewal Put, or (ii) for a period of five (5) years thereafter, in the event of a PHH Sale, a Two Year PHH Sale or a Non-Renewal PHH Sale. In connection with any termination contemplated by clause (ii) above, PMC shall deliver to the Company, at the effective time of such termination, any records in its possession as contemplated by Section 11 hereof.

14. Indemnification .

(a) PMC shall indemnify, hold harmless and defend the Company, its members, directors, officers and employees and its successors and assigns and their members, directors, officers and employees, with counsel approved by the Company, from and against any and all Losses which the Company or any such parties may incur or be subject to arising out of, relating to, or in connection with (i) any representation of PMC that was not true when made, (ii) any breach by PMC of its warranties or covenants or the terms and conditions of this Services Agreement, or (iii) any actions or failures to act by PMC or any of its Affiliates in connection with the services provided pursuant to this Services Agreement that constitute negligence, bad faith or willful misconduct. PMC’s obligation to so indemnify, hold harmless and defend the Company and any such parties shall survive termination of this Services Agreement in accordance with Section 14. The Company’s right to indemnification, as provided herein, shall be in addition to, and not in lieu of all other rights and remedies it may have under law.

(b) The Company shall indemnify, hold harmless and defend PMC, its directors, officers and employees and its successors and assigns and their directors, officers and

 

6


employees, with counsel approved by PMC, from and against any and all Losses which PMC or any such parties may incur or be subject to arising out of, relating to or in connection with any representation made by the Company that was not true when made or any breach by the Company of its warranties or covenants or the terms and conditions of this Services Agreement. The Company’s obligation to so indemnify, hold harmless and defend PMC and any such parties shall survive termination of this Services Agreement in accordance with Section 14. PMC’s right to indemnification, as provided herein, shall be in addition to, and not in lieu of, all other rights and remedies it may have under law.

15. Cooperation . The Parties acknowledge that the success of their efforts under this Services Agreement depends on the cooperation of each of them. Accordingly, each of the Parties shall use its best efforts and confer in good faith in an attempt to agree upon any matter hereunder which requires such agreement.

16. No Partnership . This Services Agreement is not intended to be, nor shall it be construed to be, the formation of a partnership or joint venture between the Parties.

 

7


17. Notices . All notices and statements to be given under this Services Agreement are to be in writing, delivered by hand, facsimile, overnight mail or similar service, or first class United States mail, postage prepaid and registered or certified with return receipt requested, to the following addresses or facsimile numbers, as applicable (which addresses and facsimile numbers may be revised by written notice):

The Company:

 

   PHH Home Loans, LLC
   3000 Leadenhall Road
   Mt. Laurel, NJ 08054
   Attention:   President
   Facsimile:  
   With a copy to:
   Cendant Real Estate Services Venture Partner, Inc.
   1 Campus Drive
   Parsippany, NJ 07054
   Attention:   Eric Bock
   Facsimile:  
PMC :     
   PHH Mortgage Corporation
   3000 Leadenhall Road
   Mt. Laurel, NJ 08054
   Attention:   President
   Facsimile:   856-917-6016

All written notices and statements shall be deemed given, delivered, received and effective upon personal delivery or receipt of facsimile or telegram, one (1) calendar day after sending by overnight mail or any similar service or five (5) calendar days after mailing by first class United States mail in the manner set forth above.

18. Expenses . PMC shall receive no compensation under the terms of this Services Agreement except as expressly provided herein. The Company shall, at its sole cost and expense, employ all persons necessary for it to carry out its duties and responsibilities hereunder. All costs and expenses incurred by either Party in connection herewith (including salaries for their respective personnel and their respective legal fees and expenses) shall be solely the expenses of the Party incurring them. Neither Party shall be obligated to contribute any amount as capital or otherwise to the other.

 

8


19. Amendment . This Services Agreement may be amended and any provision hereof waived, but only in writing signed by the Party against whom such amendment or waiver is sought to be enforced; provided , however , that any action taken by the Company pursuant to this Section 19 shall be valid only if taken following receipt of the prior approval of the Company’s Board of Advisors (as defined in the Operating Agreement) in accordance with Section 6.3 of the Operating Agreement.

20. Governing Law . THIS SERVICES AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAWS RULES THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Any legal suit, action or proceeding against any of the Parties hereto arising out of or relating to this Services Agreement shall only be instituted in any federal or state court in New York, New York, pursuant to Section 5-1402 of the New York General Obligations Law, and each Party hereby irrevocably submits to the exclusive jurisdiction of any such court in any such suit, action or proceeding. The Parties hereby agree to venue in such courts and hereby waive, to the fullest extent permitted by law, any claim that any such action or proceeding was brought in an inconvenient forum. Each of the Parties hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Services Agreement.

 

9


21. Dispute Resolution . In the event of any disputes under this Services Agreement, resolution shall occur pursuant to the dispute resolution procedures contained in Section 13.11 of the SRA as if such provision applied to the Parties hereto.

22. Severability; Release . The Parties hereto shall not perform, or be expected to perform, any act hereunder that is, or is reasonably believed to be, in violation of any applicable state or federal rule or regulation. If any provision of this Services Agreement is now or later in violation of any local, state or federal law, then such provision shall be considered null and void for purposes of this Services Agreement with all other provisions remaining in full force and effect. Each Party expressly releases the other from any liability in the event either of said Parties cannot fulfill any obligation hereunder due to any prohibition under local, state or federal laws pertaining to such obligation; provided, that the Parties agree to work together to structure an alternative solution for addressing the provisions so found to be in violation.

23. Further Assurances . The Parties agree that each will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such amendments and supplements hereto and such further instruments as may be reasonably required or appropriate to further express the intention of the Parties, or to facilitate the performance of this Services Agreement.

24. Section Headings . The headings of the various sections of this Services Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Services Agreement.

 

10


25. Assignment . PMC may not assign this Services Agreement or any of its rights or obligations hereunder without the prior express written consent of the Company. The Company may not assign this Services Agreement or any of its rights or obligations hereunder without the prior approval of the Company’s Board of Advisors (as defined in the Operating Agreement) in accordance with Section 6.3 of the Operating Agreement.

 

11


IN WITNESS WHEREOF, each of the undersigned Parties has caused this Services Agreement to be duly executed and delivered by one of its duly authorized officers, all as of the Effective Date.

 

PHH HOME LOANS, LLC   PHH MORTGAGE CORPORATION
By:  

 

  By:  

 

Name:   Terence W. Edwards   Name:   Terence W. Edwards
Title:   President and Chief Executive Officer   Title:   President and Chief Executive Officer

 

12


EXHIBIT 4.1

Seasonal Staffing

Services:

Seasonal Staffing services includes the following services provided by PMC to the Company:

 

   

Seasonal Staffing for Net One Tele-services – includes phone consultants and additional staff for Loan Processing Center and Document Review Center – additional staffing will be through PMC employees.

 

   

As needed and staffing availability permitting, the Company will provide reverse staffing to PMC.

Fees :

 

   

The Company shall pay all *CONFIDENTIAL; plus

 

   

A fixed fee per week for actual compensation, plus *CONFIDENTIAL.

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

13


EXHIBIT 5.1

Product Support Services

Services:

Product Support consists of the following services provided by PMC to the Company (whether or not the Company incurs these costs or similar costs directly):

 

   

Loan control and completion (LCC) – post-closing functions here include reconciling the HUD1 received from closing agents to the cash dispersed on the loan reconciling the tax and insurance escrows if appropriate, the submissions for insurance with HUD for GNMA insured loans and loan pools, certain compliance monitoring activities, verification of recorded deeds and title insurance policies etc.

 

   

Pricing – functions here include establishing the rate and fees for the borrowers established at the time of the rate lock commitment based on then current market conditions and profit expectations, performance of competitive surveys and market data gathering efforts to verify the competitiveness of pricing, determination of price concessions and implementation of concession policies etc.

 

   

Loan sales – functions here include the aggregation of loans into pools based on appropriate characteristics, determination of best execution decisions, gathering loans files, performance of due diligences, and shipping of files, management of GSE agency and mortgage loan investor relationships etc.

 

   

Product development – functions include development of loan program parameters, program design to comply with investor requirements, design integration of new programs to company processes, communication of new programs and related requirements etc.

 

   

Credit risk management – includes providing access to PMC’s automated underwriting systems, monitoring of loan quality, monitoring of compliance with documentation standards, monitoring performance of loans to assess underwriting and pricing effectiveness etc.

 

   

Mail print center – includes collection and copying of documents in connection with processing of the Company’s loan applications and loan closing packages.

 

   

Operational strategy department – includes development, processing and reporting on client survey results, office of the president for customer satisfaction and recovery, etc.

 

   

Mail away program – includes the cost of program to allow borrowers to sign loan documents in the presence of a notary rather than a closing agent etc.

 

14


Fees:

Fees will be based on the fair value of services provided, based on actual costs incurred by PMC plus a profit margin of *CONFIDENTIAL.

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

15


EXHIBIT 6.1

General Administrative Services

Services:

General Administrative (non-IT) services includes the following services provided by PMC to the Company (whether or not the Company incurs these costs or similar costs directly):

 

   

Accounting and Finance – includes maintenance of the general ledger and related sub ledgers, preparation of financial reports and management reports, preparation of financial forecasts, staffing models, profitability models, payment of bills, funding of loans, establishment of controls, controls monitoring, determination of sales proceeds, etc.

 

   

Telecom – includes the cost of telephone systems, staffing for maintenance and call prioritization systems, etc (including the PIMI systems)

 

   

Business intelligence – includes development and scheduling of management reporting and client reporting systems, reporting data management etc.

 

   

Legal – includes consulting on legal matters etc.

 

   

Human resources – includes payroll processing or related management, benefits management and participation in benefit plans, hiring-related matters, training-related matters, etc

 

   

Public relations – includes event management services, press related matters, etc.

 

   

Administration – Vendor management, etc

 

   

Facilities – includes building management, landscaping management, heating, air conditioning, power, growth management, etc.

 

   

Training – development and delivery of training materials etc.

 

   

Executive – includes an allocation of PHH Corporation executive management and corporate structure, PHH Mortgage executive management and structure, a portion of Management incentive programs to the extent not allocated to specific functions, etc

Fees:

Fees will be charged based on either (a) a per loan basis or (b) subject to a fixed minimum with a variable component, in the Cendant Member’s sole discretion. The fees will index annually at a maximum of 3%.

 

16


EXHIBIT 7.1

IT Administrative Services

Services:

 

   

IT Administrative Services include the following:

 

   

systems operations

 

   

maintenance of production systems

 

   

help desk support

 

   

network support

 

   

development of enhancements

 

   

systems interoperability

 

   

maintenance of websites

 

   

systems security

 

   

systems management reporting

 

   

data management

 

   

IT vendor management

 

   

project evaluation and management

 

   

resource allocations

 

   

telecom systems and support

 

   

new systems integration

 

   

major systems development

 

   

systems controls

Fees:

Fees will be a per loan charge based on the fair value of services provided, based on actual costs incurred by PMC plus a profit margin of *CONFIDENTIAL. The annual growth factor will be the lesser of (i) 3% or (ii) the Consumer Price Index rate at the time of reset.

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

17


Exhibit C

Master Shared Office Space Agreement

This Master Shared Office Space Agreement (“Agreement”) is made as of this      day of             , 2005, by and between NRT Inc., on behalf of its subsidiary listed on the attached Exhibit “A” (such subsidiary is herein referred to as “NRT”), and PHH Home Loans, LLC (“PHH”).

NRT currently occupies numerous locations identified as the “Master Premises” on Exhibit A pursuant to the certain master leases (“Master Leases”) identified on Exhibit A.

NRT has agreed to lease a portion (the “Premises”) of the Master Premises to PHH, and PHH has agreed to hire and take said Premises from NRT, pursuant to the terms and conditions set forth on Exhibit A and further pursuant to the following terms and conditions:

 

1. Commencement Date: As set forth on Exhibit A.

 

2. Expiration Date: As set forth on Exhibit A.

 

3. Proportionate Share: As set forth on Exhibit A.

 

4. Base Rent and Additional Rent: As set forth on Exhibit A.

 

5. Utilities: The costs associated with utilities are included in the base rent. PHH shall pay all costs associated with PHH’s telephone usage and information technology services within thirty (30) days after receipt of invoices for such services.

 

6. Common Areas: During the term of this Agreement, PHH shall have the right to use the Common Areas, which shall be deemed to include, but not be limited to, the conference room(s), kitchen, bathroom(s), reception area, receptionist’s services and other similar facilities at the Premises.

 

7. Parking: PHH shall have the right to purchase parking spaces at prevailing rates in the parking area available to the Premises, on an as needed basis and as agreed upon with NRT’s branch manager; provided, however that if NRT has a right to park free of charge, NRT shall provide PHH with 1 parking space free of charge or such greater number of parking spaces as the parties reasonably determine that PHH would have if PHH leased similar space in the same market from a third party landlord.

 

8. Maintenance, Repairs and Alterations: NRT shall, or shall cause NRT’s landlord to, clean and maintain the Premises and Common Areas in good order and condition. PHH will be responsible for any and all alterations and for repairs to the Premises resulting from PHH’s negligent or intentional act. All alterations shall be subject to the consent of NRT (which consent shall not be unreasonably withheld, conditioned or delayed) and to the conditions of the Master Lease.

 

9. Signage: PHH shall have the right to display signs bearing its name and/or the name of its division provided said signs do not conflict with NRT’s signage. PHH also shall have the right to display a sign within the interior of the Premises that can be seen prominently by persons entering the Premises. All signage must be approved by NRT’s landlord as required by the Master Lease.


10. Personal Property and Equipment: PHH may supply any and all of its own personal property reasonably necessary to its business. Further, PHH will install telephone lines for its telephones, computers and facsimile machines and be responsible for the payment thereof.

 

11. Master Lease Obligations: PHH shall be bound to all covenants, terms and conditions contained in the Master Lease as the same relates to PHH’s occupancy of the Premises.

 

12. Termination of Master Lease: In the event that during the Term of this Agreement the Master Lease is terminated or comes to an end for any reason, then this Agreement and any assignments of this Agreement shall terminate on the effective date of such termination of the Master Lease. Notwithstanding the foregoing provisions of this section, if the reason for such termination of the Master Lease shall be a default on the part of PHH with respect to any of the terms or conditions of this Agreement or of the Master Lease, NRT shall be entitled to recover from PHH as liquidated damages at least an amount equal to the damages which Landlord shall be entitled to recover from NRT in connection with such termination of the Master Lease.

 

13. Indemnification: Except for the negligent acts, omissions or willful misconduct of NRT (for which NRT shall defend and indemnify PHH), PHH shall defend, indemnify and hold NRT harmless from and against all costs, expenses, attorneys’ fees, liabilities and damages arising out of (a) any breach or default on the part of PHH in the observance or performance of any of its agreements or obligations under this Agreement, and (b) any injury or damage to any person or property occurring in or on the Premises caused by the acts or omissions of PHH, its agents, employees or contractors. NRT shall defend, indemnify and hold PHH harmless from and against all costs, expenses, attorneys’ fees, liabilities and damages arising out of (a) any breach or default on the part of NRT in the observance or performance of any of its agreements or obligations under this Agreement, and (b) any injury or damage to any person or property occurring in the Premises which are caused by the negligent acts, omissions or willful misconduct of NRT.

 

14. Entire Agreement: This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements. No modification of this Agreement shall be binding unless executed in writing by the party to be bound thereby.

 

15. Counterparts: This Agreement may be executed in counterparts and, as so executed, shall constitute one agreement binding upon all parties. This Agreement shall inure to the benefit of and shall be binding upon the respective successors and assigns of each of the parties.

 

16. Mutual Termination Option: Either PHH or NRT may terminate this Agreement at anytime by providing the other party with ninety (90) days’ advanced written notice of its intent to so terminate.


IN WITNESS WHEREOF, NRT and PHH have executed this Agreement as of the dates set forth below.

 

NRT:
NRT, Inc., on behalf of its subsidiary
By:  

 

Name:   Eric J. Bock   Date
Title:   Executive Vice President and Secretary
PHH:
PHH Home Loans, LLC
By:  

 

Name:   Terence W. Edwards   Date
Title:   President and Chief Executive Officer

 


Exhibit D

Small Corps

1. Axiom Financial, Inc., a Utah corporation

2. Hamera Corp. d/b/a First Capital, a California corporation

3. LongIsland Mortgage Group, Inc., a New York corporation

4. NE Moves Mortgage Corporation, a Massachusetts corporation

5. Preferred Mortgage Group, Inc., a Virginia corporation

6. RMR Financial, a California corporation

7. Sunbelt Lending Services, Inc., a Florida corporation

8. Burnet Home Loans (a division of PHH Mortgage)


Schedule I

Initial Capital Contributions

 

Member

   Initial Capital Contribution    Common Interest Percentage  

PHH Broker Partner Corporation

   $ 250,500    50.1

Cendant Real Estate Services Venture Partner, Inc.

   $ 249,500    49.9


Schedule II

Subsequent Capital Contributions

 

Member

        Estimated Value  

PHH Broker Partner Corporation

  

1) Businesses of Small Corps (Exhibit D)

   $ *CONFIDENTIAL (a)  
  

2) Direct assets of Phone-In Move-In channel

     TBA   
           
  

Total

   $ *CONFIDENTIAL   

Cendant Real Estate Services Venture Partner Inc.

  

1) Exclusive royalty-free license for Coldwell Banker Home Loans and ERA Home Loans

   $ *CONFIDENTIAL (a)  
  

2) Cash

   $ *CONFIDENTIAL (b)  
           
  

Total

   $ *CONFIDENTIAL   

 

(a) Based upon preliminary valuations prepared by external valuation firm. These valuations will be updated at the time of the Subsequent Capital Contributions.
(b) Actual amount of cash contribution by Cendant Member will be determined based upon the final valuations referenced in (a) above. Common Interest Percentage will be consistent with Schedule I.

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Schedule 2.2

Other Company Names

1. ERA Home Loans

2. Coldwell Banker Home Loans

3. Burnet Home Loans


Schedule 2.10(a)

D/B/A, Fictitious Name and Similar Filings

to be made by the Company and its Subsidiaries

 

    

Coldwell Banker

Home Loans

  

ERA Home Loans

  

Burnet Home Loans

Alabama

        

Alaska

        

Arizona

   X      

Arkansas

        

California- Sacramento County

   X      

Colorado

   X      

Connecticut

   X      

Delaware-New Castle County

   X    X   

DC

   X      

Florida

   X      

Georgia-Gwinnet County

   X      

Hawaii

        

Idaho

        

Illinois

   X      

Indiana

   X       X

Iowa

        

Kansas

        

Kentucky

   X      

Louisiana

   X      

Maine

   X      

Maryland

   X    X   

Massachusetts-Boston City Clerk

   X      

Michigan

   X      

Minnesota

   X       X

Mississippi

        

Missouri

   X      

Montana

   X      

Nebraska

        

Nevada-Carson City Clerk

   X      

New Hampshire

   X      

New Jersey

   X    X   

New Mexico

   X      

New York

   X    X   

North Carolina

        

North Dakota

        

Ohio

   X      

Oklahoma

        

Oregon

        


Pennsylvania

   X    X   

Rhode Island

   X      

South Carolina

        

South Dakota

        

Tennessee

        

Texas

   X      

Utah

   X      

Vermont

        

Virginia-Alexandria City

   X    X   

Virginia

   X    X   

Washington

        

West Virginia

   X      

Wisconsin

         X

Wyoming

   X      


Schedule 2.11(a)

NRT Operating States

Georgia

Maryland

California

Illinois

Ohio

Colorado

Connecticut

Texas

Florida

Minnesota

Wisconsin

New Jersey

Pennsylvania

Missouri

Utah

Virginia

Maine

New Hampshire

Massachusetts

Rhode Island

Delaware


Schedule 6.7

Initial Officers

1. President – Terry Edwards

2. Secretary – William F. Brown


Schedule 6.10(a)(i)

Sample Pricing Survey

PHH Analysis - PHH vs. National Lenders

*CONFIDENTIAL

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Schedule 6.10(a)(ii)

Reports

*CONFIDENTIAL

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Schedule 8.1(e)

Cendant List

 

*CONFIDENTIAL

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit 10.10

STRATEGIC RELATIONSHIP AGREEMENT

BY AND AMONG

CENDANT REAL ESTATE SERVICES GROUP, LLC,

CENDANT REAL ESTATE SERVICES VENTURE PARTNER, INC.,

PHH CORPORATION,

CENDANT MORTGAGE CORPORATION,

PHH BROKER PARTNER CORPORATION,

AND

PHH HOME LOANS, LLC

January 31, 2005

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Table of Contents

 

ARTICLE I
DEFINITIONS
Section 1.1   Definitions    1
Section 1.2   Interpretation    10
ARTICLE II
EXCLUSIVITY; MARKETING
Section 2.1   Exclusivity; Marketing    11
Section 2.2   Termination of Exclusivity    11
Section 2.3   Marketing    12
Section 2.4   Variable Compensation    12
ARTICLE III
LOAN ORIGINATION
Section 3.1   Marketing    13
Section 3.2   Mortgage Loan Types    13
Section 3.3   Company Origination Channels    13
Section 3.4   Mortgage Loan Application Processing    16
Section 3.5   Underwriting Guidelines    17
Section 3.6   Degree of Care    17
Section 3.7   Mortgage Loan Closing    17
Section 3.8   Company Personnel    18
Section 3.9   Processors    18
Section 3.10   Access    18
Section 3.11   Maintenance of Licenses    19
Section 3.12   Record Keeping    19
Section 3.13   Legal and Regulatory Compliance    19
Section 3.14   Customer Fees and Charges    20
Section 3.15   Pricing Standards    20
Section 3.16   Service Standards    21


ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1   Representations    22
ARTICLE V
CENDANT REAL ESTATE COVENANTS
Section 5.1   Cendant Real Estate Trade Shows, Conferences and Conventions    23
Section 5.2   Offline Promotion to Consumers    24
ARTICLE VI
REAL ESTATE BROKERAGE AND SETTLEMENT SERVICES
Section 6.1   Exclusive Recommended Real Estate Broker    24
Section 6.2   Commercial Real Estate    24
Section 6.3   Settlement Services    24
Section 6.4   REO Services    25
ARTICLE VII
CUSTOMER DATA; PRIVACY REQUIREMENTS
Section 7.1   Customer Information    25
Section 7.2   Compliance with Privacy Requirements    25
ARTICLE VIII
CENDANT FRANCHISEES
Section 8.1   Mortgage Loan Types    27
Section 8.2   Origination Channels    27
Section 8.3   Mortgage Loan Application Processing    29
Section 8.4   Underwriting Guidelines    29
Section 8.5   Degree of Care    30
Section 8.6   Mortgage Loan Closing    30
Section 8.7   PMC Personnel    30
Section 8.8   Processors    31
Section 8.9   Maintenance of Licenses    31
Section 8.10   Legal and Regulatory Compliance    31
Section 8.11   Customer Fees and Charges    31

 

ii


Section 8.12   Surveys    32
Section 8.13   MSA Payments    32
ARTICLE IX
FUTURE CENDANT REAL ESTATE BROKERAGE ACQUISITIONS
Section 9.1   Subsequent Small Corps    32
ARTICLE X
NON-COMPETITION
Section 10.1   PHH Non-Compete    35
Section 10.2   No Mortgage Loan Solicitation by PHH    37
Section 10.3   Cendant Participation    37
ARTICLE XI
TERMINATION ASSISTANCE
Section 11.1   Termination Assistance Services    38
Section 11.2   Development of Transition Plan    40
Section 11.3   Post-Termination Assistance    40
ARTICLE XII
TERM AND TERMINATION
Section 12.1   Term    40
Section 12.2   SRA Termination Event    40
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1   PHH Guarantee    41
Section 13.2   Notice of Certain Events    42
Section 13.3   Indemnification    42
Section 13.4   Lawful Conduct; Severability; Release    43
Section 13.5   Confidential Treatment    43
Section 13.6   Expenses    43
Section 13.7   Confidentiality and No Personal Solicitation    44
Section 13.8   Entire Agreement    44
Section 13.9   Amendment    44

 

iii


Section 13.10   Binding Effect    45
Section 13.11   Negotiation and Mediation    45
Section 13.12   Governing Law    46
Section 13.13   Effect of Waiver or Consent    46
Section 13.14   Notices    46
Section 13.15   No Assignment    47
Section 13.16   Benefit of Parties Only    48
Section 13.17   No Joint Venture; Legal Entity    48
Section 13.18   Counterparts    48

 

iv


Index of Defined Terms

 

Additional Services    40
Affiliate    1
Agreement    1
Applicable Requirements    2
Brand Franchisee    2
Cendant    2
Cendant Competitor    38
Cendant Customer    2
Cendant Employees    2
Cendant Entities    2
Cendant Indemnitees    44
Cendant Indemnitor    44
Cendant Member    1
Cendant Mobility    2
Cendant Mobility Broker Network    3
Cendant Mobility Office    3
Cendant Owned Real Estate Offices    3
Cendant Owned Real Estate Offices Tradenames    3
Cendant Real Estate    1
Cendant Real Estate Franchisee Brands    3
Cendant Real Estate Seller    34
Cendant Real Estate Services Division    3
Cendant Restricted Brands    3
Cendant Websites    3
Company    1
Company Loan Officers    17
Company Pricing    14
Competitor Data Point    21
Competitors    22
Content    4
CSSG    4
Cure Period    12
Customer    4
Customer Fees and Charges    4
Customer Information    15
Customer Payment    15
Customer Survey    22
Dispute    47
Disputing Party    47

 

v


Domain Name

   5

FHLMC

   18

FNMA

   18

Franchisee Customer

   5

Franchisee Customer Survey

   33

Franchisee Key Customer Question

   34

Franchisee Key Referral Question

   34

Franchisee Mortgage Content

   29

Franchisee Referral Survey

   33

Franchisee Surveys

   33

Franchisee Telephone Lines

   28

Guarantee

   43

Guarantee Amount

   15

HMDA

   7

Hyperlink

   6

Information Security Program

   6

Interagency Guidelines

   28

Internet

   6

Internet Customer Payment

   17

Key Customer Question

   22

Key Referral Question

   22

Losses

   44

Managing Member

   6

Mediation Request

   47

Mortgage Content

   16

Mortgage Lending Law

   6

Mortgage Loan

   7

Mortgage Loan Disclosure

   7

Mortgage Loan Documents

   7

Mortgage Loan Pricing

   7

Mortgage Loan Types

   7

MSA

   7

Non-Competitive

   22

Nonperformance Jurisdiction

   12

NRT

   7

Operating Agreement

   7

Origination Channels

   8

Other Origination Channels

   13

Parties

   1

Party

   1

PHH

   1

PHH Affiliates

   43

 

vi


PHH Data Point

   21

PHH Entities

   8

PHH Indemnitees

   44

PHH Indemnitor

   44

PHH Member

   1

PIMI Origination Channel

   8

Pipeline Loans

   43

PLS

   26

PMC

   1

PMC Mortgage Loan Types

   8

PMC Pricing

   28

PMC Underwriting Guidelines

   31

Point of Sale Origination Channel

   8

Pre-Approval Decision

   9

Premier Agent Program

   9

Pricing Occurrence

   21

Pricing Ratio

   22

Privacy Requirements

   27

Private Label Business Channel

   9

Programs

   22

Purchase Price

   34

Qualifying Target

   34

Qualifying Target EBITDA Multiple

   35

Qualifying Target Mortgage Business

   34

Rates

   21

Referral Agent

   22

Referral Survey

   22

Rules

   47

Settlement Services

   10

Small Corp Notification

   34

Small Corps

   10

SRA Termination Event

   42

STARS

   10

Survey Failure

   23

Surveys

   22

Telephone Lines

   14

Termination Assistance Period

   40

Termination Assistance Services

   40

URL

   10

Venture Underwriting Guidelines

   18

Website

   10

World Wide Web

   11

 

vii


This STRATEGIC RELATIONSHIP AGREEMENT, dated as of January 31, 2005 (this “ Agreement ”), is by and among Cendant Real Estate Services Group, LLC, a Delaware limited liability company (“ Cendant Real Estate ”), Cendant Real Estate Services Venture Partner, Inc., a Delaware corporation (the “ Cendant Member ”), PHH Corporation, a Maryland corporation (“ PHH ”), Cendant Mortgage Corporation, a New Jersey corporation (to be renamed “PHH Mortgage Corporation”) (“ PMC ”), PHH Broker Partner Corporation, a Maryland corporation (the “ PHH Member ”) and PHH Home Loans, LLC, a Delaware limited liability company (the “ Company ”). Each of Cendant Real Estate, the Cendant Member, PHH, PMC, the PHH Member and the Company is sometimes referred to herein as a “ Party ” and, collectively, as the “ Parties .”

W I T N E S S E T H :

WHEREAS, the PHH Member and the Cendant Member formed the Company on November 3, 2004, for the principal purpose of originating and selling mortgage loans sourced through Cendant’s residential real estate brokerage and corporate relocations businesses and from employees of Cendant and its Subsidiaries, in accordance with the terms and provisions of this Agreement and the Operating Agreement; and

WHEREAS, this Agreement sets forth, among other things, certain matters related to the business relationship among the Parties.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants, promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall each have the meaning set forth in this Article (unless the context otherwise requires). All capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Operating Agreement.

Additional Services ” has the meaning set forth in Section 11.1(b).

Affiliate ” means, when used with reference to a specific Person, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specific Person. For the avoidance of doubt, neither the Company nor any of the “Brand Franchisees” shall be deemed to be an Affiliate of Cendant or any of Cendant’s Affiliates.

Agreement ” has the meaning set forth in the preamble.


Applicable Requirements ” means, as of the time of reference, collectively, (A) with respect to the Mortgage Loans, all of the following: (i) all contractual obligations, including those contractual obligations contained in this Agreement, in any agreement with any investor or insurer or in the applicable Mortgage Loan; (ii) all applicable federal, state and local legal and regulatory requirements (including statutes, rules, administrative interpretations, regulations and ordinances), including all Mortgage Lending Laws; (iii) all other applicable requirements and guidelines of each investor, insurer, governmental agency, board, commission, instrumentality and other governmental body or office having jurisdiction; (iv) all other applicable judicial and administrative judgments, orders, stipulations, awards, writs and injunctions; and (v) the reasonable and customary mortgage origination practices of prudent mortgage lending institutions which make mortgage loans of the same type as the Mortgage Loans in the jurisdictions in which the related mortgaged properties are located; and (B) the Foreign Corrupt Practices Act of 1977, as amended.

Brand Franchisee ” means any residential real estate brokerage business that (i) operates under a Cendant Real Estate Franchisee Brand and (ii) is not owned by Cendant Real Estate or any of its Subsidiaries; provided , that the Parties acknowledge that the “Sotheby’s International Realty” brand may not be included in this definition for certain aspects of this Agreement.

Cendant ” means Cendant Corporation, a Delaware corporation.

Cendant Competitor ” has the meaning set forth in Section 10.1(c).

Cendant Customer ” means any customer of the Cendant Entities or any of their respective Subsidiaries; provided , however , that for purposes of this Agreement the term “Cendant Customer” shall not include any Brand Franchisee or any employee or independent sale associate thereof acting in such capacity.

Cendant Employees ” means, collectively, all U.S.-based employees of Cendant and its Subsidiaries.

Cendant Entities ” means, collectively, Cendant Real Estate and the Cendant Member.

Cendant Indemnitees ” has the meaning set forth in Section 13.3(a).

Cendant Indemnitor ” has the meaning set forth in Section 13.3(b).

Cendant Member ” has the meaning set forth in the preamble.

Cendant Mobility ” means Cendant Mobility Services Corporation, a Delaware Corporation.

Cendant Mobility Broker Network ” means the network of real estate brokers who have executed agreements with Cendant Mobility to assist customers of Cendant Mobility clients in acquiring or disposing of a home.

 

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Cendant Mobility Office ” means any office comprising part of Cendant’s corporate relocation business, including, without limitation, any office of Cendant Mobility or any of its Subsidiaries.

Cendant Owned Real Estate Office ” means any residential real estate brokerage office owned as of the date hereof or acquired or opened hereafter by Cendant Real Estate or one of its Subsidiaries, including, without limitation, NRT.

Cendant Owned Real Estate Offices Tradenames ” means, collectively, the real estate brand names or trade names owned or licensed as of the date hereof or acquired or licensed hereafter by Cendant Real Estate or one of its Subsidiaries under which the Cendant Owned Real Estate Offices operate, including those brand names and trade names listed in Exhibit A .

Cendant Real Estate ” has the meaning set forth in the preamble.

Cendant Real Estate Franchisee Brands ” means, collectively, the real estate brand names or trade names owned or licensed as of the date hereof or acquired or licensed hereafter by the franchisor Subsidiaries of Cendant Real Estate or one of its Subsidiaries, including those brand names and trade names listed in Exhibit B ; provided , that the Parties acknowledge that the “Sotheby’s International Realty” brand may not be included in this definition for certain aspects of this Agreement.

Cendant Real Estate Services Division ” means (i) the residential and commercial real estate brokerage business owned and operated by NRT and its Subsidiaries; (ii) the relocation business owned and operated by Cendant Mobility and its Subsidiaries; and (iii) the Settlement Services business owned and operated by CSSG and its Subsidiaries (it being understood that for all purposes of this Agreement, the Cendant Real Estate Services Division shall not include Century 21 Real Estate LLC, Coldwell Banker Real Estate Corporation, ERA Franchise Systems, Inc. and Sotheby’s International Realty Affiliates, Inc.).

Cendant Restricted Brands ” means the “Sotheby’s International Realty” trade name and any other real estate brand name or trade name that may be licensed or acquired by Cendant or any of its Subsidiaries but which has not been licensed to PMC or an Affiliate thereof pursuant to either the License Agreement or a similar agreement between Cendant or an Affiliate thereof, on the one hand, and PMC or an Affiliate thereof, on the other hand.

Cendant Websites ” means (i) all Websites operated by, or on behalf of, any of the Cendant Owned Real Estate Offices or the Cendant Mobility Offices and (ii) all Cendant Owned Real Estate Offices Tradename Websites and Cendant Real Estate Franchisee Brand Websites operated by Cendant Real Estate, Cendant Mobility, or a Subsidiary thereof, in either case through which inquiries or applications for Mortgage Loans may be made. For the avoidance of doubt, the term “Cendant Websites” shall not include any Website operated by, or on behalf of, any Brand Franchisee.

Company ” has the meaning set forth in the preamble.

 

3


Company Loan Officers ” has the meaning set forth in Section 3.3(b)(i).

Company Pricing ” has the meaning set forth in Section 3.2(a).

Competitor Data Point ” has the meaning set forth in Section 3.15(a).

Competitors ” has the meaning set forth in Section 3.15(c)(ii).

Content ” means, with respect to any Person, all content which such Person has created or may hereafter create, has licensed or may hereafter license, or has acquired or may hereafter acquire, in any form and in any medium now known or hereafter developed, including: (a) art, audiovisual works, animations, cartoons, characters, choreography, compilations, collective works, computer software and programs, data, designs, emblems, films, film clips, graphics, images, illustrations, likenesses, literary works, logos, motion pictures, musical compositions, music videos, performances, photographs, pictorial works, songs, song lyrics, sound recordings, scripts, screenplays, templates, text, video recordings, copyrightable subject matter, works of authorship, trade secrets (including customer and vendor lists), and other proprietary rights; (b) all rights under copyright and moral rights associated with the foregoing; (c) all copyrightable derivative works, enhancements, improvements, modifications, updates, new releases or other revisions of the foregoing; (d) all publicity rights or privacy rights (or waivers or quitclaims thereof) of any person or entity, and (e) all rights corresponding to the foregoing throughout the world.

CSSG ” means Cendant Settlement Services Group LLC, a Delaware limited liability company.

Cure Period ” has the meaning set forth in Section 2.2(a).

Customer ” means any individual who contacts the Company, whether in person, by mail, phone, via the Internet (including by electronic mail), or otherwise, or who is so contacted by the Company, about the possibility of obtaining a Mortgage Loan through the Company, or who otherwise obtains a Mortgage Loan from or through the Company.

Customer Fees and Charges ” means, with respect to any Mortgage Loan, an amount equal to the sum of: (i) all reasonable charges or fees paid or incurred by the Mortgage Loan originator for taking the Mortgage Loan application, locking-in Mortgage Loan Pricing, surveys, title insurance premiums, appraisal fees, abstract and attorneys’ fees, recording or registration charges, escrow fees, document preparation fees, credit report charges, tax service fees and similar charges, and all other reasonable and customary third-party charges for settlement services contracted for and permitted by applicable law related to the origination of a Mortgage Loan; and (ii) all origination and discount points or other similar amounts described in the Mortgage Loan Pricing for such Mortgage Loan.

 

4


Customer Information ” means any personally identifiable information or records in any form (written, electronic, or otherwise) relating to a Customer, including a Customer’s name, address, telephone number, electronic mail address, loan number, loan payment history, delinquency status, insurance carrier or payment information, tax amount or payment information, the fact that the Customer has a relationship with the Company or the Cendant Entities or the Brand Franchisees or their respective Affiliates and any other personally identifiable information.

Customer Payment ” has the meaning set forth in Section 3.3(a)(i)(C).

Customer Survey ” has the meaning set forth in Section 3.16(a).

Dispute ” has the meaning set forth in Section 13.11(a).

Disputing Party ” has the meaning set forth in Section 13.11(b).

Domain Name ” means the unique name that identifies an Internet site.

FHLMC ” has the meaning set forth in Section 3.5.

FNMA ” has the meaning set forth in Section 3.5.

Franchisee Customer ” means any customer of a Brand Franchisee that contacts PMC or an Affiliate thereof, whether in person, by mail, phone, via the Internet (including by electronic mail), or otherwise, or who is so contacted by PMC or such Affiliate, about the possibility of obtaining a Mortgage Loan through PMC or an Affiliate thereof, or who otherwise obtains a Mortgage Loan from or through PMC or an Affiliate thereof.

Franchisee Customer Survey ” has the meaning set forth in Section 8.12.

Franchisee Key Customer Question ” has the meaning set forth in Section 8.12.

Franchisee Key Referral Question ” has the meaning set forth in Section 8.12.

Franchisee Mortgage Content ” has the meaning set forth in Section 8.2(a)(ii)(A).

Franchisee Referral Survey ” has the meaning set forth in Section 8.12.

Franchisee Surveys ” has the meaning set forth in Section 8.12.

Franchisee Telephone Lines ” has the meaning set forth in Section 8.2(a)(i)(A).

Guarantee ” has the meaning set forth in Section 13.1(a).

Guarantee Amount ” has the meaning set forth in Section 3.3(a)(i)(C).

 

5


HMDA ” has the meaning set forth in the definition of “Mortgage Lending Law.”

Hyperlink ” means an electronic link providing direct access from one distinctively marked place in a World Wide Web page to another place in the same or a different World Wide Web page.

Information Security Program ” means the Company’s information security program to (i) insure the security and confidentiality of Customer Information, (ii) protect against any anticipated threats or hazards to the security or integrity of the Customer Information and (iii) protect against unauthorized access to or use of the Customer Information that could result in substantial harm or inconvenience to any Customer.

Interagency Guidelines ” has the meaning set forth in Section 7.2(b).

Internet ” means the electronic communications network that connects computer networks and organizational computer facilities around the world.

Internet Customer Payment ” has the meaning set forth in Section 3.3(a)(ii)(D).

Key Customer Question ” has the meaning set forth in Section 3.16(a).

Key Referral Question ” has the meaning set forth in Section 3.16(a).

Losses ” has the meaning set forth in Section 13.3(a).

Managing Member ” means the PHH Member or such other member as may replace the PHH Member as managing member pursuant to the Operating Agreement.

Mediation Request ” has the meaning set forth in Section 13.11(b).

Mortgage Content ” has the meaning set forth in Section 3.3(a)(ii)(A).

Mortgage Lending Law ” means any federal, state or local constitution, statute, rule, regulation, order or similar legal or regulatory requirement applicable to: the communication with, and marketing directed toward Mortgage Loan customers; the application process for Mortgage Loans; the Pre-Approval Decision process; the processing of Mortgage Loan applications; the communication to the customer of a Mortgage Loan underwriting decision; the closing and funding of a Mortgage Loan; and the preparation, execution and delivery of Mortgage Loan Documents and Mortgage Loan Disclosures. Mortgage Lending Laws include, but are not limited to, the following: (i) the record keeping and reporting requirements of the Home Mortgage Disclosure Act (“ HMDA ”); (ii) the Real Estate Settlement Procedures Act and Regulation X (24 C.F.R. Part 3500); (iii) the Fair Housing Act; (iv) the Fair Credit Reporting Act; (v) the Flood Disaster Protection Act; (vi) the Truth-in-Lending Act and (Regulation Z); (vii) the National Housing Act; (viii) the Servicemen’s Readjustment Act; (ix) the Equal Credit Opportunity Act and (Regulation B); (x) any usury laws or regulations; and (xi) the Homeowner’s Protection Act.

 

6


Mortgage Loan ” means a mortgage loan (including a home equity line of credit) evidenced by one or more promissory notes and secured by a mortgage or deed of trust on one or more residential real estate properties.

Mortgage Loan Disclosure ” shall mean any disclosure, notice or other document or statement that, according to a Mortgage Lending Law, must be provided to a customer by or on behalf of the Person originating the Mortgage Loan in connection with the origination, closing and funding of a Mortgage Loan or an application for a Mortgage Loan.

Mortgage Loan Documents ” means the Mortgage Instruments, Mortgage Notes and Assignments.

Mortgage Loan Pricing ” means the interest rates, discount points, loan origination fees, loan application fee, closing costs and other associated cost elements for a Mortgage Loan.

Mortgage Loan Types ” means the various types of Mortgage Loans offered by the Company from time to time.

MSA ” shall have the meaning set forth in the Operating Agreement.

Non-Competitive ” has the meaning set forth in Section 3.15(b).

Nonperformance Jurisdiction ” has the meaning set forth in Section 2.2(a).

NRT ” means NRT Incorporated, a Delaware corporation.

Operating Agreement ” means the Amended and Restated Limited Liability Company Operating Agreement of the Company, dated as of January 31, 2005, as it may be amended from time to time.

Origination Channels ” means the PIMI Origination Channel, Point of Sale Origination Channel and the Other Origination Channels, together with any improvements made thereto from time to time.

Other Origination Channels ” has the meaning set forth in Section 3.1.

Party ” or “ Parties ” has the meaning set forth in the preamble.

PHH ” has the meaning set forth in the preamble.

PHH Affiliates ” has the meaning set forth in Section 13.1(a).

PHH Data Point ” has the meaning set forth in Section 3.15(a).

 

7


PHH Entities ” means, collectively, PHH, PMC and the PHH Member.

PHH Indemnitees ” has the meaning set forth in Section 13.3(b).

PHH Indemnitor ” has the meaning set forth in Section 13.3(a).

PHH Member ” has the meaning set forth in the Preamble.

PIMI Origination Channel ” means the system of exclusive and dedicated toll-free telephone lines, Websites, World Wide Web pages, electronic mail addresses, or other means of remote electronic communication established from time to time to meet the Mortgage Loan needs of the Customers and Franchisee Customers.

Pipeline Loans ” has the meaning set forth in Section 12.2(c).

PLS ” has the meaning set forth in Section 6.3.

PMC ” has the meaning set forth in the preamble.

PMC Mortgage Loan Types ” means the various types of Mortgage Loans now or hereafter offered by PMC and its Affiliates.

PMC Pricing ” has the meaning set forth in Section 8.1.

PMC Underwriting Guidelines ” has the meaning set forth in Section 8.4.

Point of Sale Origination Channel ” means the system, including related software, hardware and other facilities (including Telephone Lines, Websites, World Wide Web pages, electronic mail addresses, or other means of communication) established from time to time to meet the Mortgage Loan needs of Customers through Company Loan Officers located in or near Cendant Owned Real Estate Offices and other field locations. The “Point of Sale Origination Channel” shall include the origination channel referred to as the “My Choice” origination channel whereby loan officers can take Mortgage Loan applications and submit them through the PIMI Origination Channel, or through processing systems used in the PIMI Origination Channel.

Pre-Approval Decision ” means the process by which (i) the Company or PMC, as the case may be, requests certain information from a Customer or Franchisee Customer, as the case may be, and, with such customer’s permission, obtains a credit report on such customer; (ii) the Company or PMC, as the case may be, analyzes the information provided by the Customer or Franchisee Customer, as the case may be, and the credit report and (iii) then advises the Customer or Franchisee Customer, as the case may be, whether or not it is likely that he or she will be approved for a Mortgage Loan and, if so, the maximum amount of such Mortgage Loan.

Premier Agent Program ” means a program sponsored by PMC whereby certain real estate agents whose real estate sales performances (based on buyer controlled sales, gross commission income and/or sales volume) reach a target level are invited (at their option) to participate in a program in which PMC provides certain resources, including telephone services (800 numbers and priority handling), personalized marketing materials and post-closing customer gifts.

 

8


Pricing Occurrence ” has the meaning set forth in Section 3.15(a).

Pricing Ratio ” has the meaning set forth in Section 3.15(b).

Privacy Requirements ” has the meaning set forth in Section 7.2(b).

Private Label Business Channel ” means PHH’s and its Affiliates’ lending partners, the financial institutions, the depository institution Subsidiaries of the foregoing and the investment securities brokers/dealers utilizing a private label telemarketing program for first lien mortgage loans.

Programs ” has the meaning set forth in Section 3.15(c)(i).

Purchase Price ” has the meaning set forth in Section 9.1(a).

Qualifying Target ” has the meaning set forth in Section 9.1(a).

Qualifying Target EBITDA Multiple ” has the meaning set forth in Section 9.1(a)(i).

Qualifying Target Mortgage Business ” has the meaning set forth in Section 9.1(a).

Rates ” has the meaning set forth in Section 3.15(a).

Referral Agent ” has the meaning set forth in Section 3.16(a)

Referral Survey ” has the meaning set forth in Section 3.16(a).

Rules ” has the meaning set forth in Section 13.11(b).

Settlement Services ” means the provision of title, closing, escrow or search-related services for residential real estate transactions and all other mortgage-related transactions (including, without limitation, first mortgage loans, second mortgage loans, home equity lines of credit, other home equity loans and refinance transactions), including the issuance of title insurance policy (including title search procedures), property tax tracking service and closing escrow service; provided , however , that Settlement Services shall not include, by way of example, credit review services, appraisal review services or flood zone determinations for properties.

Small Corp Notification ” has the meaning set forth in Section 9.1(a).

Small Corps ” means, collectively, the companies listed in Exhibit C .

SRA Termination Event ” has the meaning set forth in Section 12.2(a).

 

9


STARS ” means Speedy Title and Appraisal Review Services LLC, a Delaware limited liability company.

Survey Failure ” has the meaning set forth in Section 3.16(b).

Surveys ” has the meaning set forth in Section 3.16(a).

Telephone Lines ” has the meaning set forth in Section 3.3(a)(i)(A).

Termination Assistance Period ” has the meaning set forth in Section 11.1(a).

Termination Assistance Services ” has the meaning set forth in Section 11.1(a).

URL ” means the address of a computer or a document on the Internet that consists of a communications protocol followed by a colon and two slashes (as http://), the identifier of a location of computer, or a path through a directory to a file.

Venture Underwriting Guidelines ” has the meaning set forth in Section 3.5.

Website ” means a group of World Wide Web pages containing Hyperlinks to each other.

World Wide Web ” means the part of the Internet designed to allow easier navigation through the use of graphical user interfaces and Hyperlinks between different URLs.

Section 1.2 Interpretation . Each definition in this Agreement includes the singular and the plural, and reference to the neuter gender includes the masculine and feminine where appropriate. References to any statute or Treasury Regulations means such statute or regulations as amended at the time and include any successor legislation or regulations. The word “including” or any variations thereof means “including, without limitation” and shall not be construed to limit any general statement that it follow to the specific or similar items or matters immediately following it. The headings to the Articles and Sections are for convenience of reference and shall not affect the meaning or interpretation of this Agreement. Except as otherwise stated, reference to Articles, Exhibits, Sections and Schedules mean the Articles, Exhibits, Sections and Schedules of this Agreement. The Exhibits and Schedules are hereby incorporated by reference into and shall be deemed a part of this Agreement.

 

10


ARTICLE II

EXCLUSIVITY; MARKETING

Section 2.1 Exclusivity; Marketing .

(a) The Cendant Entities hereby agree that, except as set forth below or elsewhere in this Agreement, the Cendant Real Estate Services Division shall exclusively recommend the Company as provider of Mortgage Loans to (a) the independent sales associates affiliated with a Cendant Entity or any Subsidiary thereof (provided that, for the avoidance of doubt, this clause (a) shall not include any independent sale associate of a Brand Franchisee acting in such capacity), (b) all Cendant Customers, and (c) all Cendant Employees. The Cendant Entities further agree that the Cendant Real Estate Services Division shall actively and exclusively promote the Company and its Mortgage Loan origination services to Cendant Customers and Cendant Employees; provided , however that:

(i) the Cendant Real Estate Services Division shall not be required, in any manner whatsoever, to condition doing business with a customer on such customer obtaining a Mortgage Loan from, having to contact, or having to agree to be contacted by, the Company; and

(ii) the Company and PMC acknowledge that neither Cendant nor any of its Affiliates have the right to co-brand with a Person that is not a Cendant Affiliate the “Sotheby’s International Realty” name and mark and that all marketing materials directed to the customers of the Sotheby’s brand will be branded as “PHH Home Loans.”

(b) For the avoidance of doubt, for purposes of this Section 2.1, the “Cendant Real Estate Services Division” shall not include Cendant’s and its Affiliates’ hospitality services business, including the business of selling vacation ownership and fractional ownership interests, or any successor business thereto.

Section 2.2 Termination of Exclusivity . Notwithstanding anything to the contrary contained in this Agreement:

(a) The Cendant Entities shall have the right to terminate the exclusivity provisions of Section 2.1, following notice and an opportunity to cure within the applicable Cure Period set forth below, (i) if the Company is prohibited by law, regulation, rule, order or other legal or regulatory restriction, or for any other reason, from performing its origination function in any jurisdiction (the “ Nonperformance Jurisdiction ”), but in such case exclusivity shall only be terminated with respect to the Nonperformance Jurisdiction; (ii) in the event there is a material violation or breach by PHH or any of its respective Affiliates (including the PHH Member acting in any capacity whatsoever, including as Managing Member) of any representation, warranty, covenant or other agreement contained in this Agreement or any other Transaction Document; or (iii) upon the occurrence of a “PHH Regulatory Event” or a “Company Regulatory Event,” as each are defined in the Operating Agreement. The “ Cure Period ” shall be (x) in the case of (ii) and (iii) above, thirty (30) calendar days after notice of such event has been provided by any of the Cendant Entities to the PHH Entities; provided ,

 

11


however , that PHH shall have an additional thirty (30) day cure period (other than in respect of breaches resulting from payment defaults) if it is diligently pursuing a cure and the Cendant Member, in its reasonable judgment, believes that the event will be cured within such extension period, and (y) in the case of (i) above, ninety (90) calendar days after notice of such event has been provided by any of the Cendant Entities to the PHH Entities; provided , however , that PHH shall have an additional thirty (30) day cure period if it is diligently pursuing a cure and the Cendant Member, in its reasonable judgment, believes that the event will be cured within such extension.

(b) The exclusivity provisions of Section 2.1 shall not be applicable to any Cendant Owned Real Estate Office or Cendant Mobility Office acquired by Cendant Real Estate, Cendant Mobility or any of their respective Subsidiaries after the date hereof, which at the time of such acquisition is subject to an agreement, arrangement or understanding with respect to the origination of Mortgage Loans for customers of such office that would conflict with the provisions of this Agreement; provided , however , that nothing in this Section 2.2(b) shall affect any of the obligations of the Parties pursuant to Article IX hereof.

Section 2.3 Marketing . The Cendant Entities shall, and shall cause their Subsidiaries to, cooperate with and support the Company in the marketing of Mortgage Loans through the Origination Channels to Cendant Customers and Cendant Employees, and arrange for the Company to have reasonable access thereto. Cendant Real Estate shall make information provided by the Company related to the Origination Channels available to its and its Subsidiaries’ employees, sales agents and sales associates and provide other information to its sales agents and sales associates with respect to such Origination Channels as Cendant Real Estate may deem appropriate in its sole discretion. Cendant Real Estate shall use its commercially reasonable best efforts to ensure that each Cendant Owned Real Estate Office and Cendant Mobility Office, and their respective office managers, agents and sales associates, to the fullest extent practicable, market the goods and services which are the subject of the Origination Channels, it being understood that such “commercially reasonable best efforts” shall not include taking actions against any sales associates which Cendant Real Estate reasonably believes will have any negative impact on its business.

Section 2.4 Variable Compensation . Without reimbursement by any PHH Entity or the Company, Cendant Real Estate may pay, or cause to be paid, to each NRT and/or Cendant Mobility office manager that is an employee of Cendant Real Estate or a Subsidiary thereof a variable component of annual compensation, which component may be based on either (i) the volume of Mortgage Loans originated by such manager’s Cendant Owned Real Estate Office or Cendant Mobility Office, as the case may be, (ii) penetration rate of Mortgage Loans, or (iii) any other measure; provided , however , that Cendant shall have sole control over determining the form of such program and the right to modify or terminate any such program at any time, so long as such program is replaced with another program, policy or arrangement that, in Cendant’s sole and exclusive discretion, is intended to incentivize NRT and/or Cendant Mobility office managers.

 

12


ARTICLE III

LOAN ORIGINATION

The Company shall, and the PHH Member shall cause the Company to, operate in accordance with the provisions of this Article III.

Section 3.1 Marketing . The Company shall market the PIMI Origination Channel, Point of Sale Origination Channel and any other origination channels that may be developed by the Company (“ Other Origination Channels ”), at its expense, to Cendant Customers and Cendant Employees, and shall secure, at its expense, such forms of insurance coverage and other protection from liability as is customary in the industry for similar originators of Mortgage Loans, including but not limited to insurance coverage and protections from liability for the acts or failures of its employees, officers, agents and other representatives.

Section 3.2 Mortgage Loan Types .

(a) The Company shall offer to the Customers a variety of Mortgage Loan Types in order to permit Customers to select a Mortgage Loan Type best suited to their financial needs. The Company shall be responsible for developing the various Mortgage Loan Types and establishing the Mortgage Loan Pricing associated therewith (the “ Company Pricing ”); provided , however , that the Company shall offer to the Customers the full range of Mortgage Loan Types that are currently offered or may in the future be offered by PHH or any of its Affiliates to their customers.

(b) From time to time, the Cendant Entities may request that a Mortgage Loan Type not offered by the Company be made available to Customers pursuant to this Agreement and the Company shall, and the PHH Member shall cause the Company to, make such Mortgage Loan Type available to Customers. Upon such request, the Parties shall mutually agree upon the cost allocation of the set-up and processing functions to be implemented by the Company and the PHH Entities to accommodate the Cendant Entities’ request. The Parties acknowledge that the typical start-up time necessary for any such product is 6 to 8 weeks from the time the Parties mutually agree to make such product available.

Section 3.3 Company Origination Channels .

(a)  PIMI Origination Channel . The Company’s PIMI Origination Channel shall be operated in accordance with the provisions of this Section 3.3(a).

(i) Telephone Lines .

(A) The Company shall provide to the Cendant Owned Real Estate Offices, Cendant Mobility Offices and participants in the Cendant Real Estate Services Division’s Premier Agent Program, dedicated and exclusive toll-free telephone lines established and operated at the expense of and by the Company (“ Telephone Lines ”), which the Company reasonably believes are adequate to meet the reasonably anticipated needs of the current and prospective Customers.

 

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(B) Trained Company personnel shall answer Telephone Lines in the name of (i) the appropriate Cendant Owned Real Estate Offices Tradename, if such Telephone Line has been assigned to a Cendant Owned Real Estate Office; provided , however , that the Telephone Lines dedicated to a Cendant Owned Real Estate Office operating under a Cendant Restricted Brand shall be answered in the name of “PHH Home Loans,” (ii) “PHH Home Loans,” if such Telephone Line has been assigned to a Cendant Mobility Office, (iii) the appropriate Small Corps entity, if such Telephone Line has been assigned to the Point of Sale Origination Channel, or (iv) the appropriate Cendant Owned Real Estate Offices Tradename, if such Telephone Line has been assigned to the Premier Agent Program, as the case may be. Such personnel shall explain to the Customer, as appropriate: (a) the procedure to be followed in obtaining a Mortgage Loan; (b) the various Mortgage Loan Types available and their associated Mortgage Loan Pricing; and (c) their short- and long-term financial implications. Such personnel shall provide counsel and advice to the Customer as to the Mortgage Loan Types that might best serve the Customer’s needs, including answering any questions the Customer might have regarding the process.

(C) The Company shall provide each Customer who utilizes the Telephone Lines with a same day Pre-Approval Decision and Guarantee. A “same day” Pre-Approval Decision and Guarantee means that the Company will provide the Customer with a Pre-Approval Decision during the same day the Customer provided the Company with the information requested from the Customer for purposes of making a Pre-Approval Decision for that Customer or, if the Company does not provide the Customer with such a Pre-Approval Decision, the Company will promptly pay the Customer the Guarantee Amount (a “ Customer Payment ”). The Cendant Entities and their respective Subsidiaries shall have the right to publicize and advertise to their customers the availability of such Pre-Approval Decisions and Guarantees in accordance with all Mortgage Lending Laws. For purposes of this Agreement, the “ Guarantee Amount ” shall mean an amount equal to the higher of (a) $250 and (b) such other amount as may be offered by PMC or any Affiliate thereof to customers under a similar program (exclusive of client subsidized programs).

(D) The Company will provide to Customers for whom it has made a Pre-Approval Decision and which Customer is likely to be approved for a Mortgage Loan information tailored to the Customer’s individual circumstances. Such information will be designed to enable the Customer to determine the nature of the Mortgage Loan the Customer may qualify for if an appropriate property securing the Mortgage Loan is identified and all information submitted is verified.

 

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(ii) Internet .

(A) The Company will take applications for Mortgage Loans via the Internet. In order to accomplish this, the Company will provide each operator of a Cendant Website with Hyperlinks to such Content as the Company reasonably believes is adequate to meet the reasonably anticipated needs of the current and prospective Customers (the “ Mortgage Content ”). The Cendant Entities shall, and shall cause their respective Subsidiaries to, embed such Hyperlinks prominently in a consumer oriented and contextually relevant position on each Cendant Website. The Parties will cooperate in structuring and embedding such Hyperlinks so that, by clicking on the Hyperlink at the Cendant Websites, the Customer will be immediately transferred to the Mortgage Content via the Internet. Except in the case of Cendant Restricted Brands, such Mortgage Content will be presented by the Company in such a way that it will appear as if it were on a World Wide Web page or series of World Wide Web Pages on the Cendant Website from which the Hyperlink originated to the extent it is consistent with Applicable Requirements to do so. The form and substance of such World Wide Web pages will be subject to the prior written consent of the Cendant Entities. In order to improve the graphical compatibility of the Cendant Websites and the Company’s sites, the Company and the Cendant Entities will consult with each other when developing or modifying such World Wide Web pages, and also when considering the design of future releases of their respective Websites. The Company shall not permit the Mortgage Content accessed by Customers via Hyperlinks from the Cendant Websites contemplated by this Agreement to display any advertising, except in such instances where the Cendant Entities have provided their prior written consent to such advertising.

(B) The Mortgage Content will include information about the Mortgage Loans and Mortgage Loan Types, Mortgage Loan calculators, counseling regarding down payments and Mortgage Loan affordability, pre-qualification tools to be used by consumers and Mortgage Loan application modules. The Company will ensure that a Customer shall be able to complete and submit a Mortgage Loan application by means of the Mortgage Content without any other contact with the Company.

(C) Customers utilizing the Mortgage Content to initiate the Mortgage Loan process will be offered the option of communicating with a processing team or other persons contemplated in Section 3.9 of this Agreement, either by electronic mail or by telephone, or by a combination of electronic mail and telephone.

 

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(D) Each Customer initiating the origination process via the Internet shall receive a Pre-Approval Decision within 24 hours of the time such Customer either (i) submits a complete Mortgage Loan application via the Mortgage Content, or (ii) first speaks with a Company loan consultant by telephone after submitting certain information not constituting a complete Mortgage Loan application through the Mortgage Content, or the Company shall promptly pay the Customer the Guarantee Amount (the “ Internet Customer Payment ”).

(b)  Point of Sale Origination Channel .

(i) Cendant Real Estate shall have the right to request at any time that the Company designate a specific number of loan officers (“ Company Loan Officers ”) to be located in and around any Cendant Owned Real Estate Office and other field locations identified by Cendant Real Estate, provided that the number of Company Loan Officers requested shall be commercially reasonable. The Company shall use reasonable best efforts to satisfy any such request within 90 days after it is first delivered in writing to the Company.

(ii) Company Loan Officers will be Company employees and will take loan applications from Customers in a face-to-face setting, unless Cendant Real Estate and the Company agree otherwise. Company Loan Officers will promptly transmit applications taken in a face-to-face setting to the Company via the Point of Sale Origination Channel, unless Cendant Real Estate and the Company agree otherwise. The Company shall provide dedicated Telephone Lines for Company Loan Officers that use the “My Choice” origination channel described in the definition of “Point of Sale Origination Channel.”

(iii) The Company shall pay Cendant Real Estate a fee for the lease or sublease of the office space occupied by any Company Loan Officer in any Cendant Owned Real Estate Office, in each case as set forth in the Master Sublease Agreement, as defined in the Operating Agreement.

Section 3.4 Mortgage Loan Application Processing . For each Customer who applies for a Mortgage Loan through the origination channels described in Section 3.3, the Company shall arrange for the receipt by the Customer, as promptly as practicable under the circumstances, and in any event in accordance with applicable law, of (i) the Mortgage Loan application for the Customer to review and sign, accompanied by a request for appropriate Customer documents and (ii) all Mortgage Loan Disclosures. In addition, and to the extent required or permitted under the Venture Underwriting Guidelines, as applicable, the Company shall: (i) verify the Customer’s credit history;

 

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(ii) obtain an appraisal or other appropriate valuation of the real property that will secure the Customer’s Mortgage Loan; (iii) cause to be conducted a review of or report on the status of the legal title to the real property prepared by either (A) CSSG, if the Company is permitted to make the service provider decision under Applicable Requirements, or (B) a qualified title company or other entity acceptable to the PHH Member and the Cendant Member, if the Company does not make the service provider decision; (iv) evaluate the Customer’s employment history; (v) evaluate any information provided with respect to the Customer by a Cendant Entity or any of their respective Subsidiaries, (vi) perform such other underwriting functions as the Company deems appropriate, all in accordance with the Venture Underwriting Guidelines; and (vii) communicate a loan decision or counteroffer to the Customer in accordance with all applicable laws.

Section 3.5 Underwriting Guidelines . The Company shall develop appropriate underwriting guidelines for each Mortgage Loan Type (the “ Venture Underwriting Guidelines ”), which Venture Underwriting Guidelines shall be consistent with the underwriting guidelines followed by PHH and its Affiliates in connection with Mortgage Loans offered to their own customers for the same products in the same geographic area and at the same time. Unless the Venture Underwriting Guidelines specify otherwise for specific Mortgage Loan Types, all Mortgage Loans shall be underwritten in accordance with the standards of the Federal Home Loan Mortgage Corporation (“ FHLMC ”), the Federal National Mortgage Association (“ FNMA ”) and other applicable federal agencies providing standards for the sale of loans in the secondary market for mortgage loans. The Company shall issue approval letters on those applications which generally satisfy the Venture Underwriting Guidelines.

Section 3.6 Degree of Care . The Company shall perform the origination, processing, underwriting, approval, closing, shipping, and other origination services on all Mortgage Loans in all material respects in accordance with all Mortgage Lending Laws and with no less degree of care than PMC or any of its Affiliates exercises in originating Mortgage Loans for its own account or the account of any third party with a similar regulatory profile, provided , that in no event shall the Company exercise a lesser degree of care than PMC exercised in originating Mortgage Loans prior to the Closing Date.

Section 3.7 Mortgage Loan Closing . The Company shall use its best efforts to complete the processing and closing of all Mortgage Loans originated pursuant to this Agreement in the time frame requested by the Customer at the time of submission of the Mortgage Loan application. The Company shall: (i) prepare all required Mortgage Loan closing documents in accordance with all applicable Mortgage Lending Laws; (ii) arrange for their execution by the Customer; (iii) provide the Customer with a copy of the Company’s privacy policy in accordance with the Privacy Requirements; and (iv) arrange for the Mortgage Loan closing. All Mortgage Loans shall be closed in the name of the Company or the name under which the Company is doing business in the appropriate jurisdiction. On purchase money Mortgage Loans, the Company shall meet the closing date set by the Customer or the Company shall reduce the interest rate payable on that Customer’s Mortgage Loan by one-eighth percent (1/8%) for the life of loan. For refinance loans, the Company shall use its best efforts (taking

 

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into consideration factors such as periods of high volume loan refinance activity (as substantiated by the Refinance Application Index as promulgated by the Mortgage Bankers Association)) to perform its obligations hereunder to complete the processing and closing within sixty (60) days from the date of application.

Section 3.8 Company Personnel .

(a) The Company will provide, supervise and make available such personnel as are reasonably necessary to carry out the Company’s obligations under this Agreement. Such personnel, including rate lock personnel, shall be available between the hours of 8:30 a.m. and 10:00 p.m. Eastern time, or such additional hours as may be required by operating conditions and requested by the Cendant Entities, on Business Days. Such personnel, excluding rate lock personnel, shall also be available, as needed, to process Mortgage Loans and contact Customers, between the hours of 10 a.m. and 7 p.m., Eastern time, or such additional hours as may be required by operating conditions and requested by the Cendant Entities, on Saturdays and Sundays, except in those instances where a Saturday falls on or near a national holiday and the Company provides reasonable advance notice to Cendant Real Estate in writing that its facilities will be closed on any such day.

(b) The Company shall at all times permit employees of Cendant Real Estate and its Subsidiaries access to the Company’s offices (including offices where it conducts Mortgage Loan origination services) during the Company’s working hours to observe the origination, processing and closing of the Mortgage Loans. The Company shall, at its expense, make available all customary, reasonable office space, facilities, and equipment for such employees. The salaries, travel, subsistence and other related expenses for such employees shall be borne by Cendant Real Estate.

Section 3.9 Processors . The Company shall cause each Customer who makes an application for a Mortgage Loan to be processed through any of the origination channels described in Section 3.3 to be served by a processing team or other persons employed by the Company and determined by the Company to be most efficient under the circumstances. The Company shall cause each such processing team or other persons to serve the Customer throughout the entire process of Mortgage Loan application, processing, underwriting and closing, and to use best efforts to meet the Customer’s closing date.

Section 3.10 Access . At any time, upon the Cendant Member’s request, the Company shall afford to the officers, employees, accountants, counsel and other representatives of any of the Cendant Entities, as well as any regulatory officials with regulatory authority over any of the Cendant Entities or their respective Affiliates, access to all its properties, books, contracts, commitments, records, officers, employees, accountants, counsel and other representatives. Furthermore, each of the Company, the PHH Member and PMC, at their sole cost and expense, shall make available, or cause to be made available, to the Cendant Member all information concerning the Company’s business, properties and personnel as the Cendant Member may reasonably request.

 

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Section 3.11 Maintenance of Licenses . The Company shall, at its own cost and expense, obtain and maintain any and all licenses and registrations, and cause each of its employees to obtain any and all licenses and registrations, that are necessary or desirable in the performance of the Mortgage Loan origination services to be provided by the Company pursuant to the terms of this Agreement.

Section 3.12 Record Keeping .

(a) The Company shall maintain at all times a system that tracks accurately and verifiably the number and dollar volume of Mortgage Loans originated by the Company and the Company’s revenue and expense items including income and net profits.

(b) The Parties shall develop and maintain commercially reasonable, appropriate and cost-effective voice, data, facsimile and e-mail processes and systems to support communication between them. Each Party shall pay the costs it incurs in developing such communications.

Section 3.13 Legal and Regulatory Compliance .

(a) Actions taken or not taken by the Company, and all communications made by the Company, in each case when performing its obligations under this Agreement shall comply in all material respects with the requirements of all applicable Mortgage Lending Laws.

(b) Actions taken or not taken by any of the Cendant Entities, and all communications made by any of them, in each case when performing its obligations under this Agreement, shall comply in all material respects with the requirements of applicable Mortgage Lending Laws.

(c) The Company shall keep in full effect its existence, rights and franchises in the state of its incorporation except as permitted herein or in the Operating Agreement, and will obtain and preserve its qualifications to do business as a foreign entity in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement or any of the Mortgage Loans and/or to perform its duties under this Agreement.

(d) The Company shall not engage in activities in performing origination services hereunder that generally would be reasonably likely to be determined by the relevant regulatory agency to be prohibited as “predatory.”

(e) Each of the Company and PMC shall promptly inform the Cendant Member in writing of any notices, inquiries or other communications, written or oral, received by the Company, or by PMC or the PHH Member, respectively, with respect to any material legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations or findings with respect to Mortgage Loans originated, closed and funded by the Company or any action or omission of the Company in connection therewith.

 

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(f) Any fine, penalty, levy or restitution ordered by any such federal or state body that would give rise to indemnity by a PHH Entity pursuant to Section 13.3 of this Agreement shall be paid by PHH or, if a Cendant Entity or any Affiliate thereof shall have paid any such amount, PHH shall immediately reimburse the Cendant Member for such amount.

Section 3.14 Customer Fees and Charges .

(a) At the closing of any Mortgage Loan and at such other times as may be customary, the closing agent may collect from the Customer and forward to the Company the Customer Fees and Charges for such Mortgage Loan.

(b) The amount, payor and payee of any Customer Fees and Charges shall be described in the Mortgage Loan Disclosures in accordance with the Mortgage Lending Laws. The Company shall retain and distribute the Customer Fees and Charges to third parties, including settlement service providers, in accordance with applicable law, this Agreement and the arrangements governing such relationships. The Company covenants and agrees that the payment of Customer Fees and Charges to third parties shall be made in a timely manner and in accordance with payment terms governing such relationships.

Section 3.15 Pricing Standards .

(a) On Friday of each week, PMC shall cause its pricing department to conduct a survey of interest rates, inclusive of points and fees (“ Rates ”), in the relevant marketplaces for Wednesday of that week, offered by the Competitors for each of the Programs. Each Rate applicable for each Program of each Competitor shall be charted as a “ Competitor Data Point .” Also on Friday of each week, PMC shall chart the Rates offered to customers of the Private Label Business Channel for substantially similar Programs on Wednesday of that week (each, a “ PHH Data Point ”) against the corresponding Competitor Data Points. Each instance in which the PHH Data Point reflects a higher Rate than the corresponding Competitor Data Point shall be deemed to be a “ Pricing Occurrence .” There will initially be eighty (80) Competitor Data Points and sixteen (16) PHH Data Points for each bi-monthly period (assuming eight-week bi-monthly periods). At the end of each bi-monthly period, PMC shall review the number of Pricing Occurrences for the previous period and shall deliver to the Cendant Member a written report detailing the Competitor Data Points, PHH Data Points and Pricing Occurrences for such bi-monthly period together with all other relevant market and other data for such bi-monthly period so as to enable the Cendant Member to review the competitiveness of the Company’s pricing over such bi-monthly period.

(b) In the event the ratio (expressed as a percentage) obtained by dividing the total number of Pricing Occurrences by the total number of Competitor Data Points (the “ Pricing Ratio ”) is *CONFIDENTIAL.

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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(c) For purposes of this Agreement:

(i) “ Programs ” shall mean collectively, the programs listed in Schedule 3.15(c)(i) hereto; provided , however , that such list may be modified by the Cendant Entities from time to time in their sole discretion by giving written notice to PMC; provided further , however , that such list may not be so modified by the Cendant Entities more than twice in any twelve-month period; and

(ii) “ Competitors ” shall mean, collectively, the five (5) Persons listed in Schedule 3.15(c)(ii) hereto; provided , however , that such list may be modified by the Cendant Entities from time to time in their sole discretion by giving written notice to PMC; provided further , however , that such list may not be so modified by the Cendant Entities more than twice in any twelve-month period.

Section 3.16 Service Standards .

(a) With respect to all closed Mortgage Loans, the Company shall conduct a survey of the related Customer contemporaneously with the closing (the “ Customer Survey ”) and a survey of the Cendant Employee or independent sales associates affiliated with the Cendant Entity (the “ Referral Agent ”) that referred such Customer (the “ Referral Survey ” and, together with the Customer Survey, the “ Surveys ”) for the purpose of assessing overall satisfaction levels relating to the Company’s performance as loan originator. The Company shall administer such Surveys and shall provide the results of the Surveys to the Cendant Member on a monthly basis. Schedule 3.16(a) hereto sets forth an example of the content of such Surveys; provided , however , that the Cendant Entities shall have the right to amend such Surveys from time to time in their sole discretion; provided further , however , that (i) the Referral Survey shall always contain the question “would you recommend a PHH Home Loan Mortgage Loan to another client?” (the “ Key Referral Question ”), and (iii) the Customer Survey shall always contain the question “Would you recommend [us] to a friend/another person?” (the “ Key Customer Question ”). The Cendant Entities shall (A) have the right to review and audit all Survey responses at any time, and (B) have the right, but not the obligation, to disseminate such Surveys once annually at its option.

(b) The Company shall maintain a *CONFIDENTIAL or greater rate of customer satisfaction on Customer Surveys received during each calendar month as measured by the percentage of positive responses to the Key Customer Question and a *CONFIDENTIAL or greater rate of satisfaction on Referral Surveys received during each calendar month as measured by the percentage of positive responses to the Key Referral Question (the failure of either or both Survey(s) to obtain such satisfaction level in a given month, a “ Survey Failure ”). The Parties hereby agree that failure to maintain either satisfaction level shall result in damage amounts to be payable by the Company upon demand in immediately available funds, in the manner set forth in Schedule 3.16(b) hereto.

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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(c) Notwithstanding paragraph (b) above, during any calendar month during which PHH and its Subsidiaries experience a volume of loan refinance activity which exceeds an average level of *CONFIDENTIAL for such month on the Refinance Application Index promulgated by the Mortgage Bankers Association, the satisfaction levels required for all purposes under paragraph (b) with respect to Surveys conducted for such month shall be *CONFIDENTIAL for the Customers Surveys and *CONFIDENTIAL for the Referral Surveys.

(d) A “PHH Material Breach,” as defined in Section 8.1(c) of the Operating Agreement, shall be deemed to have occurred (it being understood and agreed that such breach is not curable) if the Company shall fail to maintain a satisfaction rate of at least *CONFIDENTIAL for either of the Customer Surveys or the Referral Surveys for nine (9) consecutive months; provided , that if during any such month, refinance activity meets the level described in paragraph (c) above, the Company shall only be required to achieve an *CONFIDENTIAL satisfaction rate for the Referral Surveys and the Customer Surveys for such month.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations . Each of the Cendant Entities hereby represents and warrants to the PHH Entities, and each of the PHH Entities and the Company hereby represents and warrants to the Cendant Entities, as of the date hereof and throughout the term of this Agreement, that:

(a) Such Party is a corporation, limited liability company, partnership or business trust duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. Such Party has full right, power and authority to execute and deliver this Agreement and to perform each of its obligations hereunder.

(b) All necessary action, corporate or otherwise, on the part of such Party necessary to authorize the execution and delivery by such Party of this Agreement and the performance by such Party of its obligations hereunder has been taken, and no further action on the part of such Party is necessary for such authorization. This Agreement has been duly authorized, executed and delivered by such Party and (assuming due authorization, execution and delivery by the other Parties), constitutes a legal, valid and binding obligation of such Party enforceable against such Party in accordance with its terms.

(c) No consent, approval or authorization of, or filing or registration with, any governmental or regulatory authority or any other Person (other than such as have been obtained or made by such Party) is required to be made or obtained by such Party in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement.

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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(d) Neither the execution and delivery of this Agreement by such Party nor the consummation by such Party of the transactions contemplated hereby, nor compliance by such Party with any of the terms or provisions hereof, will (i) conflict with or result in a breach of any provision of the certificate of incorporation, by-laws or similar governing documents of such Party or (ii) assuming the consents, permits, authorizations, approvals, filings and registrations previously disclosed in writing by such Party to the other Parties are obtained or made (x) violate any statute, code, ordinance, rule, regulation, judgment, order, write, decree or injunction applicable to such Party or any of its properties or assets or (y) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any encumbrance upon any of the properties or assets of such Party under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which such Party is a party, or by which its properties or assets may be bound or affected, except, in the case of clause (ii), for such violations, conflicts, breaches or defaults which, either individually or in the aggregate, would not prevent or materially hinder or delay such Party’s ability to consummate the transactions contemplated hereby or perform its obligations hereunder.

ARTICLE V

CENDANT REAL ESTATE COVENANTS

Section 5.1 Cendant Real Estate Trade Shows, Conferences and Conventions .

(a) Cendant Real Estate shall use reasonable efforts to reserve for the Company and PMC (and not any other Mortgage Loan originator), at each real estate business trade show and Cendant Mobility Conference which Cendant Real Estate or any of its Affiliates organizes: (1) no less than two standard sized booths at a mutually agreeable location prominent to visitors to such trade shows and international business conferences, subject to the same terms and conditions (including registration and other fees) applicable to other participants; and (2) a meaningful opportunity for a Company representative to speak at break-out sessions (if any) during such conferences for such amount of time as shall be mutually agreed upon by Cendant Real Estate and PMC.

(b) Cendant Real Estate shall provide to the Company, and not any other Mortgage Loan originator, the opportunity (at no charge to the Company) for a senior member of the Company’s (or PMC’s) management to speak at the annual real estate brokerage convention/conference and annual Cendant Mobility conference sponsored by Cendant Real Estate or its Affiliates, subject to Cendant Real Estate’s approval of individual and script. The Company and PMC shall abide by all reasonable rules established by Cendant Real Estate for each such convention or conference, including payment of any non-speaking fees charged to other participants and attendees.

 

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(c) Cendant Real Estate shall provide to the Company (subject to the payment of any fees charged to other event sponsors) a “premier” (or the highest level that may exist) sponsorship at all national conventions and regional or local conferences under the control of Cendant Real Estate that relate to the real estate brokerage business or the corporate relocation business.

(d) At the Cendant Member’s request, the Company shall direct Company representatives (in such number and of such seniority as the Cendant Member may reasonably request) to attend, at the Company’s expense, such real estate business or corporate relocation business conventions, trade shows, conferences, meetings and seminars as Cendant may designate from time to time.

Section 5.2 Offline Promotion to Consumers .

Cendant Real Estate shall provide the opportunity to advertise the mortgage products and services offered by the Company in all Cendant Owned Real Estate Offices Tradename publications at Cendant Real Estate’s most favorable pricing, but never below the actual cost incurred by Cendant Real Estate and its Affiliates in connection therewith. Cendant Real Estate will have sole discretion to control positioning and content of advertising of the Company in its publications, provided however , the Company shall not be treated less favorably than other advertisers paying similar prices for advertisement in such publications.

ARTICLE VI

REAL ESTATE BROKERAGE AND SETTLEMENT SERVICES

Section 6.1 Exclusive Recommended Real Estate Broker .

PHH shall, and shall cause its Subsidiaries to, adopt such internal policies and procedures as shall be reasonably necessary so that Cendant Real Estate shall be the exclusive recommended real estate firm for employees of PHH or any of its Subsidiaries and for all customers of PHH or any of its Subsidiaries other than any such customers who are subject to any other venture agreement with a third party.

Section 6.2 Commercial Real Estate .

PHH shall, and shall cause its Subsidiaries to, use Cendant Real Estate on all commercial real estate transactions where a Cendant commercial real estate agent is available, except for transactions in progress as of the date of this Agreement.

Section 6.3 Settlement Services .

PHH shall, and shall cause its Subsidiaries to (i) recommend CSSG as provider of Settlement Services (including, without limitation, on all transactions where PHH or one of its Subsidiaries has the option to choose the provider of such services, all closings by mail, all *CONFIDENTIAL and all search products such as Property and Judgment Reports), (ii) utilize CSSG on an exclusive basis

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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whenever PHH or one of its Subsidiaries has the option to choose the title or escrow agent and, in the applicable jurisdiction, CSSG either provides such services or receives compensation in connection with such services or both, and (iii) recommend CSSG as provider of Settlement Services to private label solutions (“ PLS ”) partners and the Small Corps; provided , however , that: (a) during the first eighteen (18) months after the date of this Agreement, CSSG shall provide all such services at the pricing levels which existed immediately prior to execution of this Agreement (and, thereafter, agree to most favored nation status for such pricing); and (b) within one hundred eighty (180) days from the date of this Agreement, Cendant Real Estate shall cause CSSG to provide most favored nation status on service level agreements and processes that are consistent with existing CSSG service levels. PHH shall not, and shall cause its Subsidiaries not to, enter into any arrangement that provides for a party other than CSSG to provide the products and services set forth in (i) above to PHH’s customers or its PLS partners’ customers, unless such PLS partner requires an alternative provider as a condition to entering into or renewing such arrangement with PHH or such Subsidiary and then only after CSSG has been afforded the opportunity to present its service offerings to such PLS partner.

Section 6.4 REO Services . PHH shall, and shall cause its asset management vendors ( i.e. , attorneys, REO property managers and/or realtors) to utilize, where Cendant has a Brand Franchisee or an NRT office providing such services, such Brand Franchisee and/or NRT office for any and all real estate owned assets of PHH, provided that such Brand Franchisees and/or NRT shall adhere to performance standards substantially similar to those common in the industry.

ARTICLE VII

CUSTOMER DATA; PRIVACY REQUIREMENTS

Section 7.1 Customer Information . Subject to such rights as any Person may acquire in any Customer Information of any Customer as a result of owning the servicing rights with respect to a Mortgage Loan to such Customer, the Company and PMC acknowledge and agree that, as between the Company, PMC, and the Cendant Entities, the Cendant Entities are the owner of all rights in Customer Information provided by the Cendant Entities to the Company pursuant to the terms of this Agreement or any other Transaction Document. Nothing contained herein shall be construed as granting the Company or PMC or any Affiliate thereof any rights, express or implied to such Customer Information other than those rights necessary to the conduct, promotion or attainment of the business purposes of the Company specified herein or in Section 2.5(a) of the Operating Agreement.

Section 7.2 Compliance with Privacy Requirements .

(a) In connection with the origination of Mortgage Loans, each of the Company and PMC shall comply with the Privacy Requirements, subject to (i) the mandatory compliance date of such Privacy Requirements and (ii) the applicability of such Privacy Requirements to the Company or PMC, as the case may be. The foregoing obligation to comply with the Privacy Requirements may include the following:

(i) the Company shall not disclose any Customer Information to any person or entity, other than to the extent necessary to carry out Mortgage Loan origination services, and for no other purpose. The Company shall ensure that each person or entity to whom or to which the Company intends to disclose Customer Information shall, prior to any such disclosure of information, agree to: (A) keep confidential any such Customer Information and (B) use or disclose such Customer Information only to the extent necessary to carry out Mortgage Loan origination services;

 

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(ii) the Company shall not use Customer Information for any purpose, including the marketing of products or services to, or the solicitation of business from Customers. The Company may use the Customer Information to the extent necessary to carry out the Company’s express obligations under the Transaction Documents;

(iii) The Company shall assess, manage, and control risks relating to the security and confidentiality of Customer Information, shall implement the standards relating to such risks in the manner set forth in the FFIEC Interagency Guidelines Establishing Standards for Safeguarding Customer Information set forth in 12 CFR Parts 30, 208, et al, and shall maintain at all times an Information Security Program;

(iv) without limiting the scope of the above, the Company shall use at least the same physical and other security measures to protect all Customer Information in the Company’s possession or control, as PHH uses for its own confidential and proprietary information.

(b) “ Privacy Requirements ” means (a) Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq. ; (b) the applicable federal regulations implementing such act and codified at 12 CFR Parts 40, 216, 332, and/or 573; (c) Interagency Guidelines Establishing Standards For Safeguarding Borrower Information proposed on June 26, 2000, unless and until such proposed guidelines are superseded by final guidelines (such proposed and/or final guidelines and/or rules, the “ Interagency Guidelines ”); and (d) other applicable federal, state and local laws, rules, regulations, and orders relating to the privacy and security of Customer Information.

 

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ARTICLE VIII

CENDANT FRANCHISEES

PMC shall, and shall cause its Subsidiaries to, abide by the following provisions of this Article VIII in connection with its provision of Mortgage Loan services to Brand Franchisees and their customers in connection with the Program contemplated by the MSA:

Section 8.1 Mortgage Loan Types . PMC shall offer to the Franchisee Customers a variety of PMC Mortgage Loan Types in order to permit Franchisee Customers to select a PMC Mortgage Loan Type best suited to their financial needs. PMC shall be responsible for developing the various PMC Mortgage Loan Types to be available to Franchisee Customers and establishing the Mortgage Loan Pricing associated therewith (the “ PMC Pricing ”); provided , however , that PMC shall offer to the Franchisee Customers the full range of Mortgage Loan Types that are currently offered or may in the future be offered by PHH or any of its Affiliates to their other customers.

Section 8.2 Origination Channels .

(a)  PIMI Origination Channel . PMC’s PIMI Origination Channel shall be operated in accordance with the provisions of this Section 8.2(a) in connection with the origination of Mortgage Loans for Franchisee Customers.

(i) Telephone Lines .

(A) PMC shall provide to the Brand Franchisees dedicated and exclusive toll-free telephone lines established and operated at the expense of and by PMC (“ Franchisee Telephone Lines ”), which PMC reasonably believes are adequate to meet the reasonably anticipated needs of the current and prospective Franchisee Customers.

(B) Trained PMC personnel shall answer Franchisee Telephone Lines in the name of the appropriate Cendant Real Estate Franchisee Brand; provided , however , that the Telephone Lines dedicated to the Brand Franchisees operating under a Cendant Restricted Brand shall be answered in the name of “PHH Mortgage.” Such personnel shall explain to the Franchisee Customer, as appropriate: (a) the procedure to be followed in obtaining a Mortgage Loan; (b) the various Mortgage Loan Types available and their associated Mortgage Loan Pricing; and (c) their short- and long-term financial implications. Such personnel shall provide counsel and advice to the Franchisee Customer as to the Mortgage Loan Types that might best serve the Franchisee Customer’s needs, including answering any questions the Franchisee Customer might have regarding the process.

(C) PMC shall provide each Franchisee Customer who utilizes the Franchisee Telephone Lines with a same day Pre-Approval Decision and Guarantee. A “same day” Pre-Approval Decision and Guarantee means that PMC will provide the Franchisee

 

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Customer with a Pre-Approval Decision during the same day the Franchisee Customer provided PMC with the information requested from the Franchisee Customer for purposes of making a Pre-Approval Decision for that Franchisee Customer or, if PMC does not provide the Franchisee Customer with such Pre-Approval Decision, PMC will promptly pay the Customer the Guarantee Amount. The Brand Franchisees shall have the right to publicize and advertise to their customers the availability of such Pre-Approval Decisions and Guarantees in accordance with all Mortgage Lending Laws.

(D) PMC will provide to Franchisee Customers for whom it has made a Pre-Approval Decision and which Franchisee Customer is likely to be approved for a Mortgage Loan information tailored to the Franchisee Customer’s individual circumstances. Such information will be designed to enable the Franchisee Customer to determine the nature of the Mortgage Loan the Franchisee Customer may qualify for if an appropriate property securing the Mortgage Loan is identified and all information submitted is verified.

(ii) Internet .

(A) PMC will take applications for Mortgage Loans from Franchisee Customers via the Internet. In order to accomplish this, PMC will provide each operator of a Cendant Real Estate Franchisee Brand Website with Hyperlinks to such Content as PMC reasonably believes is adequate to meet the reasonably anticipated needs of the current and prospective Franchisee Customers (the “ Franchisee Mortgage Content ”). By clicking on the Hyperlink at the Cendant Real Estate Franchisee Brand Websites, the Franchisee Customer will be immediately transferred to the Franchisee Mortgage Content via the Internet. Except in the case of Cendant Restricted Brands, such Franchisee Mortgage Content will presented by the Company in such a way that it will appear as if it were on a World Wide Web page or series of World Wide Web Pages on the Cendant Real Estate Franchisee Brand Website from which the Hyperlink originated to the extent it is consistent with Applicable Requirements to do so. The form and substance of such World Wide Web pages will be subject to the prior written consent of the Cendant Entities. In order to improve the graphical compatibility of the Franchisee Websites and PMC’s sites, PMC and the Cendant Entities will consult with each other when developing or modifying such World Wide Web pages, and also when considering the design of future releases of their respective Websites. PMC shall not permit the Franchisee Mortgage Content accessed by Franchisee Customers via Hyperlinks from the Cendant Real Estate Franchisee Brand Websites contemplated by this Agreement to display any advertising, except in such instances where the Cendant Entities have provided their prior written consent to such advertising.

 

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(B) The Franchisee Mortgage Content will include information about the Mortgage Loans and Mortgage Loan Types, Mortgage Loan calculators, counseling regarding down payments and Mortgage Loan affordability, pre-qualification tools to be used by consumers and Mortgage Loan application modules. PMC will ensure that a Franchisee Customer shall be able to complete and submit a Mortgage Loan application by means of the Franchisee Mortgage Content without any other contact with the Company.

(C) Franchisee Customers utilizing the Mortgage Content to initiate the Mortgage Loan process will be offered the option of communicating with a processing team or other persons contemplated in Section 8.8 of this Agreement, either by electronic mail or by telephone, or by a combination of electronic mail and telephone.

(D) Each Franchisee Customer initiating the origination process via the Internet shall receive a Pre-Approval Decision within 24 hours of the time such Franchisee Customer either (i) submits a complete Mortgage Loan application via the Mortgage Content, or (ii) first speaks with a PMC loan consultant by telephone after submitting certain information not constituting a complete Mortgage Loan application through the Mortgage Content, or PMC shall promptly pay the Franchisee Customer the Guarantee Amount.

Section 8.3 Mortgage Loan Application Processing . For each Franchisee Customer who applies for a Mortgage Loan through the origination channels described in Section 8.2, PMC shall arrange for the receipt by the Franchisee Customer, as promptly as practicable under the circumstances, and in any event in accordance with applicable law, of (i) the Mortgage Loan application for the Franchisee Customer to review and sign, accompanied by a request for appropriate Franchisee Customer documents and (ii) all Mortgage Loan Disclosures. In addition, and to the extent required or permitted under PMC Underwriting Guidelines, as applicable, PMC shall communicate a loan decision or counteroffer to the Franchisee Customer in accordance with all applicable laws.

Section 8.4 Underwriting Guidelines . PMC shall develop appropriate underwriting guidelines for each PMC Mortgage Loan Type available to Franchisee Customers (the “ PMC Underwriting Guidelines ”), which PMC Underwriting Guidelines shall be consistent with the underwriting guidelines followed by PHH and its Affiliates in connection with Mortgage Loans offered to their own customers for the same products in the same geographic area and at the same time. Unless the PMC Underwriting Guidelines specify otherwise for specific PMC Mortgage Loan Types, all Mortgage Loans shall be underwritten in accordance with the standards of FHLMC, FNMA and other applicable federal agencies providing standards for the sale of loans in the secondary market for mortgage loans. PMC shall issue approval letters on those applications which generally satisfy the PMC Underwriting Guidelines.

 

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Section 8.5 Degree of Care . PMC and its Affiliates shall perform the origination, processing, underwriting, approval, closing, shipping, and other origination services on all Mortgage Loans in all material respects in accordance with all Mortgage Lending Laws and with no less degree of care than PMC or any of its Affiliates exercises in originating other Mortgage Loans for its own account or the account of any third party with similar regulatory profile, provided that in no event shall PMC exercise a lesser degree of care than it exercised in originating Mortgage Loans prior to the Closing Date.

Section 8.6 Mortgage Loan Closing . PMC shall use its best efforts to complete the processing and closing of all Mortgage Loans originated pursuant to this Article VIII in the time frame requested by the Franchisee Customer at the time of submission of the Mortgage Loan application. PMC shall: (i) prepare all required Mortgage Loan closing documents in accordance with applicable Mortgage Lending Laws; (ii) arrange for their execution by the Franchisee Customer; (iii) provide the Franchisee Customer with a copy of PMC’s privacy policy in accordance with the Privacy Requirements; and (iv) arrange for the Mortgage Loan closing. All Mortgage Loans shall be closed in the name of PMC or an Affiliate thereof. On purchase money Mortgage Loans, PMC shall meet the closing date set by the Franchisee Customer or PMC shall reduce the interest rate payable on that Franchisee Customer’s Mortgage Loan by one-eighth percent (1/8%) for the life of loan. For refinance loans, PMC shall use its best efforts (taking into consideration factors such as periods of high volume loan refinance activity (as substantiated by the Refinance Application Index as promulgated by the Mortgage Bankers Association)) to perform its obligations hereunder to complete the processing and closing within thirty (30) days from the date of application.

Section 8.7 PMC Personnel .

(a) PMC will provide, supervise and make available such personnel as are reasonably necessary to carry out PMC’s obligations under this Article VIII. Such personnel, including rate lock personnel, shall be available between the hours of 8:30 a.m. and 10:00 p.m. Eastern time, or such additional hours as may be required by operating conditions and requested by the Cendant Entities, on Business Days. Such personnel, excluding rate lock personnel, shall also be available, as needed, to process Mortgage Loans and contact Franchisee Customers, between the hours of 10 a.m. and 7 p.m., Eastern time, or such additional hours as may be required by operating conditions and requested by the Cendant Entities, on Saturdays and Sundays, except in those instances where a Saturday falls on or near a national holiday and PMC provides reasonable advance notice to Cendant Real Estate in writing that its facilities will be closed on any such day.

(b) PMC shall at all times permit employees of Cendant Real Estate and its Subsidiaries access to PMC’s offices (including offices where it conducts Mortgage Loan origination services) during PMC’s working hours to observe the origination, processing and closing of the Mortgage Loans to Franchisee Customers. PMC shall, at its expense, make available all customary, reasonable office space, facilities, and equipment for such employees. The salaries, travel, subsistence and other related expenses for such employees shall be borne by Cendant Real Estate.

 

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Section 8.8 Processors . PMC shall cause each Franchisee Customer who makes an application for a Mortgage Loan to be processed through any of the origination channels described in Section 8.2 to be served by a processing team or other persons employed by PMC and determined by PMC to be most efficient under the circumstances. PMC shall cause each such processing team or other persons to serve the Franchisee Customer throughout the entire process of Mortgage Loan application, processing, underwriting and closing, and to use best efforts to meet the Franchisee Customer’s closing date.

Section 8.9 Maintenance of Licenses .

PMC shall, at its own cost and expense, obtain and maintain any and all licenses and registrations, and cause each of its employees to obtain any and all licenses and registrations, that are necessary or desirable in the performance of the Mortgage Loan origination services to be provided by PMC pursuant to the terms of this Article VIII.

Section 8.10 Legal and Regulatory Compliance .

(a) Actions taken or not taken by PMC and its Affiliates, and all communications made when performing its obligations under this Agreement (including this Article VIII) shall comply in all material respects with the requirements of all applicable Mortgage Lending Laws.

(b) PMC shall, and shall cause its Affiliates to, keep in full effect its existence, rights and franchises in the state of its incorporation except as permitted herein or in the Operating Agreement, and will obtain and preserve its qualifications to do business as a foreign entity in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement or any of the Mortgage Loans and/or to perform its duties under this Agreement.

(c) PMC and its Affiliates shall not engage in activities in performing origination services hereunder that generally would be reasonably likely to be determined by the relevant regulatory agency to be prohibited as “predatory.”

(d) PMC shall promptly inform the Cendant Entities in writing of any notices, inquiries or other communications, written or oral, received by PMC or any Affiliate thereof with respect to any material legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations or findings with respect to Mortgage Loans originated, closed and funded by PMC or any Affiliate thereof or any action or omission of PMC or any of its Affiliates in connection therewith.

Section 8.11 Customer Fees and Charges .

(a) At the closing of any Mortgage Loan and at such other times as may be customary, the closing agent may collect from the Franchisee Customer and forward to PMC or an Affiliate thereof the Customer Fees and Charges for such Mortgage Loan.

 

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(b) The amount, payor and payee of any Customer Fees and Charges shall be described in the Mortgage Loan Disclosures in accordance with the Mortgage Lending Laws. PMC shall retain and distribute the Customer Fees and Charges to third parties, including settlement service providers, in accordance with applicable law, this Agreement and the arrangements governing such relationships. PMC covenants and agrees that the payment of Customer Fees and Charges to third parties shall be made in a timely manner and in accordance with payment terms governing such relationships.

Section 8.12 Surveys .

With respect to all closed Mortgage Loans, PMC shall conduct a survey of the related Franchisee Customer contemporaneously with the closing (the “ Franchisee Customer Survey ”) and a survey of the Brand Franchisee that referred such Franchisee Customer (the “ Franchisee Referral Survey ” and, together with the Franchisee Customer Survey, the “ Franchisee Surveys ”) for the purpose of assessing overall satisfaction levels relating to PMC’s performance as loan originator. PMC shall administer such Surveys and shall provide the results of the Franchisee Surveys to Cendant Real Estate on a monthly basis. Schedule 3.16(a) hereto sets forth an example of the content of such Franchisee Surveys; provided , however , that Cendant Real Estate shall have the right to amend such Franchisee Surveys from time to time in its sole discretion; provided further , however , that (i) the Franchisee Referral Survey shall always contain the question “would you recommend a PMC Loan to another client?” (the “ Franchisee Key Referral Question ”), and (iii) the Franchisee Customer Survey shall always contain the question “Would you recommend PMC to a friend/another person?” (the “ Franchisee Key Customer Question ”). Cendant Real Estate shall (A) have the right to review and audit all Franchisee Survey responses at any time, and (B) have the right, but not the obligation, to disseminate such Surveys once annually at its option.

Section 8.13 MSA Payments .

The Parties hereby agree and acknowledge that all payments under the MSA payable to any Brand (as defined in the MSA) shall be the sole responsibility of PMC and its Affiliates (other than the Company), and neither the Cendant Entities nor their Affiliates, nor the Company, shall be responsible for making any such payment.

ARTICLE IX

FUTURE CENDANT REAL ESTATE BROKERAGE ACQUISITIONS

Section 9.1 Subsequent Small Corps .

(a) In the event that, during the term of this Agreement, Cendant Real Estate, or any Affiliate of Cendant Real Estate, notifies (a “ Small Corp Notification ”) PMC and the Company of its intent to acquire, or enter into an agreement to acquire, directly or indirectly, any Person that owns or conducts a residential real estate brokerage

 

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business and in connection therewith also owns or conducts, directly or indirectly, a mortgage loan origination business (any such Person, a “ Qualifying Target ”), then promptly thereafter Cendant Real Estate, PMC and the Company shall work together to formulate a plan for the sale by Cendant Real Estate or such Person (such seller, the “ Cendant Real Estate Seller ”) of such mortgage loan origination business (or the stock or other equity of an entity directly or indirectly conducting such business, as determined by Cendant Real Estate in its sole discretion) (the “ Qualifying Target Mortgage Business ”) to the Company, and Cendant Real Estate, the Cendant Real Estate Seller and PMC shall use their reasonable best efforts to complete such sale as promptly as practicable thereafter. Cendant Real Estate shall use reasonable best efforts to provide PMC and the Company an adequate opportunity to conduct due diligence with respect to the Qualifying Target Mortgage Business. Cendant Real Estate, the Company and PMC shall cooperate with and assist each other in obtaining all consents and approvals of, making all filings and registrations with and providing all notices to, such Governmental Entities or third parties as shall be necessary or advisable to consummate such sale. At the time agreed upon for the closing of such sale, the Company shall pay to the Cendant Real Estate Seller, by wire transfer of immediately available funds, in consideration for the Qualifying Target Mortgage Business to be acquired, a purchase price (the “ Purchase Price ”) calculated as follows (with each of the PHH Member and the Cendant Member contributing to the Company cash in an amount equal to its ratable share of the Purchase Price based on their respective percentage ownership interests in the Company):

(i) If the purchase price paid by Cendant to acquire the Qualifying Target represents a multiple (a “ Qualifying Target EBITDA Multiple ”) of such Qualifying Target’s trailing 12-months’ EBITDA of *CONFIDENTIAL or less, then the Purchase Price shall be equal to the product of (A) such Qualifying Target EBITDA Multiple and (B) such Qualifying Target Mortgage Business’ trailing 12-months EBITDA, adjusted to remove all refinance originations in excess of *CONFIDENTIAL% of the Qualifying Target Mortgage Business’ total originations for such trailing twelve months;

(ii) If the Qualifying Target EBITDA Multiple is more than *CONFIDENTIAL, then Cendant Real Estate and PMC shall negotiate in good faith to agree upon the Purchase Price, provided that in no event shall the Purchase Price be less than the product of (A) *CONFIDENTIAL and (B) such Qualifying Target Mortgage Business’ trailing 12-months EBITDA, adjusted to remove all refinance originations in excess of *CONFIDENTIAL% of the Qualifying Target Mortgage Business’ total originations for such trailing twelve months;

(iii) If the total purchase price of a Qualifying Target is $*CONFIDENTIAL (to be increased annually by the percentage increase in the National Consumer Price Index) or greater, then the Purchase Price shall be equal to the product of (A) such Qualifying Target Mortgage Business’ trailing 12-months EBITDA, adjusted to remove all refinance originations in excess of *CONFIDENTIAL% of the Qualifying Target Mortgage

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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Business’ total originations for such trailing twelve months and (B) either (1) the Qualifying Target EBITDA Multiple paid by Cendant if such multiple is less than *CONFIDENTIAL, or (2) *CONFIDENTIAL if the Qualifying Target EBITDA Multiple paid by Cendant is *CONFIDENTIAL or greater.

(b) If, within thirty (30) days after Cendant Real Estate or any Affiliate of Cendant Real Estate delivers to PMC and the Company a Small Corp Notification, PMC and the Company have not completed their due diligence and Cendant Real Estate, PMC and the Company have not agreed upon the amount to be paid by the Company to the Cendant Real Estate Seller, then (i) Cendant Real Estate shall have the option to either (A) sell (or cause to be sold) such mortgage loan origination business to a third party; provided , however , that if the price to be paid by the third party in such sale is less than *CONFIDENTIAL of the Purchase Price for such Qualifying Target Mortgage Business determined pursuant to Section 9.1(a), or, if no formula is applicable, the price offered by Cendant Real Estate to the Company, then the Company shall have a right of first refusal with respect to such sale at the purchase price offered to the third party (in which case Cendant Real Estate shall offer such Qualifying Target Mortgage Business to the Company for a period of 15 days, during which period the Company shall have the option to accept the sale of such Qualifying Target Mortgage Business on all terms, including price, of such third party sale; provided that if the Company fails to accept all such sale terms pursuant to a binding agreement with Cendant Real Estate within such 15 day period, then the sale to the third party may proceed as planned), or (B) continue to own and operate such mortgage loan origination business and (ii) in either case, the exclusivity provisions of Section 2.1 hereof shall, at the option of the Cendant Entities, terminate with respect to each county in which the Qualifying Target Mortgage Business conducts business (except that exclusivity shall not terminate with respect to any county where the total amount of originations by the Qualifying Target Mortgage Business for the trailing 12-months were less than *CONFIDENTIAL (to be increased annually by the percentage increase in the National Consumer Price Index)).

(c) If Cendant Real Estate, PMC and the Company agree upon the amount to be paid in connection with, and execute an agreement for, the sale of a Qualifying Target Mortgage Business to the Company within the 30-day period set forth above, then the Company shall pay to the Cendant Real Estate Seller an amount equal to 25% of the Purchase Price agreed to by the Parties if such sale is not consummated in the time frame reasonably requested by Cendant Real Estate (unless such delay is due to the failure to obtain a required regulatory approval, which approval has been diligently pursued by the Company, or due to acts or omissions on the part of Cendant or any of its Affiliates or any of their respective officers, directors or advisors). Such payment shall be made not later than the 30 th day following the date on which such acquisition was scheduled to close and, if made on any day other than the scheduled closing date, shall include interest through the date of payment. If such payment is not made by the Company within such 30-day period, the exclusivity provisions of Section 2.1 shall, at the option of the Cendant Entities, terminate with respect to each county in which the Qualifying Target conducts business (except that exclusivity shall not terminate with respect to any county where the total amount of originations by the Qualifying Target Mortgage Business for the trailing 12-months were less than *CONFIDENTIAL (to be increased annually by the percentage increase in the National Consumer Price Index)).

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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(d) No term or provision contained in this Section 9.1 or elsewhere in this Agreement shall be deemed to restrict the ability of Cendant Real Estate or any of its Subsidiaries to acquire any Person that owns or conducts a residential real estate brokerage business and in connection therewith also owns or conducts a mortgage loan origination business, provided that such acquisition is completed pursuant to the terms of this Section 9.1.

(e) Notwithstanding anything to the contrary contained in this Agreement, the Parties shall use their reasonable best efforts to structure a sale by the Cendant Real Estate Seller to the Company of the Qualifying Target Mortgage Business on a tax efficient basis to Cendant Real Estate and its Affiliates (including Cendant), including, without limitation, by (x) causing the Cendant Real Estate Seller to contribute a portion of the Qualifying Target Mortgage Business (equal to the Cendant Member’s percentage ownership interest in the Company) to the Company in a transaction intended to qualify as a tax-free contribution under section 721 of the Internal Revenue Code of 1986, as amended and (y) by causing the Cendant Real Estate Seller to sell to the PHH Member the remaining portion of the Qualifying Target Mortgage Business (equal to the PHH Member’s percentage ownership interest in the Company) for an amount equal to the PHH Member’s ratable share of the Purchase Price based on its percentage ownership interest in the Company, followed by the contribution by the PHH Member of such purchased portion of the Qualifying Target Mortgage Business to the Company; provided , however , that nothing contained in this section 9.1(e) shall require the PHH Member to contribute to the Company or pay to Cendant Real Estate or the Cendant Real Estate Seller in respect of the Qualifying Target Mortgage Business an amount in excess of the PHH Member’s ratable share of the Purchase Price based on its percentage ownership interest in the Company.

ARTICLE X

NON-COMPETITION

Section 10.1 PHH Non-Compete .

(a) Without the express prior written consent of the Cendant Entities, neither PHH nor any Affiliate of PHH shall, within the United States of America, directly or indirectly:

(i) engage in the Settlement Services business (or provide any services or products which as of the date of this Agreement are otherwise provided and/or offered by CSSG),

(ii) engage in the residential real estate brokerage business, commercial real estate brokerage business, or corporate relocation services business, or become or operate as a broker, owner or franchisor in any such business, or otherwise, directly or

 

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indirectly, assist or facilitate the purchase or sale of residential or commercial real estate other than through (x) the origination and servicing of Mortgage Loans, or (y) the conduct of the business of STARS substantially as currently conducted, or

(iii) engage in any other business which as of the date of this Agreement is conducted by the Cendant Real Estate Services Division; provided that, to the extent that Cendant Real Estate Services expands into new businesses from and after the date of this Agreement and at the time of such expansion PHH or any of its Affiliates is currently engaged in the same business, nothing herein shall be deemed to prohibit PHH or any such Affiliate from continuing to conduct such business thereafter. Notwithstanding the foregoing, (1) PHH may obtain real estate brokerage licenses solely to the extent necessary to engage in, and solely for the purpose of engaging in, referral business with a Cendant Affiliate via the Cendant Mobility Broker Network and (2) nothing contained herein shall prohibit PHH from acquiring, directly or indirectly, any company that engages in a business as described in (i), (ii) or (iii) above if the revenue derived from such business for the last four full calendar quarters preceding such acquisition equals less than the greater of $1 million or 1% of such acquired company’s total consolidated revenue for such last four full calendar quarters.

(b) In the event that, at any time after the date of this Agreement and prior to the expiration of the covenant set forth in Section 10.1(a), any Person shall, directly or indirectly, acquire PHH or any of its significant subsidiaries (as defined under Regulation S-X of the Securities and Exchange Commission), including but not limited to by way of merger, consolidation, share exchange, asset acquisition or similar transaction (including a merger of PHH or such subsidiary with another Person where the common stockholders of PHH or such subsidiary immediately prior to such merger do not own more than two-thirds of the common stock of the surviving entity in such merger or the Controlling Person thereof), then (i) the acquiring Person, (ii) any Controlling Person thereof, and (iii) all Persons that are Affiliates of such acquiring Person or any such Controlling Person immediately prior to completion of such acquisition shall be bound by the covenant contained in Section 10.1(a) from and after the completion of such acquisition.

(c) PHH shall not, and shall cause its Subsidiaries not to, without the consent of the Cendant Entities, sell directly or indirectly, any Mortgage Loans or mortgage servicing rights to any Cendant Competitor; provided , however , that with respect to any agreement in effect as of the date of this Agreement with a Cendant Competitor, the PHH Member shall use its reasonable best efforts to cause such agreement to be terminated prior to October 1, 2005 if such agreement would violate the provisions of this Section 10.1(c), but only as long as such termination can be accomplished without the payment of a significant economic penalty. A “ Cendant Competitor ” is any entity that is, or directly or indirectly is affiliated with or controls, one of the twenty (20) largest residential real estate brokerage firms in the United States or one of the ten largest residential real estate brokerage franchisors in the United States.

 

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(d) PHH acknowledges that the restrictions and agreements contained in this Section 10.1 are reasonable and necessary to protect the legitimate interests of the Cendant Entities, and that any violation of this Section 10.1 will cause substantial and irreparable injury to the Cendant Entities that would not be quantifiable and for which no adequate remedy would exist at law and agrees that injunctive relief, in addition to all other remedies, shall be available therefor.

(e) The covenants contained in this Section 10.1 shall survive for (i) two (2) years following the termination of this Agreement as a result of an SRA Termination Event described in Sections 12.2(a)(i) and (ii), and (ii) one (1) year following a termination of this Agreement as a result of any other SRA Termination Event; provided , however , that in the case of a termination of this Agreement as a result of an SRA Termination Event described in Section 12.2(a)(iv) or (v), the covenants contained in subparagraph (a)(i) of this Section 10.1 shall not survive termination of this Agreement.

Section 10.2 No Mortgage Loan Solicitation by PHH . PHH shall not, and shall cause its Affiliates not to, knowingly solicit any Cendant Customers for Mortgage Loans, except through the Company and as provided for in this Agreement and the Operating Agreement; provided , however , that PMC and its Affiliates may market Mortgage Loans to affinity groups and other groups so long as the information has not been obtained by PMC or its Affiliates from information provided through Cendant Real Estate and its Subsidiaries, the Company or any of their respective customers.

Section 10.3 Cendant Participation .

(a) Neither PHH nor any of its Subsidiaries shall directly solicit any Customer or any Cendant Customer to purchase any product or service, unless an appropriate, mutually agreed upon participation in such transaction by the Cendant Member or by an Affiliate thereof is structured; provided , however , that nothing herein shall prohibit PHH or any of its Subsidiaries from conducting general advertising campaigns through print or other media so long as such campaigns are not directed specifically at such individual Customers or Cendant Customers and do not involve any direct marketing such as mailings, telephone calls, faxes or e-mails or other direct electronic communications.

(b) PHH shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to direct to the Company any Mortgage Loan origination opportunity where such Mortgage Loan refinances or replaces a Mortgage Loan originated by the Company and where such Mortgage Loan results from a general solicitation of the type permitted by Section 10.3(a) above.

(c) Notwithstanding the foregoing, none of the restrictions on cross-selling or refinancing set forth above in this Section 10.3 shall apply to PHH, the Company or any of their Subsidiaries with respect to Mortgage Loans that have been sold by PHH or one of its Subsidiaries on a servicing-released basis.

 

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(d) For a period of one (1) year following the effective date of any termination of the Company pursuant to Article VIII of the Operating Agreement, the Party relinquishing its interest in the Company in connection with such termination shall not, and shall cause its Affiliates not to, directly or indirectly, solicit for employment any of the employees of the Company or any of its Subsidiaries; provided , however , that nothing herein shall prohibit (i) a general solicitation or advertisement through print or other media not targeted directly or specifically at the Company or any of its Subsidiaries or any of their employees, or (ii) the relinquishing party from hiring or considering for hire any employee of the Company or any of its Subsidiaries if contact was initiated by such employee independently and not pursuant to any solicitation or communication by the relinquishing party in violation of this Section 10.3(d).

ARTICLE XI

TERMINATION ASSISTANCE

Section 11.1 Termination Assistance Services .

(a)  Termination Assistance Services . Upon the consummation of a PHH Sale, a Two Year PHH Sale or a Non-Renewal PHH Sale, PMC shall for a period of one (1) year following the termination date (the “ Termination Assistance Period ”), upon the Cendant Member’s request and at the Cendant Member’s expense, continue to provide to the Company all such transition and other services as shall be reasonably necessary to facilitate an orderly transition of the business and operations of the Company to the Cendant Designated Buyer (“ Termination Assistance Services ”). In providing Termination Assistance Services, PMC shall provide such reasonable cooperation and technical assistance as required to facilitate the transfer of the management of the Company to a Cendant Designated Buyer. The rights of the Cendant Member under this Article XI shall be without prejudice to the Parties’ rights to pursue legal remedies for breach of this Agreement, either for breaches prior to termination or during the period this Agreement continues to be in force post-termination. Termination Assistance Services shall be provided for a fee calculated based on then-current fair value for such services, and PMC shall use commercially reasonable best efforts to perform the Termination Assistant Services at the same service levels as such services were provided prior to termination.

(b)  Additional Services . From time to time during the Termination Assistance Period, the Cendant Member may find it desirable to request, in addition to the Termination Assistance Services, additional services to be made available to the Company by PMC (the “ Additional Services ”). In the event that the Cendant Member makes a written request that PMC provide Additional Services and PMC agrees to provide such Additional Services, PMC and the Cendant Member shall negotiate in good faith to agree upon, among other things, (a) the time period during which the Additional Services shall be provided, (b) a description of the Additional Services, and (c)

 

38


and the estimated charge for the Additional Services. PMC’s obligations with respect to providing any such Additional Services shall become effective only upon an agreement with respect thereto being duly executed and delivered by each of PMC and the Cendant Member.

(c)  Obligations as to Additional Services . PMC agrees to enter into discussions with the Cendant Member to provide any Additional Services that (i) the Company is unable to obtain from a third party provider, (ii) are directly dependent upon or inextricably intertwined with the Termination Assistance Services or (iii) were inadvertently and unintentionally omitted from the list of Termination Assistance Services; provided , however , that PMC shall not be obligated to provide such Additional Services if, following good-faith negotiation, PMC and the Cendant Member are unable to reach agreement on such terms.

(d)  Standard of Service . PMC agrees that in providing (or causing others to provide) the Termination Assistance Services under this Agreement, it shall (and shall cause each Affiliate or advisor and, to the extent practicable, any or other third-party service provider to): (i) conduct itself in accordance with (A) standards of quality consistent with the standards applied by PMC as of the date of the beginning of the Termination Assistance Period with respect to the specific matters in question, and (B) standards of quality consistent with those applied by PMC hereafter with respect to the specific matters in question in its own business; (ii) comply with all laws, regulations and orders applicable to the conduct of the activities contemplated hereby in all material respects; (iii) comply in all material respects with any applicable standards, procedures, policies, operating guidelines, practices and instructions mutually agreed upon with respect to the relevant Termination Assistance Services; and (iv) comply in all material respects with any commercially reasonable standards, procedures, policies, operating guidelines, practices and instructions imposed by third-parties in connection with the Termination Assistance Services. Notwithstanding the foregoing, it shall not be deemed to be a breach of this Agreement if PMC fails to meet the standards required under this Section 11.1 because of the failure of the Cendant Member to cooperate with PHH or any of its Subsidiaries as may be required under this Agreement.

(i) In addition to the provisions of Section 11.1, if the Cendant Member desires a higher quality of Termination Assistance Services than PMC is otherwise obligated to provide pursuant to Section 11.1 or any of the other provisions of this Agreement, the Cendant Member will be entitled to receive such higher level of quality after giving no less than 30 days’ prior written notice to PMC if (i) the Cendant Member agrees to pay for all additional actual costs associated with such increased level and (ii) in the sole judgment of PMC, such increased level does not impose an additional burden on PMC.

(ii) PMC shall promptly notify the Cendant Member of any event or circumstance of which PMC or any of its representatives has knowledge that would or would be reasonably likely to cause a disruption in the Termination Assistance Services.

 

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(e)  Supervision and Compensation . PMC shall select, employ, pay, supervise, direct and discharge all the personnel providing Termination Assistance Services under this Article XI. PMC shall be solely responsible for the payment of all benefits and any other direct and indirect compensation for PMC personnel assigned to perform services under this Article XI, as well as such personnel’s worker’s compensation insurance, employment taxes, and other employer liabilities relating to such personnel as required by law. PMC shall be an independent contractor in connection with the performance of Termination Assistance Services hereunder and the employees performing Termination Assistance Services in connection herewith shall not be deemed to be employees of the Cendant Member or any affiliate thereof.

(f)  Staffing of Personnel . PMC shall be solely responsible for assigning personnel to perform the Termination Assistance Services, which personnel will be instructed by PMC to perform the Termination Assistance Services in a timely, efficient and workmanlike manner.

Section 11.2 Development of Transition Plan . If and to the extent requested by the Cendant Member, whether prior to, upon, or following any termination of this Agreement, PMC shall reasonably assist the Cendant Member in developing a plan which shall specify the tasks to be performed by PMC in connection with the Termination Assistance Services and the schedule for the performance of such tasks. The transition plan shall include descriptions of the Termination Assistant Services, service levels, fees, documentation and access requirements that will promote an orderly transition of such services.

Section 11.3 Post-Termination Assistance . For a period of six (6) months following the Termination Assistance Period, PMC shall: (i) answer all reasonable and pertinent verbal or written questions from the Cendant Member or the Cendant Designated Buyer regarding the Termination Assistance Services on an “as needed” basis and (ii) deliver to the Cendant Member any remaining Company-owned reports and documentation still in PMC’s possession.

ARTICLE XII

TERM AND TERMINATION

Section 12.1 Term . The term of this Agreement shall be coextensive with the term of the Operating Agreement, subject to termination as set forth in Section 12.2 below.

Section 12.2 SRA Termination Event .

(a) For purposes of this Agreement, an “ SRA Termination Event ” means the consummation of (i) a Cendant Put, (ii) a PHH Sale, (iii) a Purchase Right transaction, (iv) a Two Year Put, (v) a Two Year PHH Sale, (vi) a Special Termination Put, (vii) a Non-Renewal Put, (viii) a Non-Renewal PHH Sale, or (ix) the dissolution of the Company pursuant to Article IX of the Operating Agreement.

 

40


(b) Upon the occurrence of an SRA Termination Event, this Agreement shall automatically expire and terminate, provided that:

(i) The obligations of PHH and its Affiliates pursuant to Article VII hereof shall survive the termination of this Agreement to the extent required by law.

(ii) The obligations of PHH and its Affiliates under Section 10.1 of this Agreement shall survive the termination of this Agreement as set forth in Section 10.1(e).

(iii) The respective obligations of each Party under the provisions of Article XI, Article XII and Article XIII hereof shall survive the termination of this Agreement.

(c) Notwithstanding anything to the contrary contained herein, immediately following the consummation of a Cendant Put, a Two Year Put, a Purchase Right transaction, a Special Termination Put or a Non-Renewal Put, the Company and its Subsidiaries shall continue to process, close, fund and sell all Pipeline Loans in a manner consistent with the terms of this Agreement and the Operating Agreement. For purposes of this paragraph (c), “ Pipeline Loans ” shall mean all potential Mortgage Loans which are in one of various stages of loan origination, approval and processing at the Company or one of its Subsidiaries, but which, as of the time of consummation of a Cendant Put, a Two Year Put, a Purchase Right transaction, a Special Termination Put or a Non-Renewal Put, shall not have closed and funded.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

Section 13.1 PHH Guarantee .

(a) Each of PHH and PMC irrevocably, absolutely and unconditionally guarantees (the “ Guarantee ”) each and every representation, warranty, covenant, agreement and other obligation of its Subsidiaries and Affiliates (including the PHH Member but excluding the Company and any Subsidiaries of the Company) and/or any of their respective permitted assigns (collectively, the “ PHH Affiliates ”) set forth in, and the full and timely performance of their respective obligations under the provisions of, this Agreement and each of the other Transaction Documents. This is a guarantee of payment and performance, and not of collection, and each of PHH and PMC acknowledges and agrees that this Guarantee is full and unconditional, and no discharge, release or extinguishment of any of the PHH Affiliates’ liabilities (other than in accordance with the terms of this Agreement), whether by decree in any insolvency, bankruptcy, reorganization or other similar proceeding or otherwise, and no change in the corporate existence, structure or ownership of any of the parties hereto or any of their Affiliates, and no assignment, pledge or other transfer (whether voluntary, involuntary or by operation of law) of any of the rights, interests or obligations of the parties hereto under this Agreement or the other Transaction Documents, shall affect the continuing validity and enforceability of this Guarantee, as well as any provision requiring or contemplating performance by PHH.

 

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(b) Each of PHH and PMC hereby waives, for the benefit of the Cendant Entities, (i) any right to require the Cendant Entities, as a condition of payment or performance by either PHH or PMC, to proceed against any of the PHH Affiliates or pursue any other remedy whatsoever and (ii) to the fullest extent permitted by law, any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate either PHH or PMC or sureties, except to the extent that any such defense is available to the appropriate PHH Affiliates.

(c) Without limiting in any way the foregoing Guarantee, each of PHH and PMC covenants and agrees to take all actions to enable the PHH Affiliates to adhere to each provision of this Agreement and the other Transaction Documents which requires an act or omission on the part of PHH or PMC or any of their Subsidiaries to enable the PHH Affiliates to comply with their obligations under this Agreement.

(d) Each of PHH and PMC understands that the Cendant Entities are relying on this Guarantee in entering into this Agreement and the other Transaction Documents and may, to the extent PHH or PMC is not a party to any such other Transaction Document, enforce this Guarantee as if each of PHH and PMC were a party thereto.

Section 13.2 Notice of Certain Events . Each Party shall promptly notify the others of (i) any event or condition that would cause any of the representations or warranties of such party contained herein no longer to be complete and accurate, and (ii) any failure on the part of such Party to comply with any of its covenants or agreements contained herein.

Section 13.3 Indemnification .

(a)  PHH Indemnification . Except as otherwise provided by the terms of this Agreement, each of the PHH Entities, jointly and severally (each, a “ PHH Indemnitor ”) agrees to indemnify, defend and hold harmless each of the Cendant Entities and their respective officers, directors, employees, agents, attorneys, members and shareholders (collectively called the “ Cendant Indemnitees ”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including reasonable attorneys’ fees and disbursements in connection with any investigative, administrative or judicial proceeding) (“ Losses ”) imposed on, incurred by or asserted against any such Cendant Indemnitee, whether brought under common law or in equity, or in contract, tort or otherwise, caused by, arising from or connected with (i) any misrepresentation or the breach in any material respect by the PHH Indemnitor of any term, condition, representation, obligation or warranty of the PHH Indemnitor set forth in this Agreement or in any schedule, exhibit, or certificate furnished by the PHH Indemnitor pursuant to this Agreement; or (ii) the negligence or willful misconduct of the PHH Indemnitor.

 

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(b)  Cendant Indemnification . Except as otherwise provided by the terms of this Agreement, each of the Cendant Entities, jointly and severally (each, a “ Cendant Indemnitor ”) agrees to indemnify, defend and hold harmless each of the PHH Entities and the respective officers, directors, employees, agents, attorneys, members and shareholders (collectively called the “ PHH Indemnitees ”) from and against any and all Losses imposed on, incurred by or asserted against such PHH Indemnitees, whether brought under common law or in equity, or in contract, tort or otherwise, caused by, arising from or connected with (i) any misrepresentation or the breach in any material respect by the Cendant Indemnitor of any term, condition, representation, obligation or warranty of the Cendant Indemnitor set forth in this Agreement or in any schedule, exhibit, or certificate furnished by the Cendant Indemnitor pursuant to this Agreement; or (ii) the negligence or willful misconduct of the Cendant Indemnitor.

(c)  Indemnification of the Company . PMC shall indemnify and hold the Company harmless from and against the following Losses incurred or sustained by the Company:

(i) any amounts paid by the Company to Cendant Real Estate pursuant to Section 9.1(c) hereof, and

(ii) any interest paid by the Company pursuant to Section 8.1(d) of the Operating Agreement.

Section 13.4 Lawful Conduct; Severability; Release . The Parties hereto shall not perform, or be expected to perform, any act hereunder that is, or is reasonably believed to be, in violation of any applicable state or federal rule or regulation. If any provision of this Agreement is now or later in violation of any local, state or federal law, then such provision shall be considered null and void for purposes of this Agreement with all other provisions remaining in full force and effect. Each Party expressly releases each other Party from any liability in the event any such Party cannot fulfill any obligation hereunder due to any prohibition under local, state or federal laws pertaining to such obligation; provided , however , that nothing herein shall relieve or release any Party hereto from any liability or obligation under the Operating Agreement.

Section 13.5 Confidential Treatment . Each Party and its respective Affiliates shall request confidential treatment for this Agreement and all Transaction Documents (or appropriate provisions of this Agreement, where applicable) by all applicable regulatory bodies, including, without limitation, the Securities and Exchange Commission, when making any regulatory filings, registrations or notifications, to the extent such request may be made in good faith.

Section 13.6 Expenses . Except as otherwise specified in this Agreement, all costs, fees and expenses incurred in connection with the performance of any and all obligations pursuant to this Agreement shall be paid by the Party incurring such costs, fees and expenses.

 

43


Section 13.7 Confidentiality and No Personal Solicitation . Each Party understands that certain information which it has been furnished and will be furnished in connection with this Agreement, including, but not limited to information concerning business procedures or prices, policies or plans of the other Party or any of its Affiliates, is confidential and proprietary, and each Party agrees that it will maintain the confidentiality of such information and will not disclose it to others or use it except in connection with the proposed transactions contemplated by this Agreement, without the prior written consent of the Party furnishing such information. Information which is generally known in the industry concerning a Party or among such Party’s creditors generally or which has been disclosed to the other Party by third parties who have a right to do so shall not be deemed confidential or proprietary information for these purposes. If PHH, any of its Affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it by or on behalf of a Cendant Entity or an Affiliate thereof in connection with the transactions contemplated hereby, PHH agrees to provide the Cendant Entities with prompt notice of such request(s) so that the Cendant Entities may seek an appropriate protective order and/or waive PHH’s compliance with the terms of this Section 13.7. If the Cendant Entities, any of their Affiliates or any officer, director, employee or agent of any of the foregoing is at any time requested or required to disclose any information supplied to it by or on behalf of PHH or an Affiliate thereof in connection with the transactions contemplated hereby, the Cendant Entities agree to provide PHH with prompt notice of such request(s) so that PHH may seek an appropriate protective order and/or waive the Cendant Entities’ compliance with the terms of this Section 13.7. Notwithstanding the terms of this Section 13.7, if, in the absence of a protective order or the receipt of a waiver hereunder, any Party is nonetheless, in the opinion of its counsel, compelled to disclose information concerning the other Party to any tribunal or else stand liable for contempt or suffer other censure or penalty, such Party may disclose such information to such tribunal without liability hereunder. Upon termination of this Agreement, each Party agrees to promptly return to the other all confidential materials, and all copies thereof, which have been furnished to it in connection with the transactions contemplated hereby.

Section 13.8 Entire Agreement . This Agreement and the other Transaction Documents, as defined in Section 1.1 of the Operating Agreement, constitute the entire agreement among the Parties hereto and contains all of the agreements among such Parties with respect to the subject matter hereof and thereof. This Agreement and the other Transaction Documents supersede any and all other agreements, either oral or written, between such Parties with respect to the subject matter hereof and thereof.

Section 13.9 Amendment . Except as expressly provided herein, this Agreement may be amended only by a written agreement executed by all the Parties. Following such amendment, the Agreement, as amended, shall be binding upon all Parties. Notwithstanding the foregoing, in the event that Cendant Real Estate transfers all or part of its interest in Cendant Mobility or NRT, and in connection therewith the Cendant Member transfers a portion of its Interest in the Company, the Person acquiring such portion of the Cendant Member’s Interest shall become a party to this Agreement and shall have all of the same rights and shall be subject to all of the same obligations with respect to the business acquired from Cendant Real Estate as Cendant Real Estate has hereunder, and the Parties shall execute an amendment to this Agreement to reflect the same.

 

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Section 13.10 Binding Effect . This Agreement will be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns; provided , however , that in the event that any Person acquires Cendant Real Estate, this Agreement will continue to be binding upon Cendant Real Estate but shall not be binding upon such acquiring Person or any Person that was an Affiliate of such acquiring Person immediately prior to such acquisition. In the event that Cendant Real Estate sells, transfers or otherwise disposes of NRT substantially as an entirety (whether by merger, sale of stock, sale of assets or otherwise), Cendant Real Estate shall make proper provision so that NRT and the Person acquiring or succeeding to NRT shall acknowledge and agree in writing that NRT shall assume all rights and obligations of Cendant Real Estate under this Agreement solely as they relate to the business of NRT; provided , however , that this Agreement shall not be binding upon any real estate or other business already owned and operated by such acquiring Person or any Person that was an Affiliate of such acquiring Person immediately prior to the completion of such acquisition.

Section 13.11 Negotiation and Mediation .

(a)  Negotiation . In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or validity thereof, or the transactions contemplated hereby (a “ Dispute ”), upon the written notice of any Party hereto, the Parties shall attempt in good faith to negotiate a resolution of the Dispute. If the Parties are unable for any reason to resolve a Dispute within 30 days after the receipt of such notice, the Dispute shall be submitted to mediation in accordance with Section 13.11(b) hereof.

(b)  Mediation . Any Dispute not resolved pursuant to Section 13.11(a) hereof shall, at the request (the “ Mediation Request ”) of any Party (the “ Disputing Party ”), be submitted to mediation in accordance with the then-prevailing Commercial Mediation Rules of the American Arbitration Association, as modified herein (the “ Rules ”). The mediation shall be held in New York, New York. The Parties shall have twenty (20) days from receipt by a Party of a Mediation Request to agree on a mediator. If no mediator has been agreed upon by the Parties within twenty (20) days of receipt by a Party (or Parties) of a Mediation Request, then any Party may request (on written notice to the other Party or Parties), that the American Arbitration Association appoint a mediator in accordance with the Rules. All mediation pursuant to this Section 13.11(b) shall be confidential and shall be treated as compromise and settlement negotiations, and no oral or documentary representations made by the Parties during such mediation shall be admissible for any purpose in any subsequent proceedings. No Party shall disclose or permit the disclosure of any information about the evidence adduced or the documents produced by another Party in the mediation proceedings or about the existence, contents or results of the mediation award without the prior written consent of such other Party except in the course of a judicial or regulatory proceeding or as may be required by law, rule or regulation or requested by a governmental authority or securities

 

45


exchange. Before making any disclosure permitted by the preceding sentence, the Party intending to make such disclosure shall give the other Party a reasonable opportunity to protect its interests. If the Dispute has not been resolved within sixty (60) days of the appointment of a mediator, or within ninety (90) days of receipt by a Party of a Mediation Request in accordance with this Section 13.11 (whichever occurs sooner) or within such longer period as the Parties may agree to in writing, then any Party may file an action on the Dispute in any court having jurisdiction in accordance with Section 13.12 herein.

Section 13.12 Governing Law . THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAWS RULES THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Any legal suit, action or proceeding against any of the Parties hereto arising out of or relating to this Agreement shall only be instituted in any federal or state court in New York, New York, pursuant to Section 5-1402 of the New York General Obligations Law, and each Party hereby irrevocably submits to the exclusive jurisdiction of any such court in any such suit, action or proceeding. The Parties hereby agree to venue in such courts and hereby waive, to the fullest extent permitted by law, any claim that any such action or proceeding was brought in an inconvenient forum. Each of the Parties hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

Section 13.13 Effect of Waiver or Consent . No provision of this Agreement shall be deemed to have been waived unless such waiver is contained in a written notice given to the Party claiming such waiver has occurred. A waiver or consent, express or implied, to or of any breach or default by any Person in the performance by that Person of its obligations with respect to this Agreement is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person with respect to this Agreement. Failure on the part of a Person to complain of any act of any Person or to declare any Person in default with respect to this Agreement, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that default until the applicable statute-of-limitations period has run.

Section 13.14 Notices . To be effective, unless otherwise specified in this Agreement, all notices and demands, consents and other communications under this Agreement must be in writing and must be given (a) by depositing the same in the United States mail, postage prepaid, certified or registered, return receipt requested, (b) by delivering the same in person and receiving a signed receipt therefore, (c) by sending the same by a nationally recognized overnight delivery service or (d) by telecopy (promptly confirmed by telephone and followed by personal or nationally recognized overnight delivery). For purposes of notices, demands, consents and other communications under this Agreement, the addresses of the Parties (and their respective counsel, if applicable) shall be as follows:

If to a Cendant Entity, addressed to:

Cendant Corporation

9 West 57th Street

New York, New York 10021

Facsimile: (212) 413-1922

Attention:   Eric J. Bock,
  Executive Vice President-Law
  and Corporate Secretary

 

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If to a PHH Entity or the Company, addressed to:

PHH Mortgage Corporation

3000 Leadenhall Road

Mail Stop ACC

Mt. Laurel, NJ 08054

Facsimile: (856) 917-0950

Attention:   William F. Brown,
  Senior Vice President
  and General Counsel

Copies of all notices hereunder shall be delivered to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Facsimile: (212) 735-2000

Attention: Fred B. White III, Esq.

Notices, demands, consents and other communications mailed in accordance with the foregoing clause (a) shall be deemed to have been given, made and received three (3) Business Days following the date so mailed. Notices, demands, consents and other communications given in accordance with the foregoing clauses (b) and (d) shall be deemed to have been given, made and received when sent on a Business Day or, if not a Business Day, then the next succeeding Business Day. Notices, demands, consents and other communications given in accordance with the foregoing clause (c) shall be deemed to have been given, made and received when delivered or refused on a Business Day or, if not a Business Day, then the next succeeding Business Day. Any Party or its assignee may designate a different address to which notices or demands shall thereafter be directed and such designation shall be made by written notice given in the manner hereinabove required, provided, that at all times each Party shall be required to maintain a notice address in the continental United States.

Section 13.15 No Assignment . Except as specifically provided elsewhere herein, no Party may assign all or any part of its rights or obligations hereunder without first obtaining the written consent of the other Party.

 

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Section 13.16 Benefit of Parties Only . This Agreement is made for the sole benefit of the Parties hereto and of their respective successors and permitted assigns. Nothing herein shall create, or be deemed to create, a relationship between the Parties hereto, or either of them and any third person in the nature of a third-party beneficiary, equitable lien or fiduciary relationship.

Section 13.17 No Joint Venture; Legal Entity . The Parties hereto agree that the relationships existing among them are contractual in nature, and that nothing contained herein or in the other Transaction Documents is intended to create, or shall be deemed or construed as creating, any legal entity between the Parties hereto or the Parties thereto other than as specifically set forth in the Operating Agreement. This Agreement shall not be deemed to create a joint venture or partnership among the Parties hereto. No Party hereto shall have the authority or right, or hold itself out as having the authority or right, to assume, create or undertake any obligation of any kind whatsoever, express of implied, on behalf of or in the name of any other Party hereto, except as expressly provided herein or in the Operating Agreement.

Section 13.18 Counterparts . This Agreement may be executed in several counterparts, each of which will be deemed an original but all of which will constitute one and the same.

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written.

 

CENDANT REAL ESTATE SERVICES GROUP, LLC
By:  

/s/    Eric J. Bock

Name:   Eric J. Bock
Title:   Executive Vice President and Secretary
CENDANT REAL ESTATE SERVICES VENTURE PARTNER, INC.
By:  

/s/    Eric J. Bock

Name:   Eric J. Bock
Title:   Executive Vice President and Secretary
PHH CORPORATION
By:  

/s/    Terence W. Edwards

Name:   Terence W. Edwards
Title:   President and Chief Executive Officer
CENDANT MORTGAGE CORPORATION
By:  

/s/    Terence W. Edwards

Name:   Terence W. Edwards
Title:   President and Chief Executive Officer
PHH HOME LOANS, LLC
By:  

/s/    Terence W. Edwards

Name:   Terence W. Edwards
Title:   President and Chief Executive Officer

 

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PHH BROKER PARTNER CORPORATION
By:  

/s/    Terence W. Edwards

Name:   Terence W. Edwards
Title:   President

 

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Exhibit A

Cendant Owned Real Estate Offices Tradenames

 

Metro

  

Dba

Atlanta    Coldwell Banker Residential Brokerage

Baltimore/DE/DC

  

Coldwell Banker Residential Brokerage

New England (ME, NH, MA, RI)

  

Coldwell Banker Residential Brokerage

Northern California

  

Coldwell Banker Residential Brokerage

Southern California

  

Coldwell Banker Residential Brokerage

Chicago IL/Milwaukee WI

  

Coldwell Banker Residential Brokerage

Columbus, OH

  

Coldwell Banker King Thompson

Cincinnati, OH

  

Coldwell Banker Burnet

Dallas, Ft. Worth, TX

  

Coldwell Banker Residential Brokerage

Denver, CO

  

Coldwell Banker Residential Brokerage

Florida

  

Coldwell Banker Residential Real Estate

Harrisburg, PA

  

Jack Gaughen Realtor ERA

Long Island, NY

  

Coldwell Banker Residential Brokerage

Minnesota

  

Coldwell Banker Burnet

New Jersey - Burgdorff

  

Burgdorff Realtors ERA

New Jersey - CB

  

Coldwell Banker Residential Brokerage

New York

  

The Corcoran Group

  

CitiHabitats

Pittsburgh, PA

  

Coldwell Banker Real Estate

Salt Lake City, UT

  

Coldwell Banker Residential Brokerage

St.Louis, MO

  

Coldwell Banker Gundaker


Westchester, NY/CT

  

Coldwell Banker Residential Brokerage

Sunshine

  

The Sunshine Group

SIR

  

Sotheby’s International Realty

Condo Store

  

Coldwell Banker The Condo Store

CB Commercial

  

Coldwell Banker Commercial NRT

 

2


Exhibit B

Cendant Real Estate Franchisee Brands

 

1. Century 21 Real Estate LLC
2. Century 21
3. Coldwell Banker Real Estate Corporation
4. Coldwell Banker
5. ERA Franchise Systems, Inc.
6. ERA
7. Sotheby’s International Realty Affiliates, Inc.
8. Sotheby’s International Realty
9. Sotheby’s Realty


Exhibit C

Small Corps

1. Axiom Financial, Inc., a Utah corporation

2. Hamera Corp. d/b/a First Capital, a California corporation

3. LongIsland Mortgage Group, Inc., a New York corporation

4. NE Moves Mortgage Corporation, a Massachusetts corporation

5. Preferred Mortgage Group, Inc., a Virginia corporation

6. RMR Financial, a California corporation

7. Sunbelt Lending Services, Inc., a Florida corporation

8. Burnet Home Loans (a division of PHH Mortgage)


Schedule 3.15(b)

Pricing Penalties

* CONFIDENTIAL

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Schedule 3.15(c)(i)

Programs

*CONFIDENTIAL

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


Schedule 3.15(c)(ii)

Competitors

*CONFIDENTIAL

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted information has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 


Schedule 3.16(a)

Surveys

 

1. We provided you with an accurate application package:

Strongly agree [    ]

Agree [    ]

Disagree [    ]

Comments:

 

2. We thoroughly explained and accurately guided you through the steps of the mortgage process:

Strongly agree [    ]

Agree [    ]

Disagree [    ]

Comments:

 

3. Once you received your application package, your Loan Processor kept you informed about the progress of your loan:

Strongly agree [    ]

Agree [    ]

Disagree [    ]

Comments:

 

4. We made your closing smooth and easy:

Strongly agree [    ]

Agree [    ]

Disagree [    ]

Comments:

 

5. You would recommend us to others:

Strongly agree [    ]

Agree [    ]

Disagree [    ]

Comments:


Schedule 3.16(b)

Service Standards Damages

* CONFIDENTIAL

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

9

Exhibit 10.11

JOINDER AGREEMENT

JOINDER AGREEMENT dated as of January 1, 2005 (this “ Agreement ”), between SPTC Delaware, LLC, a Delaware limited liability company (the “ Licensor ”), Sotheby’s Holdings, Inc., a Michigan Corporation (“ Holdings ”), and Sotheby’s, an unlimited company registered in England (“ Sotheby’s (UK) ”), on the one hand, and Cendant Corporation, a Delaware corporation (“ Parent ”) and Sotheby’s International Realty Licensee Corporation, a Delaware corporation (“ Licensee ”), on the other hand. Capitalized terms used in this Agreement but not defined herein shall have the meanings assigned to such terms in the License Agreement (as defined below).

WITNESSETH:

WHEREAS, Holdings and Licensor (as assignee of SPTC, Inc.), on the one hand, and Parent and Licensee, on the other hand, are parties to a License Agreement dated as of February 17, 2004 (the “ License Agreement ”);

WHEREAS, on December 15, 2004, pursuant to the letter set forth as Exhibit 1 hereto (the “ Option Exercise Letter ”), Licensee notified Licensor of Licensee’s desire to exercise its rights, pursuant to the terms and subject to the conditions of Article XVIII of the License Agreement, to license the Licensed Marks for use in the countries listed on Schedule A to the Option Exercise Letter (the “ Option Countries ”) solely for the offer and sale of Authorized Services in the Option Countries on the terms provided in the License Agreement;

WHEREAS, on or about July 15, 2004, the international registrations of the SIR Mark with respect to the Option Countries in which the SIR Mark has been registered (the “ Option Country Registrations ”) were owned by Sotheby’s International Realty GmbH (“ SIR GmbH ”), and all of SIR GmbH’s right, title, and interest in and to the SIR Mark and the Option Country Registrations, along with the goodwill of the business symbolized by the SIR Mark and Option Country Registrations, was transferred and assigned by SIR GmbH to Sotheby’s (UK); and

WHEREAS, as more fully set forth in this Agreement, the parties desire to grant the license in the Option Countries as contemplated by Section 18.6 of the License Agreement and to satisfy the parties’ obligations under Section 18.3(e) of the License Agreement.

In consideration of the respective representations, warranties and covenants set forth herein and in the License Agreement and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

I. Addition of Option Countries and Amendment of Schedule C:

The Option Countries are hereby added to the Territory, and Schedule C of the License Agreement is hereby amended to add the names of all such Option Countries.


II. Application of the terms of use of the License Agreement

The parties acknowledge and agree that the terms and conditions of the License Agreement with respect to Licensee’s use of the Licensed Marks, including the terms and conditions with respect to the quality control matters, shall apply to Licensee’s use of the Licensed Marks in the Option Countries. For the avoidance of doubt, the parties acknowledge that the foregoing shall not be deemed to amend, modify or affect those terms and conditions of the License Agreement that expressly do not apply to the Option Countries.

III. Agreement of Sotheby’s (UK) to be bound; Eligible SPV

Sotheby’s (UK) hereby agrees to be bound by the terms and conditions of the License Agreement as a Licensor with respect to the Option Countries. In accordance with the provisions of the License Agreement, subject to clauses (i) through (iv) of Section 18.3(e) thereof, Holdings and Sotheby’s (UK) hereby agree to establish an Eligible SPV in accordance with Section 18.3 of the License Agreement, cause such Eligible SPV to be the holder of the Option Country Registrations or to file a registration or registrations for the Licensed Marks in the Option Countries pursuant to the terms and subject to the conditions of the License Agreement, and upon a transfer of the Option Country Registrations or the grant of a registration or registrations for the Option Countries, cause such Eligible SPV to be bound by the terms and conditions of the License Agreement as Licensor, whereupon Sotheby’s (UK) shall no longer be deemed a party to the License Agreement as Licensor with respect to the Option Countries.

IV. Representations and Warranties

 

  (a) Holdings, Licensor and Sotheby’s (UK) jointly and severally represent and warrant to Parent and Licensee as follows as of the date of this Agreement:

 

  (i)

Authority, Validity . Each of Holdings, Licensor and Sotheby’s (UK) is a corporation (or in the case of Licensor, a limited liability company) validly existing and in good standing under the laws of its state or jurisdiction of organization. Each of Holdings, Licensor and Sotheby’s (UK) has the power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereunder. The execution, delivery and performance of this Agreement by Holdings, Licensor and Sotheby’s (UK) and the consummation by Holdings, Licensor and Sotheby’s (UK) of the transactions contemplated hereunder, have been or will be duly and validly authorized by Holdings, Licensor and Sotheby’s (UK), and no other corporate or limited liability company proceedings on the part of Holdings, Licensor and Sotheby’s (UK) are necessary to authorize this Agreement or for the consummation of the transactions contemplated hereunder. This Agreement has been duly executed and delivered by Holdings, Licensor and Sotheby’s (UK), and, assuming due execution and delivery by Parent and

 

2


Licensee, constitutes a valid and binding obligation of Holdings, Licensor and Sotheby’s (UK) enforceable against each in accordance with its terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

  (ii) Licensed Marks in the Option Countries . Sotheby’s (UK) is the sole and exclusive owner of the Option Country Registrations. To the knowledge of Holdings, Licensor and Sotheby’s (UK), the use of the SIR Mark by Licensee for the offer and sale of Authorized Brokerage Services with respect to the Option Countries will not infringe on the intellectual property rights of any third party. The Option Country Registrations are the sole registrations as of the date hereof of the Licensed Marks with respect to the Option Countries and to the knowledge of Holdings, Licensor and Sotheby’s (UK), such registrations are valid and subsisting and in full force and effect as of the date hereof. There is no material Litigation pending or, to the knowledge of Licensor and Sotheby’s (UK), threatened, and neither Licensor nor Sotheby’s (UK) has received or sent any written notice of a claim or suit, (x) alleging that the SIR Mark infringes upon or otherwise violates any intellectual property rights of any third party in the Option Countries or (y) challenging the ownership, use, validity or enforceability of, or application or registration for, the SIR Mark with respect to the Option Countries. Sotheby’s (UK) has the full power to license the SIR Mark in the Option Countries for use in connection with the Authorized Brokerage Services pursuant to the terms and conditions of the License Agreement.

 

  (iii) No Conflict; Government Consents .

 

  (1)

Neither the execution, delivery or performance by Holdings, Licensor or Sotheby’s (UK) of this Agreement nor the consummation of the transactions contemplated hereby and compliance by Holdings, Licensor and Sotheby’s (UK) with any of the provisions hereof or of the License Agreement with respect to the licensing of the Licensed Marks in the Option Countries will (x) violate any provision of any Organizational Document of Holdings, Licensor or Sotheby’s (UK); (y) require any consent, approval or notice under, violate or result in the violation of, conflict with or result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time or both, could reasonably be expected to constitute a default) under,

 

3


result in the termination of, result in a right of termination of, any material contractual obligation of Holdings, Licensor or Sotheby’s (UK) (other than such consents as have already been obtained); or (z) violate any material Law of the United States applicable to Holdings or Licensor.

 

  (2) No material consent, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by Licensor in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby that has not been obtained or made.

 

  (b) Parent and Licensee jointly and severally represent and warrant to Holdings, Licensor and Sotheby’s (UK) as follows as of the date of this Agreement:

 

  (i) Authority, Validity . Each of Parent and Licensee is a corporation validly existing and in good standing under the laws of the state of its incorporation. Each of Parent and Licensee has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereunder. The execution, delivery and performance of this Agreement by Parent and Licensee and the consummation by Parent and Licensee of the transactions contemplated hereunder, have been duly and validly authorized by Parent and Licensee, and no other corporate proceedings on the part of Parent or Licensee are necessary to authorize this Agreement or for the consummation of the transactions contemplated hereunder. This Agreement has been duly executed and delivered by Parent and Licensee, and, assuming due execution and delivery by Holdings, Licensor and Sotheby’s (UK), constitutes a valid and binding obligation of Parent and Licensee enforceable against Parent and Licensee in accordance with its terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

  (ii) No Conflict; Government Consents .

 

  (1)

Neither the execution, delivery or performance by Parent or Licensee of this Agreement nor the consummation of the transactions contemplated hereby and compliance by Parent and Licensee with any of the provisions hereof or of the

 

4


License Agreement with respect to the licensing of the Licensed Marks in the Option Countries will (x) violate any provision of any Organizational Document of Parent or Licensee; (y) require any consent, approval or notice under, violate or result in the violation of, conflict with or result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time or both, could reasonably be expected to constitute a default) under, result in the termination of, result in a right of termination of, any material contractual obligation of Parent or Licensee (other than such consents as have already been obtained); or (z) violate any material Law of the United States applicable to Parent or Licensee.

 

  (2) No material consent, order or authorization of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by Parent or Licensee in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby that has not been obtained or made.

 

  (c) The representations and warranties contained in this Section IV shall survive for a period of two years beginning on the date of this Agreement. Breaches of such representations and warranties shall be indemnifiable by the parties consistent with the terms of Sections 13.1 and 13.2 of the License Agreement (it being understood that any breach of such representations shall be deemed a breach of the License Agreement for purposes of Sections 13.1(i) and 13.2(i) of the License Agreement), subject to the limitation provisions of Section 13.3 of the License Agreement (it being understood that indemnifiable Damages suffered by the parties for purposes of such Section 13.3 shall include any Damages suffered in connection with a breach of the representations and warranties contained herein). The procedures set forth in Section 13.5 of the License Agreement shall apply to any indemnification claim asserted by the parties in connection herewith.

V. Covered Revenue

The parties acknowledge and agree that Fees shall be payable with respect to Covered Revenue Earned by the Licensee Group from the performance of Authorized Brokerage Services in the Option Countries pursuant to the terms and subject to the conditions contained in Article V of the License Agreement.

 

5


VI. Miscellaneous

(a) Governing Law; Jurisdiction; Venue; Service of Process; Waiver of Jury Trial . THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY PRINCIPLES OR RULES OF CONFLICTS OF LAW THAT WOULD CAUSE THE APPLICATION OF ANOTHER LAW. EACH PARTY HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK CITY OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS BY NOTICE IN THE MANNER SPECIFIED IN SECTION 20.2 OF THE LICENSE AGREEMENT. EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.

(b) Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, when taken together, shall constitute one and the same agreement.

(c) Headings . The headings herein are for convenience purposes only, do not constitute a part of this Agreement, and shall not be deemed to limit or affect any of the provisions of this Agreement.

(d) Amendment; Waiver . Any provision of this Agreement may be amended, supplemented, modified or waived if, and only if, such amendment, supplement, modification or waiver is in writing and signed, in the case of an amendment, supplement or modification, by Licensee and Licensor or, in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

(e) License Agreement . This Agreement shall operate as a supplement, amendment and addendum to the License Agreement. Except as expressly provided herein, the License Agreement (including Sections 10.1 and 18.3(b) thereof) is not amended, modified or affected by this Agreement, and the License Agreement and the rights and obligations of the parties hereto thereunder are hereby ratified and confirmed by the parties hereto in all respects.

 

6


(f) Expenses . Except as otherwise provided in the License Agreement, the parties shall bear their own fees and expenses incident to this Agreement and the transactions contemplated hereby.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

7


IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed as of the date first above written.

 

SPTC DELAWARE, LLC
By:  

/s/    William S. Sheridan

Name:   William S. Sheridan
Title:   Vice President and Treasurer
SOTHEBY’S HOLDINGS, INC.
By:  

/s/    William S. Sheridan

Name:   William S Sheridan
Title:   Executive Vice President and
  Chief Financial Officer
SOTHEBY’S
By:  

/s/    Thomas Christopherson

Name:   Thomas Christopherson
Title:   Senior Director and
  European General Counsel
CENDANT CORPORATION
By:  

/s/    Steve Tanner

Name:   Steve Tanner
Title:   Vice President
SOTHEBY’S INTERNATIONAL REALTY LICENSEE CORPORATION
By:  

/s/    Kim Vukanovich

Name:   Kim Vukanovich
Title:   Vice President

 

8


EXHIBIT 1

December 15, 2004

Don Pillsbury, Esq.

SPTC, Inc.

c/o Sotheby’s Holdings, Inc.

1334 York Avenue

New York, New York 10021

RE:  License Agreement – Partial Exercise of Option

Dear Don:

Reference is made to that certain Trademark License Agreement of February 17, 2004 among SPTC Delaware, LLC (as assignee of SPTC, Inc.) (“Licensor”), Sotheby’s Holdings, Inc., Sotheby’s International Licensee Corporation (f/k/a Monticello Licensee Corporation and referred to herein as “Licensee”) and Cendant Corporation (the “License Agreement”). Capitalized terms used herein and not defined herein shall have the meanings ascribed to such terms in the License Agreement.

Licensee hereby exercises the Option described in Section 18.1 of the License Agreement at this time for the 236 countries/territories on the List of Option Countries attached hereto as Schedule A (the “Option Countries”). Licensee wishes to exercise the Option (i) to expand the Option Territory covered by the license to the Option Countries (as described under clause (i) of Section 18.1) and (ii) subject to the third paragraph of this letter, to acquire all existing broker affiliate agreements for the Option Countries (the “Affiliation Agreements”) (as described under clause (ii) of Section 18.1). By virtue of the exercise of the Option hereunder, Licensee does not wish to complete a Foreign Operations Sale with respect to any owned brokerage operations of Licensor and its affiliates in the Option Countries.

Licensee’s desire to acquire, and the consummation of the transfer to Licensee and its affiliates of, the Affiliation Agreements is conditioned on the following (in addition to any other conditions or other requirements set forth in the License Agreement, including the effectiveness of the license and the execution of applicable documentation: (1) the agreement of Sotheby’s Holdings, Inc. and its affiliates to provide to Licensee and its affiliates, and any subsequent assignee of the Affiliation Agreements (including as described in clause (2)) and its affiliates, certain rights with respect to access to marketing materials and records in connection with the Affiliation Agreements reasonably necessary for Licensee and its affiliates, or any subsequent assignee and its affiliates, to fully perform the obligations heretofore performed by Sotheby’s Holdings, Inc. and its affiliates

 

9


under the Affiliation Agreements, and (2) the substantially simultaneous transfer of all rights and obligations under the Affiliation Agreements from Licensee and its affiliates to, and the assumption of liabilities thereunder by, a third party assignee selected in Licensee’s sole discretion.

We would like to formalize the effectiveness of the license and consummation of the transfer of the Affiliation Agreements promptly (pursuant to Sections 18.3(e) and (f) of the License Agreement). Following execution of such documentation, pursuant to the terms of the License Agreement, we would ask that the registrations for the Licensed Marks for the Option Countries be transferred to an Eligible SPV.

With respect to the obligation of Licensor under Subsection 18.3 (d) of the License Agreement to file (at Licensee’s expense) trademark applications in each of the selected Option Countries, we request that you initiate such trademark applications at this time only for those 57 countries highlighted in bold and asterisked on Schedule A. We will notify you in writing at such time as we would like applications filed regarding the other countries for which we have exercised our Option.

In connection with Cendant’s exercise of the Option and as required by subsection 18.3(a) of the License Agreement, I have enclosed herewith a check in the amount of $236.00.

Please feel free to call me at 973-496-5380 if you have any questions about the foregoing.

Sincerely,

/s/ C. Patterson Cardwell, IV

C. Patterson Cardwell, IV

Senior Vice President

Real Estate Legal Department

Enclosure

 

cc: Bill Sheridan (via fax: 212-606-7574 and overnight courier: Sotheby’s

Holdings, Inc., 1334 York Avenue, New York, New York 10021)

Drew Napurano

Javier Parraga

Mitch Lewis

 

bcc: Steve Tanner

Fran Santangelo

Jeff Fox (via fax: 917-777-2537)

 

10


SCHEDULE A

List of Option Countries

 

1. Afghanistan
2. Albania
3. Algeria
4. American Samoa
5. Andorra
6. Angola
7. Anguilla*
8. Antarctica
9. Antigua and Barbuda*
10. Argentina
11. Armenia
12. Aruba*
13. Austria
14. Azerbaijan
15. Bahrain*
16. Baker Island
17. Bangladesh
18. Belarus
19. Belgium
20. Belize*
21. Benin
22. Bermuda*
23. Bhutan
24. Bolivia*
25. Bosnia and Herzegovina
26. Botswana
27. Bouvet Island
28. Brazil
29. British Indian Ocean Territory
30. British Virgin Islands*
31. Brunei*
32. Bulgaria*
33. Burkina Faso
34. Burundi
35. Cambodia
36. Cameroon
37. Cape Verde
38. Cayman Islands*
39. Central African Republic
40. Chad
41. Chile*
42. China*

 

A-1


43. Christmas Island
44. Cocos (Keeling) Islands
45. Colombia*
46. Comoros
47. Congo, Democratic Republic of the/formerly Zaire
48. Congo, Republic of the
49. Cook Islands
50. Costa Rica*
51. Cote d’Ivoire
52. Croatia
53. Cuba*
54. Cyprus
55. Czech Republic
56. Denmark
57. Djibouti
58. Dominica
59. Dominican Republic*
60. East Timor
61. Ecuador*
62. Egypt*
63. El Salvador*
64. Equatorial Guinea
65. Eritrea
66. Estonia
67. Ethiopia
68. Falkland Islands (Islas Malvinas)
69. Faroe Islands
70. Fiji*
71. Finland
72. French Guiana*
73. French Polynesia (includes Clipperton Island)
74. Gabon
75. Gambia, The
76. Gaza Strip
77. Georgia
78. Ghana
79. Gibraltar
80. Greece
81. Greenland
82. Grenada*
83. Guadeloupe*
84. Guam*
85. Guatemala*
86. Guinea
87. Guinea-Bissau
88. Guyana

 

A-2


89. Haiti*
90. Heard Island and McDonald Islands
91. Holy See (Vatican City)
92. Honduras*
93. Hong Kong
94. Howland Island
95. Hungary
96. Iceland
97. India*
98. Indonesia
99. Iran
100. Iraq
101. Ireland
102. Italy
103. Jamaica*
104. Japan*
105. Jarvis Island
106. Johnston Atoll
107. Jordan*
108. Kazakhstan
109. Kenya
110. Kingman Reef
111. Kiribati
112. Korea, North
113. Korea, South
114. Kuwait*
115. Kyrgyzstan
116. Laos
117. Latvia
118. Lebanon*
119. Lesotho
120. Liberia
121. Libya
122. Liechtenstein
123. Lithuania
124. Luxembourg
125. Macau*
126. Macedonia, The Republic of
127. Madagascar
128. Malawi
129. Malaysia
130. Maldives
131. Mali
132. Malta
133. Marshall Islands
134. Martinique*

 

A-3


135. Mauritania
136. Mauritius
137. Mayotte
138. Micronesia, Federated States of
139. Midway Islands
140. Miscellaneous (French) Indian Ocean Islands (includes Bassas da India, Europe Island, Glorioso Islands, Juan de Nova Island, Tromelin Island)
141. Moldova
142. Mongolia
143. Montserrat*
144. Morocco*
145. Mozambique
146. Myanmar (formerly Burma)*
147. Namibia
148. Nauru
149. Navassa Island
150. Nepal
151. Netherlands
152. Netherlands Antilles*
153. New Caledonia
154. Nicaragua*
155. Niger
156. Nigeria
157. Niue
158. Norfolk Island
159. Northern Mariana Islands
160. Norway
161. Oman
162. Pakistan
163. Palau
164. Palmyra Atoll
165. Panama*
166. Papua New Guinea*
167. Paracel Islands
168. Paraguay
169. Peru*
170. Philippines
171. Pitcairn Islands
172. Poland
173. Portugal
174. Puerto Rico*
175. Qatar*
176. Reunion
177. Romania*
178. Russia*
179. Rwanda

 

A-4


180. Saint Helena
181. Saint Kitts and Nevis*
182. Saint Lucia*
183. Saint Pierre and Miquelon
184. Saint Vincent and the Grenadines*
185. Samoa
186. San Marino
187. Sao Tome and Principe
188. Saudi Arabia*
189. Senegal
190. Serbia and Montenegro
191. Seychelles
192. Sierra Leone
193. Singapore
194. Slovakia
195. Slovenia
196. Solomon Islands
197. Somalia
198. South Africa
199. South Georgia and the Islands
200. Spain
201. Spratly Islands
202. Sri Lanka
203. Sudan
204. Suriname
205. Svalbard (includes Jan Mayen)
206. Swaziland
207. Sweden
208. Switzerland
209. Syria
210. Taiwan*
211. Tajikistan
212. Tanzania
213. Thailand
214. Togo
215. Tokelau
216. Tonga
217. Trinidad and Tobago*
218. Tunisia
219. Turkey*
220. Turkmenistan
221. Tuvalu
222. Uganda
223. Ukraine
224. United Arab Emirates*
225. Uruguay*

 

A-5


226. Uzbekistan
227. Vanuatu
228. Venezuela
229. Vietnam
230. Wake Island
231. Wallis and Futuna
232. West Bank
233. Western Sahara
234. Yemen
235. Zambia
236. Zimbabwe

Source: Central Intelligence Agency - The World Factbook 2003

 

A-6

Exhibit 10.12

EXECUTION COPY

SIXTH OMNIBUS AMENDMENT

(Apple Ridge)

THIS Sixth Omnibus Amendment (this “ Agreement ”) is entered into this 6 th day of June, 2007 for the purpose of making amendments to the documents described in this Agreement.

WHEREAS, this Agreement is among (i) Cartus Corporation, a Delaware corporation (“ Cartus ”), (ii) Cartus Financial Corporation, a Delaware Corporation (“ CFC ”), (iii) Apple Ridge Services Corporation, a Delaware corporation (“ ARSC ”), (iv) Apple Ridge Funding LLC, a limited liability company organized under the laws of the State of Delaware (the “ Issuer ”), (v) Realogy Corporation, a Delaware Corporation (“ Realogy ” or the “ Performance Guarantor ”), (vi) The Bank of New York, as successor to JPMorgan Chase Bank, N.A., a banking corporation organized and existing under the laws of New York, as successor Indenture Trustee. (the “Indenture Trustee”), (vii) The Bank of New York, a New York state banking corporation (the “ Paying Agent ”), as paying agent, authentication agent and transfer agent and registrar, (vii) the Conduit Purchasers, Committed Purchasers and Managing Agents party to the Note Purchase Agreement defined below, and (ix) Calyon New York Branch (“ Calyon ”), as Administrative Agent and Lead Arranger (the “ Administrative Agent ”).

WHEREAS, this Agreement relates to the following documents (as such documents have previously been amended):

—Purchase Agreement dated as of April 25, 2000 (the “ Purchase Agreement ”) by and between Cartus and CFC;

—Receivables Purchase Agreement dated as of April 25, 2000 (the “ Receivables Purchase Agreement ”) by and between CFC and ARSC;

—Master Indenture dated as of April 25, 2000 (the “ Master Indenture ”) among the Issuer, the Indenture Trustee and the Paying Agent;

—Transfer and Servicing Agreement dated as of April 25, 2000 (the “ Transfer and Servicing Agreement ”) by and between ARSC, as transferor, Cartus, as originator and servicer, CFC, as originator, the Issuer, as transferee and the Indenture Trustee;

—Performance Guaranty dated as of May 12, 2006 executed by Realogy in favor of CFC and the Issuer (the “ Performance Guaranty ”).

WHEREAS, the Purchase Agreement, the Receivables Purchase Agreement, the Master Indenture, the Transfer and Servicing Agreement and the Performance Guaranty are, in this Agreement, collectively the “ Affected Documents ”;

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


WHEREAS, terms used in this Agreement and not defined herein shall have the meanings assigned to such terms in the Purchase Agreement, and, if not defined therein, as defined in the Master Indenture.

NOW, THEREFORE, the parties hereto hereby recognize and agree as follows:

 

1. Amendments to Transfer and Servicing Agreement . Effective as of the date hereof, the Purchase Agreement is hereby amended as follows:

 

  a. The definition of “Required Marketing Expenses Account Amount” is hereby amended to add, at the conclusion thereof, the following: “provided, that if a Weekly Reporting Event has occurred and is continuing, the Required Marketing Expenses Account Amount shall be the greater of the amount otherwise required above and $250,000.”

 

  b. Section 3.07(c) is hereby amended to add at the conclusion thereof: “In addition to the foregoing, so long as the Series 2007-1 Notes are outstanding, if a Weekly Reporting Event has occurred and is continuing, the Servicer will deliver to the the Administrative Agent for the Series 2007-1 Noteholders (the “ Series 2007-1 Agent ”), concurrently with each such Receivables Activity Report, a computer tape or diskette, in an electronically readable format mutually acceptable to the Servicer and the Series 2007-1 Agent, containing the underlying data from which the Servicer prepared such Receivables Activity Report.”

 

  c. Section 9.05(a) is hereby amended to delete the first sentence thereof and substitute therefor the following: “If (i) Cartus is the Servicer, and (ii) either (x) the “Average Days in Inventory” (as defined below) is more than 120 days or (y) a Weekly Reporting Event has occurred, the Issuer will be obligated to establish an account (the “ Marketing Expenses Account ”) to be established with, and pledged to, the Indenture Trustee and maintain on deposit therein, an amount at least equal to the Required Marketing Expenses Account Amount described below.

 

2. Acceptance of Conformed Copies . Each of the parties hereto acknowledges that the “Conformed Copies” of the Affected Documents attached hereto as Exhibits A-1 through A-5 (the “ Conformed Copies ”) properly reflect all amendments to the Affected Documents executed through and including the date hereof, including the correction of mutual mistakes and the incorporation of the amendments to the Transfer and Servicing Agreement set forth hereinabove, and, from and after the date hereof, such copies shall constitute the definitive versions of the Affected Documents to the same extent as if such Affected Documents were amended and restated to conform in their entirety to such Conformed Copies.

 

3. Conditions Precedent . This Agreement shall be effective when the Indenture Trustee shall have received (a) counterparts of the signature pages hereto executed by all parties hereto and (b) the consent of the Managing Agents representing the Majority Investors to the execution of this Agreement, which consent shall be evidenced by their execution of the signature pages attached to this Agreement.

 

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4. GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

5. Counterparts . 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.

 

6. References to and Effect on Affected Documents . Upon the effectiveness of this Agreement: (i) all references in any Affected Document to “this Agreement”, “hereof”, “herein” or words of similar effect referring to such Affected Document shall be deemed to be references to such Affected Document as amended by this Agreement; (ii) each reference in any of the Affected Documents to any other Affected Document and each reference in any of the other Transaction Documents to any of the Affected Documents shall each mean and be a reference to such Affected Document as amended by this Agreement; and (iii) each reference in any Transaction Document to any of the terms or provisions of an Affected Document which are redefined or otherwise modified hereby shall mean and be a reference to such terms or provisions as redefined or otherwise modified by this Agreement; provided , that, notwithstanding the foregoing or any other provisions of this Agreement , the amendments contained in this Agreement shall not be effective to (x) modify on a retroactive basis any representations or warranties previously made under any Affected Document with respect to Receivables transferred or purported to have been transferred prior to the date hereof, which representations and warranties shall continue to speak as of the dates such Receivables were transferred and based on the terms and provisions of the Affected Documents as in effect at such time or (y) otherwise modify the terms of any transfer or purported transfer of any Receivable transferred or purported to be transferred pursuant to an Affected Document prior to the date herein.

 

7. No Waiver . This Agreement shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Affected Documents other than as set forth herein, each of which Affected Document, as modified hereby, remains in full force and effect and is hereby reaffirmed, ratified and confirmed.

 

8.

Direction to Indenture Trustee . By its signature hereto each of Calyon, Atlantic Asset Securitization LLC and LaFayette Asset Securitization LLC (collectively, the “ Investor Parties ”) hereby represent that: (i) they constitute all of the Managing Agents and the Investors in Series 2007-1, respectively, and therefore that, upon the execution of this Agreement by each such Investor Party, the “Rating Agency Condition” under the Series 2007-1 Supplement has been satisfied for the execution

 

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and delivery of this Agreement and the Series 2007-1 Supplement. Each Investor Party further represents, based on the Issuer’s representations in paragraph 9 below, that they constitute the “Majority Investors” for purposes of authorizing any amendment or supplemental indentures under Section 10.02 of the Indenture. Accordingly, each Investor Party hereby requests and directs the Indenture Trustee to agree, consent to and accept this Agreement and to execute and deliver the Series 2007-1 Supplement. For the purposes of the signature pages hereto, the term “Investor” is synonymous with the term “Noteholder” as defined in the Master Indenture. Each Conduit Purchaser party hereto further represents and warrants that (i) it is the beneficial owner of the Series 2007-1 Notes currently outstanding issued in its favor; (ii) it is duly authorized to consent to this Agreement and to direct the Indenture Trustee as set forth herein; and (iii) its authorization has not been granted or assigned to any other person or entity.

 

9. Issuer Representations re Outstanding Series . The Issuer represents and warrants that the Series 2007-1 Notes are the only Notes outstanding under the Master Indenture, and the Issuer hereby requests and directs the Indenture Trustee to agree, consent to and accept this Agreement and to execute and deliver the Amended and Restated Series 2007-1 Supplement dated as of July 6, 2007.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

 

CARTUS CORPORATION
By:  

/s/ Eric Barnes

Name:   Eric Barnes
Title:   SVP, CFO
CARTUS FINANCIAL CORPORATION
By:  

/s/ Eric Barnes

Name:   Eric Barnes
Title:   SVP, CFO
APPLE RIDGE SERVICES CORPORATION
By:  

/s/ Eric Barnes

Name:   Eric Barnes
Title:   SVP, CFO
APPLE RIDGE FUNDING LLC
By:  

/s/ Eric Barnes

Name:   Eric Barnes
Title:   SVP, CFO
REALOGY CORPORATION
By:  

/s/ Anthony E. Hull

Name:   Anthony E. Hull
Title:   CFO

 

S-1

Signature Page to Sixth Omnibus Amendment

June 2007


THE BANK OF NEW YORK, as Successor Indenture Trustee and Paying Agent
By:  

/s/ Amy Suzanne Keith

Name:   Amy Suzanne Keith
Title:   Assistant Vice President

 

S-2

Signature Page to Sixth Omnibus Amendment

June 2007


CALYON NEW YORK BRANCH, as Administrative Agent and a Managing Agent and as a Committed Purchaser
By:  

/s/ Sam Pilcer

Name:   Sam Pilcer
Title:   Managing Director
By:  

/s/ Kostantina Kourmpetis

Name:   Sam Pilcer
Title:   Managing Director
ATLANTIC ASSET SECURITIZATION LLC, as a Conduit Purchaser
By:  

/s/ Sam Pilcer

Name:   Sam Pilcer
Title:   Managing Director
By:  

/s/ Kostantina Kourmpetis

Name:   Sam Pilcer
Title:   Managing Director
LAFAYETTE ASSET SECURITIZATION LLC, as a Conduit Purchaser
By:  

/s/ Sam Pilcer

Name:   Sam Pilcer
Title:   Managing Director
By:  

/s/ Kostantina Kourmpetis

Name:   Sam Pilcer
Title:   Managing Director

 

S-3

Signature Page to Sixth Omnibus Amendment

June 2007


Exhibit A-1


 

CONFORMED COPY

 

AS AMENDED BY:

 

1. Omnibus Amendment, Agreement and Consent dated December 20, 2004.

 

2. Second Omnibus Amendment dated January 31, 2005

 

3. Third Omnibus Amendment, Agreement and Consent dated May 12, 2006

 

4. Fifth Omnibus Amendment dated April 10, 2007

PURCHASE AGREEMENT

Dated as of April 25, 2000

by and between

CARTUS CORPORATION

as Originator

and

CARTUS FINANCIAL CORPORATION

as Buyer


TABLE OF CONTENTS

 

          Page
ARTICLE I
DEFINITIONS
ARTICLE II
SALE AND PURCHASE OF ASSETS

Section 2.1

   Sale and Purchase    1

Section 2.2

   Purchases    3

Section 2.3

   No Assumption    3

Section 2.4

   No Recourse    4

Section 2.5

   True Sales    4

Section 2.6

   Servicing of Cartus Purchased Assets    4

Section 2.7

   Financing Statements    4
ARTICLE III
CALCULATION OF CFC PURCHASE PRICE

Section 3.1

   Calculation of the CFC Purchase Price.    5
ARTICLE IV
PAYMENT OF CFC PURCHASE PRICE

Section 4.1

   CFC Purchase Price Payments    5

Section 4.2

   The CFC Subordinated Note    6

Section 4.3

   Originator Adjustments.    6

Section 4.4

   Payments and Computations, Etc    7
ARTICLE V
CONDITIONS PRECEDENT

Section 5.1

   Conditions Precedent to Sales and Purchases    7

Section 5.2

   Conditions Precedent to CFC Subordinated Loans    7

 

-i-


TABLE OF CONTENTS

(continued)

 

          Page
ARTICLE VI
REPRESENTATIONS AND WARRANTIES

Section 6.1

   Representations and Warranties of the Originator    8

Section 6.2

   Representations and Warranties of the Buyer    14
ARTICLE VII
GENERAL COVENANTS

Section 7.1

   Affirmative Covenants of the Originator    14

Section 7.2

   Reporting Requirements    18

Section 7.3

   Negative Covenants of the Originator    19

Section 7.4

   Affirmative Covenants of the Buyer    22
ARTICLE VIII
ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE Cartus PURCHASED ASSETS

Section 8.1

   Rights of the Buyer.    23

Section 8.2

   Responsibilities of the Originator    24

Section 8.3

   Further Action Evidencing Purchases    25

Section 8.4

   Cartus Collections; Rights of the Buyer and its Assignees.    25
ARTICLE IX
TERMINATION

Section 9.1

   CFC Purchase Termination Events    26

Section 9.2

   Purchase Termination    28
ARTICLE X
INDEMNIFICATION; SECURITY INTEREST

Section 10.1

   Indemnities by the Originator    28

Section 10.2

   Security Interest    30

 

ii


TABLE OF CONTENTS

(continued)

 

          Page
ARTICLE XI
MISCELLANEOUS

Section 11.1

   Amendments; Waivers, Etc.    31

Section 11.2

   Notices, Etc    31

Section 11.3

   Cumulative Remedies    31

Section 11.4

   Binding Effect; Assignability; Survival of Provisions    32

Section 11.5

   Governing Law    32

Section 11.6

   Costs, Expenses and Taxes    32

Section 11.7

   Submission to Jurisdiction    33

Section 11.8

   Waiver of Jury Trial    33

Section 11.9

   Integration    34

Section 11.10

   Captions and Cross References    34

Section 11.11

   Execution in Counterparts    34

Section 11.12

   Acknowledgment and Consent.    34

Section 11.13

   No Partnership or Joint Venture    35

Section 11.14

   No Proceedings    35

Section 11.15

   Severability of Provisions    35

Section 11.16

   Recourse to the Buyer    35

Section 11.17

   Confidentiality    36

Section 11.18

   Conversion    36

 

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APPENDIX

APPENDIX A

   Definitions
SCHEDULES

SCHEDULE 2.1

   List of Pool Relocation Management Agreements

SCHEDULE 6.1(n)

   Principal Place of Business and Chief Executive Office of the Originator and List of Offices Where the Originator Keeps Cartus Records

SCHEDULE 6.1(s)

   List of Legal Names for Cartus Corporation

SCHEDULE 11.2

   Notice Addresses
EXHIBITS

EXIBIT 2.1

   Form of Notice of Additional Pool Relocation Management Agreements

EXHIBIT 4.2

   Form of CFC Subordinated Note

EXHIBIT 6.1(u)

   Credit and Collection Policy

EXHIBIT 7.3(j)

   Form of Acknowledgment Letter

EXHIBIT C

   Forms of Relocation Management Agreements

 

-iv-


PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (this “ Agreement ”) dated as of April 25, 2000 made by and between CARTUS CORPORATION, a Delaware corporation, as originator (the “ Originator ”) and Cartus Financial Corporation, a Delaware corporation, as buyer (the “ Buyer ”).

WHEREAS, the Originator wishes to sell Receivables and Related Assets that it now owns and Receivables and Related Assets that it from time to time hereafter will own to the Buyer, and the Buyer is willing to purchase such Receivables and Related Assets from the Originator from time to time, on the terms and subject to the conditions contained in this Agreement; and

WHEREAS, the Buyer intends to transfer the Cartus Purchased Assets, together with additional Receivables and Related Assets that the Buyer from time to time hereafter will own, to Apple Ridge Services Corporation (“ ARSC ”) from and after the Closing Date pursuant to the terms of the Receivables Purchase Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used and not otherwise defined in this Agreement have the meanings specified in Part A of Appendix A. In addition, this Agreement shall be interpreted in accordance with the conventions set forth in Parts B, C and D of Appendix A.

ARTICLE II

SALE AND PURCHASE OF ASSETS

Section 2.1 Sale and Purchase.

(a) Agreement . Upon the terms and subject to the conditions hereof, the Buyer agrees to buy, and the Originator agrees to sell, all of the Originator’s right, title and interest in and to the following:

(i) all Receivables owned by the Originator at the close of business on the Business Day preceding the Closing Date or thereafter created and arising (collectively, the “ Originator Receivables ”);


(ii) all Related Property with respect to the Originator Receivables (collectively, the “ Originator Related Property ”);

(iii) all Cartus Collections;

(iv) all proceeds of and earnings on any of the foregoing; and

(v) all of the right, title and interest, if any, Cartus has in, to or under the CFC Designated Receivables, including all Related Property with respect thereto, rights, if any, to reimbursement of, or interest on, such CFC Designated Receivables and all proceeds thereof;

it being understood and agreed that the Originator does not hereby sell, transfer or convey any of its right, title or interest in any Excluded Assets or Excluded Contracts.

The items listed above in clauses (ii), (iii) and (iv), whenever and wherever arising, are collectively referred to herein as the “ Originator Related Assets .” The Originator Receivables and the Originator Related Assets are sometimes collectively referred to herein as the “ Originator Assets .”

It is the intent of the parties hereto that Cartus not have any right, title, or interest in, to, or under the CFC Designated Receivables or the other property listed in clause (v) above, and such CFC Designated Receivables and other property is included in the property being sold hereunder solely in case it should be determined, contrary to the intent of the parties hereto, that Cartus does have any right, title, or interest in the CFC Designated Receivables or the other property listed in clause (v) above.

As used herein, “ Cartus Receivables ” means Originator Receivables that are being Purchased or have been Purchased by the Buyer hereunder; “ Cartus Related Property ” means Originator Related Property that is being Purchased or has been Purchased by the Buyer hereunder; “Cartus Related Assets ” means Originator Related Assets that are being Purchased or have been Purchased by the Buyer hereunder; and “ Cartus Purchased Assets ” means Originator Assets that are being Purchased or have been Purchased by the Buyer hereunder.

Schedule 2.1 sets forth a list of all Relocation Management Agreements subject to this Agreement (each, a “ Pool Relocation Management Agreement ”) as of the Closing Date. Each new Relocation Management Agreement that is not an Excluded Contract and that is entered into by the Originator during any month shall be added to the Pool Relocation Management Agreements on or after the last day of such month by delivering a written notice in the form of Exhibit 2.1 to the Buyer or its designee, whereupon Schedule 2.1 shall be amended by the Originator to add such new Relocation Management Agreement to the list of Pool

 

2


Relocation Management Agreements set forth therein. A copy of such Exhibit 2.1 appended to the Receivables Activity Report for such month, upon delivery to the Indenture Trustee, shall be sufficient evidence of inclusion. On or prior to the date of the delivery of any such notice, the Originator shall indicate, or cause to be indicated, in its computer files, books and records that the Cartus Receivables and other Cartus Purchased Assets then existing and thereafter created pursuant to or in connection with each such Pool Relocation Management Agreement are being transferred to the Buyer pursuant to this Agreement.

(b) Treatment of Certain Receivables and Related Assets . It is expressly understood that (i) each Cartus Receivable sold to the Buyer hereunder, together with all Cartus Related Assets then existing or thereafter created and arising with respect thereto, will thereafter be the property of the Buyer (or its assignees), without the necessity of any further purchase or other action by the Buyer (other than satisfaction of the conditions set forth herein) and (ii) the change of a Receivable’s status from that of Unsold Home Receivable to Unbilled Receivable or from Unbilled Receivable to Billed Receivable shall not be deemed the creation of a new Receivable for any purpose.

Section 2.2 Purchases . On the Closing Date, the Buyer shall purchase all of the Originator’s right, title and interest in and to all Originator Assets and any property described in clause (v) of Section 2.1(a) existing as of the close of business on the immediately preceding Business Day. On each Business Day thereafter until the Termination Date, the Buyer shall purchase all of the Originator’s right, title and interest in and to all Originator Assets and any property described in clause (v) of Section 2.1(a) existing as of the close of business on the immediately preceding Business Day that were not previously purchased by the Buyer hereunder. Notwithstanding the foregoing, if an Insolvency Proceeding is pending with respect to either the Originator or the Buyer prior to the Termination Date, the Originator shall not sell, and the Buyer shall not buy, any Originator Assets hereunder unless and until such Insolvency Proceeding is dismissed or otherwise terminated.

Section 2.3 No Assumption . The sales and Purchases of Cartus Purchased Assets do not constitute and are not intended to result in a creation or an assumption by the Buyer or its successors and assigns of any obligation of the Originator or any other Person in connection with the Cartus Purchased Assets (other than any such obligations as may arise from the ownership of Cartus Receivables) or under the related Contracts or any other agreement or instrument relating thereto, including without limitation any obligation to any Obligors or Transferred Employees. None of the Servicer, the Buyer or the Buyer’s assignees shall have any obligation or liability to any Obligor, Transferred Employee or other customer or client of the Originator (including without limitation any obligation to perform any of the obligations of the Originator under any Relocation Management Agreement, Cartus Home Purchase Contract, Cartus Related Property or any other agreement), except such obligations as may arise from the ownership of the Cartus Receivables. Except as expressly provided in Section 3.05(k) of the Transfer and Servicing Agreement, no such obligation or liability to any Obligor, Transferred Employee or other customer or client of the Originator is intended to be assumed by the Servicer or its successors and assigns hereunder or under the Transfer and Servicing Agreement, and any such assumption is expressly disclaimed.

 

3


Section 2.4 No Recourse . Except as specifically provided in this Agreement, the sale and Purchase of the Cartus Purchased Assets and any interest of Cartus in and to the CFC Designated Receivables and other property described in clause (v) of Section 2.1(a) under this Agreement shall be without recourse to the Originator; provided , however , that the Originator shall be liable to the Buyer for all representations, warranties, covenants and indemnities made by it pursuant to the terms of this Agreement ( it being understood that such obligations of the Originator will not arise solely on account of the credit-related inability of an Obligor to pay a Receivable).

Section 2.5 True Sales . The Originator and the Buyer intend the transfers of Cartus Purchased Assets hereunder to be true sales by the Originator to the Buyer that are absolute and irrevocable and to provide the Buyer with the full benefits of ownership of the Cartus Purchased Assets, and neither the Originator nor the Buyer intends the transactions contemplated hereunder to be, or for any purpose to be characterized as, loans from the Buyer to the Originator, secured by the Cartus Purchased Assets.

Section 2.6 Servicing of Cartus Purchased Assets . Consistent with the Buyer’s ownership of all Cartus Purchased Assets and subject to the terms of the Pool Relocation Management Agreements, as between the parties to this Agreement, the Buyer shall have the sole right to service, administer and collect all Cartus Purchased Assets, to assign such right and to delegate such right to others. In consideration of the Buyer’s purchase of the Cartus Purchased Assets and as more fully set forth in Section 11.12, the Originator hereby acknowledges and agrees that the Buyer intends to assign for the benefit of ARSC and its successors and assigns the rights and interests granted by the Originator to the Buyer hereunder, and agrees to cooperate fully with the Issuer and its successors and assigns in the exercise of such rights.

Section 2.7 Financing Statements . In connection with the transfer described above, the Originator agrees, at its expense, to record and file financing statements (and continuation statements when applicable) with respect to the Cartus Purchased Assets conveyed by the Originator meeting the requirements of applicable law in such manner and in such jurisdictions as are necessary to perfect and maintain the perfection of the transfer and assignment of its interest in the Cartus Purchased Assets to the Buyer, and to deliver a file stamped copy of each such financing statement or other evidence of such filing to the Buyer as soon as practicable after the Closing Date; provided , however , that prior to recordation pursuant to Section 8.3 or the sale of a Cartus Home to an Ultimate Buyer, record title to such Cartus Home may remain in the name of the related Transferred Employee and no recordation in real estate records of the conveyance pursuant to the related Cartus Home Purchase Contract or Cartus Home Sale Contract shall be made except as otherwise required or permitted under Section 2.01(d)(i) of the Transfer and Servicing Agreement.

 

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ARTICLE III

CALCULATION OF CFC PURCHASE PRICE

Section 3.1 Calculation of the CFC Purchase Price.

(a) Intentionally Omitted

(b) With respect to the Purchase of any Cartus Purchased Assets by the Buyer from the Originator pursuant to Article II, (i) on the Closing Date, the Buyer shall pay to the Originator a purchase price equal to $654,199,874, and (ii) thereafter the Buyer shall pay to the Originator, as provided in Section 4.1, a purchase price (each such purchase price, the “CFC Purchase Price”) in an amount that the Originator and the Buyer mutually agree is the fair market value of such Cartus Purchased Assets. The sale of the property described in clause (v) of Section 2.1(a) is in consideration of CFC funding the CFC Designated Receivables or the obligation of the Issuer to reimburse the Servicer for advances in respect to such CFC Designated Receivables.

ARTICLE IV

PAYMENT OF CFC PURCHASE PRICE

Section 4.1 CFC Purchase Price Payments. On the terms and subject to the conditions of this Agreement, the Buyer shall pay to the Originator on the Closing Date the CFC Purchase Price for the Cartus Purchased Assets sold on such date, by paying such CFC Purchase Price to the Originator in cash. On each other Business Day in each Monthly Period, on the terms and subject to the conditions of this Agreement, the Buyer shall pay to the Originator in cash an amount mutually agreed upon by the Originator and the Buyer on account of the CFC Purchase Price for the Cartus Purchased Assets purchased by the Buyer during such Monthly Period. Within seven Business Days after the end of each Monthly Period, the Originator shall deliver to the Buyer an accounting with respect to all Purchases of Cartus Purchased Assets that were made during such Monthly Period and the aggregate CFC Purchase Price for all the Cartus Purchased Assets that were purchased by the Buyer during such Monthly Period. If the payments on account of the CFC Purchase Price for such Monthly Period exceed the aggregate CFC Purchase Price set forth in such report minus the aggregate Originator Adjustments for such Monthly Period calculated pursuant to Section 4.3(c), then the Originator shall promptly pay such excess to the Buyer in cash and if the payments on account of the CFC Purchase Price for such Monthly Period are less than the aggregate CFC Purchase Price set forth in such report minus the aggregate Originator Adjustments for such Monthly Period calculated pursuant to Section 4.3(c), then the Buyer shall promptly pay such deficiency to the Originator in cash.

 

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Section 4.2 The CFC Subordinated Note . On the Closing Date, the Buyer shall deliver to the Originator the CFC Subordinated Note in the form set forth as Exhibit 4.2. Subject to the limitations set forth in the CFC Subordinated Note, the Originator irrevocably agrees to make each advance (each, a “ CFC Subordinated Loan ”) requested by the Buyer on or prior to the Termination Date for the sole purposes of acquiring CFC Homes pursuant to CFC Home Purchase Contracts (including the making of Equity Payments), making Mortgage Payoffs and Mortgage Payments with respect to CFC Homes and making Seller Adjustments under the Receivables Purchase Agreement. No advance shall be made under the CFC Subordinated Note on any date if the aggregate principal amount outstanding thereunder on such date, after giving effect to such advance, would exceed an amount equal to five times the net worth of the Buyer (such maximum amount required to be advanced at any time, the “ CFC Subordinated Note Cap ”). The CFC Subordinated Loans shall be evidenced by, and shall be payable as provided in, the CFC Subordinated Note. Notwithstanding any other provision of this Agreement, under no circumstances shall funds borrowed under the CFC Subordinated Note be used for the purpose of paying the CFC Purchase Price for the Cartus Purchased Assets.

Section 4.3 Originator Adjustments.

(a) With respect to any Cartus Receivable purchased by the Buyer from the Originator, if on any day the Buyer (or its assigns), the Servicer or the Originator determines that (i) such Cartus Receivable (A) was not identified by the Originator in the Daily Originator Report as other than an Eligible Receivable on the Business Day such Cartus Receivable was sold hereunder or (B) was otherwise treated as or represented to be an Eligible Receivable in any Receivables Activity Report, but was not in fact an Eligible Receivable on such date or (ii) any of the representations or warranties set forth in Section 6.1(d) or 6.1(k) was not true when made with respect to such Cartus Receivable or the related Cartus Related Assets (each such Cartus Receivable described in clause (i) or clause (ii), a “ Cartus Noncomplying Asset ”), then the Originator shall pay the aggregate Unpaid Balance of such Cartus Receivables (such payment, a “ Cartus Noncomplying Asset Adjustment ”) to the Buyer in accordance with Section 4.3(c).

(b) If on any day the Unpaid Balance of any Cartus Receivable (i) is reduced as a result of any cash discount or any adjustment by the Originator or any Affiliate of the Originator (other than the Buyer, ARSC or the Issuer), (ii) is subject to reduction on account of any offsetting account payable of the Originator to an Obligor or is reduced or cancelled as a result of a set-off in respect of any claim by, or defense or credit of, the related Obligor against the Originator or any Affiliate of the Originator (other than the Buyer, ARSC or the Issuer) (whether such claim, defense or credit arises out of the same or a related or an unrelated transaction) or (iii) is reduced on account of the obligation of the Originator to pay to the related Obligor any rebate or refund (each of the reductions and cancellations described above in clauses (i) through (iii), an “ Originator Dilution Adjustment ”), then the Originator shall pay such Originator Dilution Adjustment to the Buyer in accordance with Section 4.3(c).

(c) Within seven Business Days after the end of each Monthly Period, the Originator shall pay to the Buyer, in accordance with Section 4.4 and as provided in Section 4.1,

 

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an amount (an “Originator Adjustment”) equal to the sum of (A) the aggregate Originator Dilution Adjustments, if any, owing on account of each day during such Monthly Period plus (B) the aggregate Cartus Noncomplying Asset Adjustments, if any, owing on account of each day during such Monthly Period. The Cartus Receivables that gave rise to any Originator Dilution Adjustment and any related Cartus Related Assets shall remain the property of the Buyer. From and after the day on which any Cartus Noncomplying Asset Adjustment is made, any collections received by the Buyer that are identified as proceeds of the Receivables that gave rise to such Cartus Noncomplying Asset Adjustment and any Related Property with respect to such Receivable shall be promptly returned to the Originator.

Section 4.4 Payments and Computations, Etc. All amounts to be paid by the Originator to the Buyer hereunder shall be paid in accordance with the terms hereof no later than 11:00 a.m. (New York time) on the day when due in United States dollars in immediately available funds to an account specified in writing from time to time by the Buyer or its designee. Payments received by the Buyer after such time shall be deemed to have been received on the next Business Day. If any payment becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. The Originator shall pay to the Buyer, on demand, interest on all amounts not paid when due hereunder at a rate equal to the Prime Rate plus 2% per annum; provided , however , that such interest rate shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day). All payments made under this Agreement shall be made without set-off or counterclaim.

ARTICLE V

CONDITIONS PRECEDENT

Section 5.1 Conditions Precedent to Sales and Purchases . No Purchase of Cartus Purchased Assets shall be made hereunder on any date on which the Buyer does not have sufficient funds available to pay the CFC Purchase Price in cash.

Section 5.2 Conditions Precedent to CFC Subordinated Loans . The Originator’s obligation to make each CFC Subordinated Loan under this Agreement shall be subject to the conditions precedent that on the date of such CFC Subordinated Loan:

(a) the CFC Subordinated Note shall have been duly executed and delivered by the Buyer and shall be in full force and effect;

(b) no Event of Bankruptcy shall have occurred and be continuing with respect to the Buyer; and

 

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(c) after giving effect to such CFC Subordinated Loan, the aggregate outstanding principal amount of the CFC Subordinated Note shall not exceed the CFC Subordinated Note Cap.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

Section 6.1 Representations and Warranties of the Originator . In order to induce the Buyer to enter into this Agreement and to make Purchases hereunder, the Originator hereby makes the representations and warranties set forth in this Section 6.1, in each case as of the date hereof, as of the Closing Date, as of the date of each Purchase hereunder and as of any other date specified in such representation and warranty.

(a) Organization and Good Standing . The Originator is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and has full power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted. The Originator had at all relevant times, and now has, all necessary power, authority and legal right to own and sell the Cartus Purchased Assets.

(b) Due Qualification . The Originator is duly qualified to do business, is in good standing as a foreign corporation, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and in which the failure so to qualify or to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a Material Adverse Effect.

(c) Power and Authority: Due Authorization . The Originator (i) has all necessary corporate power and authority (A) to execute and deliver this Agreement, the Contracts and the other Transaction Documents to which it is a party, (B) to perform its obligations under this Agreement, the Contracts and the other Transaction Documents to which it is a party and (C) to sell and assign the Cartus Purchased Assets transferred hereunder on and after such date, on the terms and subject to the conditions herein and therein provided and (ii) has duly authorized by all necessary corporate action such sale and assignment and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement, the Contracts and the other Transaction Documents to which it is a party.

(d) Valid Sale; Binding Obligations . This Agreement constitutes a valid sale, transfer, set-over and conveyance to the Buyer of all of the Originator’s right, title and interest in, to and under the Cartus Receivables transferred hereunder on such date, which is perfected and of first priority (subject to Permitted Liens and Permitted Exceptions) under the UCC and other applicable law, enforceable against creditors of, and purchasers from, the Originator, free and clear of any Lien (other than Permitted Liens); and this Agreement constitutes, and each other

 

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Transaction Document to which the Originator is a party when duly executed and delivered will constitute, a legal, valid and binding obligation of the Originator, enforceable against the Originator in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. The Originator has no right, title or interest in or to any CFC Home, CFC Home Purchase Contract or any Receivable created or arising under any CFC Home Purchase Contract.

(e) No Conflict or Violation . The execution, delivery and performance of, and the consummation of the transactions contemplated by, this Agreement and the other Transaction Documents to be signed by the Originator, and the fulfillment of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under (A) the certificate of incorporation or the by-laws of the Originator or (B) any material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which the Originator is a party or by which it or any of its properties is bound, (ii) result in the creation or imposition of any Lien on any of the Cartus Purchased Assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any federal, state, local or foreign law or any decision, decree, order, rule or regulation applicable to the Originator or of any federal, state, local or foreign regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Originator, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(f) Litigation and Other Proceedings . (i) There is no action, suit, proceeding or investigation pending, or to the best knowledge of the Originator threatened, against the Originator before any court, arbitrator, regulatory body, administrative agency or other tribunal or governmental instrumentality and (ii) the Originator is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other government authority that, in the case of either of the foregoing clauses (i) or (ii), (A) asserts the invalidity of this Agreement or any other Transaction Document, (B) seeks to prevent the sale of any Cartus Purchased Asset by the Originator to the Buyer, the creation of a material amount of Cartus Receivables or the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document, (C) seeks any determination or ruling that, in the reasonable judgment of the Originator, would materially and adversely affect the performance by the Originator of its obligations under this Agreement or any other Transaction Document to which it is a party or the validity or enforceability of this Agreement or any other Transaction Document to which it is a party or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect.

(g) Governmental Approvals . Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a

 

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Material Adverse Effect, (i) all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Originator in connection with the conveyance of the Cartus Purchased Assets transferred hereunder on and after such date, or the due execution, delivery and performance by the Originator of this Agreement or any other Transaction Document to which it is a party and the consummation of the transactions contemplated by this Agreement or any other Transaction Documents to which it is a party have been obtained or made and are in full force and effect and (ii) all filings with any Governmental Authority that are required to be obtained in connection with such conveyance and the execution and delivery by the Originator of this Agreement have been made; provided , however , that prior to recordation pursuant to Section 8.3 or the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee and no recordation in real estate records of the conveyance pursuant to the related Home Purchase Contract or Home Sale Contract shall be made except as otherwise required or permitted under Section 2.01(d)(i) of the Transfer and Servicing Agreement.

(h) Margin Regulations . The Originator is not engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meanings of Regulations T, U and X of the Board of Governors of the Federal Reserve System). The Originator has not taken and will not take any action to cause the use of proceeds of the sales hereunder to violate said Regulations T, U or X.

(i) Taxes . The Originator has filed (or there have been filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be owing by it, other than any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, would not have a Material Adverse Effect.

(j) Solvency . After giving effect to the conveyance of Cartus Purchased Assets hereunder on such date, the Originator is solvent and able to pay its debts as they come due and has adequate capital to conduct its business as presently conducted.

(k) Quality of Title/Valid Transfers .

(i) Immediately before the Purchase to be made by the Buyer hereunder on such date, each Cartus Purchased Asset to be sold to the Buyer shall be owned by the Originator free and clear of any Lien (other than any Permitted Lien), and the Originator shall have made all filings and shall have taken all other action under applicable law in each relevant jurisdiction in order to protect and perfect the ownership interest of the Buyer and its successors and assigns in such Cartus Purchased Assets against all creditors of, and purchasers from, the Originator (subject to Permitted Exceptions).

 

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(ii) With respect to each Cartus Receivable transferred hereunder on such date, the Buyer shall acquire a valid and (subject to Permitted Exceptions) perfected ownership interest in such Cartus Receivable and any identifiable proceeds thereof, free and clear of any Lien (other than any Permitted Liens).

(iii) Immediately prior to the sale of a Cartus Purchased Asset hereunder on such date, no effective financing statement or other instrument similar in effect that covers all or part of any Cartus Purchased Asset or any interest therein is on file in any recording office except such as may be filed (A) in favor of the Originator in accordance with the Pool Relocation Management Agreements, (B) in favor of the Buyer pursuant to this Agreement, (C) in favor of the Buyer’s successors and assigns pursuant to the Receivables Purchase Agreement, the Transfer and Servicing Agreement or the Indenture or otherwise filed by or at the direction of the Buyer’s successors and assigns or (D) to evidence any Mortgage on a Cartus Home created by a Transferred Employee.

(iv) The CFC Purchase Price constitutes reasonably equivalent value for the Cartus Purchased Assets conveyed in consideration therefor on such date, and no purchase of an interest in such Cartus Purchased Assets by the Buyer from the Originator constitutes a fraudulent transfer or fraudulent conveyance under the United States Bankruptcy Code or applicable state bankruptcy or insolvency laws or is otherwise void or voidable or subject to subordination under similar laws or principles or for any other reason.

(l) Eligible Receivables . Each Cartus Receivable included in the Cartus Purchased Assets transferred hereunder on such date, unless otherwise identified to the Buyer and its assignees by the Originator in the related Daily Originator Report, is an Eligible Receivable on such date.

(m) Accuracy of Information . All written information furnished by the Originator to the Buyer or its successors and assigns pursuant to or in connection with any Transaction Document or any transaction contemplated herein or therein with respect to the Cartus Purchased Assets transferred hereunder on such date is true and correct in all material respects on such date.

(n) Offices . The principal place of business and chief executive office of the Originator is located, and the offices where the Originator keeps all Cartus Records (and all original documents relating thereto) are located, at the addresses specified in Schedule 6.1(n), except that (i) Home Deeds and related documents necessary to close Cartus Home sale transactions, including powers of attorney, may be held by local attorneys or escrow agents acting on behalf of the Originator in connection with the sale of Cartus Homes to Ultimate Buyers, so long as such local attorneys are notified of the interest of the Buyer and the Buyer’s assignees therein and (ii) Cartus Records relating to any Pool Relocation Management Agreement and the Receivables arising thereunder or in connection therewith may be maintained at the offices of the related Employer.

 

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(o) Payment Instructions to Obligors . The Originator has instructed (i) all Obligors to remit all payments on the Cartus Purchased Assets directly to one of the Lockboxes or Lockbox Accounts, (ii) all Lockbox Banks to deposit all Cartus Collections remitted to a Lockbox directly to the related Lockbox Account and (iii) all Persons receiving Cartus Home Sale Proceeds to deposit such Cartus Home Sale Proceeds in one of the Lockboxes or Lockbox Accounts within two Business Days after receipt, except to the extent a longer escrow period is required under applicable law, in which case such Cartus Home Sale Proceeds shall be deposited into one of the Lockboxes or Lockbox Accounts within one Business Day after the expiration of such period.

(p) Investment Company Act . The Originator is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act.

(q) Accounting for Certain Assets . (i) If the Cartus Receivables sold on such date hereunder had not been sold to the Buyer hereunder, and if interests therein had not been transferred by the Buyer in accordance with the Transaction Documents, all Cartus Receivables would have been and at all times would be represented in the financial statements and records of the Originator as accounts receivable or amounts owed from Obligors in accordance with GAAP consistently applied by the Originator and (ii) in accordance with GAAP consistently applied, upon the sale of any Cartus Home to an Ultimate Buyer, any such obligation relating to any Equity Payment, Mortgage Payoff or Mortgage Payment with respect to such Cartus Home would be reduced by the amount of the cash proceeds of the sale of such Cartus Home (in some cases, net of certain Direct Expenses relating to such Cartus Home).

(r) ERISA . Each Plan is in compliance with all applicable material provisions of ERISA, and the Originator or the relevant ERISA Affiliate has received a favorable determination letter from the Internal Revenue Service that each Plan intended to be qualified under Section 401(a) of the Code is so qualified. No Plan has incurred an “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not waived. Neither the Originator nor any ERISA Affiliate (i) has incurred or expects to incur any liability under Title IV of ERISA with respect to any Plan that could give rise to a lien in favor of the PBGC other than liability for the payment of premiums, all of which have been timely paid when due in accordance with Section 4007 of ERISA, (ii) has incurred or expects to incur any withdrawal liability within the meaning of Section 4201 of ERISA, (iii) is subject to any lien under Section 412(n) of the Code or Sections 302(f) or 4068 of ERISA or arising out of any action brought under Sections 4070 or 4301 of ERISA or (iv) is required to provide security to a Plan under Section 401(a)(29) of the Code. The PBGC has not instituted proceedings to terminate any Plan or to appoint a trustee or administrator of any such Plan, and no circumstances exist that constitute grounds under Section 4042 of ERISA to commence any such proceedings.

(s) Legal Names . Except as described in Schedule 6.1(s), since January 1, 1995, the Originator (i) has not been known by any legal name other than its corporate name as

 

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of the date hereof, except as otherwise permitted pursuant to Section 7.3(d), (ii) has not been the subject of any merger or other corporate reorganization that resulted in a change of name, identity or corporate structure and (iii) has not used any trade names other than its actual corporate name.

(t) Compliance with Applicable Laws . The Originator is in compliance with the requirements of all applicable laws, rules, regulations and orders of all Governmental Authorities (federal, state, local or foreign, including without limitation Environmental Laws), a violation of any of which, individually or in the aggregate for all such violations, is reasonably likely to have a Material Adverse Effect.

(u) Credit and Collection Policy . The copy of the Credit and Collection Policy of the Originator attached as Exhibit 6.1(u) to this Agreement is a true and complete copy thereof. As of the date each Cartus Purchased Asset is transferred hereunder, the Originator has complied in all applicable material respects with the Credit and Collection Policy with respect to such Cartus Purchased Asset transferred on such date and the related Contract. There has been no change to the Credit and Collection Policy that would be reasonably likely to adversely affect the collectibility of any material portion of the Cartus Receivables or other Cartus Purchased Assets or to decrease the credit quality of any newly created Cartus Receivables or other Cartus Purchased Assets.

(v) Environmental . On such date, to the best knowledge of the Originator, (i) there are no (A) pending or threatened claims, complaints, notices or requests for information received by the Originator with respect to any alleged violation of any Environmental Law in connection with any Cartus Home relating to any Cartus Receivable transferred hereunder on such date or (B) pending or threatened claims, complaints, notices or requests for information received by the Originator regarding potential liability under any Environmental Law in connection with any Cartus Home relating to any Cartus Receivable transferred hereunder on such date and (ii) the Originator is in material compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters, if any, that are required to be held by it under applicable law in connection with any Cartus Homes relating to any Cartus Receivable transferred hereunder on such date, other than those that, in the case of either clause (i) or (ii), singly or in the aggregate, are not reasonably likely to have a Material Adverse Effect.

(w) Pool Relocation Management Agreements . The Pool Relocation Management Agreements include all Relocation Management Agreements to which the Originator is a party except for Excluded Contracts.

(x) Indebtedness for Borrowed Money . As of the Closing Date, the Originator has no Indebtedness for Borrowed Money.

 

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Section 6.2 Representations and Warranties of the Buyer . The Buyer hereby represents and warrants, on and as of the date hereof and on and as of the Closing Date, that (a) this Agreement has been duly authorized, executed and delivered by the Buyer and constitutes the Buyer’s valid, binding and legally enforceable obligation, except (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law, (b) the execution, delivery and performance of this Agreement does not violate any federal, state, local or foreign law applicable to the Buyer or any agreement to which the Buyer is a party and (c) all of the outstanding capital stock of the Buyer is directly or indirectly owned by the Originator, and all such capital stock is fully paid and nonassessable.

ARTICLE VII

GENERAL COVENANTS

Section 7.1 Affirmative Covenants of the Originator . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, the Originator hereby agrees that it will perform the covenants and agreements set forth in this Section 7.1.

(a) Compliance with Laws, Etc. The Originator will comply in all material respects with all applicable laws, rules, regulations, judgments, decrees and orders (including without limitation those relating to the Cartus Receivables, Cartus Home Purchase Contracts, Cartus Related Assets and all Environmental Laws affecting any Cartus Home), in each case to the extent that any such failure to comply, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(b) Preservation of Corporate Existence . The Originator (i) will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation (other than any change in corporate status by reason of a merger or consolidation permitted by Section 7.3(c)) and (ii) will qualify and remain qualified in good standing as a foreign corporation in each jurisdiction in which the failure to preserve and maintain such qualification as a foreign corporation could reasonably be expected to have a Material Adverse Effect.

(c) Keeping of Records and Books of Account . The Originator will maintain and implement administrative and operating procedures (including without limitation an ability to recreate records evidencing the Cartus Purchased Assets in the event of the destruction of the originals thereof) and will keep and maintain all documents, books, records and other information that are necessary or advisable, in the reasonable determination of the Buyer, for the collection of all amounts due under any or all Cartus Purchased Assets. Upon the reasonable request of the Buyer or its assignees made at any time after the occurrence and continuance of an

 

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Unmatured Servicer Default or a Servicer Default, the Originator will deliver copies of all Cartus Records maintained pursuant to this Section 7.1(c) to the Buyer or its designee. The Originator will maintain at all times accurate and complete books, records and accounts relating to the Cartus Purchased Assets and all Cartus Collections, in which timely entries will be made. The Originator’s master data processing records will be marked to indicate the sales of all Cartus Purchased Assets to the Buyer hereunder and will include without limitation all payments received and all credits and extensions granted with respect to the Cartus Purchased Assets.

(d) Location of Records and Offices . The Originator will keep its principal place of business and chief executive office and the offices where it keeps all Cartus Records (and all original documents relating thereto other than those Cartus Records that are maintained with local attorneys or escrow agents or at the offices of the relevant Employer as described in Section 6.1(n)) at the addresses specified in Schedule 6.1(n) or, upon not less than 30 days’ prior written notice given by the Originator to the Buyer and its assignees, at such other locations in jurisdictions in the United States of America where all action required by Section 8.3 has been taken and completed.

(e) Separate Corporate Existence of the Buyer . The Originator hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance on the Buyer’s identity as a legal entity separate from the Originator and the other Cartus Persons. From and after the date hereof until the Final Payout Date, the Originator will, and will cause each other Cartus Person to, take such actions on the part of the Originator or such Cartus Person as shall be required in order that:

(i) The Buyer’s operating expenses will not be paid by any Cartus Person, except that certain organizational expenses of the Buyer and expenses relating to creation and initial implementation of the Transaction Documents have been or will be paid by the Originator;

(ii) Any financial statements of any Cartus Person that are consolidated to include the Buyer will contain appropriate footnotes clearly stating that (A) all of the Buyer’s assets are owned by the Buyer and (B) the Buyer is a separate corporate entity with its own separate creditors that will be entitled to be satisfied out of the Buyer’s assets prior to any value in the Buyer becoming available to the Buyer’s equity holders;

(iii) Any transaction between the Buyer and a Cartus Person will be fair and equitable to the Buyer, will be the type of transaction that would be entered into by a prudent Person in the position of the Buyer with a Cartus Person and will be on terms that are at least as favorable as may be obtained from a Person that is not a Cartus Person; and

(iv) No Cartus Person will be, or will hold itself out to be, responsible for the debts of the Buyer.

(f) Payment Instruction to Obligors . The Originator will (i) instruct all Obligors to submit all payments on the Cartus Purchased Assets either (A) to one of the

 

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Lockboxes maintained at the Lockbox Banks for deposit in a Lockbox Account or (B) directly to one of the Lockbox Accounts and (ii) instruct all Persons receiving Home Sale Proceeds to deposit such Home Sale Proceeds in one of the Lockboxes or Lockbox Accounts within two Business Days after such receipt, except to the extent a longer escrow period is required under applicable law, in which case such Home Sale Proceeds will be deposited into one of the Lockboxes or Lockbox Accounts within one Business Day after the expiration of such period. The Originator will direct all Obligors with respect to receivables and related assets that are not Cartus Receivables or CFC Receivables to deposit all collections in respect of such receivables and related assets in an account that is not a Lockbox or Lockbox Account and will take such other steps as the Buyer reasonably may request to ensure that all collections on such receivables and related assets will be segregated from Cartus Collections and CFC Collections.

(g) Segregation of Collections . The Originator will use reasonable efforts to minimize the deposit of any funds other than Cartus Collections or CFC Collections into any of the Lockbox Accounts and, to the extent that any such funds are deposited into any of such Lockbox Accounts, promptly will identify any such funds or will cause such funds to be so identified to the Servicer, it being understood and agreed that the Originator does not hereby assume any affirmative duty to re-direct Obligors to remit funds to alternate locations.

(h) Identification of Eligible Receivables . The Originator will (i) establish and maintain necessary procedures for determining whether each Cartus Receivable, as of the date it is sold hereunder, qualifies as an Eligible Receivable, and for identifying all Cartus Receivables sold to the Buyer that are not Eligible Receivables on the date sold and (ii) will provide to the Servicer in a timely manner (i.e., no less frequently than the date on which the Servicer needs such information to prepare its next Receivables Activity Report or Weekly Activity Report, as applicable) information that shows whether, and to what extent, the Cartus Receivables sold to the Buyer hereunder were not Eligible Receivables on the date sold.

(i) Payment of Taxes . The Originator will file (or there will be filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to be filed by it and will pay all taxes, assessments and governmental charges thereby shown to be owing by it, except for any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, would not have a Material Adverse Effect.

(j) Accounting for Certain Assets . To the extent permitted by applicable law and GAAP, the Originator will (i) prepare all financial statements that account for the transactions contemplated hereby as a sale of the Cartus Purchased Assets by the Originator to the Buyer and, in all other respects, will account for and treat the transactions contemplated hereby (including but not limited to accounting and (to the extent taxes are not consolidated) for tax reporting purposes) as a sale of the Cartus Purchased Assets by the Originator to the Buyer and (ii) maintain and prepare its financial statements and records in accordance with GAAP, applied in accordance with the representation contained in Section 6.1(q).

 

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(k) Receivables Reviews . Upon reasonable prior notice, the Originator will permit the Buyer or its assignees (or other Persons designated by the Buyer from time to time) or their agents or representatives (including without limitation certified public accountants or other auditors), at the expense of the Originator and during regular business hours, (i) to examine and make copies of and abstracts from, and to conduct accounting reviews of, all Cartus Records in the possession or under the control of the Originator, including without limitation the related Contracts, invoices and other documents related thereto and (ii) to visit the offices and properties of the Originator for the purpose of examining any materials described in the preceding clause (i) and to discuss matters relating to the Cartus Receivables or the other Cartus Purchased Assets or the performance by the Originator of its obligations under any Transaction Document to which it is a party with any Authorized Officers of the Originator having knowledge of such matters or with the Originator’s certified public accountants or other auditors; provided , however , that all such reviews will occur no more frequently than twice per year (with only the first such review in any year being at the Originator’s expense) unless (i) Cartus is the Servicer and a Servicer Default has occurred and is continuing or (ii) the Buyer or its successor or assignee has given advance written notice to the Originator that it believes the composition and/or performance of the Cartus Purchased Assets have deteriorated in a manner materially adverse to the interests of the Buyer or its assignees.

(l) Computer Software, Hardware and Services . The Originator will provide the Buyer and its assignees with such licenses, sublicenses and/or assignments of contracts as the Servicer, the Buyer or the Buyer’s assignees require with respect to all services and computer hardware or software that relate to the servicing of the Cartus Receivables or the other Cartus Purchased Assets; provided , however , that with respect to any computer software licensed from a third party, the Originator will be required to provide such licenses, sublicenses and/or assignments of such software only to the extent that provision of the same would not violate the terms of any contracts of the Originator with such third party.

(m) Environmental Claims . The Originator will use commercially reasonable efforts to promptly cure and have dismissed with prejudice to the satisfaction of the Buyer any actions and any proceedings relating to compliance with Environmental Laws relating to any Cartus Home, but only to the extent that the conditions that gave rise to such proceedings were in existence as of the date on which the Buyer acquired the related Cartus Receivable.

(n) Turnover of Collections . If the Originator or any of its agents or representatives at any time receives any cash, checks or other instruments constituting Cartus Collections or CFC Collections, such recipient will segregate and hold such payments in trust for, and in a manner acceptable to, the Servicer and will, promptly upon receipt (and in any event within one Business Day following receipt) remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to a Lockbox Account.

(o) Performance and Compliance by Originator with Relocation Management Agreements . The Originator will, at its expense, timely and fully perform and comply with all provisions, covenants and other promises required to be observed by it under the Pool Relocation Management Agreements, the Cartus Home Purchase Contracts and other Contracts related to the Cartus Purchased Assets.

 

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(p) Compliance with Credit and Collection Policy . The Originator will comply in all applicable material respects with the Credit and Collection Policy with respect to each Cartus Purchased Asset and will not take any action in violation of the Credit and Collection Policy with respect to any other ARSC Purchased Asset.

Section 7.2 Reporting Requirements . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, the Originator agrees that it will furnish to the Buyer or its assignees:

(a) Annual Financial Statements . As soon as available and in any event within 95 days after the end of each fiscal year of the Performance Guarantor and the Originator, as applicable, copies of (i) the consolidated balance sheet of the Performance Guarantor and its consolidated subsidiaries as at the end of such fiscal year and the related statements of earnings and cash flows and stockholders’ equity of the Performance Guarantor and its consolidated subsidiaries for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year and prepared in accordance with GAAP applied consistently throughout the periods reflected therein, certified by Deloitte & Touche (or such other independent certified public accountants of nationally recognized standing in the United States of America as shall be selected by the Performance Guarantor) and (ii) copies of the statements of earnings of the Originator on a consolidated basis for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year and certified by the chief financial officer, chief accounting officer or controller of the Originator (it being understood and agreed that such statements of earnings will be prepared in accordance with the Originator’s customary management accounting practices as in effect on the date hereof and need not be prepared in accordance with GAAP);

(b) Material Adverse Effect . Promptly and in any event within two Business Days after the president, chief financial officer, controller or treasurer of the Originator has actual knowledge thereof, written notice that describes in reasonable detail any event or occurrence with respect to Cartus that, individually or in the aggregate for all such events or occurrences, has had, or that such Authorized Officer in its reasonable good faith judgment determines could reasonably be expected to have, a Material Adverse Effect (as defined in the Indenture);

(c) Proceedings . Promptly and in any event within five Business Days after an Authorized Officer of the Originator has knowledge thereof, written notice of (i) any litigation, investigation or proceeding of the type described in Section 6.1(f) not previously disclosed to the Buyer, (ii) any material adverse development that has occurred with respect to any such previously disclosed litigation, investigation or proceeding or (iii) any CFC Purchase Termination Event or event which, with the giving of notice or passage of time or both, would constitute a CFC Purchase Termination Event;

 

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(d) ERISA Event . (i) As soon as possible and in any event within 30 days after the Originator or any ERISA Affiliate knows or has reason to know that a “reportable event” (as defined in Section 4043 of ERISA) has occurred with respect to any Plan, a statement of an Authorized Officer of the Originator setting forth details as to such reportable event and the action that the Originator or an ERISA Affiliate proposes to take with respect thereto, together with a copy of the notice of such reportable event, if any, given to the PBGC, the Internal Revenue Service or the Department of Labor; (ii) promptly and in any event within 10 Business Days after receipt thereof, a copy of any notice the Originator or any ERISA Affiliate receives from the PBGC relating to the intention of the PBGC to terminate any Plan or to appoint a trustee to administer any such Plan; (iii) promptly and in any event within 10 Business Days after a filing with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to make a required installment or other payment with respect to a Plan, a statement of the chief financial officer of the Originator setting forth details as to such failure and the action that the Originator or an ERISA Affiliate proposes to take with respect thereto, together with a copy of such notice given to the PBGC; and (iv) promptly and in any event within 30 Business Days after receipt thereof by the Originator or any ERISA Affiliate from the sponsor of a multiemployer plan (as defined in Section 3(37) of ERISA), a copy of each notice received by the Originator or any ERISA Affiliate concerning the imposition of withdrawal liability or a determination that a multiemployer plan is, or is expected to be, terminated or reorganized;

(e) Environmental Claims . Promptly and in any event within five Business Days after receipt thereof, notice and copies of all written claims, complaints, notices, actions, proceedings, requests for information or inquiries relating to the condition of any Cartus Homes or compliance with Environmental Laws relating to the Cartus Homes, other than those received in the ordinary course of business and that, singly or in the aggregate, do not represent events or conditions that would cause the representation set forth in Section 6.1(v) to be incorrect; and

(f) Other . Promptly, from time to time, such other information, documents, records or reports with respect to the Cartus Purchased Assets or the condition or operations, financial or otherwise, of the Originator as the Buyer or its assignees may from time to time reasonably request in order to protect the interests of the Buyer or such assignees under or as contemplated by this Agreement and the other Transaction Documents, including timely delivery of all such information required under any Enhancement Agreement.

Section 7.3 Negative Covenants of the Originator . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, the Originator agrees that it will not:

(a) Sales, Liens, Etc. Sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien (other than Permitted Liens) of anyone claiming by or through it on or with respect to, any ARSC Purchased Asset or Excluded Asset or any interest therein or any Lockbox or Lockbox Account, other than (i) sales of Cartus Purchased Assets pursuant to this Agreement, (ii) sales of Cartus Homes in accordance with the applicable Contracts and (iii) transfers of Excluded Assets where the transferee has executed and delivered to the Indenture Trustee an Acknowledgement Letter;

 

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(b) Change in Business or Credit and Collection Policy . (i) Make any material change in the Credit and Collection Policy or (ii) make any material change in the character of its employee relocation business or engage in any business unrelated to such business as currently conducted that, in either case, individually or in the aggregate with all other such changes, would be reasonably likely to have a material adverse effect on the composition or performance of the Cartus Purchased Assets;

(c) No Mergers, Etc. Consolidate with or merge with or into any other Person or convey, transfer or sell all or substantially all of its properties and assets to any Person, unless:

(i)(A) the Originator is the surviving entity thereof or, if the Originator is not the surviving entity thereof, (x) the Person formed by such consolidation or into which the Originator is merged or the Person that acquires by conveyance, transfer or sale all or substantially all of the properties and assets of the Originator (any such Person, the “ Surviving Entity ”) is an entity organized and existing under the laws of the United States of America or any State thereof, (y) such Surviving Entity expressly assumes, by an agreement supplemental hereto in form and substance satisfactory to the Buyer and its assignees, performance of every covenant and obligation of the Originator hereunder and under the other Transaction Documents to which the Originator is a party and (z) such Surviving Entity delivers to the Buyer and its assignees an opinion of counsel that such Surviving Entity is duly organized and validly existing under the laws of its organization, has duly executed and delivered such supplemental agreement, and such supplemental agreement is a valid and binding obligation of such Surviving Entity, enforceable against such Surviving Entity in accordance with its terms (subject to customary exceptions relating to bankruptcy and equitable principles) and covering such other matters as the Buyer or its assignees may reasonably request;

(ii) all actions necessary to maintain the perfection of the security interests or ownership interests of the Buyer in the Cartus Purchased Assets in connection with such consolidation, merger, conveyance or transfer have been taken, as evidenced by an opinion of counsel reasonably satisfactory to the Buyer and its assignees;

(iii) so long as the Originator is the Servicer, no Servicer Default or Unmatured Servicer Default is then occurring or would result from such merger, consolidation, conveyance or transfer; and

(iv) any necessary consents of each applicable Series Enhancer have been obtained.

 

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(d) Change in Name . Change its corporate name or the name under or by which it conducts its core relocation business or the jurisdiction in which it is incorporated unless the Originator has given the Buyer and its assignees and each rating agency then rating any Series of Notes at least 30 days’ prior written notice thereof and unless, prior to any such change in name or jurisdiction of incorporation, the Originator has taken and completed all action required by Section 8.3;

(e) Home Deeds . Record any Home Deeds with respect to any Homes except at the direction of the Buyer or its assignees or as permitted by Section 8.3 hereof or by Section 2.01(d)(i) of the Transfer and Servicing Agreement; and

(f) Termination of Relocation Management Agreements . Terminate any Pool Relocation Management Agreement, Cartus Home Purchase Contract, Cartus Home Sale Contract, Cartus Equity Loan Note or Cartus Equity Loan Agreement except in accordance with the Credit and Collection Policy.

(g) Extension or Amendment . Extend, amend or otherwise modify the terms of any Receivable included in the ARSC Purchased Assets, or amend, modify or waive any material term or condition related thereto, except in accordance with Section 3.10 of the Transfer and Servicing Agreement.

(h) Change in Payment Instruction to Obligors . Make any change in its instructions to Obligors or other Persons regarding payments to be made to the Originator or payments to be made to any Lockbox Account (except for a change in instructions solely for the purpose of directing such Obligors or other Persons to make such payments to another existing Lockbox Account), unless (i) the Indenture Trustee has received copies of a Lockbox Agreement with each new Lockbox Bank duly executed by the Originator, the Buyer, the Issuer, the Indenture Trustee and such Lockbox Bank and (ii) in the case of any termination, the Buyer or its successors and assigns have received evidence to their satisfaction that the Obligors that were making payments into a terminated Lockbox Account have been instructed in writing to make payments into another Lockbox Account then in use.

(i) Home Purchase Contracts . Purchase any Home or make any Equity Payments, Mortgage Payoffs, or Mortgage Payments on or after the Closing Date other than Equity Payments, Mortgage Payoffs and Mortgage Payments with respect to Cartus Homes.

(j) Indebtedness for Borrowed Money . Create, incur, guarantee or permit to exist any Indebtedness for Borrowed Money, except for (A) any such Indebtedness owed on an intercompany basis to the Performance Guarantor or any Affiliate thereof and (B) any such Indebtedness the terms of which include acknowledgment provisions in substantially the form of Exhibit 7.3(j) hereto.

 

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Section 7.4 Affirmative Covenants of the Buyer . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, the Buyer hereby agrees that it will perform the covenants and agreements set forth in this Section 7.4.

(a) The Buyer hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance upon the Buyer’s identity as a legal entity separate from the Originator and the other Cartus Persons. From and after the date hereof until one year and one day after the Final Payout Date, the Buyer will take such actions as shall be required in order that:

(i) The Buyer will conduct its business in office space allocated to it and for which it pays an appropriate rent and overhead allocation;

(ii) The Buyer will maintain corporate records and books of account separate from those of each Cartus Person and telephone numbers and stationery that are separate and distinct from those of each Cartus Person;

(iii) The Buyer’s assets will be maintained in a manner that facilitates their identification and segregation from those of any Cartus Person;

(iv) The Buyer will strictly observe corporate formalities in its dealings with the public and with each Cartus Person, and funds or other assets of the Buyer will not be commingled with those of any Cartus Person, except as expressly permitted by the Transaction Documents. The Buyer will at all times, in its dealings with the public and with each Cartus Person, hold itself out and conduct itself as a legal entity separate and distinct from each Cartus Person. The Buyer will not maintain joint bank accounts or other depository accounts to which any Cartus Person (other than the Originator in its capacity as Servicer under the Transfer and Servicing Agreement) has independent access;

(v) The duly elected board of directors of the Buyer and duly appointed officers of the Buyer will at all times have sole authority to control decisions and actions with respect to the daily business affairs of the Buyer;

(vi) Not less than one member of the Buyer’s board of directors will be an Independent Director. The Buyer will observe those provisions in its certificate of incorporation that provide that the Buyer’s board of directors will not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Buyer unless the Independent Director and all other members of the Buyer’s board of directors unanimously approve the taking of such action in writing prior to the taking of such action;

(vii) The Buyer will compensate each of its employees, consultants and agents from the Buyer’s own funds for services provided to the Buyer;

 

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(viii) The Buyer will not hold itself out to be responsible for the debts of any Cartus Person; and

(ix) The Buyer will take all actions necessary on its part to be taken in order to ensure that the facts and assumptions relating to the Buyer set forth in the opinions of Orrick, Herrington & Sutcliffe LLP dated as of July 31, 2006 relating to true sale matters with respect to the Purchase of the Cartus Purchased Assets hereunder and substantive consolidation matters with respect to the Originator and the Buyer will be true and correct at all times.

(b) The Buyer assumes no obligations of the Originator under the Pool Relocation Management Agreements with respect to any Cartus Home Purchase Contracts, including without limitation the obligations of the Originator to make Equity Payments, Mortgage Payoffs and Mortgage Payments with respect to Cartus Homes. The Buyer will enter into all Home Purchase Contracts under the Pool Relocation Management Agreements in its own name and will make all Equity Payments, Mortgage Payoffs and Mortgage Payments from and after the Closing Date other than Equity Payments, Mortgage Payoffs and Mortgage Payments with respect to Cartus Homes.

ARTICLE VIII

ADDITIONAL RIGHTS AND OBLIGATIONS IN

RESPECT OF THE CARTUS PURCHASED ASSETS

Section 8.1 Rights of the Buyer.

(a) Subject to Section 8.4(b), the Originator hereby authorizes the Buyer and its assignees and designees to take any and all steps in the Originator’s name and on behalf of the Originator that the Buyer, the Servicer and/or their respective designees determine are reasonably necessary or appropriate to collect all amounts due under any and all Cartus Purchased Assets, including without limitation endorsing the name of the Originator on checks and other instruments representing Cartus Collections and enforcing such Cartus Purchased Assets.

(b) The Buyer shall have no obligation to account for, to replace, to substitute or to return any Cartus Purchased Asset to the Originator, except as provided in Section 4.3(c).

(c) The Buyer shall have the unrestricted right to further assign, transfer, deliver, hypothecate, subdivide or otherwise deal with the Cartus Purchased Assets and all of the Buyer’s right, title and interest in, to and under this Agreement on whatever terms the Buyer determines, pursuant to the Receivables Purchase Agreement or otherwise.

 

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(d) As between the Originator and the Buyer, the Buyer shall have the sole right to retain any gains or profits created by buying, selling or holding the Cartus Purchased Assets.

Section 8.2 Responsibilities of the Originator . Anything herein to the contrary notwithstanding:

(a) The Originator agrees to deliver directly to the Servicer (for the Buyer’s account), within one Business Day after receipt thereof, any Cartus Collections or CFC Collections that it receives, in the form so received, and agrees that all such Cartus Collections and CFC Collections will be deemed to be received in trust for the Buyer and its assignees and will be maintained and segregated separate and apart from all other funds and moneys of the Originator until delivery of such Cartus Collections and CFC Collections to the Servicer; and

(b) The Originator hereby grants to the Buyer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of the Originator all steps necessary or advisable to endorse, negotiate or otherwise realize on any writing or other right of any kind held or transmitted by the Originator or transmitted or received by the Buyer (whether or not from the Originator) in connection with any Cartus Purchased Asset (which power of attorney may be exercised by the Buyer’s successors and assigns in accordance with Section 8.4 and Section 11.12(b)).

(c) The Originator shall perform all of its obligations hereunder and under the Pool Relocation Management Agreements and other Contracts related to the Cartus Purchased Assets to which it is a party (other than those obligations undertaken by the Buyer as provided in Section 7.4(b)) to the same extent as if such Cartus Purchased Assets had not been sold hereunder, and the exercise by the Buyer or its designee or assignee of the Buyer’s rights hereunder or in connection herewith shall not relieve the Originator from any of its obligations under any such Pool Relocation Management Agreements or Contracts related to the Cartus Purchased Assets to which it is a party. Notwithstanding the foregoing, the Originator acknowledges that the Buyer or its designees are entitled to perform such obligations to the extent permitted under the Transaction Documents.

 

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Section 8.3 Further Action Evidencing Purchases . The Originator agrees that from time to time, at its expense and upon reasonable request, it will promptly execute and deliver all further instruments and documents and take all further action as is reasonably necessary to perfect, protect or more fully evidence the Purchase of the Cartus Purchased Assets by the Buyer hereunder, or to enable the Buyer or its assignees to exercise or enforce any of its rights hereunder or under any other Transaction Document to which the Originator is a party; provided , however , that the Originator will not file or record any Home Deeds except (i) in its capacity as the Servicer pursuant to the Transfer and Servicing Agreement and in accordance with the terms thereof and (ii) at any time, to the extent such recordation is required by local law, regulation or custom. No Home Deeds or Home Purchase Contracts may be recorded in the name of the Originator other than Home Deeds relating to Cartus Homes and Cartus Home Purchase Contracts. Without limiting the generality of the foregoing, the Originator shall:

(a) upon the Buyer’s request, execute and file such financing or continuation statements or amendments thereto or assignments thereof and such other instruments or notices as the Buyer or its assignees may reasonably determine to be necessary or appropriate; and

(b) mark the master data processing records evidencing the Cartus Purchased Assets and, if requested by the Buyer or its assignees, legend the related Pool Relocation Management Agreements and Cartus Home Purchase Contracts to reflect the sale of the Cartus Purchased Assets to the Buyer pursuant to this Agreement.

The Originator hereby authorizes the Buyer and its assignees to file one or more financing or continuation statements and amendments thereto and assignments thereof with respect to all or any of the Cartus Purchased Assets, in each case whether now existing or hereafter generated by the Originator. If (i) the Originator fails to perform any of its agreements or obligations under this Agreement and does not remedy such failure within the applicable cure period, if any, and (ii) the Buyer or its assignees in good faith reasonably believes that the performance of such agreements and obligations is necessary or appropriate to protect the interests of the Buyer or its assignees under this Agreement, then the Buyer or its assignees may (but shall not be required to) perform or cause performance of such agreement or obligation, and the reasonable expenses of the Buyer or its assignees incurred in connection with such performance shall be payable by the Originator as provided in Section 10.1.

Section 8.4 Cartus Collections; Rights of the Buyer and its Assignees.

At any time following the designation of a Servicer other than the Originator pursuant to the Transfer and Servicing Agreement:

(a) The Buyer or its assignees may direct the Obligors of Cartus Receivables, or any of them, to pay all amounts payable under any Cartus Receivable directly to the Buyer or its assignees;

 

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(b) At the request of the Buyer or its assignees and at the Originator’s expense, the Originator shall give notice of such ownership to each said Obligor and direct that payments be made directly to the Buyer or its assignees;

(c) At the request of the Buyer or its assignees and at the Originator’s expense, the Originator shall (A) assemble all of the Cartus Records, to the extent such Cartus Records are in its possession, and make the same available at a place selected by the Buyer or its successors and assigns, or instruct any escrow agents holding any such documents, instruments and other records on its behalf to make the same available and (B) segregate all cash, checks and other instruments received by it from time to time constituting Cartus Collections or CFC Collections in a manner reasonably acceptable to the Buyer or its assignees and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Buyer or its assignees; and

(d) The Originator hereby authorizes the Buyer or its assignees to take any and all steps in the Originator’s name and on behalf of the Originator that are necessary or desirable, in the reasonable determination of the Buyer or its assignees, to collect all amounts due under any and all Cartus Purchased Assets, including without limitation endorsing the Originator’s name on checks and other instruments representing Cartus Collections and enforcing the Cartus Purchased Assets.

ARTICLE IX

TERMINATION

Section 9.1 CFC Purchase Termination Events . The following events shall be “ CFC Purchase Termination Events ”:

(a) The occurrence of an Event of Default or an Amortization Event with respect to all outstanding Series of Notes; or

(b) Any representation or warranty made by the Originator under any of the Transaction Documents, any Receivables Activity Report or other information or report delivered by the Originator (including in its capacity as Servicer) with respect to the Originator or the Cartus Purchased Assets shall prove to have been untrue or incorrect in any material respect when made or deemed to have been made, and such failure could be reasonably expected to have a Material Adverse Effect and such occurrence remains unremedied for 30 days; provided , however , that any such incorrect representation relating to a Cartus Receivable with respect to which the Originator has made a Cartus Noncomplying Asset Adjustment pursuant to Section 4.3(a) shall not constitute a CFC Purchase Termination Event; or

 

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(c) (i) The Originator shall fail to perform or observe, as and when required, any term, covenant or agreement contained in this Agreement or any of the other Transaction Documents to which it is a party or any Contract required on its part to be performed or observed, and such failure shall remain unremedied for: (A) in the case of a failure to deliver any Daily Originator Report pursuant to Section 3.1(a), ten calendar days ( provided , however , that such ten-day period may be extended for an additional three days if such failure to deliver a Daily Originator Report is due to computer failure); (B) in the case of a failure to provide payment instructions to Obligors pursuant to Section 7.1(f), a failure to segregate Cartus Collections or CFC Collections pursuant to Section 7.1(g), a failure to provide records pursuant to Section 7.1(k), a failure to provide required notices pursuant to Section 7.2(c), a failure to provide any required monthly report or a breach of any of the negative covenants of the Originator set forth in Section 7.3, ten calendar days; or (C) in the case of any other failure to perform or observe, as and when required, any term, covenant or agreement, which failure could be reasonably expected to have a Material Adverse Effect, 30 days or (ii) the Performance Guarantor shall fail to make any required payment under its Performance Guaranty and such failure shall remain unremedied for one Business Day or (iii) the Performance Guarantor shall otherwise fail to perform under its Performance Guaranty; or

(d) An Event of Bankruptcy shall have occurred with respect to the Originator or the Performance Guarantor; or

(e) The representation and warranty in Section 6.1(k) shall not be true at any time with respect to a substantial portion of the Cartus Purchased Assets; or

(f) Either (i) the Internal Revenue Service shall file notice of a Lien pursuant to Section 6323 of the Internal Revenue Code with respect to any of the Cartus Receivables or the Cartus Related Assets and such Lien shall not have been released within five days or, if released, proved to the satisfaction of the rating agencies then rating each Series of Notes or (ii) the PBGC shall file, or shall indicate its intention to file, notice of a Lien pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974 with respect to any of the Cartus Receivables or the Cartus Related Assets; or

(g) This Agreement or the Performance Guaranty shall cease to be in full force and effect for any reason other than in accordance with its terms; or

(h) An ARSC Purchase Termination Event or Transfer Termination Event shall have occurred.

If a CFC Purchase Termination Event occurs, the Originator shall promptly give notice to the Buyer and its assignees of such CFC Purchase Termination Event.

 

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Section 9.2 Purchase Termination . (a) On the Termination Date, the Originator shall cease transferring Cartus Purchased Assets to the Buyer, provided that any right, title and interest of the Originator in and to any CFC Designated Receivables arising from any Servicer Advances made thereafter, including any Related Property relating thereto and proceeds thereof, shall continue to be transferred. Notwithstanding any cessation of the transfer to the Buyer of additional Cartus Purchased Assets, Cartus Purchased Assets transferred to the Buyer prior to the Termination Date and Cartus Collections in respect of such Cartus Purchased Assets and the related Finance Charges, whenever accrued in respect of such Cartus Receivables, shall continue to be property of the Buyer available for transfer by the Buyer pursuant to the Receivables Purchase Agreement. Nothing in this Section 9.2 shall be deemed to prohibit the Buyer from funding CFC Designated Receivables from and after the Termination Date.

(b) Upon the occurrence of a CFC Purchase Termination Event, the Buyer and its assignees shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Without limiting the foregoing, the occurrence of a CFC Purchase Termination Event shall not deny to the Buyer or its assignees any remedy in addition to termination of its obligation to make Purchases hereunder to which the Buyer or its assignees may be otherwise appropriately entitled, whether by statute or applicable law, at law or in equity.

ARTICLE X

INDEMNIFICATION; SECURITY INTEREST

Section 10.1 Indemnities by the Originator . Without limiting any other rights that any Cartus Indemnified Party may have hereunder or under applicable law, the Originator agrees to indemnify the Buyer and each of its successors, permitted transferees and assigns, and all officers, directors, shareholders, controlling Persons, employees and agents of any of the foregoing (each of the foregoing Persons, a “ Cartus Indemnified Party ”), from and against any and all damages, losses, claims (whether on account of settlements or otherwise), actions, suits, demands, judgments, liabilities (including penalties), obligations or disbursements of any kind or nature and related costs and expenses (including reasonable attorneys’ fees and disbursements) awarded against or incurred by any of them, arising out of or as a result of any of the following (all of the foregoing, collectively, “ Cartus Indemnified Losses ”):

(a) any representation or warranty made by the Originator under any of the Transaction Documents to which it is a party, any Receivables Activity Report or any other information or report delivered by the Originator (including in its capacity as Servicer) with respect to the Originator or the Cartus Purchased Assets, having been untrue or incorrect in any respect when made or deemed to have been made; provided , however , that the Originator’s obligation to make a Cartus Noncomplying Asset Adjustment pursuant to Section 4.3(a) with respect to any representation made in Section 6.1(1) as to Eligible Receivables having been incorrect when made shall be the only remedy available to the Buyer or its assignees relating to such incorrect representation;

 

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(b) the failure by the Originator to comply with any material applicable law, rule or regulation applicable to the Originator with respect to any Cartus Purchased Asset or any failure of a Cartus Purchased Asset to comply with any such law, rule or regulation as of the date of sale of such Cartus Purchased Asset hereunder;

(c) the failure to vest and maintain in the Buyer a valid ownership interest in the Cartus Purchased Assets, free and clear of any Lien arising through the Originator or anyone claiming through or under the Originator (including without limitation any such failure arising from a circumstance described in the definition of Permitted Exceptions);

(d) any failure of the Originator to perform its duties or obligations in accordance with the provisions of the Transaction Documents or any Contract, in each case to which it is a party;

(e) the failure to file, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to the transfer of any Cartus Purchased Assets to the Buyer, whether at the time of any sale or at any subsequent time;

(f) the failure by the Originator to pay when due any taxes owing by it (including sales, excise or property taxes) payable in connection with the Cartus Purchased Assets, other than any such taxes, assessments or charges that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens);

(g) any reduction in the Unpaid Balance of any Receivable included in the ARSC Purchased Assets as a result of (i) any cash discount or any adjustment by the Originator, (ii) any offsetting account payable of the Originator to an Obligor, (iii) a set-off in respect of any claim by, or defense or credit of, the related Obligor against the Originator (whether such claim, defense or credit arises out of the same or a related or an unrelated transaction) or (iv) the obligation of the Originator to pay to the related Obligor any rebate or refund;

(h) any product liability or personal injury claim in connection with the service that is the subject of any Cartus Purchased Asset; and

(i) any investigation, litigation or proceeding related to any use by Cartus of the proceeds of any Purchase made hereunder.

Notwithstanding anything to the contrary in this Agreement, any representations, warranties and covenants made by the Originator in this Agreement or the other Transaction

 

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Documents that are qualified by or limited to events or circumstances that have, or are reasonably likely to have, given rise to a Material Adverse Effect shall (solely for purposes of the indemnification obligations set forth in this Section 10.1) be deemed not to be so qualified or limited.

Notwithstanding the foregoing (and with respect to clause (ii) below, without prejudice to the rights that the Buyer may have pursuant to the other provisions of this Agreement or the provisions of any of the other Transaction Documents), in no event shall any Cartus Indemnified Party be indemnified for any Cartus Indemnified Losses (i) resulting from negligence or willful misconduct on the part of such Cartus Indemnified Party, (ii) to the extent the same includes losses in respect of Cartus Purchased Assets and reimbursement therefor that would constitute credit recourse to the Originator for the amount of any Cartus Receivable not paid by the related Obligor or (iii) resulting from the action or omission of the Servicer (unless the Servicer is the Originator or an Affiliate thereof (other than the Buyer, ARSC or the Issuer)).

If for any reason the indemnification provided in this Section 10.1 is unavailable to an Cartus Indemnified Party or is insufficient to hold an Cartus Indemnified Party harmless, then the Originator shall contribute to the maximum amount payable or paid to such Cartus Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Cartus Indemnified Party on the one hand and the Originator on the other hand, but also the relative fault of such Cartus Indemnified Party and the Originator, and any other relevant equitable considerations.

Section 10.2 Security Interest . Without prejudice to the provisions of Section 2.1 providing for the absolute transfer of the Originator’s interest in the Cartus Purchased Assets and the proceeds thereof and any interest of the Originator in the other property described in clause (v) of Section 2.1(a) to the Buyer, in order to secure the prompt payment and performance of all obligations of the Originator to the Buyer arising in connection with this Agreement, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, the Originator hereby assigns and grants to the Buyer a first priority security interest in the Originator’s right, title and interest, if any, in, to and under all of the Cartus Purchased Assets and the proceeds thereof and any interest of the Originator in the other property described in clause (v) of Section 2.1(a), whether now or hereafter existing.

 

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ARTICLE XI

MISCELLANEOUS

Section 11.1 Amendments; Waivers, Etc.

(a) The provisions of this Agreement may be amended, modified or waived from time to time if such amendment, modification or waiver is in writing and signed by the Originator and the Buyer and its assignees. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b) No failure or delay on the part of the Buyer or its assignees, or any Cartus Indemnified Party, or any other third party beneficiary referred to in Section 11.12(a) in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to, or demand on, the Originator shall entitle it in any case to any notice or demand in similar or other circumstances. No waiver or approval by the Buyer or its assignees under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

Section 11.2 Notices, Etc. Unless otherwise stated herein, all notices, demands, consents, approvals and other communications provided for hereunder shall be in writing (including via telecopier) and shall be personally delivered or sent by certified mail, return receipt requested, postage prepaid, by telecopier or by overnight courier to the intended party at the address or telecopier number of such party set forth on Schedule 11.2 hereof, or at such other address or telecopier number as shall be designated by such party in a written notice to the other party hereto given in accordance with this Section 11.2. Copies of all notices and other communications provided for hereunder shall be delivered to ARSC and the Issuer at their respective addresses for notices set forth in the Receivables Purchase Agreement. All notices and communications provided for hereunder shall be effective when received.

Section 11.3 Cumulative Remedies . The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

 

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Section 11.4 Binding Effect; Assignability; Survival of Provisions . This Agreement shall be binding upon, and inure to the benefit of, the Buyer and the Originator and their respective successors and assigns. Except as permitted pursuant to Section 7.3(c), the Originator may not assign any of its rights hereunder or any interest herein without the prior written consent of the Buyer and its assignees. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated pursuant hereto. Such termination shall not occur prior to the Final Payout Date. The rights and remedies with respect to any breach of any representation and warranty made by the Originator pursuant to Article VI and the indemnification and payment provisions of Article X and Section 11.6 and the provisions of Section 11.14 and Section 11.16 shall be continuing and shall survive any termination of this Agreement.

Section 11.5 Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

Section 11.6 Costs, Expenses and Taxes . In addition to the obligations of the Originator under Article X , the Originator agrees to pay on demand:

(a) all reasonable costs and expenses incurred by the Buyer and its assignees in connection with the negotiation, preparation, execution and delivery of, the administration (including periodic auditing), the preservation of any rights under, or the enforcement of, or any breach of, this Agreement (including any amendment, supplement or modification hereto), including without limitation (i) the reasonable fees, expenses and disbursements of counsel to any such Persons incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under this Agreement and (ii) all reasonable out-of-pocket expenses (including reasonable fees and expenses of independent accountants) incurred in connection with any review of the Originator’s books and records either prior to the execution and delivery hereof or pursuant to Section 7.1(k), and

(b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or any amendment, supplement or modification thereto, and agrees to indemnify each Cartus Indemnified Party against any liabilities with respect to, or resulting from, any delay in paying or omission to pay such taxes and fees.

 

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Section 11.7 Submission to Jurisdiction . EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY (a) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (c) IRREVOCABLY APPOINTS CORPORATION SERVICE COMPANY (THE “PROCESS AGENT”), WITH AN OFFICE ON THE DATE HEREOF AT 80 STATE STREET, ALBANY, NEW YORK, NEW YORK 12207, UNITED STATES OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT’S ABOVE ADDRESS, AND EACH PARTY HERETO HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH PARTY HERETO AGREES TO ENTER INTO ANY AGREEMENT RELATING TO SUCH APPOINTMENT THAT THE PROCESS AGENT MAY CUSTOMARILY REQUIRE AND TO PAY THE PROCESS AGENT’S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE, EACH PARTY HERETO ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS SPECIFIED PURSUANT TO SECTION 11.2. NOTHING IN THIS SECTION 11.7 SHALL AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF EITHER PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY HERETO OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.

Section 11.8 Waiver of Jury Trial . EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF EITHER OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

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Section 11.9 Integration . This Agreement contains a 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 between the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings.

Section 11.10 Captions and Cross References . The various captions (including without limitation the table of contents) in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

Section 11.11 Execution in Counterparts . 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.

Section 11.12 Acknowledgment and Consent.

(a) The Originator acknowledges that, from time to time prior to the Termination Date, the Buyer intends to sell all of the Buyer’s right, title and interest in, to and under the Cartus Purchased Assets, this Agreement and all of the other Transaction Documents pursuant to the Receivables Purchase Agreement, and that the interests of the Buyer hereunder will be further assigned pursuant to the Transfer and Servicing Agreement and the Indenture. The Originator acknowledges and agrees to each such sale by the Buyer and consents to the sale and assignment by the Buyer of all or any portion of its right, title and interest in, to and under the Cartus Purchased Assets, this Agreement and the other Transaction Documents and all of the Buyer’s rights, remedies, powers and privileges and all claims of the Buyer against the Originator under or with respect to this Agreement and the other Transaction Documents (whether arising pursuant to the terms of this Agreement or otherwise available at law or in equity), including without limitation (whether or not an Unmatured Servicer Default or a Servicer Default has occurred and is continuing) (i) the right of the Buyer at any time to enforce this Agreement against the Originator and the obligations of the Originator hereunder and (ii) the right at any time to give or withhold any and all consents, requests, notices, directions, approvals, demands, extensions or waivers under or with respect to this Agreement, any other Transaction Document or the obligations in respect of the Originator thereunder, all of which rights, remedies, powers, privileges and claims may be exercised and/or enforced by the Buyer’s successors ands assigns to the same extent as the Buyer may do. Each of the parties hereto acknowledges and agrees that the Buyer’s successors and assigns are third party beneficiaries of this Agreement, including without limitation the rights of the Buyer arising hereunder, and may rely on the Originator’s representations and warranties made herein as if made directly to them. The Originator hereby acknowledges and agrees that, except with respect to its rights under Section 4.3, it has no claim to or interest in any of the Lockbox Accounts.

(b) The Originator hereby agrees to execute all agreements, instruments and documents and to take all other actions that the Buyer or its assignees determines are necessary

 

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or appropriate to evidence its consent described in Section 11.12(a). The Originator hereby acknowledges and agrees that the Buyer in all of its capacities may assign to the Buyer’s successors and assigns such powers of attorney and other rights and interests granted by the Originator to the Buyer hereunder and agrees to cooperate fully with the Buyer’s successors and assigns in the exercise of such rights.

(c) The Originator hereby acknowledges that the Buyer’s successors and assigns are entering into the Transaction Documents in reliance on the Buyer’s identity as a legal entity separate from the Originator.

Section 11.13 No Partnership or Joint Venture . Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third person to create the relationship of principal and agent or of partnership or of joint venture.

Section 11.14 No Proceedings . The Originator hereby agrees that it will not institute against the Buyer or its successors or join any other Person in instituting against the Buyer or its successors any Insolvency Proceeding so long as there shall not have elapsed one year plus one day since the Final Payout Date. The foregoing shall not limit the right of the Originator to file any claim in or otherwise take any action with respect to any Insolvency Proceeding that was instituted against the Buyer or its successors by any Person other than the Originator or any other Cartus Person.

Section 11.15 Severability of Provisions . If any one or more of the covenants, agreements, provisions or terms of this Agreement are for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.

Section 11.16 Recourse to the Buyer . Except to the extent expressly provided otherwise in the Transaction Documents, the obligations of the Buyer under the Transaction Documents to which it is a party are solely the obligations of the Buyer, and no recourse shall be had for payment of any fee payable by or other obligation of or claim against the Buyer that arises out of any Transaction Document to which the Buyer is a party against any director, officer or employee of the Buyer. The provisions of this Section 11.16 shall survive the termination of this Agreement.

 

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Section 11.17 Confidentiality . The Buyer agrees to maintain the confidentiality of any information regarding the Originator or Realogy obtained in accordance with the terms of this Agreement that is not publicly available; provided however, that the Buyer may reveal such information (a) as necessary or appropriate in connection with the administration or enforcement of this Agreement or its funding of Purchases under this Agreement or (b) as required by law, government regulation, court proceeding or subpoena. Notwithstanding anything herein to the contrary, neither the Originator nor Realogy shall have any obligation to disclose to the Buyer or its assignees any personal or confidential information relating to a Transferred Employee.

Section 11.18 Conversion . Notwithstanding any covenants in this Agreement requiring Cartus, CFC or ARSC to maintain its “corporate existence”, such entity may elect to convert their status from that of a Delaware corporation to that of a Delaware limited liability company, either by filing a certificate of conversion with the Delaware Secretary of State or by merging with and into a newly formed Delaware limited liability company(such conversion or merger, as applicable, being herein called a “Conversion”) subject to the conditions that:

(a)(x) the Person formed by such Conversion (any such Person, the “Surviving Entity”) is an entity organized and existing under the laws of the United States of America or any State thereof, (y) such Surviving Entity expressly assumes, by an agreement in form and substance satisfactory to the applicable transferee and its assignees, performance of every covenant and obligation of such Person under the Transaction Documents to which such Person is a party and (z) such Surviving Entity delivers to the other parties to the Fifth Omnibus Amendment hereto dated as of April 10, 2007 (such parties, the “Amendment Parties”) an opinion of counsel that such Surviving Entity is duly organized and validly existing under the laws of its organization, has duly executed and delivered such supplemental agreement, and such supplemental agreement is a valid and binding obligation of such Surviving Entity, enforceable against such Surviving Entity in accordance with its terms (subject to customary exceptions relating to bankruptcy and equitable principles) and covering such other matters as the Amendment Parties may reasonably request;

(b) all actions necessary to maintain the perfection of the security interests or ownership interests created by such Person under the Transaction Documents to which such Person is a party in connection with such Conversion shall have been taken, as evidenced by an opinion of counsel reasonably satisfactory to the Amendment Parties;

(c) so long as such Person is the Servicer, no Servicer Default or Unmatured Servicer Default is then occurring or would result from such Conversion;

(d) in the case of a Conversion of CFC or ARSC, (x) the organizational documents of any Surviving Entity with respect to CFC or ARSC shall contain limitations on its business activities and requirements for independent directors or managers substantially equivalent to those set forth in its current organizational documents, and (y) Orrick Herrington & Sutcliffe shall have delivered an opinion of counsel reasonably satisfactory to the Amendment Parties that such Conversion will not, in and of itself, alter the conclusions set forth in its opinions previously issued in connection with the Transaction Documents with respect to true sale matters, substantive consolidation matters and bankruptcy issues relating to “home sale proceeds” (to the extent such opinions relate to such Person); and

 

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(e) each Amendment Party shall have received such other documents as such Amendment Party may reasonably request.

In connection with any such Conversion and the resulting change in name of such entity, Cartus, CFC and/or ARSC, as applicable, shall be required to comply with the name change covenants in the Transaction Documents, except that to the extent 30 days prior written notice of the name change is required, such notice period shall be reduced to five Business Days.

From and after any such Conversion effected in compliance with the above conditions, (a) all references in the Transaction Documents to any Person which has altered its corporate structure to become a limited liability company shall be deemed to be references to the Surviving Entity as successor to such Person, (b) all representations, warranties and covenants in the Transaction Documents which state that any of Cartus, CFC or ARSC is or is required to be a corporation shall be deemed to permit and require the Surviving Entity to be a limited liability company, (c) all references to such Person’s certificate of incorporation, other organizational documents, capital stock, corporate action or other matters relating to its corporate form will be deemed to be references to the organizational documents and analogous matters relating to limited liability companies, (d) all references to such Person’s directors or independent directors will be deemed to be references to the Surviving Entity’s directors, independent directors, managers or independent managers, as the case may be and (e) no representation, warranty or covenant in any Transaction Document shall be deemed to be breached or violated solely as a result of the fact that the Surviving Entity in any Conversion may be disregarded as a separate entity for state, local or federal income tax purposes.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

 

CARTUS CORPORATION
By:  

 

Name:  
Title:  
CARTUS FINANCIAL CORPORATION
By:  

 

Name:  
Title:  

[Signature Page to Purchase Agreement]


APPENDIX A

DEFINITIONS

 

  A. Defined Terms . As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

Acknowledgment Letter ” shall mean a letter substantially in the form attached hereto as Exhibit 7.3(j).

Advance Billing Receivable ” shall mean a Billed Receivable for Advance Payments owed by an Obligor.

Advance Payment ” shall mean an amount paid by an Obligor pursuant to a Pool Relocation Management Agreement or otherwise for application to existing or future Receivables (other than existing Billed Receivables), including without limitation any payments of anticipated fees and expenses under a Pool Relocation Management Agreement.

Affiliate ” shall mean, when used with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. As used in this definition of Affiliate, the term “ control ” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a Person, whether through the ownership of such Person’s voting securities, by contract or otherwise, and the terms “affiliated,” “controlling” and “controlled” have correlative meanings.

Aggregate Employer Balance ” shall have the meaning set forth in the Indenture.

Aggregate Receivable Balance ” shall have the meaning set forth in the Indenture as in effect on January 31, 2005.

Amortization Event ” shall have the meaning provided in the Indenture.

ARSC ” shall have the meaning set forth in the Preliminary Statement to this Agreement.

ARSC Purchased Assets ” shall have the meaning set forth in the Receivables Purchase Agreement.

Authorized Officer ” shall mean, with respect to any Transaction Party, the President, the Chief Financial Officer, the Controller, the Treasurer, any Assistant Treasurer, any Senior Vice President, any Vice President, the Secretary or any Assistant Secretary of such Transaction Party.

Average Days Outstanding ” shall have the meaning set forth in the Indenture.

 

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Bankruptcy Code ” shall mean the United States Bankruptcy Code, as amended from time to time (Title 11 of the United States Code).

Billed Receivable ” shall mean any Cartus Receivable or CFC Receivable that has been billed to an Obligor.

Business Day ” shall mean a day (other than a Saturday or Sunday) on which commercial banks in New York, New York and Chicago, Illinois are not authorized or required to be closed.

Buyer ” shall mean Cartus Financial Corporation, in its capacity as the buyer under this Agreement.

Cartus ” shall mean Cartus Corporation, a Delaware corporation.

Cartus Collections ” shall mean all funds that are received on account of or otherwise in connection with any Cartus Purchased Asset, including without limitation all funds received (a) from or on behalf of any Obligor in payment of or otherwise in respect of any Cartus Receivable included in the Cartus Purchased Assets (including without limitation funds received in respect of Advance Payments, but only including any such Advance Payments to the extent necessary to reduce the Aggregate Employer Balance of Receivables with respect to the related Employer to zero), (b) from or on behalf of any Ultimate Buyer or any other Person in respect of Cartus Home Sale Proceeds, (c) from any other Person to the extent such funds were applied, or should have been applied, pursuant to any Contract to repay or discharge any Cartus Receivable or Cartus Related Asset included in the Cartus Purchased Assets (including without limitation insurance payments that any Transaction Party applies in the ordinary course of its business to amounts owed in respect of such Cartus Purchased Assets and the amount of any Equity Payments applied to repayment of Equity Loans), (d) from the Originator in respect of Originator Adjustments under this Agreement or any other obligation of the Originator hereunder, (e) if the Servicer is Cartus, from the Servicer in respect of Servicer Dilution Adjustments with respect to Cartus Purchased Assets under Section 3.10(a) of the Transfer and Servicing Agreement and (f) from the Performance Guarantor in respect of any payments made by the Performance Guarantor as guarantor of the obligations of Cartus under the Performance Guaranty executed by it; provided , however , that any proceeds of Receivables that gave rise to Cartus Noncomplying Asset Adjustments that have been paid as provided in Section 4.3 hereof and any Related Property with respect to such Receivables shall not constitute Cartus Collections and shall be promptly returned to the Originator as provided in Section 4.3 hereof.

Cartus Equity Loan ” shall mean an Equity Loan made by the Originator.

Cartus Equity Loan Agreement ” shall mean a loan agreement entered into by the Originator and a Transferred Employee in connection with a Cartus Equity Loan.

Cartus Equity Loan Note ” shall mean a promissory note executed to evidence a Cartus Equity Loan.

 

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Cartus Home ” shall mean any Home subject to a Cartus Home Purchase Contract.

Cartus Home Purchase Contract ” shall mean any Home Purchase Contract that was executed, and pursuant to which Cartus purchased a Home, prior to the Closing Date and that relates to a Receivable included in the Cartus Purchased Assets.

Cartus Home Sale Contract ” shall mean any Home Sale Contract with respect to a Cartus Home.

Cartus Home Sale Proceeds ” shall mean any Home Sale Proceeds arising under a Cartus Home Sale Contract.

Cartus Indemnified Losses ” shall have the meaning set forth in Section 10.1.

Cartus Indemnified Party ” shall have the meaning set forth in Section 10.1.

Cartus Noncomplying Asset ” shall have the meaning set forth in Section 4.3(a).

Cartus Noncomplying Asset Adjustment ” shall have the meaning set forth in Section 4.3(a).

Cartus Person ” shall mean the Originator and each of its Subsidiaries and Affiliates other than CFC, ARSC or the Issuer.

Cartus Purchased Assets ” shall have the meaning set forth in Section 2.1(a).

Cartus Receivable ” shall have the meaning set froth in Section 2.1(a).

Cartus Records ” shall mean all Records maintained by the Originator with respect to the Cartus Purchased Assets, the Pool Assets and/or the related Obligors.

Cartus Related Assets ” shall have the meaning set forth in Section 2.1(a).

Cartus Related Property ” shall have the meaning set forth in Section 2.1(a).

CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

CFC Collections ” shall have the meaning set forth in the Receivables Purchase Agreement.

CFC Designated Receivable ” shall mean any Receivable arising from an amount advanced by CFC or the Servicer on behalf of CFC in respect of Equity Payments, Mortgage Payoffs, Direct Expenses, Mortgage Payments or Other Reimbursable Expenses, even though such amounts may be advanced after the Termination Date.

 

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CFC Home ” shall have the meaning set forth in the Receivables Purchase Agreement.

CFC Home Purchase Contract ” shall have the meaning set forth in the Receivables Purchase Agreement.

CFC Home Sale Contract ” shall have the meaning set forth in the Receivables Purchase Agreement.

CFC Purchase Price ” shall have the meaning set forth in Section 3.1(b).

CFC Purchase Termination Event ” shall have the meaning set forth in Section 9.1.

CFC Receivable ” shall have the meaning set forth in the Receivables Purchase Agreement.

CFC Subordinated Loan ” shall have the meaning set forth in Section 4.2.

CFC Subordinated Note ” shall mean the CFC Subordinated Note dated the Closing Date, made by the Buyer and payable to the order of the Originator substantially in the form of Exhibit 4.2, as such note may be amended, supplemented, otherwise modified or replaced from time to time.

CFC Subordinated Note Cap ” shall have the meaning set forth in Section 4.2.

Closing Date ” shall mean April 25, 2000.

Code ” shall mean the Internal Revenue Code of 1986, as amended.

Contract ” shall mean a Pool Relocation Management Agreement and any other related contract entered into pursuant thereto or in connection therewith, pursuant to or under which any Person (other than a Transaction Party) is obligated to make payments from time to time, including as the context may require any Equity Loan Note, Equity Loan Agreement, Home Purchase Contract or Home Sale Contract.

Credit and Collection Policy ” shall mean those credit and collection policies and practices of the Originator relating to the Contracts and Receivables described in Exhibit 6.1(u), as such credit and collection policies may be modified from time to time in accordance with Section 7.3(b).

Cut-Off Date ” shall mean the last day of any Monthly Period.

Defaulted Receivable ” shall mean any Receivable that:

(a) has been or should have been written off as uncollectible in conformity with the Credit and Collection Policy; or

 

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(b) is owed by an Obligor who is in Insolvency Proceedings or with respect to which an Event of Bankruptcy has occurred; or

(c) has been billed and remains unpaid more than 120 days after the due date thereof.

Direct Expenses ” shall mean, with respect to any Home, any costs attributable to the provision of services to a Transferred Employee, including without limitation appraisals, broker’s market analyses and inspections, brokerage commissions, title and title search fees, transfer taxes, mortgage payments, mortgage interest (or interest on the mortgage payments at the mortgage interest rate), insurance premiums, property taxes, cost of establishment and maintenance of appropriate files, overnight delivery charges, wire transfer fees, cost of interest in the manner specified in the related Contract, cost of improvements, cost of removal and mitigation of Hazardous Materials or gases (such as removal of asbestos, lead paint, radon gas or urea formaldehyde insulation) and reinsulation with suitable replacement materials, repair and maintenance costs, utilities, sales loss on resale, buyer incentive costs and real estate closing costs.

Eligible Contract ” shall mean:

(a) a Relocation Management Agreement (i) that has been duly executed and delivered by an Employer that is an Eligible Obligor and is in full force and effect, (ii) (A) the rights to payment under which are assignable without the consent of the Employer party thereto or any other Person (other than the Originator), other than any such consent that has been obtained and remains in effect, or (B) which, if subject to any restriction on assignment of rights to payment, is in effect on April 10, 2007 and such restriction is not effective under Section 9-406 or Section 9-408 of the UCC, as applicable, (iii) that provides for the payment in full by the Employer of all Direct Expenses, Service Fees and Other Reimbursable Expenses and any loss sustained with respect to a Home covered thereby following the sale of such Home (less any Advance Payment with respect to such Home and after giving effect to the application of the Home Sale Proceeds with respect to such Home) (it being understood that any Contract that permits an Employer to approve any expenses or the price at which any Home is sold shall not, for that reason alone, fail to qualify as an Eligible Contract), (iv) that was originated in accordance with the Credit and Collection Policy, (v) the Receivables under which, once billed, are required to be paid within 90 days of the original invoice date and (vi) that is substantially in the form of Relocation Management Agreement attached as Exhibit C, with such Permitted Changes to such form as may be made by the Originator in the ordinary course of its business (or such other form as has been approved in writing by the Buyer and its successors and assigns);

(b) an Equity Loan Agreement or Equity Loan Note (i) that has been duly executed and delivered by a Transferred Employee that is an Eligible Obligor and that is an employee of an Employer that is a party to a Pool Relocation Management Agreement (which Pool Relocation Management Agreement is then an Eligible Contract), (ii) that is

 

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substantially in the form of Equity Loan Agreement attached as Exhibit C or the form of Equity Loan Note attached as Exhibit C, as applicable, with such Permitted Changes to such forms as may be made by the Originator in the ordinary course of its business (or, in either case, such other form as has been approved in writing by the Buyer and its successors and assigns) and (iii) the obligations of the Transferred Employee under which are fully covered by the Guaranty or loss indemnity of the related Employer or Employer-purchased insurance policy under the applicable Pool Relocation Management Agreement;

(c) a Home Purchase Contract that (i) has been duly executed and delivered by a Transferred Employee of an Employer that is a party to a Pool Relocation Management Agreement (which Pool Relocation Management Agreement is then an Eligible Contract) and (ii) is substantially in the form of Home Purchase Contract attached as Exhibit C, with such Permitted Changes to such form as may be made by the Originator in the ordinary course of its business (or such other form as has been approved in writing by the Buyer and its successors and assigns); or

(d) a Home Sale Contract that (i) was entered into under or in connection with a Pool Relocation Management Agreement (which Pool Relocation Management Agreement is then an Eligible Contract), (ii) has been duly executed and delivered by the applicable Ultimate Buyer and is in full force and effect and (iii) is substantially in the form of the contract of purchase and sale used in the area where the property is located, or on a form prescribed by the Originator for that area, with such amendments and additions as may be reasonably negotiated to efficiently sell the Home (or such other form as has been approved in writing by the Buyer and its assignees and assigns).

Eligible Governmental Obligor ” shall mean the Federal Deposit Insurance Corporation, the United States Postal Service, and any other governmental obligor which is party to a Guaranteed Government Contract and is specifically approved in writing by the Buyer, the Issuer and the Majority Investors as an “Eligible Governmental Obligor”.

Eligible Home ” shall mean a Home (a) that is located within the United States, (b) record title for which is not in the name of any Transaction Party or any Affiliate of a Transaction Party and (c) that satisfies the requirements specified in the definition of “Home” in the applicable Pool Relocation Management Agreement or, if such term is not defined therein, in the applicable Home Sale Service Supplement; provided , however , that a Home that does not satisfy the requirement specified in clause (b) may nonetheless be treated as an Eligible Home if and to the extent that either (i) title is recorded on terms and conditions reasonably satisfactory to the Buyer and its assignees or (ii) the aggregate Unpaid Balance of all Eligible Unsold Home Receivables that do not satisfy the requirement specified in clause (b) would not exceed 10% of the aggregate Unpaid Balance of all Eligible Unsold Home Receivables; and provided , further , that a Home that does not satisfy the requirements specified in clause (c) may nonetheless constitute an Eligible Home if and to the extent that (i) the applicable Employer has acknowledged in writing that such property constitutes a “Special Home Transaction” within the meaning of the applicable Home Sale Service Supplement and (ii) the Originator and its

 

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Affiliates followed all necessary procedures and obtained all necessary approvals with respect to such Home (including without limitation approvals of the applicable Employer) as may be required by the Credit and Collection Policy and the customary practices of the Originator with respect to such Homes.

Eligible Obligor ” shall mean an Obligor that:

(a) is a United States resident (which term includes a United States division or branch of an entity organized in a jurisdiction outside of the United States, so long as such division or branch maintains a place of business in the United States to which all Receivables are billed);

(b) is not the United States of America, any state or local government or any agency or instrumentality of any of the foregoing unless such Obligor qualifies as an Eligible Governmental Obligor;

(c) is not an Affiliate of the Originator or the Buyer;

(d) is not the subject of an Insolvency Proceeding; and

(e) has been instructed by the Originator to remit all payments on the Cartus Purchased Assets directly to one of the Lockboxes or Lockbox Accounts.

Eligible Receivable ” shall mean any Receivable:

(a) the Obligor of which is an Eligible Obligor;

(b) that is denominated and payable only in U.S. dollars;

(c) that was generated in the ordinary course of the Originator’s business;

(d) either (1) with respect to which all of the Originator’s right, title and interest has been (or will be, at the time such Receivable becomes included in the Cartus Purchased Assets) validly transferred to the Buyer under and in accordance with the terms of this Agreement; or (2) with respect to any CFC Receivable only, that arose out of or with respect to an Equity Payment, Mortgage Payment or Mortgage Payoff made by the Buyer in respect of a CFC Home Purchase Contract;

(e) that arises under or in connection with a Pool Relocation Management Agreement that is then an Eligible Contract, and with respect to which any Home Sale Contract, Home Purchase Contract, Equity Loan Agreement or Equity Loan Note relating to such Receivable is also an Eligible Contract;

(f) that is not a Defaulted Receivable;

 

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(g) that is an “eligible asset” within the meaning of Rule 3a-7 promulgated under the Investment Company Act of 1940, as amended;

(h) that constitutes an “account” or a “general intangible” or “chattel paper” and not an “instrument” (except in the case of an Equity Loan, to the extent the same is evidenced by an Equity Loan Note), in each case within the meaning of the New York UCC;

(i) the transfer of which (including without limitation the sale by the Originator to the Buyer or by the Buyer to ARSC) does not contravene or conflict with any law, rule or regulation or any contractual or other restriction, limitation or encumbrance that applies to the Originator (or, with respect to any CFC Receivable only, the Buyer) (including without limitation the related Contract), and the sale, assignment or transfer of which, and the granting of a security interest in which, does not require the consent of the Obligor thereof or any other Person other than any such consent that has been previously obtained and is in effect; provided , however , that a Receivable arising out of a Relocation Management Agreement that is subject to a restriction on assignment may nonetheless be an Eligible Receivable hereunder if such restriction is not effective under Section 9-406 or Section 9-408 of the UCC, as applicable;

(j) that has not been compromised, adjusted, amended or otherwise modified (including by extension of time for payment or the granting of any discounts, allowances or credits) except in a manner that is expressly permitted under Section 3.10(b) of the Transfer and Servicing Agreement;

(k) that, together with the Contracts related thereto, conforms in all material respects with all applicable laws, rules, regulations, orders, judgments, decrees and determinations of all courts and other Governmental Authorities (whether federal, state, local or foreign and including without limitation usury laws);

(l) that is not subject to an asserted reduction (other than any reduction on account of any offsetting account payable of the Originator or the Buyer to an Obligor or any Advance Payment made by the related Obligor so long as such reduction is either included in the determination of the Aggregate Employer Balance with respect to the related Obligor, or, in the case of any Advance Payment, subtracted in the determination of the Aggregate Receivable Balance) cancellation, rebate or refund or any dispute, offset, counterclaim, lien or defense whatsoever;

(m) with respect to which the representations and warranties of the Originator in Section 6.1(k) of this Agreement (or with respect to any CFC Receivable only, of the Buyer in Section 6.1(k) of the Receivables Purchase Agreement) are true and correct;

(n) that represents a bona fide obligation arising under a Contract that has been duly authorized and that, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the Obligor of such Receivable,

 

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enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and general principles of equity;

(o) that, in the case of a Receivable arising on account of any Equity Payment, Mortgage Payoff, Mortgage Payment, Direct Expenses or any Service Fee or Finance Charge arising in connection with any of the foregoing, relates to an Eligible Home as to which (i) a Home Purchase Contract has been executed and delivered by the related Homeowner and the Originator or the Buyer, as applicable and, to the best knowledge of the Originator (or the Buyer, with respect to CFC Homes only), constitutes the legal, valid and binding obligation of such Homeowner, (ii) a Home Deed has been executed and delivered by the related Homeowner naming the Originator or the Buyer, as applicable, as transferee or with the transferee’s name blank, (iii) such Home Purchase Contract and Home Deed have been delivered to and are then in the possession of the agent of Cartus (with respect to Cartus Homes) or the agent of CFC (with respect to CFC Homes) and (iv) either no Mortgage is outstanding or, if a Mortgage is outstanding, no more than one monthly payment on such Mortgage is past due;

(p) that, in the case of a Receivable that arises from an Equity Loan, arose under an Equity Loan Agreement and an Equity Loan Note, each of which are Eligible Contracts and are then in the possession of the Servicer;

(q) that, in the case of an Unbilled Receivable, represents the right to payment for services rendered; and

(r) that, in the case of a Billed Receivable (other than an Advance Billing Receivable), has been fully earned by performance.

Eligible Unsold Home Receivable ” shall mean an Unsold Home Receivable that is an Eligible Receivable.

Employer ” shall mean a customer of the Originator that has executed a Relocation Management Agreement with the Originator.

Enhancement Agreement ” shall have the meaning provided in the Indenture.

Environmental Laws ” shall mean all applicable federal, state or local statutes, laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders) relating to public health and safety and protection of the environment.

Equity Loan ” shall mean an advance of all or a portion of the Equity Payment to be made to a Homeowner prior to the execution of the Home Purchase Contract by such Homeowner.

 

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Equity Loan Agreement ” shall mean a loan agreement entered into by a Transferred Employee in connection with an Equity Loan or a proposed Equity Loan.

Equity Loan Note ” shall mean a promissory note made by a Transferred Employee to evidence the Transferred Employee’s obligations in respect of an Equity Loan, which may be included in the same document as an Equity Loan Agreement.

Equity Payment ” shall mean, with respect to any Homeowner, a payment or credit (other than an Equity Loan) made to such Homeowner at the time of, or following the execution of, the related Home Purchase Contract by such Homeowner in respect of its equity interest in a Home as determined pursuant to the applicable Home Purchase Contract.

ERISA ” shall mean the Employee Retirement Income Security Act of 1974 and the rules and regulations thereunder, each as amended from time to time.

ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that is treated as a single employer with the Originator under Section 414 of the Code.

Event of Bankruptcy ” shall be deemed to have occurred with respect to a Person if either:

(a) a case or other proceeding has been commenced in any court without the application or consent of such Person, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or any substantial part of its assets, or any similar action with respect to such Person under any law (foreign or domestic) relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts and such case or proceeding continues undismissed or unstayed and in effect for a period of 60 days; or an order for relief with respect to such Person has been entered in an involuntary case under the Bankruptcy Code or other similar laws (foreign or domestic) now or hereafter in effect; or

(b) such Person has commenced a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall admit in writing its inability to, pay its debts generally as they become due.

Excluded Asset ” shall mean any receivable or related asset that arises under or relates to an Excluded Contract.

Excluded Contract ” shall mean (a) any of the following, to the extent that either the same have not been identified as Pool Relocation Management Agreements or all Cartus

 

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Receivables and CFC Receivables arising thereunder have been the subject of a Cartus Noncomplying Asset Adjustment or CFC Noncomplying Asset Adjustment that has been fully paid: (i) if the Originator merges with any other Person that is engaged in the relocation management business, any agreement for relocation management services originated by such other Person prior to the date of such merger and, so long as such business is maintained and operated as a separate division of the Originator, any additional agreements for relocation management services originated by such division, (ii) any agreement for relocation management services that is not an Eligible Contract or (iii) any agreement for relocation management services the receivables arising under which would not be Eligible Receivables because the Employer party thereto is not obligated to provide reimbursement for losses on resale of homes or because the homes relating to such agreement would be located solely outside of the United States and (b) any home purchase contract, home sale contract, equity loan note, equity loan agreement or similar agreement entered into pursuant to any agreement referred to in clause (a) above.

Final Payout Date ” shall mean the earlier of the date after the satisfaction and discharge of the Indenture pursuant to Article IV thereof on which either (i) all of the Notes have been paid in full or (ii) the Unpaid Balance of all outstanding Cartus Receivables has been reduced to zero; provided that for purposes of this definition of Final Payout Date, the Unpaid Balance of a Defaulted Receivable shall be deemed to be outstanding until all Homes related thereto have been sold and such Receivable has been written off as uncollectible.

Finance Charge ” shall mean any interest, late payment fee or other finance charge with respect to a Receivable or other Related Property, including without limitation any interest accrued or to accrue on an Equity Loan, Equity Payment, Mortgage Payoff or Mortgage Payment under the terms of the applicable Contract or Contracts.

GAAP ” shall mean generally accepted accounting principles, including the opinions, statements and pronouncements of the American Institute of Certified Public Accountants, the Financial Accounting Standards Board and the Securities and Exchange Commission, as in effect from time to time.

Governmental Authority ” shall mean the United States of America, any State or other political subdivision thereof and any entity in the United States of America or any applicable foreign jurisdiction that exercises executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

Guaranteed Government Contract ” shall mean any Relocation Management Agreement between Cartus and an Eligible Governmental Obligor which qualifies as an Eligible Contract and which has been designated as a Pool Relocation Management Agreement under the Purchase Agreement.”

Guaranty ” shall mean any agreement, undertaking or arrangement by which any Person guarantees, endorses, agrees to purchase or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss)

 

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the indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions on the shares of any other Person.

Hazardous Material ” shall mean (a) any “hazardous substance” as defined under CERCLA, (b) any “hazardous waste” as defined under the Resource Conservation and Recovery Act, 42 U.S.C. Section 690, et seq. , as amended, (c) any petroleum product or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any Environmental Laws.

Home ” shall mean a family residence or other improved real estate that is the subject of any services provided under a Pool Relocation Management Agreement, including without limitation any Home or property subject to a “Special Home Transaction” within the meaning of the applicable Home Sale Service Supplement.

Home Deed ” shall mean, with respect to any Home, a deed or other instrument of conveyance executed by the related Homeowner that effects the conveyance of such Home pursuant to the related Home Purchase Contract.

Home Purchase Contract ” shall mean the contract by which a Home is purchased from a Homeowner pursuant to, or in connection with, a Pool Relocation Management Agreement.

Home Sale Contract ” shall mean, with respect to any Home, the contract by which such Home is sold to an Ultimate Buyer.

Home Sale Proceeds ” shall mean, with respect to any Home, the cash sale proceeds received upon the sale of such Home to an Ultimate Buyer, net of any unpaid mortgage loan amounts, closing costs, brokerage costs, commissions owed to third parties and any other amounts payment of which are necessary to clear title to such Home.

Home Sale Service Supplement ” shall mean a supplement to a Pool Relocation Management Agreement substantially in the form attached as Exhibit C.

Homeowner ” shall mean, with respect to any Home, the Transferred Employee and any other homeowner of record with respect to such Home.

Indebtedness ” of any Person shall mean, in the aggregate, without duplication, (i) all indebtedness, obligations and other liabilities of such Person and its Subsidiaries that are, at the date as of which Indebtedness is to be determined, includable as liabilities in a consolidated balance sheet of such Person and its Subsidiaries, other than (x) accounts payable and accrued expenses, (y) advances from clients obtained in the ordinary course of the relocation management services business of any such Person and (z) current and deferred income taxes and other similar liabilities, (ii) the maximum aggregate amount of all liabilities of such Person or any of its Subsidiaries under any Guaranty, indemnity or similar undertaking given or assumed of or in respect of, the indebtedness, obligations or other liabilities, assets, revenues, income or dividends of any Person other than such Person or one of its Subsidiaries and (iii) all other obligations or

 

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liabilities of such Person or any of its Subsidiaries with respect to the discharge of the obligations of any Person other than itself or one of its Subsidiaries. For purposes of the Transaction Documents, the Indebtedness of any Person includes the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer.

Indebtedness for Borrowed Money ” shall mean, with respect to any Person, (i) any Indebtedness of such Person, contingent or otherwise, in respect of borrowed money including all principal, interest, fees and expenses with respect thereto (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), or evidenced by bonds, notes, acceptances, debentures or other instruments or letters of credit (or reimbursement obligations with respect thereto) but excluding capitalized lease obligations and excluding obligations representing the deferred and unpaid purchase price of any property.

Indenture ” shall mean the Indenture dated as of April 25, 2000 by and between the Issuer and the Indenture Trustee.

Indenture Supplement ” shall have the meaning set forth in the Indenture.

Indenture Trustee ” shall mean The Bank of New York, as successor to JPMorgan Chase Bank, N.A., as indenture trustee under the Indenture, and any successor thereto.

Independent Director ” shall mean, with respect to the Buyer, ARSC or the Issuer, an individual who is an Independent Director as defined in the organizational documents of such entity as in effect on the date of this Agreement.

Insolvency Proceeding ” shall mean, with respect to any Person, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any Federal or state bankruptcy or similar law or any other proceeding of the type described in the definition of Event of Bankruptcy, whether voluntary or involuntary.

Issuer ” shall mean Apple Ridge Funding LLC, a Delaware limited liability company.

Lien ” shall mean, when used with respect to any Person, any interest in any real or personal property, asset or other right held, owned or being purchased or acquired by such Person for its own use, consumption or enjoyment in its business that secures payment or performance of any obligation, and includes any mortgage, lien, pledge, encumbrance, charge, retained security title of a conditional vendor or lessor or other security interest of any kind, whether arising under a security agreement, mortgage, deed of trust, chattel mortgage, assignment, pledge, retention of security title, financing or similar statement or notice or arising as a matter of law, judicial process or otherwise.

Lockbox ” shall mean any post office box to which the Obligors remit Cartus Collections established pursuant to the Transfer and Servicing Agreement.

Lockbox Account ” shall mean any lockbox account, concentration account, depositary account or similar account (including any associated demand deposit account) established pursuant to the Transfer and Servicing Agreement, in which any Cartus Collections or CFC Collections are collected or deposited.

 

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Lockbox Agreement ” shall have the meaning provided in the Transfer and Servicing Agreement.

Lockbox Bank ” shall mean any institution at which a Lockbox or Lockbox Account is maintained.

Material Adverse Effect ” shall mean, with respect to any event or circumstance, a material adverse effect on (a) the business, financial condition, operations or assets of the Originator, (b) the ability of the Originator to perform its obligations under any Transaction Document or all or any substantial portion of the Contracts, (c) the validity or enforceability of, or collectibility of, amounts payable by the Originator under any Transaction Document, (d) the status, existence, perfection or priority of the interest of the Buyer (and its assignees) in the Cartus Purchased Assets, taken as a whole, in each case free and clear of any Lien (other than Permitted Liens) or (e) the validity, enforceability or collectibility of all or any substantial portion of the ARSC Purchased Assets.

Monthly Period ” shall mean (i) a calendar month or (ii) with respect to the initial Monthly Period for any Series, the period commencing on the closing date with respect to such Series and ending on the last day of the same month, or such other period set forth in the related Indenture Supplement.

Mortgage ” shall mean, with respect to a Home, either or both of (a) any indebtedness of the relevant Homeowner secured by a mortgage, deed of trust or other Lien on such Home and (b) such mortgage, deed of trust or other Lien, as the context may require.

Mortgage Payment ” shall mean, with respect to any Home, any payment actually made under any Mortgage on such Home (other than a Mortgage Payoff), including without limitation payments of principal and interest and for taxes and insurance.

Mortgage Payoff ” shall mean, with respect to any Home, the amount, if any, paid to retire the entire remaining principal balance of any Mortgage on such Home, together with interest accrued thereon to the date of payment.

Notes ” shall have the meaning set forth in the Indenture.

Obligor ” shall mean, with respect to any Contract, the Person or Persons obligated to make payments in respect of Receivables arising thereunder, including without limitation (i) with respect to any Equity Payment, Mortgage Payoff or Mortgage Payment, the related Employer, (ii) with respect to any Equity Loan, both the Transferred Employee and the related Employer and (iii) with respect to any Unsold Home Receivable, the Employer party to the related Relocation Management Agreement.

Originator ” shall mean Cartus and its successors and permitted assigns.

 

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Originator Adjustment ” shall have the meaning set forth in Section 4.3(c).

Originator Assets ” shall have the meaning set forth in Section 2.1(a).

Originator Dilution Adjustment ” shall have the meaning set forth in Section 4.3(b).

Originator Receivables ” shall have the meaning set forth in Section 2.1(a).

Originator Related Assets ” shall have the meaning set forth in Section 2.1(a).

Originator Related Property ” shall have the meaning set forth in Section 2.1(a).

Other Reimbursable Expense ” shall mean a cost or expense that is incurred and paid in connection with services under a Pool Relocation Management Agreement or reimbursable by the Obligor under the applicable Pool Relocation Management Agreement, and that is not included in the calculation of Direct Expenses thereunder.

PBGC ” shall mean the Pension Benefit Guaranty Corporation and any successor thereto.

Performance Guaranty ” shall mean that certain performance guarantee dated as of May 12, 2006, executed by the Performance Guarantor in favor of the Buyer and the Issuer.

Performance Guarantor ” shall mean Realogy.

Permitted Change ” shall mean, with respect to any Contract the form of which is attached hereto in Exhibit C, any revisions or modifications to such form that (i) are made by the Originator in the ordinary course of its business consistent with the Credit and Collection Policy, (ii) do not, individually or in the aggregate, materially adversely affect the collectibility of the Cartus Receivables or any Receivables arising under or in connection with any CFC Home Purchase Contract, (iii) do not, individually or in the aggregate, materially alter (in a manner adverse to the Originator or any of its assigns) the reimbursement or indemnification obligations of such Obligor thereunder or the composition of the losses, costs or expenses to which such reimbursement or indemnification obligations pertain, (iv) would not cause such Contract to cease to be an Eligible Contract or the Receivables arising thereunder to cease to be Eligible Receivables and (v) do not violate any of the terms and provisions of this Agreement.

Permitted Exception ” shall mean that, with respect to any representation, warranty or covenant with respect to the interest of the Buyer and its assignees in the ARSC Purchased Assets or any Servicer Default, that (i) prior to recordation (A) pursuant to Section 8.3 of this Agreement and/or Section 2.01(d)(i) of the Transfer and Servicing Agreement or (B) upon the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee, and no recordation in real estate records of any mortgage or any conveyance pursuant to the related Home Purchase Contract or Home Sale Contract in favor of any Transaction Party or any of the Buyer’s assignees and assigns pursuant to the Receivables Purchase Agreement will be made except as otherwise permitted under Section 2.01(d)(i) of the Transfer and Servicing Agreement and (ii) no delivery of any Home Purchase Contracts, Home Deeds and Equity Loan Notes to any custodian will be required.

 

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Permitted Lien ” shall mean:

(a) with respect to any Home, the related Receivables or Related Property with respect thereto, (i) an inchoate Lien on the Home for real estate taxes not yet due and payable, (ii) a Mortgage on the Home created by the related Transferred Employee and (iii) any Lien that is fully covered by the terms of the indemnity provisions of the applicable Pool Relocation Management Agreement and that arises in the ordinary course of the Originator’s business;

(b) with respect to any Cartus Purchased Asset, any Lien in favor of the Buyer pursuant to this Agreement; and

(c) with respect to any ARSC Purchased Asset, any Lien created pursuant to the Transaction Documents.

Person ” shall mean an individual, partnership, corporation (including a business trust), joint stock company, trust, limited liability company, unincorporated association, joint venture, government or any agency or political subdivision thereof or any other entity.

Plan ” shall mean each employee benefit plan (as defined in Section 3(3) of ERISA) currently sponsored, maintained or contributed to by the Originator or any ERISA Affiliate or with respect to which the Originator or any ERISA Affiliate has any liability.

Pool Relocation Management Agreement ” shall have the meaning set forth in Section 2.1(a).

Prime Rate ” shall mean the Prime Rate as most recently published in The Wall Street Journal in New York City.

Purchase ” shall mean each purchase of Cartus Receivables and other Cartus Purchased Assets by the Buyer from the Originator hereunder.

Realogy ” shall mean Realogy Corporation, a Delaware corporation, and any successors thereto.

Receivable ” shall mean any right arising under a Contract to receive any payment or any funds from or on behalf of an Obligor, whether or not earned by performance and whether constituting an account, chattel paper, instrument, general intangible or otherwise. The term “Receivable” includes without limitation rights to payment (whether matured or unmatured and whether absolute or contingent) arising out of or with respect to Equity Loans, Equity Payments, Direct Expenses, Mortgage Payments, Mortgage Payoffs, Service Fees and Other Reimbursable Expenses and the right to payment of any and all Finance Charges with respect to any of the foregoing, whether such amounts are owed by an Employer, a Transferred Employee, an Ultimate Buyer or any other Obligor. The change of a Receivable’s status from that of Unsold Home Receivable to Unbilled Receivable or from Unbilled Receivable to Billed Receivable shall not be deemed the creation of a new Receivable for any purpose hereunder.

 

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Receivables Activity Report ” shall have the meaning provided in the Transfer and Servicing Agreement.

Receivables Purchase Agreement ” shall mean the receivables purchase agreement dated as of April 25, 2000, by and between CFC and ARSC. 1

Records ” shall mean all Contracts, purchase orders, invoices, customer lists, credit files and other agreements, documents, books, records and other media for the storage of information (including without limitation tapes, disks, punch cards, computer software and databases and related property) with respect to the Receivables, the Related Property and/or the related Obligors.

Related Property ” shall mean, with respect to any Receivable, (i) all security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the related Relocation Management Agreement or any other Contract related to such Receivable or otherwise; (ii) all guarantees and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable, (iii) all rights under warranties, indemnities or insurance with respect to such Receivable, related Contracts, Cartus Related Assets (with respect to Cartus Receivables) or CFC Related Assets (with respect to the CFC Receivables), (iv) all rights to the Cartus Home Sale Proceeds arising out of or with respect to any Cartus Homes and CFC Home Sale Proceeds arising out of or with respect to any CFC Homes under the related Relocation Management Agreement and (v) all Records.

Relocation Management Agreement ” shall mean an agreement pursuant to which the Originator agrees to provide employee relocation, asset management or other services, as the same may be amended, restated or otherwise modified from time to time, including any and all supplements thereto, and any similar agreement, howsoever denominated, and any agreement for intercultural services.

Self-Funding Obligor ” shall mean an Employer that deposits funds with the Originator in order to fund Equity Payments, Other Reimbursable Expenses or other payments made to or on behalf of the Transferred Employees of such Employer under the terms of the Employer’s Relocation Management Agreement.

Seller Adjustment ” shall have the meaning set forth in the Receivables Purchase Agreement.

Series ” shall have the meaning set forth in the Indenture.

Series Enhancer ” shall have the meaning set forth in the Indenture.

 

 

1

Definition missing in actual documents

 

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Service Fee ” shall mean any fee payable by an Employer under a Pool Relocation Management Agreement, including without limitation any fee payable with respect to the marketing and sale of a particular Home or otherwise in connection with any employee relocation services or asset management services performed under or in connection with such Pool Relocation Management Agreement.

Servicer ” shall mean the Originator, in its capacity as the Servicer under the Transfer and Servicing Agreement, and any successor thereto in such capacity appointed pursuant to Article IX of the Transfer and Servicing Agreement.

Servicer Default ” shall have the meaning set forth in the Transfer and Servicing Agreement.

Servicer Dilution Adjustment ” shall have the meaning set forth in the Transfer and Servicing Agreement.

Subsidiary ” shall mean, with respect to any Person, any corporation or other entity of which more than 50% of the outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors of such corporation (notwithstanding that at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) or other persons performing similar functions is at the time directly or indirectly owned by such Person.

Surviving Entity ” shall have the meaning provided in Section 7.3(c)(i).

Termination Date ” shall mean the date specified by the Indenture Trustee following the occurrence of a CFC Purchase Termination Event; provided , however , that if an Event of Bankruptcy has occurred with respect to either the Originator or the Buyer, the Termination Date shall be deemed to have occurred automatically without any such notice.

Transaction Documents ” shall mean, collectively, this Agreement, the Receivables Purchase Agreement, the Transfer and Servicing Agreement, the Performance Guaranty, the CFC Subordinated Note, the Lockbox Agreements and all agreements, instruments, certificates, reports and documents (other than any of the Contracts) executed and delivered or to be executed and delivered under or in connection with any of the foregoing, as any of the foregoing may be amended, supplemented, restated or otherwise modified from time to time.

Transaction Party ” shall mean the Buyer, the Originator, ARSC, the Issuer or the Servicer (so long as the Servicer is the Originator or an Affiliate thereof).

Transfer and Servicing Agreement ” shall mean the transfer and servicing agreement dated as of April 25, 2000 by and between the Originator, the Buyer, ARSC, the Servicer and the Issuer.

 

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Transferred Employee ” shall mean an individual designated by an authorized representative of an Employer pursuant to the applicable Relocation Management Agreement as a person entitled to the benefits of such Relocation Management Agreement.

UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction or jurisdictions.

Ultimate Buyer ” shall mean the buyer of a Home from the Originator (or from the Buyer or its assignee, as the case may be).

Unbilled Receivable ” shall mean any Cartus Receivable or CFC Receivable (other than any Unsold Home Receivable) that has not yet been billed to the related Obligor.

Unmatured Servicer Default ” shall have the meaning set forth in the Transfer and Servicing Agreement.

Unpaid Balance ” of any Receivable shall mean at any time the unpaid amount thereof at such time; provided , however , that the Unpaid Balance of Unsold Home Receivables with respect to any Home shall be the aggregate amount (without duplication) of Receivables arising from Equity Payments, Mortgage Payoffs, Mortgage Payments and Equity Loans in respect of such Home.

Unsold Home Receivable ” shall mean any Cartus Receivable or CFC Receivable, including any Finance Charges in respect thereof, incurred in respect of an Equity Loan, Equity Payment, Mortgage Payoff or Direct Expenses on a Home that has not yet been sold to an Ultimate Buyer (or the sale of which has not been closed or the Home Sale Proceeds of which have not been received).

B. Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP or with United States generally accepted regulatory principles, as applicable. To the extent that the definitions of accounting terms in this Agreement are inconsistent with the meanings of such terms under GAAP or regulatory accounting principles, the definitions contained in this Agreement shall control. 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.

C. Computation of Time Periods . Unless otherwise stated in this Agreement with respect to computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and each of the words ‘to” and “until’ means “to but excluding”.

D. Reference . The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and references to “ Section ”, “ subsection ”, “ Appendix ”, “ Schedule ” and “ Exhibit ” in this Agreement are references to Sections, subsections, Appendices, Schedules and Exhibits in or to this Agreement unless otherwise specified in this Agreement. References herein to this Agreement, the Receivables Purchase

 

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Agreement, the Transfer and Servicing Agreement, the Indenture and the Performance Guaranty shall mean and be references to each such document as amended and modified by that certain Omnibus Amendment, Agreement and Consent dated December 20, 2004, that certain Second Omnibus Amendment dated January 31, 2005, that certain Amendment, Agreement and Consent dated January 30, 2006, that certain Third Omnibus Amendment, Agreement and Consent dated May 12, 2006, that certain Fourth Omnibus Amendment dated November 29, 2006 and that certain Fifth Omnibus Amendment dated April 10, 2007.

 

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SCHEDULE 2.1

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

List of Pool Relocation Management Agreements

Attached.

 

S-2.1-1


SCHEDULE 6.1(n)

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

Principal Place of Business

and Chief Executive Office of the Originator

Cartus Corporation

40 Apple Ridge Road

Danbury, Connecticut 06810

List of Offices Where

the Originator Keeps Cartus Records

Cartus Corporation

40 Apple Ridge Road

Danbury, CT 06810

Cartus Corporation

8081 Royal Ridge Parkway

Suite 200

Irving, TX 75063

Cartus Corporation

27271 Las Ramblas

Mission Viejo, CA 92691

 

S-6.1(n)-1


SCHEDULE 6.1(s)

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

List of Legal Names for Cartus Corporation

Cendant Mobility Services Corporation

Coldwell Banker Moving Services, Inc.

Coldwell Banker Relocation Services, Inc.

Executrans, Inc.

HFS Mobility Services, Inc.

PHH Homequity Corporation

PHH Real Estate Services Corporation

Relocation 1, Inc.

Worldwide Relocation Management Inc.

 

S-6.1(s)-1


SCHEDULE 11.2

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

Notice Addresses

Cartus Corporation

40 Apple Ridge Road

Danbury, Connecticut 06810

Fax: (203) 749-8763

Cartus Financial Corporation

40 Apple Ridge Road

Suite 4C45

Danbury, CT 06810

Fax: 203-205-6575

 

S-11.2-1


EXHIBIT 2.1

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

FORM OF NOTICE OF ADDITIONAL

POOL RELOCATION MANAGEMENT AGREEMENTS

[DATE]

Cartus Financial Corporation

40 Apple Ridge Road

Suite 4C45

Danbury, CT 06810

Fax: 203-205-6575

 

  Re: Additional Pool Relocation Management Agreements

Dear Sir or Madam:

Reference is made to the Purchase Agreement, dated as of April 25, 2000 (the “Purchase Agreement”), between Cartus Corporation and Cartus Financial Corporation. Capitalized terms used herein and not defined herein shall have the meanings assigned to them in the Purchase Agreement.

Pursuant to Section 2.1 of the Purchase Agreement, we are required to deliver a notice to you on the last of day of each month setting forth the new Relocation Management Agreements which were executed during such month. Attached hereto is a list of Pool Relocation Management Agreements that were executed during [Month/Year]. Pursuant to Section 2.1 of the Purchase Agreement, Schedule 2.1 to the Purchase Agreement is hereby amended to include the Relocation Management Agreements attached hereto.

 

Very truly yours,
CARTUS CORPORATION
By:    
  Name:
  Title:

 

E-2.1-1


EXHIBIT 4.2

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

FORM OF CFC SUBORDINATED NOTE

April 25, 2000

1. Note . FOR VALUE RECEIVED, the undersigned, CARTUS FINANCIAL CORPORATION, a Delaware corporation (the “Buyer”), hereby unconditionally promises to pay to the order of CARTUS CORPORATION, a Delaware corporation (the “Originator”), in lawful money of the United States of America and in immediately available funds, on the day following the Final Payout Date, the aggregate unpaid principal sum outstanding of all “CFC Subordinated Loans” made from time to time by the Originator to the Buyer pursuant to and in accordance with the terms of that certain Purchase Agreement dated as of April 25, 2000, between the Originator and the Buyer (as amended, restated, supplemented, or otherwise modified from time to time, the “Purchase Agreement”). Reference to Sections 4.2 and 5.2 of the Purchase Agreement is hereby made for a statement of the terms and conditions under which the loans evidenced hereby have been and will be made. All capitalized terms used herein that are not otherwise specifically defined herein shall have the meanings given to such terms in the Purchase Agreement. No advance shall be made hereunder on any date if the aggregate principal amount outstanding hereunder on such date after giving effect to such advance, plus the aggregate amount then outstanding under the Notes, would exceed an amount equal to five times the net worth of CFC. Proceeds of amounts advanced hereunder shall not be used for any purpose except to purchase CFC Homes (including the making of Equity Payments), to make Mortgage Payments and Mortgage Payoffs with respect to CFC Homes and to pay Seller Adjustments.

2. Interest . The Buyer further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full hereof at a rate equal to LIBOR plus 2.25%; provided , however , that if the Buyer defaults in the payment of any principal hereof, the Buyer promises to pay, on demand, interest at the Prime Rate plus 2.00% per annum on any such unpaid amounts, accrued with respect to each Interest Period from the date such payment is due to the date of actual payment. LIBOR shall be determined on each LIBOR Determination Date on the basis of the rate for deposits in United States dollars for a one-month period which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate does not appear on Telerate Page 3750, the rate for that LIBOR Determination Date shall be determined on the basis of the rates quoted by the four major banks in the London interbank market selected by the Paying Agent to the Paying Agent as the rates at which deposits in United States dollars are offered by such banks in the London interbank market at approximately 11:00 a.m., London time, on that day to prime banks in the London interbank market for a one-month period. Notwithstanding the foregoing, interest shall accrue at a rate equal to 8.46% per annum

 

E-4.2-1


during the first Interest Period. Interest shall be payable on the Distribution Date in each month in arrears. The outstanding principal of any loan made under this CFC Subordinated Note shall be due and payable on the day after the Final Payout Date, and may be repaid or prepaid at any time without premium or penalty.

LIBOR Determination Date means the second London Business Day prior to the commencement of the second and each subsequent Interest Period. A London Business Day is any Business Day on which dealings in deposits in U.S. dollars are transacted in the London interbank market and banking institutions in London are not authorized or obligated by law or regulation to close. An Interest Period is the period beginning on and including the Distribution Date immediately preceding such Distribution Date and ending on and excluding such Distribution Date; provided that the first Interest Period shall begin on and include April 25, 2000 and end on and exclude June 15, 2000. A Distribution Date means June 15, 2000 and the fifteenth day of each calendar month thereafter, or if such fifteenth day is not a Business Day, the next succeeding Business Day.

3. Principal Payments . The Originator is authorized and directed by the Buyer to enter in its books and records the date and amount of each loan made by it that is evidenced by this CFC Subordinated Note and the amount of each payment of principal made by the Buyer and, absent manifest error, such entries shall constitute prima facie evidence of the accuracy of the information so entered; provided that neither the failure of the Originator to make any such entry or any error therein shall expand, limit or affect the obligations of the Buyer hereunder.

4. Subordination . The indebtedness evidenced by this CFC Subordinated Note is subordinated to the prior payment in full of all of the Buyer’s recourse obligations under the Receivables Purchase Agreement. The subordination provisions contained herein are for the direct benefit of, and may be enforced by, the Buyer’s successors and assigns and/or any of their respective assignees (collectively, the “Senior Claimants”) under the Receivables Purchase Agreement. Until the date after the Final Payout Date on which all advances outstanding under the Receivables Purchase Agreement have been repaid in full and all other obligations of the Buyer thereunder (all such obligations, collectively, the “Senior Claims”) have been indefeasibly paid and satisfied in full, the Originator shall not demand, accelerate, sue for, take, receive or accept from the Buyer, directly or indirectly, in cash or other property or by set-off or any other manner (including without limitation from or by way of collateral) any payment or security of all or any of the indebtedness under this CFC Subordinated Note or exercise any remedies or take any action or proceeding to enforce the same; provided , however , that (i) the Originator hereby agrees that it will not institute against the Buyer any Insolvency Proceeding unless and until a period of one year and one day has elapsed after the Final Payout Date and (ii) nothing in this paragraph shall restrict the Buyer from paying, or the Originator from requesting, any payments under this CFC Subordinated Note so long as the Buyer is not required under the Receivables Purchase Agreement to set aside the funds used for such payments for the benefit of, or otherwise pay over to, any of the Senior Claimants; and provided , further , that the making of such payment would not otherwise violate the terms and provisions of the Receivables Purchase Agreement. Should any payment, distribution or security or proceeds thereof be received by the Originator in

 

E-4.2-2


violation of the immediately preceding sentence, the Originator agrees that such payment shall be segregated, received and held in trust for the benefit of, and deemed to be the property of, and shall be immediately paid over and delivered to the Indenture Trustee for the benefit of the Senior Claimants.

5. Bankruptcy; Insolvency . Upon the occurrence of any Insolvency Proceeding involving the Buyer as debtor, then and in any such event the Senior Claimants shall receive payment in full of all amounts due under the Receivables Purchase Agreement (whether or not any or all of such amount is an allowable claim in any such proceeding) before the Originator is entitled to receive payment on account of this CFC Subordinated Note and, to that end, any payment or distribution of assets of the Buyer of any kind or character, whether in cash, securities or other property in any applicable Insolvency Proceeding which would otherwise be payable to, or deliverable upon or with respect to, any or all indebtedness under this CFC Subordinated Note, is hereby assigned to and shall be paid or delivered by the Person making such payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee or otherwise) pursuant to the Receivables Purchase Agreement for application to, or as collateral for the payment of, the Senior Claim until such Senior Claim shall have been paid in full and satisfied.

6. GOVERNING LAW . THIS CFC SUBORDINATED NOTE SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF NEW YORK. WHEREVER POSSIBLE EACH PROVISION OF THIS CFC SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS CFC SUBORDINATED NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS CFC SUBORDINATED NOTE.

7. Waivers . All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. Originator additionally expressly waives all notice of the acceptance by any Senior Claimant of the subordination and other provisions of this CFC Subordinated Note and expressly waives reliance by any Senior Claimant upon the subordination and other provisions herein provided.

8. Assignment . Prior to the satisfaction and discharge of the Indenture pursuant to Article IV thereof, this CFC Subordinated Note may not be assigned, pledged or otherwise transferred to any party other than Originator except in accordance with the Receivables Purchase Agreement.

 

E-4.2-3


Cartus Financial Corporation
By:    
  Name:
  Title:

 

E-4.2-4


EXHIBIT 6.1(u)

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

CREDIT AND COLLECTION POLICY

Attached.

 

E-6.1(u)-1


EXHIBIT 7.3(j)

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

FORM OF ACKNOWLEDGMENT LETTER

For purposes of this Section          , capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Transfer and Servicing Agreement, dated April 25, 2000, among Apple Ridge Services Corporation (“ARSC”), Cartus Corporation (“Cartus”), Cartus Financial Corporation (“CFC”), Apple Ridge Funding LLC (“ARF”) and The Bank of New York (the “Indenture Trustee”), or, if not defined therein, as assigned to such terms in the “Purchase Agreement” or “Receivables Purchase Agreement” referred to therein, in each case as each such agreement has been amended by (i) that certain Amendment, Agreement and Consent dated December 20, 2004, (ii) that certain Second Omnibus Amendment dated January 31, 2005, (iii) that certain Amendment, Agreement and Consent dated January 30, 2006, (iv) that certain Third Omnibus Amendment, Agreement and Consent dated May 12, 2006, (v) that certain Fourth Omnibus Amendment dated November 29, 2006 and (vi) that certain Fifth Omnibus Amendment dated April 10, 2007. Subsequent references in this Section          to ARSC, Cartus and CFC below shall mean and be references to such corporations as they currently exist but shall also include references to any limited liability companies which succeed to the assets and liabilities of such companies in connection with a conversion of any such corporation into a limited liability company.

The Collateral Agent acknowledges and agrees, and each Secured Party by its execution of the Credit Agreement (or its Assignment and Acceptance) and/or its acceptance of the benefits of this Agreement acknowledges and agrees, as follows, solely in its capacity as a Secured Party:

Each Secured Party hereby acknowledges that (i) CFC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing Cartus Purchased Assets (originally referred to as CMSC Purchased Assets) from Cartus pursuant to the Purchase Agreement, making Equity Payments, Equity Loans, Mortgage Payoffs and Mortgage Payments to or on behalf of employees or otherwise purchasing Homes in connection with the Pool Relocation Management Agreements, funding such activities through the sale of CFC Receivables (originally referred to as CMF Receivables) to ARSC, and such other activities as it deems necessary or appropriate in connection therewith, (ii) ARSC is a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to purchasing from CFC all CFC Receivables acquired by CFC from Cartus or otherwise originated by CFC, funding such acquisitions through the sale of the CFC Receivables to ARF and such other activities as it deems necessary or appropriate to carry out such activities, and (iii) ARF is a limited purpose limited liability company whose activities are limited in its limited liability company agreement to purchasing the Pool Receivables from ARSC, funding such acquisitions through the issuance of the Notes, pledging such Pool Receivables to the Indenture Trustee and such other activities as it deems necessary or appropriate to carry out such activities.

 

E-7.3(j)-1


Each Secured Party hereby acknowledges and agrees that (i) the foregoing transfers are intended to be true and absolute sales as a result of which Cartus has no right, title and interest in and to any of the Cartus Purchased Assets, any Homes acquired by CFC in connection therewith or any CFC Receivables, including any Related Property relating thereto, any proceeds thereof or earnings thereon (collectively, the “ Pool Assets ”), (ii) none of CFC, ARSC or ARF is a Loan Party, (iii) such Secured Party is not a creditor of, and has no recourse to, CFC, ARSC or ARF pursuant to the Credit Agreement or any other Loan Document, and (iv) such Secured Party has no lien on or claim, contractual or otherwise, arising under the Credit Agreement or any other Loan Document to the Pool Assets (whether now existing or hereafter acquired and whether tangible or intangible); provided that nothing herein shall limit any rights the Secured Parties may have to any proceeds or earnings which are transferred from time to time to Cartus by CFC, ARSC or ARF.

No Secured Party will institute against or join any other Person in instituting against CFC, ARSC or ARF any insolvency proceeding, or solicit, join in soliciting, cooperate with or encourage any motion in support of, any insolvency proceeding involving CFC, ARSC or ARF until one year and one day after the payment in full of all Notes; provided , that the foreoging shall not limit the right of any Secured Party to file any claim in or otherwise take any action (not inconsistent with the provisions of this Section          ) permitted or required by applicable laws with respect to any insolvency proceeding instituted against CFC, ARSC or ARF by any other person.

Without limiting the foregoing, in the event of any voluntary or involuntary bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any Federal or state bankruptcy or similar law involving Cartus, CFC, ARSC, ARF or any other Affiliates of Cartus as debtor, or otherwise, the Secured Parties agree that if, notwithstanding the intent of the parties, Cartus is found to have a property interest in the Pool Assets, then, in such event, CFC and its assigns, including the Indenture Trustee, shall have a first and prior claim to the Pool Assets, and any claim or rights the Secured Parties may have to the Pool Assets, contractual or otherwise, shall be subject to the prior claims of the Indenture Trustee and the Noteholders until all amounts owing under the Indenture shall have been paid in full, and the Secured Parties agree to turn over to the Indenture Trustee any amounts received contrary to the provisions of this clause (d).

Each Secured Party hereby covenants and agrees that it will not agree to any amendment, supplement or other modification of this Section          without the prior written consent of the Indenture Trustee. Each Secured Party further agrees that the provisions of this Section          are made for the benefit of, and may be relied upon and enforced by, the Indenture Trustee and that the Indenture Trustee shall be a third party beneficiary of this Section          .

 

E-7.3(j)-2


EXHIBIT C

to

PURCHASE AGREEMENT

Dated as of April 25, 2000

FORMS OF RELOCATION MANAGEMENT AGREEMENTS

Attached.

 

C-1


Exhibit A-2


CONFORMED COPY

AS AMENDED BY:

 

 

1. Omnibus Amendment, Agreement and Consent dated December 20, 2004.

 

2. Second Omnibus Amendment dated January 31, 2005

 

3. Third Omnibus Amendment, Agreement and Consent dated May 12, 2006

 

4. Fifth Omnibus Amendment dated April 10, 2007

RECEIVABLES PURCHASE AGREEMENT

Dated as of April 25, 2000

by and between

CARTUS FINANCIAL CORPORATION

as originator and seller,

and

APPLE RIDGE SERVICES CORPORATION

as buyer


TABLE OF CONTENTS

 

          Page
ARTICLE I
DEFINITIONS
ARTICLE II
SALE AND PURCHASE OF ASSETS

Section 2.1

   Sale and Purchase    1

Section 2.2

   Purchases    3

Section 2.3

   No Assumption    3

Section 2.4

   No Recourse    3

Section 2.5

   True Sales    3

Section 2.6

   Servicing of ARSC Purchased Assets    4

Section 2.7

   Financing Statements    4
ARTICLE III
CALCULATION OF ARSC PURCHASE PRICE

Section 3.1

   Calculation of the ARSC Purchase Price    4
ARTICLE IV
PAYMENT OF ARSC PURCHASE PRICE

Section 4.1

   ARSC Purchase Price Payments    5

Section 4.2

   The ARSC Subordinated Note    5

Section 4.3

   Seller Adjustments; Originator Adjustments    5

Section 4.4

   Payments and Computations, Etc.    6
ARTICLE V
CONDITIONS PRECEDENT

Section 5.1

   Conditions Precedent to Sales and Purchases    7

Section 5.2

   Conditions Precedent to ARSC Subordinated Loans    7
ARTICLE VI
REPRESENTATIONS AND WARRANTIES

Section 6.1

   Representations and Warranties of the Seller    7

 

-i-


Section 6.2

   Representations and Warranties of ARSC    12
ARTICLE VII
GENERAL COVENANTS

Section 7.1

   Affirmative Covenants of the Seller    12

Section 7.2

   Reporting Requirements    16

Section 7.3

   Negative Covenants of the Seller    17

Section 7.4

   Affirmative Covenants of ARSC    19
ARTICLE VIII
ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE ARSC PURCHASED ASSETS

Section 8.1

   Rights of ARSC    20

Section 8.2

   Responsibilities of the Seller    21

Section 8.3

   Further Action Evidencing Purchases    21

Section 8.4

   Collections; Rights of ARSC and its Assignees    22
ARTICLE IX
TERMINATION

Section 9.1

   ARSC Purchase Termination Events    23

Section 9.2

   Purchase Termination    24
ARTICLE X
INDEMNIFICATION; SECURITY INTEREST

Section 10.1

   Indemnities by the Seller    24

Section 10.2

   Security Interest    26
ARTICLE XI
MISCELLANEOUS

Section 11.1

   Amendments; Waivers, Etc.    27

Section 11.2

   Notices, Etc.    27

Section 11.3

   Cumulative Remedies    27

Section 11.4

   Binding Effect; Assignability; Survival of Provisions    27

Section 11.5

   Governing Law    28

Section 11.6

   Costs, Expenses and Taxes    28

 

-ii-


Section 11.7

   Submission to Jurisdiction    28

Section 11.8

   Waiver of Jury Trial    29

Section 11.9

   Integration    29

Section 11.10

   Captions and Cross References    29

Section 11.11

   Execution in Counterparts    29

Section 11.12

   Acknowledgment and Consent    29

Section 11.13

   No Partnership or Joint Venture    30

Section 11.14

   No Proceedings    30

Section 11.15

   Severability of Provisions    31

Section 11.16

   Recourse to the Seller    31

Section 11.17

   Recourse to ARSC    31

Section 11.18

   Confidentiality    31

Section 11.19

   Conversion    31

Section 11.20

   Inclusion of Receivables Assigned from Kenosia Funding LLC and Cartus Relocation Corporation    33

 

-iii-


APPENDIX

 

APPENDIX A

     Definitions

SCHEDULES

 

SCHEDULE 2.1

   List of CFC Home Purchase Contracts

SCHEDULE 6.1(n)

   Principal Place of Business and Chief Executive Office of the Seller and
   List of Offices Where the Seller Keeps CFC Records

SCHEDULE 6.1(q)

   List of Legal Names for Cartus Financial Corporation

SCHEDULE 11.2

   Notice Addresses

EXHIBITS

 

EXHIBIT 2.1

     Form of Notice of Additional CFC Home Purchase Contracts

EXHIBIT 4.2

     Form of ARSC Subordinated Note

 

-iv-


RECEIVABLES PURCHASE AGREEMENT

THIS RECEIVABLES PURCHASE AGREEMENT (this “Agreement” ) dated as of April 25, 2000 made by and between CARTUS FINANCIAL CORPORATION, a Delaware corporation, as originator and seller (the “Seller” ) and APPLE RIDGE SERVICES CORPORATION, a Delaware Corporation, as buyer ( “ARSC” ).

WHEREAS, the Seller has purchased certain Receivables and Related Assets from Cartus Corporation ( “Cartus” ) and from time to time hereafter will create, and will purchase from Cartus, additional Receivables and Related Assets; and

WHEREAS, the Seller wishes to sell Receivables and Related Assets that it now owns and Receivables and Related Assets that it from time to time hereafter will own to ARSC, and ARSC is willing to purchase such Receivables and Related Assets from the Seller from time to time, on the terms and subject to the conditions contained in this Agreement; and

WHEREAS, ARSC intends to transfer the ARSC Purchased Assets to the Issuer from and after the Closing Date pursuant to the terms of the Transfer and Servicing Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used and not otherwise defined in this Agreement have the meanings specified in Part A of Appendix A or as specified in Appendix A of the Purchase Agreement. In addition, this Agreement shall be interpreted in accordance with the conventions set forth in Parts B, C and D of Appendix A.

ARTICLE II

SALE AND PURCHASE OF ASSETS

Section 2.1 Sale and Purchase .

(a) Agreement . Upon the terms and subject to the conditions hereof, ARSC agrees to buy, and the Seller agrees to sell, all of the Seller’s right, title and interest in and to the following:

(i) all Cartus Purchased Assets owned by the Seller on the Closing Date or thereafter purchased, and all rights of the Seller under the Purchase Agreement and the Performance Guaranty with respect to the Cartus Purchased Assets (collectively, the “Seller Purchased Assets” );

 

1


(ii) all Receivables arising out of or with respect to Equity Payments, Mortgage Payments and Mortgage Payoffs made by the Seller in respect of Home Purchase Contracts to which CFC is a party from and after the Closing Date and all Governmental Receivables acquired by the Seller from Kenosia and/or CRC (collectively, the “ Seller Receivables ”);

(iii) all Related Property with respect to the Seller Receivables (collectively, the “Seller Related Property” );

(iv) all CFC Collections;

(v) all proceeds of and earnings on any of the foregoing; and

(vi) all of the right, title and interest (if any) CFC has in, to or under CFC Designated Receivables, including all Related Property with respect thereto and all proceeds thereof, including all rights, if any, to reimbursement of, or interest on, such CFC Designated Receivables.

The items listed above in clauses (iii), (iv) and (v), whenever and wherever arising, are collectively referred to herein as the “Seller Related Assets.” The Seller Purchased Assets, the Seller Receivables and the Seller Related Assets are sometimes collectively referred to herein as the “Seller Assets.”

As used herein, “CFC Purchased Assets” means Seller Purchased Assets that are being purchased or have been Purchased by ARSC hereunder; “CFC Receivables” means Seller Receivables that are being purchased or have been Purchased by ARSC hereunder; “CFC Related Property” means Seller Related Property that is being purchased or has been Purchased by ARSC hereunder; “CFC Related Assets” means Seller Related Assets that are being purchased or have been Purchased by ARSC hereunder; and “ARSC Purchased Assets” means Seller Assets that are being purchased or have been Purchased by ARSC hereunder.

Schedule 2.1 sets forth a list of all CFC Home Purchase Contracts as of the Closing Date. Each new Home Purchase Contract that is not an Excluded Contract and that is entered into by the Seller on any day in a month shall be added to the CFC Home Purchase Contracts and shall be reported on the last day of such month by delivering a notice as set forth in Exhibit 2.1 to ARSC or its designee, whereupon Schedule 2.1 shall be amended by the Seller to add such new Home Purchase Contract to the list of CFC Home Purchase Contracts set forth therein. On or prior to the date of the delivery of any such notice, the Seller shall indicate, or cause to be indicated, in its computer files, books and records that the CFC Receivables and other ARSC Purchased Assets then existing and thereafter created pursuant to or in connection with each such CFC Home Purchase Contract are being transferred to ARSC pursuant to this Agreement.

(b) Treatment of Certain Receivables and CFC Related Assets . It is expressly understood that (i) each Pool Receivable sold to ARSC hereunder, together with all other Cartus

 

2


Purchased Assets and all CFC Related Assets then existing or thereafter created and arising with respect thereto, will thereafter be the property of ARSC (or its assignees), without the necessity of any further purchase or other action by ARSC (other than satisfaction of the conditions set forth herein) and (ii) the change of a Receivable’s status from that of Unsold Home Receivable to Unbilled Receivable or from Unbilled Receivable to Billed Receivable shall not be deemed the creation of a new Receivable for any purpose.

Section 2.2 Purchases . On the Closing Date, ARSC shall purchase all of the Seller’s right, title and interest in and to all Seller Assets and in any property described in clause (vi) of Section 2.1 existing as of the close of business on the immediately preceding Business Day. On each Business Day thereafter until the ARSC Termination Date, ARSC shall purchase all of the Seller’s right, title and interest in and to all Seller Assets and in any property described in clause (vi) of Section 2.1 existing as of the close of business on the immediately preceding Business Day that were not previously purchased by ARSC hereunder. Notwithstanding the foregoing, if an Insolvency Proceeding is pending with respect to either the Seller or ARSC prior to the Termination Date, the Seller shall not sell and ARSC shall not buy any ARSC Purchased Assets hereunder unless and until such Insolvency Proceeding is dismissed or otherwise terminated.

Section 2.3 No Assumption . The sales and Purchases of ARSC Purchased Assets do not constitute and are not intended to result in a creation or an assumption by ARSC or its successors and assigns of any obligation of Cartus, the Seller or any other Person in connection with the ARSC Purchased Assets (other than such obligations as may arise from the ownership of the Pool Receivables) or under the related Contracts or any other agreement or instrument relating thereto, including without limitation any obligation to any Obligors or Transferred Employees. None of the Servicer, ARSC or ARSC’s assignees shall have any obligation or liability to any Obligor, Transferred Employee or other customer or client of Cartus (including without limitation any obligation to perform any of the obligations of Cartus under any Relocation Management Agreement, Cartus Home Purchase Contract, Cartus Related Property or any other agreement or any obligation of the Seller under any CFC Home Purchase Contract), except such obligations as may arise from the ownership of the Pool Receivables. Except as expressly provided in Section 3.05(j) of the Transfer and Servicing Agreement, no such obligation or liability to any Obligor, Transferred Employee or other customer or client of Cartus is intended to be assumed by the Servicer or its successors and assigns hereunder or under the Transfer and Servicing Agreement, and any such assumption is expressly disclaimed.

Section 2.4 No Recourse . Except as specifically provided in this Agreement, the sale and Purchase of the ARSC Purchased Assets and any other property described in clause (vi) of Section 2.1 (a) under this Agreement shall be without recourse to the Seller; provided , however , that the Seller shall be liable to ARSC and its successors and assigns for all representations, warranties, covenants and indemnities made by it pursuant to the terms of this Agreement ( it being understood that such obligations of the Seller will not arise solely on account of the credit-related inability of an Obligor to pay a Receivable).

Section 2.5 True Sales . The Seller and ARSC intend the transfers of ARSC Purchased Assets hereunder to be true sales by the Seller to ARSC that are absolute and irrevocable and to provide ARSC with the full benefits of ownership of the ARSC Purchased

 

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Assets, and neither the Seller nor ARSC intends the transactions contemplated hereunder to be, or for any purpose to be characterized as, loans from ARSC to the Seller, secured by the ARSC Purchased Assets.

Section 2.6 Servicing of ARSC Purchased Assets . Consistent with ARSC’s ownership of all ARSC Purchased Assets and subject to the terms of the Pool Relocation Management Agreements, as between the parties to this Agreement, ARSC shall have the sole right to service, administer and collect all ARSC Purchased Assets, to assign such right and to delegate such right to others. In consideration of ARSC’s purchase of the ARSC Purchased Assets and as more fully set forth in Section 11.12, the Seller hereby acknowledges and agrees that ARSC intends to assign for the benefit of the Issuer and its successors and assigns the rights and interests granted by the Seller to ARSC hereunder, and agrees to cooperate fully with the Issuer and its successors and assigns in the exercise of such rights.

Section 2.7 Financing Statements . In connection with the transfer described above, the Seller agrees, at its expense, to record and file financing statements (and continuation statements when applicable) with respect to the ARSC Purchased Assets conveyed by the Seller meeting the requirements of applicable law in such manner and in such jurisdictions as are necessary to perfect and maintain the perfection of the transfer and assignment of its interest in the ARSC Purchased Assets to ARSC, and to deliver a file stamped copy of each such financing statement or other evidence of such filing to ARSC as soon as practicable after the Closing Date; provided , however , that prior to recordation pursuant to Section 8.3 or the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee and no recordation in real estate records of the conveyance pursuant to the related Home Purchase Contract or Home Sale Contract shall be made except as otherwise required or permitted under Section 2.01(d)(i) of the Transfer and Servicing Agreement.

ARTICLE III

CALCULATION OF ARSC PURCHASE PRICE

Section 3.1 Calculation of the ARSC Purchase Price .

(a) Intentionally Omitted

(b) With respect to the Purchase of any ARSC Purchased Assets by ARSC from the Seller pursuant to Article II, (i) on the Closing Date, ARSC shall pay to the Seller a purchase price equal to $653,974,274, and (ii) thereafter ARSC shall pay to the Seller, as provided in Section 4.1, a purchase price (each such purchase price, the “ARSC Purchase Price”) in an amount that the Seller and ARSC mutually agree is the fair market value of such ARSC Purchased Asset.

 

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ARTICLE IV

PAYMENT OF ARSC PURCHASE PRICE

Section 4.1 ARSC Purchase Price Payments . On the terms and subject to the conditions of this Agreement, ARSC shall pay to the Seller on the Closing Date the ARSC Purchase Price for the ARSC Purchased Assets sold on such date, by paying such ARSC Purchase Price to the Seller in cash. On each other Business Day in each Monthly Period, on the terms and subject to the conditions of this Agreement, ARSC shall pay to the Seller in cash an amount mutually agreed upon by the Seller and ARSC on account of the ARSC Purchase Price for the ARSC Purchased Assets purchased by ARSC during such Monthly Period. Within seven Business Days after the end of each Monthly Period, the Seller shall deliver to ARSC an accounting with respect to all Purchases of ARSC Purchased Assets that were made during such Monthly Period and the aggregate ARSC Purchase Price for all the ARSC Purchased Assets that were purchased by ARSC during such Monthly Period. If the payments on account of the ARSC Purchase Price for such Monthly Period exceed the aggregate ARSC Purchase Price set forth in such report minus the aggregate Originator Adjustments for such Monthly Period calculated pursuant to Section 4.3(c), then the Seller shall promptly pay such excess to ARSC in cash and if the payments on account of the ARSC Purchase Price for such Monthly Period are less than the aggregate ARSC Purchase Price set forth in such report minus the aggregate Originator Adjustments for such Monthly Period calculated pursuant to Section 4.3(c), then ARSC shall promptly pay such deficiency to the Seller in cash.

Section 4.2 The ARSC Subordinated Note . On the Closing Date, ARSC shall deliver to Cartus the ARSC Subordinated Note in the form set forth as Exhibit 4.2. Pursuant to the terms of, and subject to the limitations set forth in, the ARSC Subordinated Note, CFC will request from Cartus an advance (each, an “ARSC Subordinated Loan” ) on or prior to the ARSC Termination Date for the purpose of purchasing ARSC Purchased Assets hereunder. Pursuant to the terms of the ARSC Subordinated Note, ARSC shall not request or receive any advance thereunder on any date if the aggregate principal amount outstanding thereunder on such date, after giving effect to such advance, would exceed an amount equal to five times the net worth of ARSC (such maximum amount required to be advanced at any time, the “ARSC Subordinated Note Cap” ). The ARSC Subordinated Loans shall be evidenced by, and shall be payable in accordance with the terms and provisions of, the ARSC Subordinated Note. Notwithstanding any other provision of this Agreement, ARSC shall not use funds borrowed under the ARSC Subordinated Note for any purpose other than paying the ARSC Purchase Price.

Section 4.3 Seller Adjustments; Originator Adjustments

(a) With respect to any CFC Receivable created by the Seller, if on any day ARSC (or ARSC’s assignee), the Servicer or the Seller determines that (i) any CFC Receivable that (A) was not identified by or on behalf of the Seller in the Daily Seller Report as other than an Eligible Receivable on the Business Day such CFC Receivable was sold hereunder or (B) was otherwise treated as or represented to be an Eligible Receivable in any Receivables Activity Report, was not in fact an Eligible Receivable on such date or (ii) any of the representations or warranties set forth in Section 6.1(d) or 6.1(k) was not true when made with respect to such CFC Receivable or the related CFC Related Asset (each such CFC Receivable described in clause (i)

 

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or clause (ii), a “CFC Noncomplying Asset” ), then the Seller shall pay the aggregate Unpaid Balance of such CFC Receivables (such payment, the “CFC Noncomplying Asset Adjustment” ) to ARSC in accordance with Section 4.3(c).

(b) If on any day the Unpaid Balance of any CFC Receivable (i) is reduced as a result of any cash discount or any adjustment by the Seller, (ii) is subject to reduction on account of any offsetting account payable of the Seller to an Obligor or is reduced or cancelled as a result of a set-off in respect of any claim by, or defense or credit of, the related Obligor against the Seller (whether such claim, defense or credit arises out of the same or a related or an unrelated transaction) or (iii) is reduced on account of the obligation of the Seller to pay to the related Obligor any rebate or refund (each of the reductions and cancellations described above in clauses (i) through (iii), a “Seller Dilution Adjustment”) , then the Seller shall pay such Seller Dilution Adjustment to ARSC in accordance with Section 4.3(c).

(c) Within seven Business Days after the end of each Monthly Period, the Seller shall pay to ARSC, in accordance with Section 4.4 and as provided in Section 4.1, an amount (an “Originator Adjustment”) equal to the sum of (A) the aggregate Originator Dilution Adjustments, if any, owing on account of each day during such Monthly Period plus (B) the aggregate CFC Noncomplying Asset Adjustments, if any, owing on account of each day during such Monthly Period. The CFC Receivables that gave rise to any CFC Noncomplying Asset Adjustment shall remain the property of ARSC. From and after the day on which any Cartus Noncomplying Asset Adjustment or CFC Noncomplying Asset Adjustment is made, any collections received by ARSC that are identified as proceeds of the Receivables that gave rise to such Cartus Noncomplying Asset Adjustment or CFC Noncomplying Asset Adjustment and any Related Property with respect to such Receivable shall be promptly returned to the Seller.

(d) The Seller shall pay to ARSC in cash, on the date of receipt by the Seller, any payment in respect of Originator Adjustments relating to the ARSC Purchased Assets made by Cartus to the Seller pursuant to the Purchase Agreement. The Seller shall instruct Cartus to deposit all payments in respect of such Originator Adjustments directly in the Collection Account.

Section 4.4 Payments and Computations, Etc . All amounts to be paid by the Seller to ARSC hereunder shall be paid in accordance with the terms hereof no later than 11:00 a.m. (New York time) on the day when due in United States dollars in immediately available funds to an account specified in writing from time to time by ARSC or its designee. Payments received by ARSC after such time shall be deemed to have been received on the next Business Day. If any payment becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. The Seller shall pay to ARSC, on demand, interest on all amounts not paid when due hereunder at a rate equal to the Prime Rate plus 2% per annum; provided , however , that such interest rate shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day). All payments made under this Agreement shall be made without set-off or counterclaim.

 

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ARTICLE V

CONDITIONS PRECEDENT

Section 5.1 Conditions Precedent to Sales and Purchases . No Purchase of ARSC Purchased Assets shall be made hereunder on any date on which ARSC does not have sufficient funds available to pay the ARSC Purchase Price in cash (including cash made available to ARSC under the ARSC Subordinated Loan).

Section 5.2 Conditions Precedent to ARSC Subordinated Loans . ARSC shall not request any ARSC Subordinated Loan under the ARSC Subordinated Note unless the following conditions precedent have been satisfied on the date of such ARSC Subordinated Loan:

(a) the ARSC Subordinated Note shall have been duly executed and delivered by ARSC and shall be in full force and effect;

(b) no Event of Bankruptcy shall have occurred and be continuing with respect to ARSC; and

(c) after giving effect to such ARSC Subordinated Loan, the aggregate outstanding principal amount of the ARSC Subordinated Note shall not exceed the ARSC Subordinated Note Cap.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

Section 6.1 Representations and Warranties of the Seller . In order to induce ARSC to enter into this Agreement and to make Purchases hereunder, the Seller hereby makes the representations and warranties set forth in this Section 6.1, in each case as of the date hereof, as of the Closing Date, as of the date of each Purchase hereunder and as of any other date specified in such representation and warranty.

(a) Organization and Good Standing . The Seller is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and has full power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted. The Seller had at all relevant times, and now has, all necessary power, authority and legal right to own and sell the ARSC Purchased Assets.

(b) Due Qualification . The Seller is duly qualified to do business, is in good standing as a foreign corporation, and has obtained (or has filed all necessary applications for and will obtain within 60 days of the Closing Date) all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and in which the failure so to qualify or to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a Material Adverse Effect.

 

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(c) Power and Authority; Due Authorization . The Seller (i) has all necessary corporate power and authority (A) to execute and deliver this Agreement, the Contracts and the other Transaction Documents to which it is a party, (B) to perform its obligations under this Agreement, the Contracts and the other Transaction Documents to which it is a party and (C) to sell and assign the ARSC Purchased Assets transferred hereunder on and after such date, on the terms and subject to the conditions herein and therein provided and (ii) has duly authorized by all necessary corporate action such sale and assignment and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement, the Contracts and the other Transaction Documents to which it is a party.

(d) Valid Sale; Binding Obligations . This Agreement constitutes a valid sale, transfer, set-over and conveyance to ARSC of all of the Seller’s right, title and interest in, to and under the Pool Receivables transferred hereunder on such date, which is perfected and of first priority (subject to Permitted Liens and Permitted Exceptions) under the UCC and other applicable law, enforceable against creditors of, and purchasers from, the Seller, free and clear of any Lien (other than Permitted Liens); and this Agreement constitutes, and each other Transaction Document to which the Seller is a party when duly executed and delivered will constitute, a legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) No Conflict or Violation . The execution, delivery and performance of, and the consummation of the transactions contemplated by, this Agreement and the other Transaction Documents to be signed by the Seller, and the fulfillment of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under (A) the certificate of incorporation or the by-laws of the Seller or (B) any material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which the Seller is a party or by which it or any of its properties is bound, (ii) result in the creation or imposition of any Lien on any of the ARSC Purchased Assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any federal, state, local or foreign law or any decision, decree, order, rule or regulation applicable to the Seller or of any federal, state, local or foreign regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(f) Litigation and Other Proceedings . (i) There is no action, suit, proceeding or investigation pending, or to the best knowledge of the Seller threatened, against the Seller before any court, arbitrator, regulatory body, administrative agency or other tribunal or

 

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governmental instrumentality and (ii) the Seller is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other government authority that, in the case of either of the foregoing clauses (i) or (ii), (A) asserts the invalidity of this Agreement or any other Transaction Document, (B) seeks to prevent the sale of any ARSC Purchased Asset by the Seller to ARSC, the creation of a material amount of CFC Receivables or the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document, (C) seeks any determination or ruling that, in the reasonable judgment of the Seller, would materially and adversely affect the performance by the Seller of its obligations under this Agreement or any other Transaction Document to which it is a party or the validity or enforceability of this Agreement or any other Transaction Document to which it is a party or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect.

(g) Governmental Approvals . Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect, (i) all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Seller in connection with the conveyance of the ARSC Purchased Assets transferred hereunder on and after such date, or the due execution, delivery and performance by the Seller of this Agreement or any other Transaction Document to which it is a party and the consummation of the transactions contemplated by this Agreement or any other Transaction Documents to which it is a party have been obtained or made and are in full force and effect and (ii) all filings with any Governmental Authority that are required to be obtained in connection with such conveyance and the execution and delivery by the Seller of this Agreement have been made; provided , however , that prior to recordation pursuant to Section 8.3 or the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee and no recordation in real estate records of the conveyance pursuant to the related Home Purchase Contract or Home Sale Contract shall be made except as otherwise required or permitted under Section 2.01(d)(i) of the Transfer and Servicing Agreement.

(h) Margin Regulations . The Seller is not engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meanings of Regulations T, U and X of the Board of Governors of the Federal Reserve System). The Seller has not taken and will not take any action to cause the use of proceeds of the sales hereunder to violate said Regulations T, U or X.

(i) Taxes . The Seller has filed (or there have been filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be owing by it, other than any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, would not have a Material Adverse Effect.

 

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(j) Solvency . After giving effect to the conveyance of ARSC Purchased Assets hereunder on such date, the Seller is solvent and able to pay its debts as they come due and has adequate capital to conduct its business as presently conducted.

(k) Quality of Title/Valid Transfers .

(i) Immediately before the Purchase to be made by ARSC hereunder on such date, each ARSC Purchased Asset to be sold to ARSC shall be owned by the Seller free and clear of any Lien (other than any Permitted Lien), and the Seller shall have made all filings and shall have taken all other action under applicable law in each relevant jurisdiction in order to protect and perfect the ownership interest of ARSC and its successors and assigns in such ARSC Purchased Assets against all creditors of, and purchasers from, the Seller (subject to Permitted Exceptions).

(ii) With respect to each Pool Receivable transferred hereunder on such date, ARSC shall acquire a valid and (subject to Permitted Exceptions) perfected ownership interest in such Pool Receivable and any identifiable proceeds thereof, free and clear of any Lien (other than any Permitted Liens).

(iii) Immediately prior to the sale of an ARSC Purchased Asset hereunder on such date, no effective financing statement or other instrument similar in effect that covers all or part of any ARSC Purchased Asset or any interest therein is on file in any recording office except such as may be filed (A) in favor of Cartus in accordance with the Pool Relocation Management Agreements, (B) in favor of the Seller in accordance with the Purchase Agreement, (C) in favor of ARSC pursuant to this Agreement, (D) in favor of ARSC’s successors and assigns pursuant to the Transfer and Servicing Agreement or the Indenture or otherwise filed by or at the direction of ARSC’s successors and assigns or (E) to evidence any Mortgage on a Cartus Home or CFC Home created by a Transferred Employee.

(iv) The ARSC Purchase Price constitutes reasonably equivalent value for the ARSC Purchased Assets conveyed in consideration therefor on such date, and no purchase of an interest in such ARSC Purchased Assets by ARSC from the Seller constitutes a fraudulent transfer or fraudulent conveyance under the United States Bankruptcy Code or applicable state bankruptcy or insolvency laws or subject to subordination under similar laws or principles or for any other reason.

(l) Eligible Receivables . Each CFC Receivable included in the ARSC Purchased Assets transferred hereunder on such date, unless otherwise identified to ARSC and its assignees by the Seller in the related Daily Seller Report, is an Eligible Receivable on such date.

(m) Accuracy of Information . All written information furnished by the Seller to ARSC or its successors and assigns pursuant to or in connection with any Transaction Document or any transaction contemplated herein or therein with respect to the ARSC Purchased Assets transferred hereunder on such date is true and correct in all material respects on such date.

 

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(n) Offices . The principal place of business and chief executive office of the Seller is located, and the offices where the Seller keeps all CFC Records (and all original documents relating thereto) are located, at the addresses specified in Schedule 6.1(n), except that (i) Home Deeds and related documents necessary to close CFC Home sale transactions, including powers of attorney, may be held by local attorneys or escrow agents acting on behalf of the Seller in connection with the sale of CFC Homes to Ultimate Buyers, so long as such local attorneys are notified that such Home Deeds constitute property of CFC and also are notified of the interest of ARSC’s assignees therein and (ii) CFC Records relating to the ARSC Purchased Assets arising under or in connection with any Pool Relocation Management Agreement may be maintained at the offices of the related Employer.

(o) Payment Instructions to Obligors . The Seller has instructed (i) all Obligors to remit all payments on the ARSC Purchased Assets directly to one of the Lockboxes or Lockbox Accounts, (ii) all Lockbox Banks to deposit all Pool Collections remitted to a Lockbox directly to the related Lockbox Account and (iii) all Persons receiving Home Sale Proceeds to deposit such Home Sale Proceeds in one of the Lockboxes or Lockbox Accounts within two Business Days after receipt, except to the extent a longer escrow period is required under applicable law, in which case such Home Sale Proceeds shall be deposited into one of the Lockboxes or Lockbox Accounts within one Business Day after the expiration of such period.

(p) Investment Company Act . The Seller is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act.

(q) Legal Names . Except as described in Schedule 6.1(q), since January 1, 1995, the Seller (i) has not been known by any legal name other than its corporate name as of the date hereof, (ii) has not been the subject of any merger or other corporate reorganization that resulted in a change of name, identity or corporate structure and (iii) has not used any trade names other than its actual corporate name.

(r) Compliance with Applicable Laws . The Seller is in compliance with the requirements of all applicable laws, rules, regulations and orders of all Governmental Authorities (federal, state, local or foreign, including without limitation Environmental Laws), a violation of any of which, individually or in the aggregate for all such violations, is reasonably likely to have a Material Adverse Effect.

(s) Credit and Collection Policy . As of the date each CFC Receivable is transferred hereunder, the Seller has complied in all applicable material respects with the Credit and Collection Policy with respect to such CFC Receivable transferred on such date and the related Contract.

(t) Environmental . On such date, to the best knowledge of Seller, (i) there are no (A) pending or threatened claims, complaints, notices or requests for information received by Seller with respect to any alleged violation of any Environmental Law in connection with any CFC Home relating to any CFC Receivable transferred hereunder on such date or (B) pending or threatened claims, complaints, notices or requests for information received by Seller regarding potential liability under any Environmental Law in connection with any CFC Home relating to

 

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any CFC Receivable transferred hereunder on such date and (ii) the Seller is in material compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters, if any, that are required to be held by it under applicable law in connection with any CFC Homes relating to any CFC Receivable transferred hereunder on such date, other than those that, in the case of either clause (i) or (ii), singly or in the aggregate, are not reasonably likely to have a Material Adverse Effect.

(u) Business and Indebtedness of Seller . The Seller has no Indebtedness for Borrowed Money except as permitted under this Agreement. The Seller has not engaged in any business other than the Purchase of Cartus Receivables and other Cartus Purchased Assets under the Purchase Agreement, the sale of ARSC Purchased Assets under this Agreement and the purchase and sale of CFC Homes and creation of CFC Receivables pursuant to related Equity Payments, Mortgage Payments and Mortgage Payoffs, and incidental activities related thereto.

Section 6.2 Representations and Warranties of ARSC . ARSC hereby represents and warrants, on and as of the date hereof and on and as of the Closing Date, that (a) this Agreement has been duly authorized, executed and delivered by ARSC and constitutes ARSC’s valid, binding and legally enforceable obligation, except (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law, (b) the execution, delivery and performance of this Agreement does not violate any federal, state, local or foreign law applicable to ARSC or any agreement to which ARSC is a party and (c) all of the outstanding capital stock of ARSC is directly or indirectly owned by the Seller, and all such capital stock is fully paid and nonassessable.

ARTICLE VII

GENERAL COVENANTS

Section 7.1 Affirmative Covenants of the Seller . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, the Seller hereby agrees that it will perform the covenants and agreements set forth in this Section 7.1.

(a) Compliance with Laws, Etc . The Seller will comply in all material respects with all applicable laws, rules, regulations, judgments, decrees and orders (including without limitation those relating to the CFC Receivables, CFC Home Purchase Contracts, CFC Related Assets and all Environmental Laws affecting any CFC Home), in each case to the extent that any such failure to comply, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(b) Preservation of Corporate Existence . The Seller (i) will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation and (ii) will qualify and remain qualified in good standing as a foreign corporation in each jurisdiction in which the failure to preserve and maintain such qualification as a foreign corporation could reasonably be expected to have a Material Adverse Effect.

 

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(c) Keeping of Records and Books of Account . The Seller will maintain and implement administrative and operating procedures (including without limitation an ability to recreate records evidencing the CFC Receivables and the related CFC Related Assets in the event of the destruction of the originals thereof) and will keep and maintain all documents, books, records and other information that are necessary or advisable, in the reasonable determination of ARSC, for the collection of all amounts due under any or all CFC Receivables and the related CFC Related Assets. Upon the reasonable request of ARSC or its assignees made at any time after the occurrence and continuance of an Unmatured Servicer Default or a Servicer Default, the Seller will deliver copies of all CFC Records maintained pursuant to this Section 7.1(c) to ARSC or its designee. The Seller will maintain at all times accurate and complete books, records and accounts relating to the CFC Receivables and the related CFC Related Assets, in which timely entries will be made. The Seller’s computer files, books and records will be marked to indicate the sales of all ARSC Purchased Assets to ARSC hereunder and will include without limitation all payments received and all credits and extensions granted with respect to the ARSC Purchased Assets.

(d) Location of Records and Offices . The Seller will keep its principal place of business and chief executive office and the offices where it keeps all CFC Records (and all original documents relating thereto other than those CFC Records that are maintained with local attorneys or escrow agents or at the offices of the relevant Employer as described in Section 6.1(n)) at the addresses specified in Schedule 6.1(n) or, upon not less than 30 days’ prior written notice given by the Seller to ARSC and its assignees, at such other locations in jurisdictions in the United States of America where all action required by Section 8.3 has been taken and completed.

(e) Separate Corporate Existence of the Seller . The Seller hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance upon the Seller’s identity as a legal entity separate from Cartus and the other Cartus Persons. From and after the date hereof until the Final Payout Date, the Seller will take such actions as shall be required in order that:

(i) The Seller will conduct its business in office space allocated to it and for which it pays an appropriate rent and overhead allocation;

(ii) The Seller will maintain corporate records and books of account separate from those of each Cartus Person and telephone numbers and stationery that are separate and distinct from those of each Cartus Person;

(iii) The Seller’s assets will be maintained in a manner that facilitates their identification and segregation from those of any Cartus Person;

(iv) The Seller will strictly observe corporate formalities in its dealings with the public and with each Cartus Person, and funds or other assets of the Seller will not be commingled with those of any Cartus Person. The Seller will at all times, in its dealings with the public and with each Cartus Person, hold itself out and conduct itself as a legal entity separate and distinct from each Cartus Person. The Seller will not maintain joint bank accounts or other depository accounts to which any Cartus Person (other than the Servicer) has independent access;

 

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(v) The duly elected board of directors of the Seller and duly appointed officers of the Seller will at all times have sole authority to control decisions and actions with respect to the daily business affairs of the Seller;

(vi) Not less than one member of the Seller’s board of directors will be an Independent Director. The Seller will observe those provisions in its certificate of incorporation that provide that the Seller’s board of directors will not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Seller unless the Independent Director and all other members of the Seller’s board of directors unanimously approve the taking of such action in writing prior to the taking of such action;

(vii) The Seller will compensate each of its employees, consultants and agents from the Seller’s own funds for services provided to the Seller; and

(viii) The Seller will not hold itself out to be responsible for the debts of any Cartus Person.

(f) Payment Instruction to Obligors . The Seller will (or will cause the Servicer to) (i) instruct all Obligors to submit all payments on the Pool Receivables either (A) to one of the Lockboxes maintained at the Lockbox Banks for deposit in a Lockbox Account or (B) directly to one of the Lockbox Accounts and (ii) instruct all Persons receiving Home Sale Proceeds to deposit such Home Sale Proceeds in one of the Lockboxes or Lockbox Accounts within two Business Days after such receipt, except to the extent a longer escrow period is required under applicable law, in which case such Home Sale Proceeds will be deposited into one of the Lockboxes or Lockbox Accounts within one Business Day after the expiration of such period.

(g) Segregation of Collections . The Seller will use reasonable efforts to minimize the deposit of any funds other than Pool Collections into any of the Lockbox Accounts and, to the extent that any such funds are deposited into any of such Lockbox Accounts, promptly will identify any such funds or will cause such funds to be so identified to the Servicer, it being understood and agreed that the Seller does not hereby assume any affirmative duty to re-direct Obligors to remit funds to alternate locations.

(h) Identification of Eligible Receivables . The Seller will (or will cause the Servicer to) (i) establish and maintain necessary procedures for determining, no less frequently than each date on which the Servicer needs such information to prepare its next Receivables Activity Report or Weekly Activity Report, as applicable, whether each Receivable qualifies as an Eligible Receivable, and for identifying on any such date all CFC Receivables to be sold to ARSC on that date that are not Eligible Receivables and (ii) will provide to the Servicer in a timely manner information that shows whether, and to what extent, the CFC Receivables described in such Receivables Activity Report or Weekly Activity Report are Eligible Receivables.

 

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(i) Payment of Taxes . The Seller will file (or there will be filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to be filed by it and will pay all taxes, assessments and governmental charges thereby shown to be owing by it, except for any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, would not have a Material Adverse Effect.

(j) Receivables Reviews . Upon reasonable prior notice, the Seller will permit ARSC or its assignees (or other Persons designated by ARSC from time to time) or their agents or representatives (including without limitation certified public accountants or other auditors), at the expense of the Seller and during regular business hours, (i) to examine and make copies of and abstracts from, and to conduct accounting reviews of, all CFC Records in the possession or under the control of the Seller, including without limitation the related Contracts, invoices and other documents related thereto and (ii) to visit the offices and properties of the Seller for the purpose of examining any materials described in the preceding clause (i) and to discuss matters relating to the CFC Receivables or the other ARSC Purchased Assets or the performance by the Seller of its obligations under any Transaction Document to which it is a party with any Authorized Officers of the Seller having knowledge of such matters or with the Seller’s certified public accountants or other auditors; provided , however , that all such reviews will occur no more frequently than twice per year (with only the first such review in any year being at the Seller’s expense) unless (i) a Servicer Default has occurred and is continuing or (ii) ARSC or its successor or assignee has given advance written notice to the Seller that it believes the composition and/or performance of the ARSC Purchased Assets have deteriorated in a manner materially adverse to the interests of ARSC or its assignees.

(k) Environmental Claims . The Seller will use commercially reasonable efforts to promptly cure and have dismissed with prejudice to the satisfaction of ARSC any actions and any proceedings relating to compliance with Environmental Laws relating to any CFC Home, but only to the extent that the conditions that gave rise to such proceedings were in existence as of the date on which ARSC acquired the related CFC Receivable.

(l) Turnover of Collections . If the Seller or any of its agents or representatives at any time receives any cash, checks or other instruments constituting Pool Collections, such recipient will segregate and hold such payments in trust for, and in a manner acceptable to, the Servicer and will, promptly upon receipt (and in any event within one Business Day following receipt) remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to a Lockbox Account.

(m) Performance and Compliance by Seller with CFC Home Purchase Contracts and other Contracts . The Seller will, at its expense, timely and fully perform and comply with, or cause to be timely and fully performed and complied with all provisions, covenants and other promises required to be observed by it under the CFC Home Purchase Contracts and other Contracts related to the CFC Receivables.

 

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(n) Compliance with Credit and Collection Policy . The Seller will (or will cause the Servicer to) comply in all material respects with the Credit and Collection Policy with respect to each CFC Receivable and the related Contract.

(o) Home Purchase Contracts . From and after the Closing Date, the Seller will enter into, and purchase the related Homes pursuant to, all Home Purchase Contracts relating to the Pool Relocation Management Agreements and will make all Equity Payments, Mortgage Payments and Mortgage Payoffs to be made in connection therewith in accordance with the Pool Relocation Management Agreements.

Section 7.2 Reporting Requirements . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, the Seller agrees that it will furnish to ARSC or its assignees:

(a) Annual Financial Statements . As soon as available and in any event within 95 days after the end of each fiscal year of the Performance Guarantor and the Seller, as applicable, copies of (i) to the extent received by the Seller pursuant to Section 7.2(a) of the Purchase Agreement, the consolidated balance sheet of the Performance Guarantor and its consolidated subsidiaries as at the end of such fiscal year and the related statements of earnings and cash flows and stockholders’ equity of the Performance Guarantor and its consolidated subsidiaries for such fiscal year and (ii) copies of the statements of earnings of the Seller on a consolidated basis for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year and certified by the chief financial officer, chief accounting officer or controller of the Seller (it being understood and agreed that such statements of earnings will be prepared in accordance with the Seller’s customary management accounting practices as in effect on the date hereof and need not be prepared in accordance with GAAP);

(b) Material Adverse Effect . Promptly and in any event within two Business Days after the president, chief financial officer, controller or treasurer of the Seller has actual knowledge thereof, written notice that describes in reasonable detail any event or occurrence that, individually or in the aggregate for all such events or occurrences, has had, or that such Authorized Officer in its reasonable good faith judgment determines could reasonably be expected to have, a Material Adverse Effect (as defined in the Indenture);

(c) Proceedings . Promptly and in any event within five Business Days after an Authorized Officer of the Seller has knowledge thereof, written notice of (i) any litigation, investigation or proceeding of the type described in Section 6.1(f) not previously disclosed to ARSC, (ii) any material adverse development that has occurred with respect to any such previously disclosed litigation, investigation or proceeding or (iii) any CFC Purchase Termination Event or ARSC Purchase Termination Event or event that, with the giving of notice or passage of time or both, would constitute an ARSC Purchase Termination Event;

(d) ERISA Event . (i) As soon as possible and in any event within 30 days after the Seller knows or has reason to know that a “reportable event” (as defined in Section 4043 of ERISA) has occurred with respect to any Plan, a statement of an Authorized Officer of the Seller setting forth details as to such reportable event and the action that the Seller or an

 

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ERISA Affiliate proposes to take with respect thereto, together with a copy of the notice of such reportable event, if any, given to the PBGC, the Internal Revenue Service or the Department of Labor; (ii) promptly and in any event within 10 Business Days after receipt thereof (or knowledge of the receipt by an ERISA Affiliate thereof), a copy of any notice the Seller receives relating to the intention of the PBGC to terminate any Plan or to appoint a trustee to administer any such Plan; (iii) promptly and in any event within 10 Business Days after a filing with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to make a required installment or other payment with respect to a Plan, a statement of the chief financial officer of the Seller setting forth details as to such failure and the action that the Seller proposes to take (or knows will be taken) with respect thereto, together with a copy of such notice given to the PBGC; and (iv) promptly and in any event within 30 Business Days after receipt thereof by the Seller from the sponsor of a multiemployer plan (as defined in Section 3(37) of ERISA), a copy of each notice received by the Seller concerning the imposition of withdrawal liability or a determination that a multiemployer plan is, or is expected to be, terminated or reorganized;

(e) Environmental Claims . Promptly and in any event within five Business Days after receipt thereof, notice and copies of all written claims, complaints, notices, actions, proceedings, requests for information or inquiries relating to the condition of any CFC Homes or compliance with Environmental Laws relating to the CFC Homes, other than those received in the ordinary course of business and that, singly or in the aggregate, do not represent events or conditions that would cause the representation set forth in Section 6.1(t) to be incorrect; and

(f) Other . Promptly, from time to time, such other information, documents, records or reports with respect to the ARSC Purchased Assets or the condition or operations, financial or otherwise, of the Seller as ARSC or its assignees may from time to time reasonably request in order to protect the interests of ARSC or such assignees under or as contemplated by this Agreement and the other Transaction Documents, including timely delivery of all such information required under any Enhancement Agreement.

Section 7.3 Negative Covenants of the Seller . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, the Seller agrees that it will not:

(a) Sales, Liens, Etc . Sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien (other than Permitted Liens) of anyone claiming by or through it on or with respect to, any ARSC Purchased Asset or any interest therein or any Lockbox or Lockbox Account, other than (i) sales of ARSC Purchased Assets pursuant to this Agreement and (ii) sales of Homes in accordance with the applicable Contracts;

(b) No Mergers, Etc . Consolidate with or merge with or into any other Person or convey, transfer or sell all or substantially all of its properties and assets to any Person;

(c) Change in Name . Change its corporate name or the name under or by which it conducts its business or the jurisdiction in which it is incorporated unless the Seller has given ARSC and its assignees and the rating agencies then rating each Series of Notes at least 30 days’ prior written notice thereof and unless, prior to any such change in name or jurisdiction of incorporation, the Seller has taken and completed all action required by Section 8.3;

 

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(d) Home Deeds . Record any Home Deeds with respect to any Homes except at the direction of ARSC or its assignees or as permitted by Section 8.3 hereof or by Section 2.01 (d) of the Transfer and Servicing Agreement; and

(e) Extension or Amendment of ARSC Purchased Assets . Extend, amend or otherwise modify the terms of any CFC Receivable included in the ARSC Purchased Assets, or amend, modify or waive any material term or condition related thereto, except in accordance with Section 3.10 of the Transfer and Servicing Agreement.

(f) Change in Payment Instruction to Obligors . Make any change in its instructions to Obligors or other Persons regarding payments to be made to the Seller or payments to be made to any Lockbox Account (except for a change in instructions solely for the purpose of directing such Obligors or other Persons to make such payments to another existing Lockbox Account), unless (i) the Indenture Trustee has received copies of a Lockbox Agreement with each new Lockbox Bank duly executed by the Originator, the Seller, the Issuer, the Indenture Trustee and such Lockbox Bank and (ii) in the case of any termination, ARSC or its successors and assigns have received evidence to their satisfaction that the Obligors that were making payments into a terminated Lockbox Account have been instructed in writing to make payments into another Lockbox Account then in use.

(g) Indebtedness . Create, incur or permit to exist, or give any guarantee or indemnity in respect of, any Indebtedness except for (A) liabilities created or incurred by the Seller pursuant to the Transaction Documents to which it is a party or contemplated by such Transaction Documents and (B) other reasonable and customary operating expenses.

(h) Amendments, Etc . Permit the validity or effectiveness of any Transaction Document to which it is a party or the rights and obligations created thereby or pursuant thereto to be amended, terminated, postponed or discharged, or permit any amendment to any Transaction Document to which it is a party without the consent of the Issuer and the Indenture Trustee, or permit any person whose obligations form part of the ARSC Purchased Assets to be released from such obligations, except in accordance with the terms of such Transaction Document.

(i) Capital Expenditures . Incur or make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

(j) Limitation on Business . Engage in any business other than financing, purchasing, owning and selling and managing the ARSC Purchased Assets and the CFC Homes in the manner contemplated by the Transaction Documents and all activities incidental thereto, or enter into or be a party to any agreement or instrument other than any Transaction Document or documents and agreements incidental thereto. Notwithstanding the foregoing, Seller shall be allowed to acquire Governmental Receivables from Kenosia and CRC, so long as (i) any such acquisition is pursuant to an assignment agreement which is in form and substance reasonably satisfactory to the Buyer and its assigns, including the Issuer and the Majority Investors and (ii) on or prior to the date of such acquisition, all UCC financing statements filed against the Seller shall be amended to reflect the inclusion of such Governmental Receivables in the Seller Receivables.

 

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(k) Capital Contributions . Except as contemplated by the Transaction Documents, make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.

(l) Charter Amendments . Amend any provision of its certificate of incorporation or by-laws unless (a) (i) ARSC shall have received not less than five Business Days’ prior written notice thereof and (ii) the certificate of incorporation of the Seller, as in effect on the date hereof, provides that such amendment can be made without the vote of the Seller’s Independent Directors or (b) the Majority Investors have consented to such amendment.

(m) Net Worth Requirements . Declare or pay any distributions on any of its common stock or make any purchase, redemption or other acquisition of, any of its common stock if, after giving effect thereto, (i) the aggregate principal amount outstanding under the CFC Subordinated Note would exceed five times the net worth of the Seller or (ii) the net worth of the Seller would be less than $8,000,000.

Section 7.4 Affirmative Covenants of ARSC . From the Closing Date until the termination of this Agreement in accordance with Section 11.4, ARSC hereby agrees that it will perform the covenants and agreements set forth in this Section 7.4.

(a) ARSC hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance upon ARSC’s identity as a legal entity separate from Cartus and the other Cartus Persons. From and after the date hereof until one year and one day after the Final Payout Date, ARSC will take such actions as shall be required in order that:

(i) ARSC will conduct its business in office space allocated to it and for which it pays an appropriate rent and overhead allocation;

(ii) ARSC will maintain corporate records and books of account separate from those of each Cartus Person and telephone numbers and stationery that are separate and distinct from those of each Cartus Person;

(iii) ARSC’s assets will be maintained in a manner that facilitates their identification and segregation from those of any Cartus Person;

(iv) ARSC will strictly observe corporate formalities in its dealings with the public and with each Cartus Person, and funds or other assets of ARSC will not be commingled with those of any Cartus Person, except as expressly permitted by the Transaction Documents. ARSC will at all times, in its dealings with the public and with each Cartus Person, hold itself out and conduct itself as a legal entity separate and distinct from each Cartus Person. ARSC will not maintain joint bank accounts or other depository accounts to which any Cartus Person (other than Cartus in its capacity as Servicer under the Transfer and Servicing Agreement) has independent access;

 

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(v) The duly elected board of directors of ARSC and duly appointed officers of ARSC will at all times have sole authority to control decisions and actions with respect to the daily business affairs of ARSC;

(vi) Not less than one member of ARSC’s board of directors will be an Independent Director. ARSC will observe those provisions in its certificate of incorporation that provide that ARSC’s board of directors will not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to ARSC unless the Independent Director and all other members of ARSC’s board of directors unanimously approve the taking of such action in writing prior to the taking of such action;

(vii) ARSC will compensate each of its employees, consultants and agents from ARSC’s own funds for services provided to ARSC;

(viii) ARSC will not hold itself out to be responsible for the debts of any Cartus Person; and

(ix) ARSC will take all actions necessary on its part to be taken in order to ensure that the facts and assumptions relating to ARSC set forth in the opinion of Orrick, Herrington & Sutcliffe LLP dated as of July 31, 2006 relating to substantive consolidation matters with respect to Cartus and CFC will be true and correct at all times.

(b) ARSC assumes no obligations of the Originator under the Pool Relocation Management Agreements with respect to any Home Purchase Contracts, including without limitation the obligations of the Originator to make Equity Payments, Mortgage Payoffs and Mortgage Payments with respect to Cartus Homes or of the Seller to make Equity Payments, Mortgage Payoffs and Mortgage Payments with respect to CFC Homes.

ARTICLE VIII

ADDITIONAL RIGHTS AND OBLIGATIONS

IN RESPECT OF THE ARSC PURCHASED ASSETS

Section 8.1 Rights of ARSC .

(a) Subject to Section 8.4(b), the Seller hereby authorizes ARSC and its assignees and designees to take any and all steps in the Seller’s name and on behalf of the Seller that ARSC, the Servicer and/or their respective designees determine are reasonably necessary or appropriate to collect all amounts due under any and all ARSC Purchased Assets, including without limitation endorsing the name of the Seller on checks and other instruments representing Pool Collections and enforcing such ARSC Purchased Assets.

(b) ARSC shall have no obligation to account for, to replace, to substitute or to return any ARSC Purchased Asset to the Seller, except as provided in Section 4.3(c).

 

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(c) ARSC shall have the unrestricted right to further assign, transfer, deliver, hypothecate, subdivide or otherwise deal with the ARSC Purchased Assets and all of ARSC’s right, title and interest in, to and under this Agreement on whatever terms ARSC determines, pursuant to the Transfer and Servicing Agreement or otherwise.

(d) As between the Seller and ARSC, ARSC shall have the sole right to retain any gains or profits created by buying, selling or holding the ARSC Purchased Assets.

Section 8.2 Responsibilities of the Seller . Anything herein to the contrary notwithstanding:

(a) The Seller agrees to deliver directly to the Servicer (for ARSC’s account), within one Business Day after receipt thereof, any Pool Collections that it receives, in the form so received, and agrees that all such Pool Collections shall be deemed to be received in trust for ARSC and its assignees and shall be maintained and segregated separate and apart from all other funds and moneys of the Seller until delivery of such Pool Collections to the Servicer; and

(b) The Seller hereby grants to ARSC an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of the Seller all steps necessary or advisable to endorse, negotiate or otherwise realize on any writing or other right of any kind held or transmitted by the Seller or transmitted or received by ARSC (whether or not from the Seller) in connection with any ARSC Purchased Asset (which power of attorney may be exercised by ARSC’s successors and assigns in accordance with Section 8.4 and Section 11.12(b)).

(c) The Seller shall perform, or cause to be performed, all of its obligations hereunder and under the CFC Home Purchase Contracts and other Contracts related to the CFC Receivables to which it is a party to the same extent as if such CFC Receivables had not been sold hereunder, and the exercise by ARSC or its designee or assignee of ARSC’s rights hereunder or in connection herewith shall not relieve the Seller from any of its obligations under any such CFC Home Purchase Contracts or Contracts related to the CFC Receivables.

Section 8.3 Further Action Evidencing Purchases . The Seller agrees that from time to time, at its expense and upon reasonable request, it will promptly execute and deliver all further instruments and documents and take all further action as is reasonably necessary to perfect, protect or more fully evidence the Purchase of the ARSC Purchased Assets by ARSC hereunder, or to enable ARSC or its assignees to exercise or enforce any of its rights hereunder or under any other Transaction Document to which the Seller is a party; provided , however , that the Seller will not file or record any Home Deeds except to the extent such recordation is required by local law, regulation or custom. Without limiting the generality of the foregoing, the Seller shall:

(a) upon ARSC’s request, execute and file such financing or continuation statements or amendments thereto or assignments thereof and such other instruments or notices as ARSC or its assignees may reasonably determine to be necessary or appropriate; and

(b) mark the master data processing records evidencing the ARSC Purchased Assets and, if requested by ARSC or its assignees, legend (or cause the Servicer to legend) the CFC Home Purchase Contracts to reflect the sale of the ARSC Purchased Assets to ARSC pursuant to this Agreement.

 

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The Seller hereby authorizes ARSC and its assignees to file one or more financing or continuation statements and amendments thereto and assignments thereof with respect to all or any of the ARSC Purchased Assets, in each case whether now existing or hereafter purchased or generated by the Seller. If (i) the Seller fails to perform any of its agreements or obligations under this Agreement and does not remedy such failure within the applicable cure period, if any, and (ii) ARSC or its assignees in good faith reasonably believes that the performance of such agreements and obligations is necessary or appropriate to protect the interests of ARSC or its assignees under this Agreement, then ARSC or its assignees may (but shall not be required to) perform or cause performance of such agreement or obligation, and the reasonable expenses of ARSC or its assignees incurred in connection with such performance shall be payable by the Seller as provided in Section 10.1.

Section 8.4 Collections; Rights of ARSC and its Assignees .

(a) The Seller hereby transfers to ARSC the ownership of, and the exclusive dominion and control over, each of the Lockboxes and Lockbox Accounts owned by the Seller, and the Seller hereby agrees to take any further action that ARSC or its assignees may reasonably request in order to effect or complete such transfer.

(b) At any time following the designation of a Servicer other than Cartus pursuant to the Transfer and Servicing Agreement:

(i) ARSC or its assignees may direct the Obligors of Pool Receivables, or any of them, to pay all amounts payable under any Pool Receivable directly to ARSC or its assignees;

(ii) At the request of ARSC or its assignees and at the Seller’s expense, the Seller shall give notice of such ownership to each said Obligor and direct that payments be made directly to ARSC or its assignees;

(iii) At the request of ARSC or its assignees and at the Seller’s expense, the Seller shall (A) assemble all of the CFC Records, to the extent such CFC Records are in its possession, or instruct any escrow agents holding any such documents, instruments and other records on its behalf to make the same available and (B) segregate all cash, checks and other instruments received by it from time to time constituting Pool Collections in a manner reasonably acceptable to ARSC or its assignees and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to ARSC or its assignees; and

(iv) The Seller hereby authorizes ARSC or its assignees to take any and all steps in the Seller’s name and on behalf of the Seller that are necessary or desirable, in the reasonable determination of ARSC or its assignees, to collect all amounts due under any and all ARSC Purchased Assets, including without limitation endorsing the Seller’s name on checks and other instruments representing Pool Collections and enforcing the ARSC Purchased Assets.

 

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ARTICLE IX

TERMINATION

Section 9.1 ARSC Purchase Termination Events . The following events shall be “ARSC Purchase Termination Events” :

(a) The occurrence of an Event of Default or an Amortization Event with respect to all outstanding Series of Notes; or

(b) Any representation or warranty made by the Seller under any of the Transaction Documents, any Daily Seller Report or other information or report delivered by the Seller with respect to the Seller or the ARSC Purchased Assets shall prove to have been untrue or incorrect in any material respect when made or deemed to have been made, such failure could reasonably be expected to have a Material Adverse Effect and such occurrence remains unremedied for 30 days; provided , however , that any such incorrect representation relating to a CFC Receivable with respect to which the Seller has made a CFC Noncomplying Asset Adjustment pursuant to Section 4.3(a) of this Agreement shall not constitute an ARSC Purchase Termination Event; or

(c) (i) The Seller shall fail to perform or observe, or cause to be performed or observed, as and when required, any term, covenant or agreement contained in this Agreement or any of the other Transaction Documents to which it is a party, or any CFC Home Purchase Contract to which it is a party required on its part to be performed or observed, and such failure shall remain unremedied for: (A) in the case of a failure to maintain its separate corporate existence pursuant to Section 7.1(p), a failure to provide payment instructions to Obligors pursuant to Section 7.1(f), a failure to segregate Pool Collections pursuant to Section 7.1(g), a failure to provide access to records and required reports pursuant to Section 7.1(j), or a breach of any of the negative covenants of the Seller set forth in Section 7.3, ten calendar days or (B) in the case of any other failure to perform or observe, as and when required, any term, covenant or agreement, which failure could reasonably be expected to have a Material Adverse Effect, 30 days or (iii) the Performance Guarantor shall fail to make any required payment under its Performance Guaranty and such failure shall remain unremedied for one Business Day or (iv) the Performance Guarantor shall otherwise fail to perform under its Performance Guaranty; or

(d) An Event of Bankruptcy shall have occurred with respect to the Seller, Cartus or the Performance Guarantor; or

(e) The representation and warranty in Section 6.1(k) shall not be true at any time with respect to a substantial portion of the ARSC Purchased Assets; or

(f) Either (i) the Internal Revenue Service shall file notice of a Lien pursuant to Section 6323 of the Internal Revenue Code with respect to any of the ARSC Purchased Assets and such Lien shall not have been released within five days or if released, proved to the satisfaction of the rating agencies then rating each Series of Notes or (ii) the PBGC shall file, or shall indicate its intention to file, notice of a Lien pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974 with respect to any of the ARSC Purchased Assets; or

 

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(g) This Agreement, the Purchase Agreement or the Performance Guaranty shall cease to be in full force and effect for any reason other than in accordance with its terms; or

(h) A CFC Purchase Termination Event or Transfer Termination Event shall have occurred.

If an ARSC Purchase Termination Event occurs, the Seller shall promptly give notice to ARSC and its assignees of such ARSC Purchase Termination Event.

Section 9.2 Purchase Termination .

(a) On the ARSC Termination Date, the Seller shall cease transferring ARSC Purchased Assets to ARSC, provided that any right, title and interest of the Seller in and to any CFC Designated Receivables arising from any Servicer Advances made thereafter, including any Related Property relating thereto and proceeds thereof, shall continue to be transferred. Notwithstanding any cessation of the transfer to ARSC of additional ARSC Purchased Assets, ARSC Purchased Assets transferred to ARSC prior to the Termination Date and Pool Collections in respect of such ARSC Purchased Assets and the related Finance Charges, whenever accrued in respect of such ARSC Purchased Assets, shall continue to be property of ARSC available for transfer by ARSC pursuant to the Transfer and Servicing Agreement.

(b) Upon the occurrence of an ARSC Purchase Termination Event, ARSC and its assignees shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Without limiting the foregoing, the occurrence of an ARSC Purchase Termination Event shall not deny to ARSC or its assignees any remedy in addition to termination of its obligation to make Purchases hereunder to which ARSC or its assignees may be otherwise appropriately entitled, whether by statute or applicable law, at law or in equity.

ARTICLE X

INDEMNIFICATION; SECURITY INTEREST

Section 10.1 Indemnities by the Seller . Without limiting any other rights that any CFC Indemnified Party may have hereunder or under applicable law, the Seller agrees to indemnify ARSC and each of its successors, permitted transferees and assigns, and all officers, directors, shareholders, controlling Persons, employees and agents of any of the foregoing (each of the foregoing Persons, a “ CFC Indemnified Party ”), from and against any and all damages, losses, claims (whether on account of settlements or otherwise), actions, suits, demands, judgments, liabilities (including penalties), obligations or disbursements of any kind or nature and related costs and expenses (including reasonable attorneys’ fees and disbursements) awarded against or incurred by any of them, arising out of or as a result of any of the following (all of the foregoing, collectively, “ CFC Indemnified Losses ”):

(a) any representation or warranty made by the Seller under any of the Transaction Documents, any Daily Seller Report or any other information or report delivered by the Seller with respect to the Seller or the ARSC Purchased Assets, having been untrue or incorrect in any respect when made or deemed to have been made; provided , however , that the Seller’s obligation to make a CFC Noncomplying Asset Adjustment pursuant to Section 4.3(a) with respect to any representation made in Section 6.1(l) as to Eligible Receivables having been incorrect when made shall be the only remedy available to ARSC or its assignees relating to such incorrect representation;

 

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(b) the failure by the Seller to comply with any material applicable law, rule or regulation applicable to the Seller with respect to any ARSC Purchased Asset or any failure of a ARSC Purchased Asset to comply with any such law, rule or regulation as of the date of the sale of such ARSC Purchased Asset hereunder;

(c) the failure to vest and maintain in ARSC a valid ownership or security interest in the ARSC Purchased Assets, free and clear of any Lien arising through the Seller or anyone claiming through or under the Seller (including without limitation any such failure arising from a circumstance described in the definition of Permitted Exceptions);

(d) any failure of the Seller to perform its duties or obligations in accordance with the provisions of the Transaction Documents or any Contract, in each case to which it is a party;

(e) the failure to file, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to the transfer of any ARSC Purchased Assets to ARSC, whether at the time of any sale or at any subsequent time;

(f) the failure by the Seller to pay when due any taxes owing by it (including sales, excise or property taxes) payable in connection with the ARSC Purchased Assets, other than any such taxes, assessments or charges that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens);

(g) any reduction in the Unpaid Balance of any CFC Receivable included in the ARSC Purchased Assets as a result of (i) any cash discount or any adjustment by the Seller or any Affiliate of the Seller (other than Cartus, the Issuer or ARSC), (ii) any offsetting account payable of the Seller to an Obligor, (iii) a set-off in respect of any claim by, or defense or credit of, the related Obligor against the Seller or any Affiliate of the Seller (other than Cartus, the Issuer or ARSC) (whether such claim, defense or credit arises out of the same or a related or an unrelated transaction) or (iv) the obligation of the Seller to pay to the related Obligor any rebate or refund;

(h) any product liability or personal injury claim in connection with the service which is the subject of any CFC Receivable or CFC Related Property; and

 

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(i) any investigation, litigation or proceeding related to any use by the Seller of the proceeds of any Purchase made hereunder.

Notwithstanding anything to the contrary in this Agreement, any representations, warranties and covenants made by the Seller in this Agreement or the other Transaction Documents that are qualified by or limited to events or circumstances that have, or are reasonably likely to have, given rise to a Material Adverse Effect, shall (solely for purposes of the indemnification obligations set forth in this Section 10.1) be deemed not to be so qualified or limited.

Notwithstanding the foregoing, no indemnification payments shall be payable by the Seller pursuant to this Section 10.1 until all amounts owing by the Issuer under the Indenture have been paid in full and all amounts payable by the Seller to Cartus under the CFC Subordinated Note have been paid in full.

Notwithstanding the foregoing (and with respect to clause (ii) below, without prejudice to the rights that ARSC may have pursuant to the other provisions of this Agreement or the provisions of any of the other Transaction Documents), in no event shall any CFC Indemnified Party be indemnified for any CFC Indemnified Losses (i) resulting from negligence or willful misconduct on the part of such CFC Indemnified Party, (ii) to the extent the same includes losses in respect of ARSC Purchased Assets and reimbursement therefor that would constitute credit recourse to the Seller for the amount of any ARSC Purchased Asset not paid by the related Obligor or (iii) resulting from the action or omission of the Servicer.

If for any reason the indemnification provided in this Section 10.1 is unavailable to a CFC Indemnified Party or is insufficient to hold a CFC Indemnified Party harmless, then the Seller shall contribute to the maximum amount payable or paid to such CFC Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such CFC Indemnified Party on the one hand and the Seller on the other hand, but also the relative fault of such CFC Indemnified Party and the Seller, and any other relevant equitable considerations.

Section 10.2 Security Interest . Without prejudice to the provisions of Section 2.1 providing for the absolute transfer of the Seller’s interest in the ARSC Purchased Assets and the proceeds thereof and any interest of the Seller in the other property described in clause (vi) of Section 2.1(a) to ARSC in order to secure the prompt payment and performance of all obligations of the Seller to ARSC arising in connection with this Agreement, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, the Seller hereby assigns and grants to ARSC a first priority security interest in the Seller’s right, title and interest, if any, in, to and under all of the ARSC Purchased Assets and the proceeds thereof and any interest of the Seller in the other property described in clause (vi) of Section 2.1(a), whether now or hereafter existing.

 

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ARTICLE XI

MISCELLANEOUS

Section 11.1 Amendments; Waivers, Etc.

(a) The provisions of this Agreement may be amended, modified or waived from time to time if such amendment, modification or waiver is in writing and signed by the Seller and ARSC and its assignees; provided , however , that no amendment, modification or waiver of this Agreement shall be effective unless the Indenture Trustee shall consent to such amendment, modification or waiver in writing and the rating agencies then rating each Series of Notes shall have been notified of such amendment, modification or waiver. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b) No failure or delay on the part of ARSC or its assignees, or any CFC Indemnified Party, or any other third party beneficiary referred to in Section 11.12(a) in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to, or demand on, the Seller shall entitle it in any case to any notice or demand in similar or other circumstances. No waiver or approval by ARSC or its assignees under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

Section 11.2 Notices, Etc. Unless otherwise stated herein, all notices, demands, consents, approvals and other communications provided for hereunder shall be in writing (including via telecopier) and shall be personally delivered or sent by certified mail, return receipt requested, postage prepaid, by telecopier or by overnight courier to the intended party at the address or telecopier number of such party set forth on Schedule 11.2 hereof, or at such other address or telecopier number as shall be designated by such party in a written notice to the other party hereto given in accordance with this Section 11.2. Copies of all notices and other communications provided for hereunder shall be delivered to the Issuer at its address for notices set forth in the Transfer and Servicing Agreement. All notices and communications provided for hereunder shall be effective when received.

Section 11.3 Cumulative Remedies . The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

Section 11.4 Binding Effect; Assignability; Survival of Provisions . This Agreement shall be binding upon, and inure to the benefit of, ARSC and the Seller and their respective successors and assigns. The Seller may not assign any of its rights hereunder or any interest herein without the prior written consent of ARSC and its assignees. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated pursuant hereto. Such termination shall not occur prior to the Final Payout Date. The rights and remedies with respect to any

 

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breach of any representation and warranty made by the Seller pursuant to Article VI and the indemnification and payment provisions of Article X and Section 11.6 and the provisions of Section 11.14, Section 11.16 and Section 11.17 shall be continuing and shall survive any termination of this Agreement.

Section 11.5 Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

Section 11.6 Costs, Expenses and Taxes . In addition to the obligations of the Seller under Article X, the Seller agrees to pay on demand:

(a) all reasonable costs and expenses incurred by ARSC and its assignees in connection with the negotiation, preparation, execution and delivery of, the administration (including periodic auditing), the preservation of any rights under, or the enforcement of, or any breach of, this Agreement (including any amendment, supplement or modification hereto), including without limitation (i) the reasonable fees, expenses and disbursements of counsel to any such Persons incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under this Agreement and (ii) all reasonable out-of-pocket expenses (including reasonable fees and expenses of independent accountants) incurred in connection with any review of the Seller’s books and records either prior to the execution and delivery hereof or pursuant to Section 7.1(h), and

(b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or any amendment, supplement or modification thereto, and agrees to indemnify each CFC Indemnified Party against any liabilities with respect to, or resulting from, any delay in paying or omission to pay such taxes and fees.

Section 11.7 Submission to Jurisdiction . EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY (a) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (c) IRREVOCABLY APPOINTS CORPORATION SERVICE COMPANY (THE “PROCESS AGENT”), WITH AN OFFICE ON THE DATE HEREOF AT 80 STATE STREET, ALBANY, NEW YORK 12207, UNITED STATES OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT’S ABOVE

 

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ADDRESS, AND EACH PARTY HERETO HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH PARTY HERETO AGREES TO ENTER INTO ANY AGREEMENT RELATING TO SUCH APPOINTMENT THAT THE PROCESS AGENT MAY CUSTOMARILY REQUIRE AND TO PAY THE PROCESS AGENT’S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE, EACH PARTY HERETO ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS SPECIFIED PURSUANT TO SECTION 11.2. NOTHING IN THIS SECTION 11.7 SHALL AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF EITHER PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY HERETO OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.

Section 11.8 Waiver of Jury Trial . EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF EITHER OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

Section 11.9 Integration . This Agreement contains a 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 between the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings.

Section 11.10 Captions and Cross References . The various captions (including without limitation the table of contents) in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

Section 11.11 Execution in Counterparts . 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.

Section 11.12 Acknowledgment and Consent .

(a) The Seller acknowledges that, from time to time prior to the Termination Date, ARSC intends to sell all of ARSC’s right, title and interest in, to and under the ARSC Purchased Assets, this Agreement and all of the other Transaction Documents pursuant to the Transfer and Servicing Agreement and that the interests of ARSC hereunder will be further assigned pursuant to the Indenture. The Seller acknowledges and agrees to each such sale by

 

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ARSC and consents to the sale and assignment by ARSC of all or any portion of its right, title and interest in, to and under the ARSC Purchased Assets, this Agreement and the other Transaction Documents and all of ARSC’s rights, remedies, powers and privileges and all claims of ARSC against the Seller under or with respect to this Agreement and the other Transaction Documents (whether arising pursuant to the terms of this Agreement or otherwise available at law or in equity), including without limitation (whether or not an Unmatured Servicer Default or a Servicer Default has occurred and is continuing) (i) the right of ARSC at any time to enforce this Agreement against the Seller and the obligations of the Seller hereunder and (ii) the right at any time to give or withhold any and all consents, requests, notices, directions, approvals, demands, extensions or waivers under or with respect to this Agreement, any other Transaction Document or the obligations in respect of the Seller thereunder, all of which rights, remedies, powers, privileges and claims may be exercised and/or enforced by ARSC’s successors ands assigns to the same extent as ARSC may do. Each of the parties hereto acknowledges and agrees that ARSC’s successors and assigns are third party beneficiaries of this Agreement, including without limitation the rights of ARSC arising hereunder, and may rely on the Seller’s representations and warranties made herein as if made directly to them. The Seller hereby acknowledges and agrees that, except with respect to its rights under Section 4.3, it has no claim to or interest in any of the Lockbox Accounts.

(b) The Seller hereby agrees to execute all agreements, instruments and documents and to take all other actions that ARSC or its assignees determines are necessary or appropriate to evidence its consent described in Section 11.12(a). The Seller hereby acknowledges and agrees that ARSC in all of its capacities may assign to ARSC’s successors and assigns such powers of attorney and other rights and interests granted by the Seller to ARSC hereunder and agrees to cooperate fully with the Indenture Trustee in the exercise of such rights.

Section 11.13 No Partnership or Joint Venture . Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third person to create the relationship of principal and agent or of partnership or of joint venture.

Section 11.14 No Proceedings .

(a) The Seller hereby agrees that it will not institute against ARSC or join any other Person in instituting against ARSC any Insolvency Proceeding so long as the Final Payout Date shall not have occurred or there shall not have elapsed one year plus one day since the Final Payout Date. The foregoing shall not limit the right of the Seller to file any claim in or otherwise take any action with respect to any Insolvency Proceeding that was instituted against ARSC or its successors by any Person other than the Seller.

(b) ARSC hereby agrees that it will not institute against the Seller or join any other Person in instituting against the Seller any Insolvency Proceeding so long as the Final Payout Date shall not have occurred or there shall not have elapsed one year plus one day since the Final Payout Date. The foregoing shall not limit the right of ARSC to file any claim in or otherwise take any action with respect to any Insolvency Proceeding that was instituted against the Seller or its successors by any Person other than ARSC.

 

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Section 11.15 Severability of Provisions . If any one or more of the covenants, agreements, provisions or terms of this Agreement are for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.

Section 11.16 Recourse to the Seller . Except to the extent expressly provided otherwise in the Transaction Documents, the obligations of the Seller under the Transaction Documents to which it is a party are solely the obligations of the Seller, and no recourse shall be had for payment of any fee payable by or other obligation of or claim against the Seller that arises out of any Transaction Document to which the Seller is a party against any director, officer or employee of the Seller. The provisions of this Section 11.16 shall survive the termination of this Agreement.

Section 11.17 Recourse to ARSC . Except to the extent expressly provided otherwise in the Transaction Documents, the obligations of ARSC under the Transaction Documents to which it is a party are solely the obligations of ARSC, and no recourse shall be had for payment of any fee payable by or other obligation of or claim against ARSC that arises out of any Transaction Document to which ARSC is a party against any director, officer or employee of ARSC. The provisions of this Section 11.17 shall survive the termination of this Agreement.

Section 11.18 Confidentiality . ARSC agrees to maintain the confidentiality of any information regarding Cartus, the Seller, and Realogy obtained in accordance with the terms of this Agreement that is not publicly available; provided, however, that ARSC may reveal such information (a) as necessary or appropriate in connection with the administration or enforcement of this Agreement or its funding of Purchases under this Agreement or (b) as required by law, government regulation, court proceeding or subpoena. Notwithstanding anything herein to the contrary, none of Cartus, the Seller or Realogy shall have any obligation to disclose to ARSC or its assignees any personal and confidential information relating to a Transferred Employee.

Section 11.19 Conversion . Notwithstanding any covenants in this Agreement requiring Cartus, CFC or ARSC to maintain its “corporate existence”, such entity may elect to convert their status from that of a Delaware corporation to that of a Delaware limited liability company, either by filing a certificate of conversion with the Delaware Secretary of State or by merging with and into a newly formed Delaware limited liability company(such conversion or merger, as applicable, being herein called a “ Conversion ”) subject to the conditions that:

(a) (x) the Person formed by such Conversion (any such Person, the “ Surviving Entity ”) is an entity organized and existing under the laws of the United States of America or any State thereof, (y) such Surviving Entity expressly assumes, by an agreement in form and substance satisfactory to the applicable transferee and its assignees, performance of every covenant and obligation of such Person under the Transaction Documents to which such Person is a party and (z) such Surviving Entity delivers to the other parties to the Fifth Omnibus Amendment hereto dated as of April 10, 2007 (such parties, the “ Amendment Parties ”) an opinion of counsel that such Surviving Entity is duly organized and validly existing under the laws of its organization, has duly executed and delivered such supplemental agreement, and such

 

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supplemental agreement is a valid and binding obligation of such Surviving Entity, enforceable against such Surviving Entity in accordance with its terms (subject to customary exceptions relating to bankruptcy and equitable principles) and covering such other matters as the Amendment Parties may reasonably request;

(b) all actions necessary to maintain the perfection of the security interests or ownership interests created by such Person under the Transaction Documents to which such Person is a party in connection with such Conversion shall have been taken, as evidenced by an opinion of counsel reasonably satisfactory to the Amendment Parties;

(c) so long as such Person is the Servicer, no Servicer Default or Unmatured Servicer Default is then occurring or would result from such Conversion;

(d) in the case of a Conversion of CFC or ARSC, (x) the organizational documents of any Surviving Entity with respect to CFC or ARSC shall contain limitations on its business activities and requirements for independent directors or managers substantially equivalent to those set forth in its current organizational documents, and (y) Orrick Herrington & Sutcliffe shall have delivered an opinion of counsel reasonably satisfactory to the Amendment Parties that such Conversion will not, in and of itself, alter the conclusions set forth in its opinions previously issued in connection with the Transaction Documents with respect to true sale matters, substantive consolidation matters and bankruptcy issues relating to “home sale proceeds” (to the extent such opinions relate to such Person); and

(e) each Amendment Party shall have received such other documents as such Amendment Party may reasonably request.

In connection with any such Conversion and the resulting change in name of such entity, Cartus, CFC and/or ARSC, as applicable, shall be required to comply with the name change covenants in the Transaction Documents, except that to the extent 30 days prior written notice of the name change is required, such notice period shall be reduced to five Business Days.

From and after any such Conversion effected in compliance with the above conditions, (a) all references in the Transaction Documents to any Person which has altered its corporate structure to become a limited liability company shall be deemed to be references to the Surviving Entity as successor to such Person, (b) all representations, warranties and covenants in the Transaction Documents which state that any of Cartus, CFC or ARSC is or is required to be a corporation shall be deemed to permit and require the Surviving Entity to be a limited liability company, (c) all references to such Person’s certificate of incorporation, other organizational documents, capital stock, corporate action or other matters relating to its corporate form will be deemed to be references to the organizational documents and analogous matters relating to limited liability companies, (d) all references to such Person’s directors or independent directors will be deemed to be references to the Surviving Entity’s directors, independent directors, managers or independent managers, as the case may be and (e) no representation, warranty or covenant in any Transaction Document shall be deemed to be breached or violated solely as a result of the fact that the Surviving Entity in any Conversion may be disregarded as a separate entity for state, local or federal income tax purposes.

 

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Section 11.20 Inclusion of Receivables Assigned from Kenosia Funding LLC and Cartus Relocation Corporation . The parties hereto acknowledge and agree that the definition of “Seller Receivables” in this Agreement may include certain Receivables (the “ Acquired Receivables ’) which were neither sold by Cartus to CFC under the Purchase Agreement nor originated by CFC. The parties hereto acknowledge and agree that, for all purposes of the Transaction Documents, (i) the Acquired Receivables shall be considered to be CFC Receivables originated by CFC, and shall be deemed to be included in the ARSC Purchased Assets transferred to the Issuer and (ii), notwithstanding anything to the contrary in the Transaction Documents, CFC shall be allowed to enter into an assignment agreement with each of Cartus, Kenosia and CRC, the form of which has been approved in writing by the Majority Investors, and to consummate the transfer of the Acquired Receivables along with the Related Property relating to such Acquired Receivables (collectively, the “ Acquired Assets ”) on the terms and conditions set forth therein. Such conditions shall include evidence of compliance with the Federal Assignment of Claims Act and confirmation from the Rating Agencies that the commercial paper ratings of the Conduit Purchasers under the Note Purchase Agreement will not be reduced or withdrawn by reason of such transaction. The parties hereto further acknowledge and agree that, so long as such Acquired Receivables satisfy all other criteria set forth in the definition of “Eligible Receivable”, such Acquired Receivables shall constitute Eligible Receivables within the meaning of the Receivables Purchase Agreement, the Transfer and Servicing Agreement and the Indenture notwithstanding the fact that such Acquired Receivables were neither sold to CFC under the Purchase Agreement nor otherwise originated by CFC.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

 

CARTUS FINANCIAL CORPORATION
By:    
  Name: Dennis O’Gara
  Title: Sup. CFO
APPLE RIDGE SERVICES CORPORATION
By:    
  Name: Eric J. Barnes
  Title: VP. Controller

[Signature Page to Receivables Purchase Agreement]


APPENDIX A

DEFINITIONS

A. Defined Terms . Capitalized terms used in this Agreement but not defined herein shall have the meanings assigned to them in the Purchase Agreement. As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

ARSC ” shall mean Apple Ridge Services Corporation, a Delaware corporation.

ARSC Purchase Price ” shall have the meaning set forth in Section 3.1(b).

ARSC Purchase Termination Event ” shall have the meaning set forth in Section 9.1.

ARSC Purchased Assets ” shall have the meaning set forth in Section 2.1(a).

ARSC Subordinated Loan ” shall have the meaning set forth in Section 4.2.

ARSC Subordinated Note ” shall mean the ARSC Subordinated Note dated the Closing Date, made by ARSC and payable to the order of Cartus substantially in the form of Exhibit 4.2, as such note may be amended, supplemented, otherwise modified or replaced from time to time.

ARSC Subordinated Note Cap ” shall have the meaning set forth in Section 4.2.

ARSC Termination Date ” shall mean the date specified by the Indenture Trustee following the occurrence of an ARSC Purchase Termination Event; provided , however , that if an Event of Bankruptcy has occurred with respect to either the Seller or ARSC, the ARSC Termination Date shall be deemed to have occurred automatically without any such notice.

CFC Collections ” shall mean all funds that are received on account of or otherwise in connection with any CFC Pool Asset, including without limitation all funds received (a) from or on behalf of any Obligor in payment of or otherwise in respect of any CFC Receivable included in the CFC Pool Assets (including without limitation funds received in respect of Advance Payments to the extent necessary to reduce the Aggregate Employer Balance of Receivables with respect to that Employer to zero), (b) from or on behalf of any Ultimate Buyer in respect of CFC Home Sale Proceeds, (c) from any other Person to the extent such funds were applied, or should have been applied, pursuant to any Contract to repay or discharge any CFC Receivable or CFC Related Asset included in the CFC Pool Assets (including without limitation insurance payments that any Transaction Party applies in the ordinary course of its business to amounts owed in respect of such CFC Pool Assets), (d) from the Seller in respect of Seller Adjustments with respect to the ARSC Purchased Assets under this Agreement or any other obligation of the Seller hereunder, (e) from the Originator in respect to Originator Adjustments with respect to the ARSC Purchased Assets under Section 4.3 (c) of the Purchase Agreement, (f) from the Servicer in respect of Servicer Dilution Adjustments with respect to the

 

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ARSC Purchased Assets under Section 3.10(a) of the Transfer and Servicing Agreement and (g) from the Performance Guarantor in respect of any payments made by the Performance Guarantor as guarantor of the obligations of the Originator or the Servicer under the Performance Guaranty executed by it.

CFC Home ” shall mean any Home subject to a CFC Home Purchase Contract.

CFC Home Purchase Contract ” shall mean any Home Purchase Contract that was executed, and pursuant to which CFC purchases a Home, on or after the Closing Date, and that relates to a Receivable included in the ARSC Purchased Assets.

“CFC Home Sale Contract ” shall mean any Home Sale Contract with respect to a CFC Home.

CFC Home Sale Proceeds ” shall mean any Home Sale Proceeds arising under a CFC Home Sale Contract.

CFC Indemnified Losses ” shall have the meaning set forth in Section 10.1.

CFC Indemnified Party ” shall have the meaning set forth in Section 10.1.

CFC Noncomplying Asset ” shall have the meaning set forth in Section 4.3(a).

CFC Noncomplying Asset Adjustment ” shall have the meaning set forth in Section 4.3(a).

CFC Pool Asset ” shall mean, collectively, all of the following assets and interests in property, whether now existing or hereafter arising and wheresoever located:

(a) all CFC Receivables, all CFC Related Assets, all CFC Collections and all proceeds of the foregoing;

(b) the Performance Guaranty;

(c) all rights to payment due or to become due from the Seller under the Transaction Documents and all other rights and interests of ARSC under this Agreement and the other Transaction Documents;

(d) all Lockboxes and Lockbox Accounts and all funds on deposit therein and certificates and instruments, if any, from time to time evidencing such accounts and funds on deposit therein, all investments made with such funds, all claims thereunder or in connection therewith and all interest, dividends, monies, instruments, securities and other property from time to time received, receivable or otherwise distributed in respect of, or in exchange for, any or all of the foregoing; and

(e) all moneys due or to become due and all amounts received or receivable with respect to any of the foregoing and all proceeds of, and earnings on the foregoing.

 

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CFC Purchased Assets ” shall have the meaning set forth in Section 2.1(a).

CFC Receivable ” shall have the meaning set forth in Section 2.1(a).

CFC Records ” shall mean all Records maintained by the Seller with respect to the CFC Receivables and CFC Related Assets.

CFC Related Assets ” shall have the meaning set forth in Section 2.1(a).

CFC Related Property ” shall have the meaning set forth in Section 2.1(a).

Collection Account ” shall have the meaning provided in the Transfer and Servicing Agreement.

CRC ” shall mean Cartus Relocation Corporation, a wholly-owned subsidiary of Cartus.

Daily Seller Report ” shall have the meaning set forth in Section 3.1.

Eligible Receivable ” shall mean any Eligible Receivable as defined in the Purchase Agreement that has been (or will be at the time such Receivable becomes included in the ARSC Purchased Assets) validly transferred to ARSC by CFC under and in accordance with this Agreement. The term “Eligible Receivable” shall also include each Governmental Receivable which (i) is acquired by Seller from Kenosia and CRC pursuant to documentation which is in form and substance reasonably satisfactory to the Buyer, and its assigns, including the Issuer and the Majority Investors, (ii) is in existence on the date the related Guaranteed Government Contract became a Pool Relocation Management Agreement and (iii) would qualify as an Eligible Receivable but for the fact that such Governmental Receivable was not acquired by Seller from the Originator under the Purchase Agreement and, in the case of any Governmental Receivable arising out of or with respect to Equity Payments, Mortgage Payments and Mortgage Payoffs, such Receivable was originated by CRC and not by Seller

Final Payout Date ” shall mean the earlier of the date after the satisfaction and discharge of the Indenture pursuant to Article IV thereof on which either (i) all of the Notes have been paid in full or (ii) the Unpaid Balance of all outstanding Pool Receivables has been reduced to zero; provided that for purposes of this definition of Final Payout Date, the Unpaid Balance of a Defaulted Receivable shall be deemed to be outstanding until all Homes related thereto have been sold and such Receivable has been written off as uncollectible.

Government Receivable ” shall mean any Receivable arising under or in connection with a Government Guaranteed Contract.

Independent Director ” shall mean an individual who is an Independent Director as defined in the Certificate of Incorporation of ARSC as in effect on the date of this Agreement.

Kenosia ” shall mean Kenosia Funding, LLC, a wholly-owned subsidiary of CRC.

 

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Material Adverse Effec t” shall mean, with respect to any event or circumstance, a material adverse effect on (a) the business, financial condition, operations or assets of the Seller, (b) the ability of the Seller to perform its obligations under any Transaction Document or all or any substantial portion of the Contracts, (c) the validity or enforceability of, or collectibility of, amounts payable by the Seller under any Transaction Document, (d) the status, existence, perfection or priority of the interest of ARSC (and its assigns) in the ARSC Purchased Assets, taken as a whole, in each case free and clear of any Lien (other than Permitted Liens) or (e) the validity, enforceability or collectibility of all or any substantial portion of the ARSC Purchased Assets.

Permitted Exception ” shall mean that, with respect to any representation, warranty or covenant with respect to the interest of ARSC and its assignees in the ARSC Purchased Assets or any Servicer Default, that (i) prior to recordation (A) pursuant to Section 8.3 of this Agreement and/or Section 2.01(d)(i) of the Transfer and Servicing Agreement or (B) upon the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee, and no recordation in real estate records of any mortgage or any conveyance pursuant to the related Home Purchase Contract or Home Sale Contract in favor of any Transaction Party, the Issuer or any of ARSC’s assignees and assigns pursuant to the Transfer and Servicing Agreement will be made except as otherwise permitted under Section 2.01(d)(i) of the Transfer and Servicing Agreement and (ii) no delivery of any Home Purchase Contract, Home Deed or Equity Loan Note to any custodian will be required.

Pool Collections ” shall mean, collectively and without duplication, the Cartus Collections and the CFC Collections; provided , however , that any proceeds of Receivables that gave rise to CFC Noncomplying Asset Adjustments that have been paid as provided in Section 4.3 hereof or Cartus Noncomplying Asset Adjustments that have been paid as provided in Section 4.3 of the Purchase Agreement and any Related Property with respect to such Receivable shall not constitute Pool Collections and shall be promptly returned to CFC as provided in Section 4.3 hereof.

Pool Receivables ” shall mean, collectively, the Cartus Receivables and the CFC Receivables.

Purchase ” shall mean each purchase of Receivables, Related Assets and other ARSC Purchased Assets by ARSC from the Seller hereunder.

Purchase Agreement ” shall mean the Purchase Agreement dated as of the date hereof by and between Cartus and the Seller.

Seller ” shall mean Cartus Financial Corporation.

Seller Adjustment ” shall have the meaning set forth in Section 4.3(c).

Seller Assets ” shall have the meaning provided in Section 2.1(a).

Seller Dilution Adjustment ” shall have the meaning set forth in Section 4.3(b).

 

A-4


Seller Person ” means the Seller and each of its Subsidiaries and Affiliates other than Cartus, ARSC and the Issuer.

Seller Purchased Assets ” shall have the meaning provided in Section 2.1(a).

Seller Receivables ” shall have the meaning provided in Section 2.1(a).

Seller Related Assets ” shall have the meaning provided in Section 2.1(a).

Seller Related Property ” shall have the meaning provided in Section 2.1(a).

Transaction Documents ” means, collectively, this Agreement, the Purchase Agreement, the Transfer and Servicing Agreement, the Performance Guaranty, the ARSC Subordinated Note, the Lockbox Agreements and all agreements, instruments, certificates, reports and documents (other than any of the Contracts) executed and delivered or to be executed and delivered by ARSC under or in connection with any of the foregoing, as any of the foregoing may be amended, supplemented, restated or otherwise modified from time to time.

Transaction Party ” means ARSC, Cartus, the Seller, the Issuer or the Servicer (so long as the Servicer is Cartus or an Affiliate thereof).

B. Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP or with United States generally accepted regulatory principles, as applicable. To the extent that the definitions of accounting terms in this Agreement are inconsistent with the meanings of such terms under GAAP or regulatory accounting principles, the definitions contained in this Agreement shall control. 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.

C. Agreements, Representations and Warranties . The agreements, representations and warranties of ARSC and Cartus Financial Corporation in this Agreement in each of their respective capacities as buyer, Seller and originator shall be deemed to be the agreements, representations and warranties of ARSC and Cartus Financial Corporation solely in each such capacity for so long as ARSC and Cartus Financial Corporation act in each such capacity under this Agreement, provided that nothing in this paragraph shall be deemed to limit the survival of such agreements, representations and warranties.

D. Computation of Time Periods . Unless otherwise stated in this Agreement with respect to computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and each of the words “to” and “until” means “to but excluding”.

E. Reference . The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and references to “ Section ”, “ subsection ”, “ Appendix ”, “ Schedule ” and “ Exhibit ” in this Agreement are references to Sections, subsections, Appendices, Schedules and Exhibits in or to this Agreement unless otherwise specified in this Agreement. References herein to this Agreement, the Purchase Agreement, the Transfer and Servicing Agreement, the Indenture and the Performance Guaranty shall mean and be references to each such document as amended and modified by that certain Omnibus Amendment, Agreement and Consent dated December 20, 2004 to which the Originator and the Buyer are a party, that certain Second Omnibus Amendment dated January 31, 2005 to which the Originator and the Buyer are a party, that certain Third Omnibus Amendment, Agreement and Consent dated May 12, 2006 to which the Originator and the Buyer are a party and that certain Fifth Omnibus Amendment dated April 10, 2007 to which the Originator and the Buyer are a party.

 

A-5


SCHEDULE 2.1

to

RECEIVABLES PURCHASE AGREEMENT

Dated as of April 25, 2000

List of CFC Home Purchase Contracts

Sent directly to Apple Ridge Services Corporation.

 

S-2.1-1


SCHEDULE 6.1(n)

to

RECEIVABLES PURCHASE AGREEMENT

Dated as of April 25, 2000

Principal Place of Business

and Chief Executive Office of the Seller

Cartus Financial Corporation

40 Apple Ridge Road

Suite 4C45

Danbury, CT 06810

Fax: 203-205-6575

List of Offices Where

the Seller Keeps CFC Records

Cartus Corporation

40 Apple Ridge Road

Danbury, CT 06810

Cartus Corporation

8081 Royal Ridge Parkway

Suite 200

Irving, TX 75063

Cartus Corporation

27271 Las Ramblas

Mission Viejo, CA 92691

 

S-6.1(n)-1


SCHEDULE 6.1(q)

to

RECEIVABLES PURCHASE AGREEMENT

Dated as April 25, 2000 as amended by the THIRD OMNIBUS AMENDMENT, AGREEMENT

AND CONSENT Dated May 12, 2006

List of Legal Names for Cartus Financial Corporation

Cartus Financial Corporation

Cendant Mobility Financial Corporation

 

S-6.1(q)-1


SCHEDULE 11.2

to

RECEIVABLES PURCHASE AGREEMENT

Dated as of April 25, 2000

Notice Addresses

Cartus Financial Corporation

40 Apple Ridge Road

Suite 4C45

Danbury, CT 06810

Fax: 203-205-6575

Apple Ridge Services Corporation

40 Apple Ridge Road

Suite 4C45

Danbury, CT 06810

Fax: (203) 205-1335

 

S-11.2-1


EXHIBIT 2.1

to

RECEIVABLES PURCHASE AGREEMENT

Dated as of April 25, 2000

FORM OF NOTICE OF ADDITIONAL

CFC HOME PURCHASE CONTRACTS

[DATE]

Apple Ridge Services Corporation

40 Apple Ridge Road

Suite 4C45

Danbury, CT 06810

Fax: 203-205-1335

 

  Re: Additional CFC Home Purchase Contracts

Dear Sir or Madam:

Reference is made to the Receivables Purchase Agreement, dated as of April 25, 2000 (the “Receivables Purchase Agreement”), between Cartus Financial Corporation and Apple Ridge Services Corporation. Capitalized terms used herein and not defined herein shall have the meanings assigned to them in the Receivables Purchase Agreement.

Pursuant to Section 2.1 of the Receivables Purchase Agreement, we are required to deliver a notice to you on the last of day of each month setting forth the new Home Purchase Contracts which were executed during such month. Attached hereto is a list of CFC Home Purchase Contracts that were executed during [Month/Year]. Pursuant to Section 2.1 of the Receivables Purchase Agreement, Schedule 2.1 to the Receivables Purchase Agreement is hereby amended to include the Home Purchase Contracts attached hereto.

 

Very truly yours,
CARTUS FINANCIAL CORPORATION
By:    
  Name:
  Title:

 

E-2.1-1


EXHIBIT 4.2

to

RECEIVABLES PURCHASE AGREEMENT

Dated as of April 25, 2000

FORM OF ARSC SUBORDINATED NOTE

April 25, 2000

1. Note . FOR VALUE RECEIVED, the undersigned, APPLE RIDGE SERVICES CORPORATION, a Delaware corporation (“ARSC”), hereby unconditionally promises to pay to the order of CENDANT MOBILITY SERVICES CORPORATION, a Delaware corporation (“CMSC”), in lawful money of the United States of America and in immediately available funds, on the day following the Final Payout Date, the aggregate unpaid principal sum outstanding of all “ARSC Subordinated Loans” made from time to time by CMSC to ARSC pursuant to and in accordance with the terms of that certain Receivables Purchase Agreement dated as of April 25, 2000, between the Seller and ARSC (as amended, restated, supplemented, or otherwise modified from time to time, the “Receivables Purchase Agreement”). Reference to Sections 4.2 and 5.2 of the Receivables Purchase Agreement is hereby made for a statement of the terms and conditions under which the loans evidenced hereby have been and will be made. All capitalized terms used herein that are not otherwise specifically defined herein shall have the meanings given to such terms in the Receivables Purchase Agreement. No advance shall be made hereunder on any date if the aggregate principal amount outstanding hereunder on such date, after giving effect to such advance, plus the aggregate amount then outstanding under the Notes, would exceed an amount equal to five times the net worth of ARSC. Proceeds of any loan hereunder shall be used solely for the purposes of paying the Purchase Price of the ARSC Purchased Assets.

2. Agreement to Make Advances . Subject to the limitations set forth herein and the following limitations set forth in Section 5.2 of the Receivables Purchase Agreement: (a) this ARSC Subordinated Note has been duly executed and delivered by ARSC and is in full force and effect, (b) no Event of Bankruptcy has occurred and is continuing with respect to ARSC and (c) after giving effect to the ARSC Subordinated Loan, the aggregate outstanding principal amount of this ARSC Subordinated Note does not exceed the ARSC Subordinated Note Cap, CMSC irrevocably agrees to make each ARSC Subordinated Loan requested by ARSC on or prior to the Termination Date for the sole purpose of purchasing ARSC Purchased Assets under the Receivables Purchase Agreement.

3. Interest . ARSC further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full hereof at a rate equal to LIBOR plus 2.25%; provided , however , that if ARSC defaults in the payment of any principal hereof, ARSC promises to pay, on demand, interest at the Prime Rate plus 2.00% per annum on any such unpaid amounts, accrued with respect to each Interest Period from the date such payment is due to the date of actual payment. LIBOR shall be determined on each LIBOR

 

S-11.2-1


Determination Date on the basis of the rate for deposits in United States dollars for a one-month period which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate does not appear on Telerate Page 3750, the rate for that LIBOR Determination Date shall be determined on the basis of the rates quoted by the four major banks in the London interbank market selected by the Paying Agent to the Paying Agent as the rates at which deposits in United States dollars are offered by such banks in the London interbank market at approximately 11:00 a.m., London time, on that day to prime banks in the London interbank market for a one-month period. Notwithstanding the foregoing, interest shall accrue at a rate equal to 8.46% per annum during the first Interest Period. Interest shall be payable on the Distribution Date in each month in arrears. The outstanding principal of any loan made under this ARSC Subordinated Note shall be due and payable on the day after the Final Payout Date, and may be repaid or prepaid at any time without premium or penalty.

LIBOR Determination Date means the second London Business Day prior to the commencement of the second and each subsequent Interest Period. A London Business Day is any Business Day on which dealings in deposits in U.S. dollars are transacted in the London interbank market and banking institutions in London are not authorized or obligated by law or regulation to close. An Interest Period is the period beginning on and including the Distribution Date immediately preceding such Distribution Date and ending on and excluding such Distribution Date; provided that the first Interest Period shall begin on and include April 25, 2000 and end on and exclude June 15, 2000. A Distribution Date means June 15, 2000 and the fifteenth day of each calendar month thereafter, or if such fifteenth day is not a Business Day, the next succeeding Business Day.

4. Principal Payments . CMSC is authorized and directed by ARSC to enter in its books and records the date and amount of each loan made by it that is evidenced by this ARSC Subordinated Note and the amount of each payment of principal made by ARSC and, absent manifest error, such entries shall constitute prima facie evidence of the accuracy of the information so entered; provided that neither the failure of CMSC to make any such entry or any error therein shall expand, limit or affect the obligations of ARSC hereunder.

5. Subordination . The indebtedness evidenced by this ARSC Subordinated Note is subordinated to the prior payment in full of all of ARSC’s recourse obligations under the Transfer and Servicing Agreement. The subordination provisions contained herein are for the direct benefit of, and may be enforced by, ARSC’s successors and assigns and/or any of their respective assignees (collectively, the “Senior Claimants”) under the Transfer and Servicing Agreement. Until the date after the Final Payout Date on which all advances outstanding under the Transfer and Servicing Agreement have been repaid in full and all other obligations of ARSC thereunder (all such obligations, collectively, the “Senior Claims”) have been indefeasibly paid and satisfied in full, CMSC shall not demand, accelerate, sue for, take, receive or accept from ARSC, directly or indirectly, in cash or other property or by set-off or any other manner (including without limitation from or by way of collateral) any payment or security of all or any of the indebtedness under this ARSC Subordinated Note or exercise any remedies or take any action or proceeding to enforce the same; provided , however , that (i) CMSC hereby agrees that it will not institute against ARSC any Insolvency Proceeding unless and until a period of one year and one day has elapsed after the Final Payout Date and (ii) nothing in this paragraph shall

 

S-11.2-1


restrict ARSC from paying, or CMSC from requesting, any payments under this ARSC Subordinated Note so long as ARSC is not required under the Transfer and Servicing Agreement to set aside the funds used for such payments for the benefit of, or otherwise pay over to, any of the Senior Claimants; and provided , further , that the making of such payment would not otherwise violate the terms and provisions of the Transfer and Servicing Agreement. Should any payment, distribution or security or proceeds thereof be received by CMSC in violation of the immediately preceding sentence, CMSC agrees that such payment shall be segregated, received and held in trust for the benefit of, and deemed to be the property of, and shall be immediately paid over and delivered to the Indenture Trustee for the benefit of the Senior Claimants.

6. Bankruptcy; Insolvency . Upon the occurrence of any Insolvency Proceeding involving ARSC as debtor, then and in any such event the Senior Claimants shall receive payment in full of all amounts due under the Transfer and Servicing Agreement (whether or not any or all of such amount is an allowable claim in any such proceeding) before CMSC is entitled to receive payment on account of this ARSC Subordinated Note and, to that end, any payment or distribution of assets of ARSC of any kind or character, whether in cash, securities or other property in any applicable Insolvency Proceeding which would otherwise be payable to, or deliverable upon or with respect to, any or all indebtedness under this ARSC Subordinated Note, is hereby assigned to and shall be paid or delivered by the Person making such payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee or otherwise) pursuant to the Transfer and Servicing Agreement for application to, or as collateral for the payment of, the Senior Claim until such Senior Claim shall have been paid in full and satisfied.

7. GOVERNING LAW . THIS ARSC SUBORDINATED NOTE SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF NEW YORK. WHEREVER POSSIBLE EACH PROVISION OF THIS ARSC SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS ARSC SUBORDINATED NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS ARSC SUBORDINATED NOTE.

8. Waivers . All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. CMSC additionally expressly waives all notice of the acceptance by any Senior Claimant of the subordination and other provisions of this ARSC Subordinated Note and expressly waives reliance by any Senior Claimant upon the subordination and other provisions herein provided.

9. Assignment . Prior to the satisfaction and discharge of the Indenture pursuant to Article IV thereof, this ARSC Subordinated Note may not be assigned, pledged or otherwise transferred to any party other than Originator except in accordance with the Transfer and Servicing Agreement.

 

S-11.2-1


APPLE RIDGE SERVICES CORPORATION
By:    
  Name:
  Title:

 

Acknowledged and agreed:
CENDANT MOBILITY SERVICES CORPORATION
By:    
  Name:
  Title:

 

S-11.2-1


Exhibit A-3


  

CONFORMED COPY

  

AS AMENDED BY:

  

1. Omnibus Amendment, Agreement and Consent dated December 20, 2004.

  

2. Second Omnibus Amendment dated January 31, 2005

  

3. Third Omnibus Amendment, Agreement and Consent dated May 12, 2006

  

4. Fourth Omnibus Amendment dated November 29, 2006

  

5. Fifth Omnibus Amendment dated April 10, 2007

  

6. Sixth Omnibus Amendment dated June 26, 2007

 

 

 

TRANSFER AND SERVICING AGREEMENT

Dated as of April 25, 2000

by and between

APPLE RIDGE SERVICES CORPORATION

as transferor,

CARTUS CORPORATION

as originator and servicer,

CARTUS FINANCIAL CORPORATION

as originator,

APPLE RIDGE FUNDING LLC

as transferee

and

THE BANK OF NEW YORK

as Indenture Trustee

 

 

 


TABLE OF CONTENTS

 

          Page
ARTICLE I   
DEFINITIONS   

Section 1.01

  

Definitions

   1

Section 1.02

  

Other Definitional Provisions

   9
ARTICLE II   
SALE AND PURCHASE OF ASSETS   

Section 2.01

  

Sale and Purchase

   11

Section 2.02

  

Representations and Warranties of the Transferor

   13

Section 2.03

  

Representations and Warranties of the Issuer

   18

Section 2.04

  

No Assumption of Obligations Relating to Transferred Assets; Excess Home Sale Proceeds

   18

Section 2.05

  

Affirmative Covenants of the Transferor

   18

Section 2.06

  

Negative Covenants of the Transferor

   21
ARTICLE III   
ADMINISTRATION AND SERVICING OF RECEIVABLES   

Section 3.01

  

Acceptance of Appointment and Other Matters Relating to the Servicer

   24

Section 3.02

  

Duties of the Servicer and the Issuer

   24

Section 3.03

  

Servicing Compensation

   27

Section 3.04

  

Representations and Warranties of the Servicer

   27

Section 3.05

  

Affirmative Covenants of Servicer

   30

Section 3.06

  

Negative Covenants of Servicer

   32

Section 3.07

  

Records of the Servicer and Reports to be Prepared by the Servicer

   33

Section 3.08

  

Annual Certificate of Servicer

   36

 

- i -


Section 3.09

  

Annual Servicing Report of Independent Public Accountants; Copies of Reports Available

   36

Section 3.10

  

Adjustments; Modifications

   36

Section 3.11

  

Escrow Agents

   37

Section 3.12

  

Servicer Advances

   37

Section 3.13

  

Calculations

   38

Section 3.14

  

Application of Collections

   38
ARTICLE IV   
ACCOUNTS AND POOL COLLECTIONS   

Section 4.01

  

Establishment of Collection Account

   39

Section 4.02

  

Pool Collections and Allocations

   40

Section 4.03

  

Withdrawals from the Collection Account

   40
ARTICLE V   
SECURITY INTEREST   

Section 5.01

  

Security Interest

   41

Section 5.02

  

Enforcement of Rights

   41
ARTICLE VI   
OTHER MATTERS RELATING TO THE TRANSFEROR   

Section 6.01

  

Liability of the Transferor

   42

Section 6.02

  

Indemnification by the Transferor

   42
ARTICLE VII   
OTHER MATTERS RELATING TO THE SERVICER   

Section 7.01

  

Liability of the Servicer

   45

Section 7.02

  

Merger or Consolidation of, or Assumption of the Obligations of, the Servicer

   45

Section 7.03

  

Limitation on Liability of the Servicer and Others

   46

 

ii


Section 7.04

  

Indemnification by the Servicer

   46

Section 7.05

  

Resignation of the Servicer

   47

Section 7.06

  

Access to Certain Documentation and Information Regarding the Receivables

   47
ARTICLE VIII   
TERMINATION   

Section 8.01

  

Transfer Termination Events

   48

Section 8.02

  

Transfer Termination

   49
ARTICLE IX   
SERVICER DEFAULTS   

Section 9.01

  

Servicer Defaults

   50

Section 9.02

  

Performance by Issuer

   52

Section 9.03

  

Indenture Trustee To Act; Appointment of Successor

   52

Section 9.04

  

Notification to Holders

   54

Section 9.05

  

Marketing Expenses Account

   54

Section 9.06

  

Lockbox Agreements

   55
ARTICLE X   
TERMINATION   

Section 10.01

  

Termination

   56
ARTICLE XI   
MISCELLANEOUS PROVISIONS   

Section 11.01

  

Amendment

   57

Section 11.02

  

Governing Law

   58

Section 11.03

  

Notices; Payments

   58

Section 11.04

  

Severability of Provisions

   58

 

iii


Section 11.05

  

Further Assurances

   58

Section 11.06

  

Nonpetition Covenant

   58

Section 11.07

  

No Waiver; Cumulative Remedies

   60

Section 11.08

  

Counterparts

   60

Section 11.09

  

Third-Party Beneficiaries

   60

Section 11.10

  

Merger and Integration

   60

Section 11.11

  

Headings

   60

Section 11.12

  

Confidentiality

   60

Section 11.13

  

Costs, Expenses and Taxes

   60

Section 11.14

  

Submission to Jurisdiction

   61

Section 11.15

  

Waiver of Jury Trial

   62

Section 11.16

  

Acknowledgment and Consent

   62

Section 11.17

  

No Partnership or Joint Venture

   62

Section 11.18

  

Conversion

   62

Section 11.19

  

Inclusion of Receivables Assigned from Kenosia Funding LLC and Cartus Relocation Corporation

   64

 

iv


APPENDIX

APPENDIX A

   Definitions   
SCHEDULES

SCHEDULE 2.1

   List of CFC Home Purchase Contracts   

SCHEDULE 6.l(n)

   Principal Place of Business and Chief Executive Office of the Seller and List of Offices Where the Seller Keeps CFC Records   

SCHEDULE 6.1(q)

   List of Legal Names for Cartus Financial Corporation   

SCHEDULE 11.2

   Notice Addresses   
EXHIBITS

EXHIBIT 2.1

   Form of Notice of Additional CFC Home Purchase Contracts   

EXHIBIT 4.2

   Form of ARSC Subordinated Note   

 

v


THIS TRANSFER AND SERVICING AGREEMENT (this “ Agreement ”) dated as of April 25, 2000 is made by and between APPLE RIDGE SERVICES CORPORATION, a Delaware corporation, as transferor, CARTUS CORPORATION, a Delaware corporation, as originator and servicer (“ Cartus ” or the “ Servicer ”), CARTUS FINANCIAL CORPORATION, a Delaware corporation, as originator (“ CFC ”), APPLE RIDGE FUNDING LLC, a Delaware limited liability company (the “ Issuer ”), as transferee, and THE BANK OF NEW YORK, as successor to JPMorgan Chase Bank, N.A., as successor Indenture Trustee.

In consideration of the mutual agreements herein contained, each party agrees as follows for the benefit of the other parties, the Indenture Trustee and the holders of any Notes issued by the Issuer from time to time under the Indenture to the extent provided herein:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . Capitalized terms used in this Agreement but not defined herein shall have the meanings assigned to them in the Receivables Purchase Agreement or Purchase Agreement, as applicable. Whenever used in this Agreement, the following words and phrases shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

Agreement ” shall mean this Transfer and Servicing Agreement and all amendments hereof and supplements hereto.

ARF Purchase Price ” shall have the meaning set forth in Section 2.01(i).

ARSC Indemnified Losses ” shall have the meaning set forth in Section 6.02.

ARSC Indemnified Party ” shall have the meaning set forth in Section 6.02.

Asset Deficiency ” shall have the meaning set forth in the Indenture.

Cash Equivalents ” shall mean (i) investments in commercial paper maturing in not more than 270 days from the date of issuance which at the time of acquisition is rated at least A-1 or the equivalent thereof by Standard & Poor’s or P-1 or the equivalent thereof by Moody’s, (ii) investments in direct obligations or obligations that are guaranteed or insured by the United States or any agency or instrumentality thereof ( provided that the full faith and credit of the United States is pledged in support thereof) having a maturity of not more than three years from the date of acquisition, (iii) investments in certificates of deposit maturing not more than one year from the date of origin issued by a bank or trust company organized or licensed under the laws of the United States or any state or territory thereof having capital, surplus and undivided profits aggregating at least $500,000,000 and rated A or better by Standard & Poor’s or A2 or better by Moody’s, (iv) money market mutual funds having assets in excess of $2,000,000,000, (v) investments in asset-backed or mortgage-backed securities, including investments in collateralized, adjustable rate mortgage securities and those mortgage-backed securities that are

 

1


rated at least AA by Standard & Poor’s or Aa by Moody’s or are of comparable quality at the time of investment and (vi) banker’s acceptances maturing not more than one year from the date of origin issued by a bank or trust company organized or licensed under the laws of the United States or any state or territory thereof and having capital, surplus and undivided profits aggregating at least $500,000,000, and rated A or better by Standard & Poor’s or A2 or better by Moody’s.

Code ” shall mean the Internal Revenue Code of 1986, as amended.

Collection Account ” shall have the meaning provided in Section 4.01.

Distribution Date ” shall mean, with respect to any Series, the date specified in the applicable Supplement for payments to holders of the Notes of that Series.

Dollars, ” “ $ ” or “ U.S. $ ” shall mean United States dollars.

Eligible Account ” shall mean an account that is (i) maintained with a depository institution whose short-term debt obligations at the time of any deposit therein are rated in the highest short-term debt rating categories by Moody’s and Standard & Poor’s, (ii) one or more accounts maintained with a depository institution, which accounts are fully insured by the FDIC, with a minimum long-term unsecured debt rating of “A3” by Moody’s and “BBB+” by Standard & Poor’s, (iii) a segregated trust account maintained with the corporate trust office of the Indenture Trustee or an Affiliate of the Indenture Trustee, in either case in its fiduciary capacity or (iv) an account otherwise acceptable to each Rating Agency as evidenced by the delivery of a rating letter by each Rating Agency on the Closing Date.

Eligible Investments ” shall mean the following instruments, investment property, or other property, other than securities issued by or obligations of Cartus or any of its Affiliates:

(a) direct obligations of, or obligations fully guaranteed as to timely payment by, the United States of America;

(b) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof, including the District of Columbia (or domestic branches of foreign banks) and subject to supervision and examination by federal or state banking or depository institution authorities, provided that, at the time of the Issuer’s investment or contractual commitment to invest therein, the short-term debt rating of such depository institution or trust company shall be A-1 + by Standard & Poor’s and P-1 by Moody’s;

(c) commercial paper (having original or remaining maturities of no more than 30 days) having, at the time of the Issuer’s investment or contractual commitment to invest therein, a short-term debt rating of A-1+ by Standard & Poor’s and P-1 by Moody’s;

 

2


(d) demand deposits, time deposits and certificates of deposit that are fully insured by the FDIC having, at the time of the Issuer’s investment therein, a short-term debt rating of A-1 + by Standard & Poor’s and P-1 by Moody’s;

(e) bankers’ acceptances (having original maturities of no more than 365 days) issued by any depository institution or trust company referred to in clause (b) above;

(f) money market funds having, at the time of the Issuer’s investment therein, a rating of AAAm or AAAm-G by Standard & Poor’s or Aaa by Moody’s (including funds for which the Indenture Trustee or any of its Affiliates is investment manager or advisor);

(g) time deposits and eurodollar deposits (having maturities not later than the succeeding Distribution Date) other than as referred to in clause (d) above, with a Person the commercial paper of which has a credit rating of at least A-1+ by Standard & Poor’s and P-1 by Moody’s; or

(h) any other investment of a type or rating that satisfies the Rating Agency Condition.

Eligible Receivables ” shall have the meaning provided in the Receivables Purchase Agreement.

Eligible Servicer ” shall mean Cartus or, if Cartus is not acting as Servicer, an entity that, at the time of its appointment as Servicer, (a) is servicing a portfolio of relocation services accounts and is acceptable to the Indenture Trustee, each Series Enhancer and the Rating Agencies, (b) is legally qualified and has the capacity to service the Receivables, (c) in the determination of the Majority Investors, has demonstrated the ability to service professionally and competently a portfolio of similar accounts in accordance with high standards of skill and care, (d) is qualified to use the software that is then being used to service the Receivables or obtains the right to use or has its own software that is adequate to perform its duties under this Agreement and (e) has a net worth of at least $ 25,000,000 as of the end of its most recent fiscal quarter (or such lesser net worth as may be approved by the Majority Investors).

FDIC ” shall mean the Federal Deposit Insurance Corporation or any successor.

Final Stated Maturity Date ” shall have the meaning set forth in the Indenture.

Home Purchase Price ” shall mean, with respect to any Home, the appraised or other value set forth in the related Home Purchase Contract as the purchase price for such Home.

Indebtedness ” shall mean, with respect to any Person, in the aggregate, without duplication, (i) all indebtedness, obligations and other liabilities of such Person that are, at the date as of which Indebtedness is to be determined, includable as liabilities in a balance sheet of such Person, other than (x) accounts payable and accrued expenses and (y) current and deferred income taxes and other similar liabilities, (ii) the maximum aggregate amount of all liabilities of such Person or under any Guaranty, indemnity or similar undertaking given or assumed of or in

 

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respect of, the indebtedness, obligations or other liabilities, assets, revenues, income or dividends of any Person other than such Person and (iii) all other obligations or liabilities of such Person with respect to the discharge of the obligations of any Person other than itself. For purposes of the Transaction Documents, the Indebtedness of any Person includes the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer.

Indenture ” shall mean the master indenture dated as of April 25, 2000, by and between the Issuer, the Indenture Trustee and The Bank of New York, as Paying Agent, Authentication Agent and Transfer Agent and Registrar.

Indenture Trustee ” shall mean The Bank of New York, as successor to JPMorgan Chase Bank, N.A., acting in its capacity as Indenture Trustee under the Indenture.

Investment Company Act ” shall mean the Investment Company Act of 1940, as amended.

Leverage Ratio ” shall mean on any date, the ratio of (a) Total Senior Secured Net Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters of the Borrower most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided, that EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis. Capitalized Terms used in this definition shall have the meaning set forth in the Realogy Credit Agreement as in effect on April 10, 2007, without giving effect to any subsequent amendments.

Lockbox ” shall mean any post office box to which the Obligors remit Pool Collections.

Lockbox Account ” shall mean each lockbox account and associated demand deposit account established pursuant to the Lockbox Agreement and such other lockbox accounts and associated demand deposit accounts that the Servicer may establish from time to time pursuant to a Lockbox Agreement.

Lockbox Agreement ” shall mean each lockbox agreement attached as Exhibit B and any other lockbox agreement pursuant to which the Servicer establishes a Lockbox Account in the name of the Indenture Trustee.

Lockbox Bank ” shall mean any institution at which a Lockbox or Lockbox Account is maintained.

Majority Investors ” shall have the meaning set forth in the Indenture.

Marketing Expenses Account ” shall mean the account established pursuant to Section 9.05.

Material Adverse Effect ” shall mean, with respect to any Person and any event or circumstance, a material adverse effect on (a) the business, financial condition, operations or assets of such Person, (b) the ability of such Person to perform its obligations under any

 

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Transaction Document to which it is a party or, if applicable, all or any substantial portion of the Contracts, (c) the validity or enforceability of, or collectibility of, amounts payable by such Person under any Transaction Document to which it is a party, (d) the status, existence, perfection or priority of the interest of the Issuer and its assignees in the Transferred Assets, taken as a whole, in each case free and clear of any Lien (other than a Permitted Lien) or (e) the validity, enforceability or collectibility of all or any substantial portion of the Transferred Assets.

Moody’s ” shall mean Moody’s Investors Service or its successor.

Nonrecoverable Advance ” shall mean any Servicer Advance previously made in respect of a Home the Receivable arising from which has become a Defaulted Receivable.

Note ” shall have the meaning provided in the Indenture.

Officer’s Certificate ” shall mean, unless otherwise specified in this Agreement, a certificate delivered as provided herein, signed:

(a) by the President, any Vice President or the chief financial officer of the Transferor or the Servicer, as the case may be, or

(b) by the President, any Vice President or the financial controller of any Successor Servicer

(or by an officer holding an office with equivalent or more senior responsibilities or, in the case of the Servicer or Successor Servicer, a Servicing Officer, and, in the case of the Transferor, any executive of the Transferor designated in writing by a Vice President or more senior officer of the Transferor for this purpose).

Opinion of Counsel ” shall mean a written opinion of counsel, who may be counsel for, or an employee of, the Person providing the opinion and who shall be reasonably acceptable to the Issuer and the Indenture Trustee.

Outstanding ” shall have the meaning set forth in the Indenture.

Outstanding Amount ” shall have the meaning set forth in the Indenture.

Possession Date ” shall have, with respect to any Home, the meaning provided in the related Home Purchase Contract.

Purchase ” shall mean each purchase of Receivables, Related Assets and other ARSC Purchased Assets by the Issuer from ARSC hereunder.

Purchase Agreement ” shall mean the purchase agreement dated as of April 25, 2000, between Cartus and CFC, as amended from time to time.

 

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Rating Agency ” shall mean, with respect to any outstanding Series, each rating agency, if any, specified in the applicable Supplement, selected by the Issuer to rate the Notes of such Series.

Rating Agency Condition ” shall mean, with respect to any action, that each Rating Agency shall have notified the Transferor, the Servicer, the Indenture Trustee and the Issuer in writing that such action will not result in a reduction, qualification or withdrawal of the then existing rating of any outstanding Series with respect to which it is a Rating Agency (or, in the case of any Series covered by a financial insurance policy or surety bond, the reduction, qualification or withdrawal of the then existing rating of such Series without giving effect to such insurance policy or surety bond, with such notice also addressed to the issuer of the applicable insurance policy or surety bond) or, with respect to any outstanding Series not rated by any Rating Agency, the required consent specified in the Supplement for such Series.

Realogy Credit Agreement ” shall mean that certain Credit Agreement dated as of April 10, 2007 among Domus Intermediate Holdings Corp., Realogy, the lenders and other financial institutions party thereto and JP Morgan Chase Bank, N.A., as Administrative Agent.

Realogy Indebtedness ” shall mean (i) all indebtedness, obligations and other liabilities of Realogy and its Consolidated Subsidiaries that are, at the date as of which Realogy Indebtedness is to be determined, includable as liabilities in a consolidated balance sheet of Realogy and its Consolidated Subsidiaries, other than (x) accounts payable and accrued expenses, (y) advances from clients obtained in the ordinary course of the relocation management services business of Realogy and its Consolidated Subsidiaries and (z) current and deferred income taxes and other similar liabilities, plus (ii) without duplicating any items included in Realogy Indebtedness pursuant to the foregoing clause (i), the maximum aggregate amount of all liabilities of Realogy or any of its Consolidated Subsidiaries under any guaranty, indemnity or similar undertaking given or assumed of, or in respect of, the indebtedness, obligations or other liabilities, assets, revenues, income or dividends of any person other than Realogy or one of its Consolidated Subsidiaries and (iii) all other obligations or liabilities of Realogy or any of its Consolidated Subsidiaries in relation to the discharge of the obligations of any Person other than Realogy or one of its Consolidated Subsidiaries.

Receivables Activity Report ” shall have the meaning provided in Section 3.07(c).

Receivables Purchase Agreement ” shall mean the receivables purchase agreement dated as of April 25, 2000, between CFC and the Transferor, as amended from time to time.

Required Marketing Expenses Account Amount ” shall mean, on any Distribution Date, an amount equal to:

(i) zero, if the average number of days the Homes relating to outstanding Pool Receivables have been owned by Cartus and CFC (excluding any such Homes relating to Self-Funding Obligors) as of the close of business on the last Business Day of the immediately preceding Monthly Period was 120 days or less;

 

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(ii) 2.5% of the aggregate Home Purchase Price for all Homes owned by Cartus and CFC (excluding any Homes relating to Self-Funding Obligors) as of the close of business on the last Business Day of the immediately preceding Monthly Period, if the average number of days such Homes have been owned by Cartus and CFC as of the close of business on the last day of the immediately preceding Monthly Period was greater than 120 days but less than or equal to 130 days;

(iii) 3.0% of the aggregate Home Purchase Price for all Homes owned by Cartus and CFC (excluding any Homes relating to Self-Funding Obligors) as of the close of business on the last Business Day of the immediately preceding Monthly Period, if the average number of days such Homes have been owned by Cartus and CFC as of the close of business on the last day of the immediately preceding Monthly Period was greater than 130 days but less than or equal to 140 days;

(iv) 4.0% of the aggregate Home Purchase Price for all Homes owned by Cartus and CFC (excluding any Homes relating to Self-Funding Obligors) as of the close of business on the last Business Day of the immediately preceding Monthly Period, if the average number of days such Homes have been owned by Cartus and CFC as of the close of business on the last day of the immediately preceding Monthly Period was greater than 140 days but less than or equal to 150 days; and

(v) 5.0% of the aggregate Home Purchase Price for all Homes owned by Cartus and CFC (excluding any Homes relating to Self-Funding Obligors) as of the close of business on the last Business Day of the immediately preceding Monthly Period, if the average number of days such Homes have been owned by Cartus and CFC as of the close of business on the last day of the immediately preceding Monthly Period was greater than 150 days;

provided , that if a Weekly Reporting Event has occurred and is continuing, the Required Marketing Expenses Account Amount shall be the greater of the amount otherwise required above and $250,000.

Series Account ” shall mean any account or accounts established pursuant to the Supplement for any Series of Notes.

Service Transfer ” shall have the meaning specified in Section 9.01.

Servicer ” shall mean Cartus, in its capacity as the Servicer under this Agreement, and any successor thereto in such capacity appointed pursuant to Article IX of this Agreement.

Servicer Advance ” shall mean any out-of-pocket payments made by the Servicer with respect to a CFC Home, including but not limited to maintenance, repairs, utilities, insurance, taxes, assessments, Mortgage Payoffs, Mortgage Payments, Other Reimbursable Expenses, homeowners or association dues and other costs of ownership.

 

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Servicer Default ” shall have the meaning set forth in Section 9.01.

Servicer Dilution Adjustment ” shall have the meaning set forth in Section 3.10(a).

Servicing Fee ” shall have the meaning specified in Section 3.03.

Servicing Officer ” shall mean any officer of the Servicer or an attorney-in-fact of the Servicer who in either case is involved in, or responsible for, the administration and servicing of the Receivables and whose name appears on a list of servicing officers furnished to the Issuer and the Indenture Trustee by the Servicer, as such list may from time to time be amended. The initial list of Servicing Officers is set forth in Exhibit C.

Standard & Poor’s ” shall mean Standard & Poor’s Ratings Services or its successor.

Sub-Servicer ” shall have the meaning set forth in Section 3.01(b).

Successor Servicer ” shall have the meaning provided in Section 9.03(a).

Supplement ” shall mean, with respect to any Series, a supplement to the Indenture, executed and delivered in connection with the original issuance of the Notes of such Series, including all amendments thereof and supplements thereto.

Termination Notice ” shall have the meaning set forth in Section 9.01.

Transfer Termination Date ” shall mean the date specified by the Indenture Trustee at the direction of the Majority Investors following the occurrence of a Transfer Termination Event; provided , however , that if an Event of Bankruptcy has occurred with respect to either ARSC or the Issuer, the Transfer Termination Date shall be deemed to have occurred automatically without any such notice.

Transfer Termination Event ” shall have the meaning set forth in Section 8.01.

Transferor ” shall mean Apple Ridge Services Corporation, a wholly owned special purpose subsidiary of CFC incorporated in the State of Delaware, or its successor under this Agreement.

Transferred Assets ” shall have the meaning set forth in Section 2.01(a).

Unmatured Servicer Default ” shall mean any event that, with the giving of notice or lapse of time, or both, would become a Servicer Default.

Weekly Activity Report ” shall have the meaning provided in Section 3.07(d).

 

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Weekly Reporting Event ” shall mean that, commencing with the quarter ending June 30, 2007, the Leverage Ratio as of the end of such fiscal quarter exceeds the applicable ratio set forth below:

 

Fiscal Quarter Ending

   Senior
Secured
Leverage
Ratio

June 30, 2007

   6.00:1.00

September 30, 2007

   6.00:1.00

December 31, 2007

   6.00:1.00

March 31, 2008

   5.35:1.00

June 30, 2008

   5.35:1.00

September 30, 2008

   5.10:1.00

December 31, 2008

   5.10:1.00

March 31, 2009

   5.10:1.00

June 30, 2009

   5.10:1.00

September 30, 2009

   4.75:1.00

December 31, 2009

   4.75:1.00

March 31, 2010

   4.75:1.00

June 30, 2010

   4.75:1.00

September 30, 2010

   4.75:1.00

December 31, 2010

   4.75:1.00

March 31, 2011 and thereafter

   4.50:1.00

Section 1.02 Other Definitional Provisions .

(a) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(b) Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP or with United States generally accepted regulatory accounting principles, as applicable. To the extent that the definitions of accounting terms in this Agreement are inconsistent with the meanings of such terms under GAAP or regulatory accounting principles, the definitions contained in this Agreement shall control. 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.

 

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(c) Agreements, Representations and Warranties . The agreements, representations and warranties of ARSC and Cartus in this Agreement in each of their respective capacities as Transferor and Servicer shall be deemed to be the agreements, representations and warranties of ARSC and Cartus solely in each such capacity for so long as ARSC and Cartus act in each such capacity under this Agreement, provided that nothing in this paragraph shall be deemed to limit the survival of such agreements, representations and warranties.

(d) Computation of Time Periods . Unless otherwise stated in this Agreement with respect to computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and each of the words “to” and “until” means “to but excluding”.

(e) References to Amounts . Unless otherwise specified, references to any amount as on deposit or outstanding on any particular date shall mean such amount at the close of business on such day.

(f) Reference . The word “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and references to “ Section ”, “ subsection ”, “ Appendix ”, “ Schedule ” and “ Exhibit ” in this Agreement are references to Sections, subsections, Appendices, Schedules and Exhibits in or to this Agreement unless otherwise specified in this Agreement. References herein to this Agreement, the Purchase Agreement, the Receivables Purchase Agreement, the Indenture and the Performance Guaranty shall mean and be references to each such document as amended and modified by that certain Omnibus Amendment, Agreement and Consent dated December 20, 2004, that certain Second Omnibus Amendment dated January 31, 2005, that certain Amendment, Agreement and Consent dated January 30, 2006, that certain Third Omnibus Amendment, Agreement and Consent dated May 12, 2006, that certain Fourth Omnibus Amendment dated November 29, 2006 and that certain Fifth Omnibus Amendment dated April 10, 2007.

[END OF ARTICLE I ]

 

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ARTICLE II

SALE AND PURCHASE OF ASSETS

Section 2.01 Sale and Purchase .

(a) Agreement . Upon the terms hereof, the Issuer agrees to buy, and the Transferor agrees to sell, all of the Transferor’s right, title and interest in and to the following:

(i) all Pool Receivables and other ARSC Purchased Assets owned by the Transferor on the Closing Date or thereafter purchased, or any other Receivables purchased under the Receivables Purchase Agreement, and all rights of the Transferor under the Receivables Purchase Agreement with respect to the ARSC Purchased Assets;

(ii) all Pool Collections; and

(iii) all proceeds of and earnings on the foregoing.

The Pool Receivables and all other property described in the foregoing sentence are sometimes collectively referred to herein as the “ Transferred Assets .”

(b) Treatment of Certain Receivables and Related Property . It is expressly understood that each Pool Receivable sold to the Issuer hereunder, together with all other Transferred Assets then existing or thereafter created and arising with respect thereto, will thereafter be the property of the Issuer (or its assignees), without the necessity of any further purchase or other action by the Issuer (other than satisfaction of the conditions set forth herein).

(c) No Recourse . Except as specifically provided in this Agreement, the sale and purchase of the Transferred Assets under this Agreement shall be without recourse. Cartus acknowledges that its representations, warranties, covenants and indemnities as originator pursuant to the terms of the Purchase Agreement have been assigned to the Issuer hereunder, and CFC acknowledges that its representations, warranties, covenants and indemnities as originator pursuant to the terms of the Receivables Purchase Agreement have been assigned to the Issuer hereunder.

(d) Financing Statements . In connection with the transfer described above, the Transferor agrees, at the expense of the Transferor:

(i) to record and file financing statements (and continuation statements when applicable) with respect to the Transferred Assets conveyed by the Transferor meeting the requirements of applicable law in such manner and in such jurisdictions as are necessary to perfect and maintain the perfection of the transfer and assignment of its interest in the Transferred Assets to the Issuer, and to deliver a file stamped copy of each such financing statement or other evidence of such filing to the Issuer and the Indenture Trustee as soon as practicable after the Closing Date. Notwithstanding the other provisions of this Section 2.01(d), the Transferor shall not, and shall not cause the Servicer to, record any Home

 

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Deeds or any documents evidencing the conveyance of Home Purchase Contracts in the applicable real estate records; provided , however , that the Transferor (or the Servicer on its behalf) may record Home Deeds and/or Home Purchase Contracts in such manner and in the names of Cartus (but only with respect to Cartus Homes) or CFC, as applicable, or such transferees and in such capacities as the Issuer may require (w) upon request by the relevant Obligor to record such Home Deeds and/or Home Purchase Contracts, (x) upon or after the lapse of one year from the Possession Date under the related Home Purchase Contract, (y) upon the bankruptcy or insolvency of the relevant Obligor or (z) otherwise as required or as deemed advisable in the judgment of the Servicer in the best interests of the Issuer and its assignees; and

(ii) to promptly execute and deliver (or cause the Servicer or the related Sub-Servicer to execute and deliver) all further instruments and documents, and take all further action, that the Indenture Trustee may reasonably request in order to perfect, protect or more fully evidence the conveyances hereunder, or to enable the Indenture Trustee to exercise or enforce any of its rights under the Indenture.

The Servicer shall record and file financing statements, cause Home Deeds and Home Purchase Contracts to be recorded and deliver other instruments and documents pursuant to this Section 2.01(d) at the direction of the Transferor.

(e) True Sales . The Transferor and the Issuer intend the transfers of Transferred Assets hereunder to be true sales by the Transferor to the Issuer that are absolute and irrevocable and to provide the Issuer with the full benefits of ownership of the Transferred Assets, and neither the Transferor nor the Issuer intends the transactions contemplated hereunder to be characterized as loans from the Issuer to the Transferor secured by the Transferred Assets; provided , that, notwithstanding the foregoing, the Transferor and the Issuer acknowledge and agree that such sales may not be recognized for accounting purposes in any financial statements including the Transferor and the Issuer due to the application of GAAP.

(f) Marking of Records . In connection with the transfer described herein, (i) the Transferor agrees to indicate clearly and unambiguously in its computer files, books and records on or prior to the Closing Date that the Pool Receivables and other Transferred Assets have been conveyed to the Issuer pursuant to this Agreement by so marking such computer files, books and records, and (ii) the Servicer agrees to indicate clearly and unambiguously in its computer files, books and records on or prior to the Closing Date that the Pool Receivables and other Transferred Assets have been conveyed to the Issuer pursuant to this Agreement by so marking such computer files, books and records, including the master data processing records evidencing the Transferred Assets.

(g) Adjustments . The Transferor shall pay to the Issuer in cash, on the date of receipt by the Transferor, any payment received by the Transferor in respect of Originator Adjustments made by Cartus to CFC pursuant to the Purchase Agreement or Seller Adjustments made by CFC to the Transferor pursuant to the Receivables Purchase Agreement. The Transferor shall instruct Cartus and CFC to deposit all payments in respect of Originator Adjustments and Seller Adjustments directly in the Collection Account.

 

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(h) Purchases . On the Closing Date, the Issuer shall purchase all of the Transferor’s right, title and interest in and to all Pool Receivables existing at the close of business on the immediately preceding Business Day, together with all other Transferred Assets related thereto. On each Business Day thereafter, until the Transfer Termination Date, the Issuer shall purchase all of the Transferor’s right, title and interest in and to all Pool Receivables existing as of the close of business on the immediately preceding Business Day and all Transferred Assets related thereto that were not previously purchased by the Issuer hereunder. Notwithstanding the foregoing, if an Insolvency Proceeding is pending with respect to either the Transferor or the Issuer prior to the Transfer Termination Date, the Transfer shall not sell, and the Issuer shall not buy, any Transferred Assets hereunder unless and until such Insolvency Proceeding is dismissed or otherwise terminated.

(i) Payment of ARF Purchase Price . With respect to the Purchase of any Transferred Assets by the Issuer from the Transferor pursuant to this Article II, the Issuer shall pay to the Transferor an agreed purchase price (the “ARF Purchase Price” ). The ARF Purchase Price paid by the Issuer on the Closing Date and on each subsequent Business Day on which any Transferred Assets are purchased by the Issuer shall be paid (i) by paying such amount in cash or (ii) by means of capital contributed by the Transferor to the Issuer in the form of a contribution of the Transferred Assets. To the extent funds are released to it from the Collection Account, the Issuer agrees that it will use such released funds to the extent necessary to pay the ARF Purchase Price.

Section 2.02 Representations and Warranties of the Transferor . The Transferor hereby makes the representations and warranties set forth in this Section 2.02, in each case as of the date hereof, as of the Closing Date, as of the date of each transfer by the Transferor of the Transferred Assets hereunder and as of any other date specified in such representation or warranty.

(a) Organization and Good Standing . The Transferor is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and has full power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted. The Transferor had at all relevant times, and now has, all necessary power, authority and legal right to own and sell the Transferred Assets.

(b) Due Qualification . The Transferor is duly qualified to do business, is in good standing as a foreign corporation, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and in which the failure so to qualify or to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a Material Adverse Effect with respect to the Transferor.

 

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(c) Power and Authority: Due Authorization . The Transferor (i) has all necessary corporate power and authority (A) to execute and deliver this Agreement and the other Transaction Documents to which it is a party, (B) to perform its obligations under this Agreement and the other Transaction Documents to which it is a party and (C) to sell and assign the Transferred Assets on the terms and subject to the conditions herein and therein provided and (ii) has duly authorized by all necessary corporate action such sale and assignment and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement and the other Transaction Documents to which it is a party.

(d) Valid Sale; Binding Obligations . This Agreement constitutes either a valid sale, transfer, set-over and conveyance, or the grant of a first perfected security interest, to the Issuer of all of the Transferor’s right, title and interest in, to and under the Transferred Assets, which is perfected and of first priority (subject to Permitted Liens and Permitted Exceptions) under the UCC and other applicable law, enforceable against creditors of, and purchasers from, the Transferor, free and clear of any Lien (other than Permitted Liens); and this Agreement constitutes, and each other Transaction Document to which the Transferor is a party when duly executed and delivered will constitute, a legal, valid and binding obligation of the Transferor, enforceable against the Transferor in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) No Conflict or Violation . The execution, delivery and performance of, and the consummation of the transactions contemplated by, this Agreement and the other Transaction Documents to be signed by the Transferor, and the fulfillment of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under (A) the certificate of incorporation or the by-laws of the Transferor or (B) any material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which the Transferor is a party or by which it or any of its properties is bound, (ii) result in the creation or imposition of any Lien on any of the Transferred Assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any federal, state, local or foreign law or any decision, decree, order, rule or regulation applicable to the Transferor or of any federal, state, local or foreign regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Transferor, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to the Transferor.

(f) Litigation and Other Proceedings . (i) There is no action, suit, proceeding or investigation pending, or to the best knowledge of the Transferor threatened, against the Transferor before any court, arbitrator, regulatory body, administrative agency or other tribunal or governmental instrumentality and (ii) the Transferor is not subject to any order, judgment,

 

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decree, injunction, stipulation or consent order of or with any court or other Government Authority that, in the case of either of the foregoing clauses (i) or (ii), (A) asserts the invalidity of this Agreement or any other Transaction Document, (B) seeks to prevent the sale of any Transferred Asset by the Transferor to the Issuer, the creation of a material amount of Pool Receivables or the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document, (C) seeks any determination or ruling that, in the reasonable judgment of the Transferor, would materially and adversely affect the performance by the Transferor of its obligations under this Agreement or any other Transaction Document to which it is a party or the validity or enforceability of this Agreement or any other Transaction Document to which it is a party or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect with respect to the Transferor.

(g) Governmental Approvals . Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect with respect to the Transferor, (i) all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Transferor in connection with the conveyance of the Transferred Assets or the due execution, delivery and performance by the Transferor of this Agreement or any other Transaction Document to which it is a party and the consummation of the transactions contemplated by this Agreement have been obtained or made and are in full force and effect and (ii) all filings with any Governmental Authority that are required to be obtained in connection with such conveyances and the execution and delivery by the Transferor of this Agreement have been made; provided , however , that prior to recordation pursuant to Section 2.01(d)(i) or upon the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee and no recordation in real estate records of the conveyance of the related Home Purchase Contract or Home Sale Contract shall be made except as otherwise required or permitted under Section 2.01(d)(i).

(h) Margin Regulations . The Transferor is not engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meanings of Regulations T, U and X of the Board of Governors of the Federal Reserve System). The Transferor has not taken and will not take any action to cause the use of proceeds of the sales hereunder to violate said Regulations T, U or X.

(i) Taxes . The Transferor has filed (or there have been filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be owing by it, other than any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, would not have a Material Adverse Effect with respect to the Transferor.

 

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(j) Solvency . After giving effect to each conveyance of Transferred Assets hereunder, the Transferor is solvent and able to pay its debts as they come due, and has adequate capital to conduct its business as presently conducted.

(k) Quality of Title/Valid Transfers .

(i) Immediately before each transfer hereunder to the Issuer, each Transferred Asset to be sold to the Issuer shall be owned by the Transferor free and clear of any Lien (other than any Permitted Lien), and the Transferor shall have made all filings and shall have taken all other action under applicable law in each relevant jurisdiction in order to protect and perfect the ownership or security interest of the Issuer and its assignees in such Transferred Assets against all creditors of, and purchasers from, the Transferor (subject to Permitted Exceptions).

(ii) With respect to each Pool Receivable transferred hereunder on such date, the Issuer shall acquire a valid and (subject to Permitted Exceptions) perfected ownership or security interest in such Pool Receivable and any identifiable proceeds thereof, free and clear of any Lien (other than any Permitted Liens).

(iii) As of the date of transfer of a Transferred Asset to the Issuer, no effective financing statement or other instrument similar in effect that covers all or part of such Transferred Asset or any interest therein is on file in any recording office except such as may be filed (A) in favor of Cartus in accordance with the Pool Relocation Management Agreements, (B) in favor of CFC pursuant to the Purchase Agreement, (C) in favor of the Transferor pursuant to the Receivables Purchase Agreement, (D) in favor of the Issuer pursuant to this Agreement or otherwise filed by or at the direction of the Issuer, (E) in favor of the Indenture Trustee under the Indenture and (F) to evidence any Mortgage on a Home created by a Transferred Employee.

(l) Accuracy of Information . All written information furnished by the Transferor to the Issuer or its successors and assigns pursuant to or in connection with any Transaction Documents or any transaction contemplated herein or therein with respect to the Transferred Assets transferred hereunder on such date is true and correct in all material respects on such date.

(m) Offices . The principal place of business and chief executive office of the Transferor is located, and the offices where the Servicer keeps all Records related to the Transferred Assets (and all original documents relating thereto) are located at the addresses specified in Schedule 2.02(m), except that (i) Home Deeds and related documents necessary to close Home sale transactions, including powers of attorney, may be held by local attorneys or escrow agents acting on behalf of CFC (with respect to CFC Homes) or Cartus (with respect to Cartus Homes) in connection with the sale of Homes to Ultimate Buyers, so long as such local

 

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attorneys are notified of the interest of the Issuer, the Indenture Trustee and the holders of any Notes therein and (ii) Records relating to any Pool Relocation Management Agreement and the Transferred Assets arising thereunder or in connection therewith may be maintained at the offices of the related Employer.

(n) Investment Company Act . The Transferor is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act.

(o) Legal Names . Except as otherwise set forth in Schedule 2.02(o), since January 1, 1995, the Transferor (i) has not been known by any legal name other than its corporate name as of the date hereof, (ii) has not been the subject of any merger or other corporate reorganization that resulted in a change of name, identity or corporate structure and (iii) has not used any trade names other than its actual corporate name.

(p) Compliance with Applicable Laws . The Transferor is in compliance with the requirements of all applicable laws, rules, regulations and orders of all governmental authorities (federal, state, local or foreign, including without limitation Environmental Laws), a violation of any of which, individually or in the aggregate for all such violations, is reasonably likely to have a Material Adverse Effect with respect to the Transferor.

(q) Business and Indebtedness of Transferor . The Transferor has no Indebtedness except as contemplated by Section 4.2 of the Receivables Purchase Agreement and under this Agreement. The Transferor has not engaged in any business other than the Purchase of Pool Receivables and other ARSC Purchased Assets under the Receivables Purchase Agreement and the transfer of Pool Receivables and other Transferred Assets under this Agreement.

The representations and warranties set forth in this Section 2.02 shall survive the transfers and assignments of the Pool Receivables and other Transferred Assets to the Issuer and the issuance of the Notes under the Indenture. Upon discovery by the Transferor, the Servicer or the Issuer of a breach of any of the representations and warranties set forth in this Section 2.02, the party discovering such breach shall give notice to the other parties within three Business Days following such discovery, provided that the failure to give notice within three Business Days shall not preclude subsequent notice.

 

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Section 2.03 Representations and Warranties of the Issuer . The Issuer hereby represents and warrants, on and as of the date hereof and on and as of the Closing Date, that (a) this Agreement has been duly authorized, executed and delivered by the Issuer and constitutes the Issuer’s valid, binding and legally enforceable obligation, except (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law, (b) the execution, delivery and performance of this Agreement does not violate any federal, state, local or foreign law applicable to the Issuer or any agreement to which the Issuer is a party and (c) all of the membership interests of the Issuer are directly or indirectly owned by the Transferor, and all such membership interests are fully paid and nonassessable.

Section 2.04 No Assumption of Obligations Relating to Transferred Assets; Excess Home Sale Proceeds .

(a) The sales and Purchases of Transferred Assets do not constitute and are not intended to result in a creation or an assumption by the Issuer, the Indenture Trustee or any holder of the Notes of any obligation of Cartus, CFC, the Transferor or any other Person in connection with the Pool Receivables or the other Transferred Assets or under the related Contracts or any other agreement or instrument relating thereto, including without limitation any obligation to any Obligors or Transferred Employees. None of the Issuer, the Indenture Trustee or any holder of the Notes shall have any obligation or liability to any Obligor, Transferred Employee or other customer or client of Cartus (including without limitation any obligation to perform any of the obligations of Cartus or CFC under any Relocation Management Agreement, Home Purchase Contract, Related Property or any other agreement). Except as expressly provided in Section 3.05(j), no such obligation or liability is intended to be assumed by the Servicer or its successors and assigns.

(b) Notwithstanding Section 2.04(a), upon a reasonable showing by Cartus or CFC that any Home Sale Proceeds received by the Servicer must be returned to the related Obligor pursuant to the related Pool Relocation Management Agreement, the Servicer shall turn over to the applicable Obligor such Home Sale Proceeds. Each such payment pursuant to this Section 2.04(b) shall be made pursuant to Section 4.03.

Section 2.05 Affirmative Covenants of the Transferor . From the Closing Date until the termination of this Agreement in accordance with Section 10.01, the Transferor hereby agrees that it will perform the covenants and agreements set forth in this Section 2.05.

(a) Compliance with Laws, Etc. The Transferor will comply in all material respects with all applicable laws, rules, regulations, judgments, decrees and orders (including without limitation those relating to the Pool Receivables and all Environmental Laws), in each case to the extent that the failure to comply, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to the Transferor.

 

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(b) Preservation of Corporate Existence . The Transferor (i) will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation and (ii) will qualify and remain qualified in good standing as a foreign corporation in each jurisdiction in which the failure to preserve and maintain such qualification as a foreign corporation could reasonably be expected to have a Material Adverse Effect with respect to the Transferor.

(c) Keeping of Records and Books of Account . The Transferor will maintain at all times accurate and complete books, records and accounts relating to the Transferred Assets and all Pool Collections thereon in which timely entries will be made. The Transferor’s master data processing records will be marked to indicate the sales of all Transferred Assets hereunder.

(d) Location of Records and Offices . The Transferor will keep its principal place of business and chief executive office at the addresses specified in Schedule 2.02(m) or, upon not less than 30 days’ prior written notice given by the Transferor to the Issuer, at such other locations in jurisdictions in the United States of America where all action required by Section 2.01(d) has been taken and completed.

(e) Separate Corporate Existence of the Transferor . The Transferor hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance on the Transferor’s identity as a legal entity separate from Cartus and the other Cartus Persons. From and after the date hereof until one year and one day after the Final Payout Date:

(i) The Transferor will conduct its business in office space allocated to it and for which it pays an appropriate rent and overhead allocation;

(ii) The Transferor will maintain corporate records and books of account separate from those of Cartus and each other Cartus Person and telephone numbers and stationery that are separate and distinct from those of Cartus and each other Cartus Person;

(iii) The Transferor’s assets will be maintained in a manner that facilitates their identification and segregation from those of Cartus and any other Cartus Person;

(iv) The Transferor will strictly observe corporate formalities in its dealings with the public and with Cartus and each other Cartus Person, and funds or other assets of the Transferor will not be commingled with those of Cartus or any other Cartus Person. The Transferor will at all times, in its dealings with the public and with Cartus and each other Cartus Person, hold itself out and conduct itself as a legal entity separate and distinct from Cartus and each other Cartus Person. The Transferor will not maintain joint bank accounts or other depository accounts to which Cartus or any other Cartus Person (other than the Servicer) has independent access;

 

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(v) The duly elected board of directors of the Transferor and duly appointed officers of the Transferor will at all times have sole authority to control decisions and actions with respect to the daily business affairs of the Transferor;

(vi) Not less than one member of the Transferor ‘s board of directors will be an Independent Director. The Transferor will observe those provisions in its certificate of incorporation that provide that the Transferor’s board of directors will not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Transferor unless the Independent Director and all other members of the Transferor’s board of directors unanimously approve the taking of such action in writing prior to the taking of such action;

(vii) The Transferor will compensate each of its employees, consultants and agents from its own funds for services provided to the Transferor; and

(viii) The Transferor will not hold itself out to be responsible for the debts of Cartus or any other Cartus Person.

(ix) The Transferor will take all actions necessary on its part to be taken in order to ensure that the facts and assumptions relating to the Transferor set forth in the opinion of Orrick, Herrington & Sutcliffe LLP dated May 12, 2006 relating to substantive consolidation matters with respect to Cartus and the Transferor will be true and correct at all times.

(f) Segregation of Collections . To the extent that any funds other than Pool Collections are deposited into any of the Lockbox Accounts, the Transferor promptly will identify any such funds or will cause such funds to be so identified to the Servicer.

(g) Computer Software, Hardware and Services . The Transferor will provide the Issuer and its successors with such licenses, sublicenses and/or assignments of contracts as the Servicer, the Issuer or its successors require with respect to all services and computer hardware or software that relate to the servicing of the Pool Receivables or the other Transferred Assets; provided , however , that with respect to any computer software licensed from a third party, the Transferor will be required to provide such licenses, sublicenses and/or assignments of such software only to the extent that provision of the same would not violate the terms of any contracts of Cartus or the Transferor with such third party.

(h) Environmental Claims . The Transferor will use commercially reasonable efforts to promptly cure and have dismissed with prejudice to the satisfaction of the Issuer any actions and any proceedings relating to compliance with Environmental Laws relating to any Home, but only to the extent that the conditions that gave rise to such proceedings were in existence as of the date on which the Issuer acquired the related Pool Receivable.

(i) Turnover of Collections . If the Transferor or any of its agents or representatives at any time receives any cash, checks or other instruments constituting Pool

 

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Collections, such recipient will segregate and hold such payments in trust for, and in a manner acceptable to, the Servicer and will, promptly upon receipt (and in any event within one Business Day following receipt) remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to a Lockbox Account.

(j) Maintenance of Property . The Transferor will not sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the property of the Transferor, other than any such sale, lease or transfer in the ordinary course of business and the transfer of the Transferred Assets as contemplated by the Transaction Documents.

(k) Performance of Obligations . The Transferor will timely and fully perform and comply with all provisions, covenants and other promises required to be observed by it under the Transaction Documents to which it is a party.

(l) Filing of Tax Returns and Payment of Taxes and Other Liabilities . The Transferor will file (or will cause to be filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to be filed by it and will pay all taxes, assessments and governmental charges shown to be owing by it, except for any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that not have given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, would not have a Material Adverse Effect with respect to the Transferor.

Section 2.06 Negative Covenants of the Transferor . From the Closing Date until the termination of this Agreement in accordance with Section 10.01, the Transferor agrees that it will not:

(a) Changes in Accounting Treatment and Reporting Practices . Change or permit any change in accounting principles or financial reporting practices applied to the Transferor, except in accordance with GAAP, if such change would have a Material Adverse Effect with respect to the Transferor.

(b) Indebtedness . Create, incur or permit to exist any Indebtedness or other liabilities or give any guarantee or indemnity in respect of any Indebtedness, except for (i) liabilities created or incurred by the Transferor pursuant to the Transaction Documents to which it is a party or contemplated by such Transaction Documents and (ii) other reasonable and customary operating expenses;

(c) Sales, Liens, Etc . Sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien (other than Permitted Liens) of anyone claiming by or through it on or with respect to, any Transferred Asset or any interest therein, any Lockbox or Lockbox Account, other than sales of Transferred Assets pursuant to this Agreement;

(d) No Mergers, Etc. Consolidate with or merge with or into any other Person or convey, transfer or sell all or substantially all of its properties and assets to any Person;

 

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(e) Limitations on Agreements . Permit the validity or effectiveness of any Transaction Document to which it is a party or the rights and obligations created thereby or pursuant thereto to be amended, terminated, postponed or discharged, or permit any amendment to any Transaction Document to which it is a party without the consent of the Issuer and the Indenture Trustee, or permit any Person whose obligations form part of the Transferred Assets to be released from such obligations, except in accordance with the terms of such Transaction Document;

(f) Change in Name . Change its corporate name or the name under or by which it does business or the jurisdiction in which it is incorporated unless the Transferor has given the Issuer and its successors at least 30 days’ prior written notice thereof and unless, prior to any such change, the Transferor has taken and completed all action required by Section 2.01(d);

(g) Charter Amendments. Amend any provision of its certificate of incorporation or by-laws unless (i) the Issuer shall have received not less than five Business Days’ prior written notice thereof and (ii) the certificate of incorporation of the Transferor, as in effect on the date hereof, provides that such amendment can be made without the vote of the Transferor’s Independent Directors;

(h) Capital Expenditures . Make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty);

(i) No Other Business or Agreements . Engage in any business other than financing, purchasing, owning and selling and managing the Transferred Assets in the manner contemplated by this Agreement and the other Transaction Documents and all activities incidental thereto, or enter into or be a party to any agreement or instrument other than any Transaction Document or documents and agreements incidental thereto;

(j) Guarantees, Loans, Advances and other Liabilities . Except as contemplated by this Agreement or the other Transaction Documents, incur any Indebtedness or make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person;

(k) Payment Instructions to Obligors . Give any payment instructions to Obligors except through the Servicer as contemplated by Section 3.05(f); or

 

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(l) Extension or Amendment of Transferred Assets . Extend, amend or otherwise modify the terms of any Receivable included in the Transferred Assets, or amend, modify or waive any material term or condition related thereto, except in accordance with Section 3.10.

(m) Dividend Restrictions . Declare or pay any distributions on any of its common stock or make any purchase redemption or other acquisition of, any common stock if, after giving effect thereto, (i) the aggregate principal amount outstanding under the ARSC Subordinated Note would exceed five times the net worth of the Transferor or (ii) the net worth of the Transferor would be less than $40,000,000.

[END OF ARTICLE II ]

 

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ARTICLE III

ADMINISTRATION AND SERVICING

OF RECEIVABLES

Section 3.01 Acceptance of Appointment and Other Matters Relating to the Servicer .

(a) The servicing, administration and collection of the Pool Receivables and the other Transferred Assets shall be conducted by the Person designated as the Servicer hereunder from time to time in accordance with this Section 3.01. Until the Indenture Trustee gives a Termination Notice to Cartus pursuant to Section 9.01, Cartus is hereby designated, and Cartus hereby agrees to act, as the Servicer under this Agreement and the other Transaction Documents with respect to the Pool Receivables and the other Transferred Assets, and each of Cartus, CFC, the Transferor, and the Issuer consents to Cartus acting as the Servicer.

(b) In the ordinary course of business, the Servicer, with prior written notice to the Indenture Trustee, may at any time delegate part or all of its duties hereunder with respect to the Receivables and the other Transferred Assets to any Affiliates of Realogy that agree to conduct such duties in accordance with the Credit and Collection Policy and this Agreement. Each such Subsidiary to whom any such duties are delegated in accordance with this Section 3.01(b) is referred to herein as a “ Sub-Servicer .” Notwithstanding any such delegation by the Servicer, the Servicer shall remain liable for the performance of all duties and obligations of the Servicer pursuant to the terms of this Agreement and the other Transaction Documents, and such delegation shall not relieve the Servicer of its liability and responsibility with respect to such duties. The fees and expenses of any such Sub-Servicers shall be as agreed between the Servicer and such Sub-Servicers from time to time, and none of the Issuer, the Indenture Trustee or the holders of any Notes issued by the Issuer under the Indenture shall have any responsibility therefor. Upon any termination of a Servicer pursuant to Section 9.01, all Sub-Servicers designated pursuant to this Section 3.01(b) by such Servicer also shall be automatically terminated.

(c) The designation of the Servicer (and each Sub-Servicer) under this Agreement (and, in the case of any Sub-Servicer, under the agreement or other document pursuant to which the Servicer makes a delegation of servicing duties to such Sub-Servicer) shall automatically cease and terminate on the Final Payout Date.

Section 3.02 Duties of the Servicer and the Issuer .

(a) Each of Cartus, CFC, the Transferor, the Issuer and the Indenture Trustee hereby appoints the Servicer from time to time designated pursuant to Section 3.01(a) as Servicer hereunder to take all actions authorized below or elsewhere in this Agreement and to enforce its respective rights and interests in and under the Pool Receivables and the other Transferred Assets.

 

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(b) As Servicer hereunder, the Servicer shall service and administer the Pool Receivables and the other Transferred Assets, shall collect and deposit into the Collection Account payments due under the Pool Receivables and shall charge-off as uncollectible Pool Receivables, all in accordance with its customary and usual servicing procedures and the Credit and Collection Policy. As Servicer hereunder, the Servicer shall have full power and authority, acting alone or through any party properly designated by it hereunder, to do any and all things it may deem necessary or appropriate in connection with such servicing and administration. Cartus, CFC, the Issuer, the Transferor and the Indenture Trustee shall furnish the Servicer with any documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. The Servicer shall exercise the same care and apply the same policies with respect to the collection, administration and servicing of the Pool Receivables and other Transferred Assets that it would exercise and apply if it owned such Pool Receivables and other Transferred Assets, all in substantial compliance with applicable law and in accordance with the Credit and Collection Policy. The Servicer shall take or cause to be taken all such actions as it deems necessary or appropriate to collect each Pool Receivable and other Transferred Asset (and shall cause each Sub-Servicer, if any, to take or cause to be taken all such actions as the Servicer deems necessary or appropriate to collect each Pool Receivable and other Transferred Asset for which such Sub-Servicer is responsible in its capacity as Sub-Servicer) from time to time, all in accordance with applicable law and in accordance with the Credit and Collection Policy.

(c) Without limiting the generality of the foregoing and subject to Section 3.02(e) and Section 9.01, each of Cartus, CFC, the Transferor, the Issuer and the Indenture Trustee hereby authorizes and empowers the Servicer or its designee as follows, except to the extent any such power and authority is revoked or limited by the Indenture Trustee on account of the occurrence of an Unmatured Servicer Default or a Servicer Default or otherwise pursuant to Section 9.01:

(i) to give instructions to the Indenture Trustee for withdrawals and payments from the Collection Account and to take any other action necessary or appropriate to service the Pledged Assets as set forth in the Indenture,

(ii) to enter into Home Sale Contracts and all related documents, instruments and agreements on behalf of Cartus (with respect to Cartus Homes) and on behalf of CFC (with respect to CFC Homes) and to take all necessary actions, including with respect to the maintenance and marketing of the related Homes, to carry out the terms of such Home Sale Contracts and related agreements; provided , however , that the Servicer shall not be a party to any Home Sale Contract or any other document, instrument, or agreement relating to the sale by CFC of a Home, unless it is expressly disclosed on the face of such document, instrument, or agreement that the Servicer is acting as Servicer for CFC,

(iii) to execute and deliver any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Pool Receivables and the other Transferred Assets on the Issuer’s behalf,

 

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(iv) after the delinquency of any Pool Receivable or any default in connection with any other Transferred Asset and to the extent permitted under and in compliance with the Credit and Collection Policy and with all applicable laws, rules, regulations, judgments, orders and decrees of courts and other Governmental Authorities and all other tribunals, to commence or settle collection proceedings with respect to such Pool Receivable or other Transferred Asset and otherwise to enforce the rights and interests of the Issuer in, to and under such Pool Receivable or other Transferred Asset (as applicable), unless the Indenture Trustee otherwise revokes such authority in writing,

(v) to make all filings and take all other actions necessary for the Issuer to maintain a perfected security and/or ownership interest in the Pool Receivables (subject to Permitted Exceptions) have been taken or made,

(vi) to determine on each Business Day whether any funds in the Lockbox Accounts represent collections on Cartus Noncomplying Assets or CFC Noncomplying Assets and to promptly return such funds to Cartus or CFC, as applicable, and

(vii) to determine on each day whether each CFC Receivable being conveyed to ARSC on such day is an Eligible Receivable and to identify on such day all CFC Receivables sold to ARSC on such date that are not Eligible Receivables.

provided , however , that:

(A) following the appointment of a Servicer other than Cartus, or when a Servicer Default has occurred and is continuing, the Indenture Trustee on behalf of the Issuer shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action to enforce collection of, or otherwise exercise rights with respect to, any Pool Receivable transferred to the Issuer or to foreclose upon or repossess or otherwise exercise rights with respect to, any other Transferred Assets transferred to the Issuer, and

(B) the Servicer shall not, under any circumstances, be entitled to make the Issuer or any assignee thereof a party to any litigation without the prior written consent of the Issuer or such assignee, as applicable.

(d) The Servicer shall pay out of its own funds, without reimbursement, all expenses incurred in connection with its servicing activities hereunder, including expenses related to enforcement of the Pool Receivables, fees and disbursements of its outside counsel and independent accountants and all other fees and expenses, including the costs of filing UCC continuation statements.

(e) In addition to its other obligations provided for hereunder, the Servicer shall hold and maintain all Records in trust, for the benefit of the Issuer, the Indenture Trustee and the holders of the Notes, which Records shall be held separate and apart from the other property of the Servicer and maintained in files marked to show that such Records have been pledged to the Indenture Trustee pursuant to the Indenture; provided , however , that the Servicer

 

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shall be entitled (i) to release any Equity Loan Notes that have been, or concurrent with such release will be, repaid, satisfied or otherwise cancelled and (ii) to release any Home Purchase Contracts and Home Deeds for Homes with respect to which a Home Sale Contract has been executed in order to facilitate the prompt closing thereof, including without limitation by delivery of such documents to escrow agents (with a notice to such escrow agents of the interest of the Issuer and the Indenture Trustee therein).

Section 3.03 Servicing Compensation . The Issuer hereby agrees to pay to the Servicer, as full compensation for its servicing activities hereunder and under the other Transaction Documents and as reimbursement for any expense incurred by it in connection therewith, a servicing fee (the “ Servicing Fee ”) with respect to each Monthly Period, payable in arrears on the related Distribution Date, in an amount equal to the product of 0.75% multiplied by the weighted average over such Monthly Period of the daily sums of the Aggregate Employer Balances for each Employer under the Pool Relocation Management Agreements, subject to adjustment at the direction of the Indenture Trustee (upon satisfaction of the Rating Agency Condition) to provide additional servicing compensation to any Successor Servicer if necessary to reflect then-current market rates for servicing of comparable receivables at any time that Cartus is replaced as Servicer hereunder. The share of the Servicing Fee allocable to the holders of the Notes issued from time to time by the Issuer under the Indenture with respect to any Monthly Period shall be set forth in the Indenture. The Servicing Fee shall be payable solely out of Pool Collections available for such purpose pursuant to, and subject to the priority of payments set forth in, the Indenture. Notwithstanding the preceding sentence, the portion of the Servicing Fee with respect to any Monthly Period not payable out of the Pool Collections allocated to the holders of the Notes shall be payable out of the Pool Collections allocable to the Issuer on the related Distribution Date as set forth in the Indenture or by the Issuer, and in no event shall the holders of the Notes be liable for the share of the Servicing Fee with respect to any Payment Period to be payable out of the Pool Collections allocable to the Issuer or by the Issuer. The Servicer shall pay the fees and expenses of, and agrees to indemnify the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar out of the Servicing Fee in accordance with the terms of the Indenture.

Section 3.04 Representations and Warranties of the Servicer . Cartus, as initial Servicer, hereby makes, and any Successor Servicer by its appointment hereunder shall make with respect to itself, on the Closing Date (and on the date of any such appointment), on the date of each issuance of Notes by the Issuer and on the date of any increases in Outstanding Amount of any Series of Notes, the following representations, warranties and covenants, on which the Issuer, the Transferor, Cartus and CFC shall be deemed to have relied:

(a) Organization and Good Standing . The Servicer is a corporation duly organized and validly existing in good standing under the laws of the State of its incorporation and has full power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted.

(b) Due Qualification . The Servicer is duly qualified to do business, is in good standing as a foreign corporation, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business

 

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requires such qualification, licenses or approvals and in which the failure so to qualify or to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a Material Adverse Effect with respect to the Servicer.

(c) Power and Authority; Due Authorization . The Servicer (i) has all necessary corporate power and authority (A) to execute and deliver this Agreement and the other Transaction Documents to which it is a party and (B) to perform its obligations under this Agreement and the other Transaction Documents to which it is a party and (ii) has duly authorized by all necessary corporate action the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement and the other Transaction Documents to which it is a party.

(d) Binding Obligations . This Agreement constitutes, and each other Transaction Document to which the Servicer is a party when duly executed and delivered will constitute, a legal, valid and binding obligation of the Servicer, enforceable against the Servicer in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) No Conflict or Violation . The execution, delivery and performance of, and the consummation of the transactions contemplated by, this Agreement and the other Transaction Documents to which the Servicer is a party, and the fulfillment of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under (A) the certificate of incorporation or the by-laws of the Servicer or (B) any material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which the Servicer is a party or by which it or any of its respective properties is bound, (ii) result in the creation or imposition of any Lien on any of the Transferred Assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument, other than this Agreement and the other Transaction Documents to which the Servicer is a party or (iii) conflict with or violate any federal, state, local or foreign law or any decision, decree, order, rule or regulation applicable to the Servicer or of any federal, state, local or foreign regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to the Servicer.

(f) Litigation and Other Proceedings . (i) There is no action, suit, proceeding or investigation pending, or to the best knowledge of the Servicer threatened, against the Servicer before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality and (ii) the Servicer is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other Governmental Authority that, in the

 

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case of either of the foregoing clauses (i) and (ii), (A) asserts the invalidity of this Agreement or any other Transaction Document to which the Servicer is a party, (B) seeks any determination or ruling that, in the reasonable judgment of the Servicer, would materially and adversely affect the performance by the Servicer of its obligations under this Agreement or any other Transaction Document to which the Servicer is a party or the validity or enforceability of this Agreement or any other Transaction Document to which the Servicer is a party or (C) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect with respect to the Servicer.

(g) Governmental Approvals . Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect with respect to the Servicer, all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Servicer in connection with the due execution, delivery and performance by the Servicer of this Agreement or any other Transaction Document to which it is a party and the consummation of the transactions contemplated by this Agreement have been obtained or made and are in full force and effect; provided , however , that prior to recordation pursuant to Section 2.01(d)(i) or upon the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee and no recordation in real estate records of the conveyance of the related Home Purchase Contract or Home Sale Contract shall be made except as otherwise required under Section 2.01(d)(i).

(h) Taxes . The Servicer has filed (or there have been filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be owing by it, except for any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, would not have a Material Adverse Effect with respect to the Servicer.

(i) Accuracy of Information . All written information furnished by the Servicer to Cartus, CFC or the Issuer pursuant to or in connection with any Transaction Document or any transaction contemplated herein or therein with respect to the Servicer is true and correct in all material respects on such date.

(j) Offices . The principal place of business and chief executive office of the Servicer is located at the address specified in Schedule 2.02(m).

(k) Compliance with Applicable Laws . The Servicer is in compliance with the requirements of all applicable laws, rules, regulations and orders of all Governmental Authorities (federal, state, local or foreign, including without limitation Environmental Laws), a violation of any of which, individually or in the aggregate for all such violations, is reasonably likely to have a Material Adverse Effect with respect to the Servicer.

 

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(l) Lockbox Banks . The names and addresses of all Lockbox Banks, together with the account numbers of the Lockbox Accounts at such Lockbox Banks into which the Pool Collections are paid, are accurately set forth in Schedule 3.04(l). Each Lockbox and each Lockbox Account is subject to a Lockbox Agreement duly executed and delivered by the parties thereto.

Section 3.05 Affirmative Covenants of Servicer . As long as it is the Servicer hereunder, the Servicer hereby agrees that it will perform the covenants and agreements set forth in this Section 3.05.

(a) Compliance with Laws, Etc. The Servicer will comply in all material respects with all applicable laws, rules, regulations, judgments, decrees and orders (including without limitation those relating to the Pool Receivables, Home Purchase Contracts and Related Assets and all Environmental Laws), in each case to the extent that the failure to comply, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to the Servicer.

(b) Preservation of Corporate Existence . The Servicer (i) will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, other than any change in corporate status by reason of a merger or consolidation permitted by Section 7.02 and (ii) will qualify and remain qualified in good standing as a foreign corporation in each jurisdiction in which the failure to preserve and maintain such qualification as a foreign corporation could reasonably be expected to have a Material Adverse Effect with respect to the Servicer.

(c) Keeping of Records and Books of Account . The Servicer will maintain and implement administrative and operating procedures (including without limitation an ability to recreate records evidencing the Transferred Assets in the event of the destruction of the originals thereof), and will keep and maintain all documents, books, records and other information that are necessary or advisable, in the reasonable determination of Cartus, CFC, the Transferor, the Issuer or the Indenture Trustee, for the collection of all amounts due under any or all Transferred Assets. Upon the reasonable request of the Issuer or the Indenture Trustee made at any time after the occurrence and continuance of a Servicer Default, the Servicer will deliver copies of all Records in its possession or under its control to the Issuer or its designee. The Servicer will maintain at all times accurate and complete books, records and accounts relating to the Transferred Assets and all Pool Collections thereon in which timely entries will be made.

(d) Location of Records and Offices . The Servicer will keep its principal place of business and chief executive office at the address specified in Schedule 2.02(m) or, upon not less than 30 days’ prior written notice given by the Servicer to the Transferor, the Issuer and the Indenture Trustee, at other locations in jurisdictions in the United States.

 

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(e) Separate Corporate Existence of the Transferor . The Servicer hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance upon the Transferor’s identity as a legal entity separate from the Servicer. As long as it is the Servicer hereunder, the Servicer will take such actions as shall be required in order that:

(i) The Transferor’s operating expenses will not be paid by the Servicer, except that certain organizational expenses of the Transferor and the Issuer and expenses relating to creation and initial implementation of the Transaction Documents have been or will be paid by Cartus;

(ii) Any financial statements of the Servicer that are consolidated to include the Transferor will contain appropriate footnotes clearly stating that (A) all of the Transferor’s assets are owned by the Transferor and (B) the Transferor is a separate corporate entity with its own separate creditors that will be entitled to be satisfied out of the Transferor’s assets prior to any value in the Transferor becoming available to the Transferor’s equity holders;

(iii) Any transaction between the Transferor and the Servicer will be fair and equitable to the Transferor, will be the type of transaction that would be entered into by a prudent Person in the position of the Transferor with the Servicer, and will be on terms that are at least as favorable as may be obtained from a Person that is not a Cartus Person; and

(iv) The Servicer will not be, or will not hold itself out to be, responsible for the debts of the Transferor.

(f) Payment Instruction to Obligors . The Servicer will (i) instruct all Obligors to submit all payments on the Transferred Assets either (A) to one of the Lockboxes maintained at the Lockbox Banks for deposit in a Lockbox Account or (B) directly to one of the Lockbox Accounts and (ii) instruct all Persons receiving Home Sale Proceeds to deposit such Home Sale Proceeds in one of the Lockbox Accounts within two Business Days after such receipt, except to the extent a longer escrow period is required under applicable law, in which case such Home Sale Proceeds will be deposited into one of the Lockbox Accounts within one Business Day after the expiration of such period. The Servicer will direct all Obligors with respect to any receivables and related assets that are not included in the Transferred Assets to deposit all collections in respect of such receivables and related assets to an account that is not a Lockbox or Lockbox Account and will take such other steps as the Issuer reasonably may request to ensure that all collections on such receivables and related assets will be segregated from Pool Collections on Transferred Assets.

(g) Segregation of Collections . The Servicer will use reasonable efforts to minimize the deposit of any funds other than Pool Collections into any of the Lockbox Accounts and, to the extent that any such funds nevertheless are deposited into any of such Lockbox Accounts, will promptly identify any such funds.

(h) Computer Software, Hardware and Services . The Servicer will provide the Issuer with such licenses, sublicenses and/or assignments of contracts as the Issuer requires

 

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with regard to all services and computer hardware or software that relate to the servicing of the Pool Receivables or the other Transferred Assets; provided , however , that with respect to any computer software licensed from a third party, the Servicer will be required to provide such licenses, sublicenses and/or assignments of such software only to the extent that provision of the same would not violate the terms of any contracts of the Servicer with such third party.

(i) Turnover of Collections . If the Servicer or any of its agents or representatives at any time receives any cash, checks or other instruments constituting Pool Collections, such recipient will segregate and hold such payments in trust for, and in a manner acceptable to, the Issuer and will, promptly upon receipt (and in any event within one Business Day following receipt) remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to a Lockbox Account or the Collection Account.

(j) Performance of Obligations . The Servicer will, at its expense, market the Cartus Homes and CFC Homes and pay the related expenses of such marketing and of the sale of Cartus Homes and CFC Homes to Ultimate Buyers in accordance with the practices of Cartus in effect on the Closing Date (as such practices have been modified either (x) in the ordinary course of Cartus’s business or (y) with the prior written consent of the Issuer).

(k) Billing of Receivables . The Servicer will bill all Receivables (i) in the case of Receivables with respect to a Home purchased under a Home Purchase Contract, within 60 days (on average) of the sale of the related Home to an Ultimate Buyer and (ii) in the case of all other Receivables, within 60 days (on average) after the Receivable arises.

(l) Filing of Tax Returns and Payment of Taxes and Other Liabilities . The Servicer will file (or will cause to be filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to be filed by it and will pay all taxes, assessments and governmental charges shown to be owing by it, except for any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP shall have been set aside on its books and that shall not have given rise to any Liens (other than Permitted Liens) or (ii) the amount of which, either singly or in the aggregate, shall not have a Material Adverse Effect with respect to the Servicer.

(m) Notification of Asset Amount Deficiency or Amortization Event . The Servicer shall promptly notify the Issuer of any Asset Deficiency or Amortization Event (as each such term is defined in the Indenture) with respect to any Series of which the Servicer has actual knowledge.

Section 3.06 Negative Covenants of Servicer . As long as it is the Servicer hereunder, the Servicer hereby covenants that the Servicer shall not:

(a) Changes in Accounting Treatment and Reporting Practices . Change or permit any change in any accounting principles or financial reporting practices applied to the Servicer, except in accordance with GAAP, if such change would have a Material Adverse Effect with respect to the Servicer;

 

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(b) Change in Credit and Collection Policy . (i) Make any material change in the Credit and Collection Policy or (ii) make any material change in the character of its business or engage in any business unrelated to such business as currently conducted that, in either case, individually or in the aggregate with all other such changes, would be reasonably likely to have a material adverse effect on the performance of the ARSC Purchased Assets;

(c) Change in Name . Change its corporate name or the name under or by which it does business unless the Servicer has given Cartus, CFC, the Transferor, the Issuer and the Issuer’s successors and assigns at least 30 days’ prior written notice thereof;

(d) Change in Payment Instruction to Obligors . Make any change in the instructions to Obligors or other Persons regarding payments to be made to it or payments to be made to any Lockbox Account, which payments relate to the Transferred Assets, unless the Servicer has given the Issuer and its successors and assigns prior written notice thereof, and then only in compliance with Section 3.05(f) or add or terminate any bank as a Lockbox Bank from those listed in Schedule 3.04(l) unless (i) the Indenture Trustee has received copies of a Lockbox Agreement with each new Lockbox Bank duly executed by the parties thereto and (ii) in the case of any termination, the Issuer or its successors and assigns have received evidence to their satisfaction that the Obligors that were making payments into a terminated Lockbox Account have been instructed in writing to make payments into another Lockbox Account then in use;

(e) Home Deeds . Record any Home Deeds except as permitted by Section 2.01(d)(i);

(f) Establishment of Lockbox Accounts . Enter into a Lockbox Agreement (other than as set forth in Exhibit B) without the prior written consent of the Issuer and the Indenture Trustee; or

(g) Instructions to Indenture Trustee . Instruct the Indenture Trustee to release any Pool Collections to the Issuer pursuant to Section 8.07 of the Indenture on any day on which an Asset Deficiency exists.

Section 3.07 Records of the Servicer and Reports to be Prepared by the Servicer .

(a) The Servicer shall maintain at all times accurate and complete books, records and accounts relating to the Pool Receivables, the other Transferred Assets and the Pool Relocation Management Agreements and all Pool Collections thereon, in which timely entries shall be made. The Servicer shall maintain and implement administrative and operating procedures (including without limitation an ability to recreate Records evidencing Pool Receivables and the other Transferred Assets in the event of the destruction of the originals thereof), and shall keep and maintain all documents, books, records and other information that the Servicer deems reasonably necessary for the identification of Eligible Receivables and for the collection of all Pool Receivables and other Transferred Assets. Upon the reasonable request of

 

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the Indenture Trustee or the Issuer after the occurrence and continuance of an Unmatured Servicer Default or a Servicer Default or other termination under Section 9.01, the Servicer will deliver copies of all books and records maintained pursuant to this Section 3.07(a) to the Indenture Trustee.

(b) During regular business hours upon reasonable prior notice, the Servicer shall permit Cartus, CFC, the Issuer, the Transferor, the Indenture Trustee (or such other Person whom the Indenture Trustee or the Issuer may designate from time to time), or their agents or representatives (including without limitation certified public accountants or other auditors), at the expense of the Servicer and to the extent reasonably necessary to protect the interests of the holders of the Notes, (i) to examine and make copies of and abstracts from, and to conduct accounting reviews of, all Records in the possession or under the control of the Servicer, including without limitation the related Contracts, invoices and other documents related thereto, and (ii) to visit the offices and properties of the Servicer for the purpose of examining the materials described in clause (i) above, and to discuss matters relating to the Pool Receivables or the other Transferred Assets or the performance by the Servicer of its obligations under any Transaction Document to which it is a party with any Authorized Officer of the Servicer having knowledge of such matters and with its certified public accountants or other auditors. The Indenture Trustee may conduct, or cause its agents or representatives to conduct, reviews of the types described in this Section 3.07(b) whenever the Indenture Trustee reasonably deems any such review appropriate, and the Indenture Trustee shall conduct, or cause its agents or representatives to conduct, such a review if requested by the Issuer.

(c) No later than two Business Days prior to the Distribution Date with respect to any Outstanding Series, the Servicer shall prepare and deliver to Cartus, CFC, the Transferor, the Issuer, the Indenture Trustee, each Rating Agency and each Series Enhancer a report with respect to the Monthly Period then most recently ended and such Outstanding Series of Notes, substantially in the form provided in the related Supplement or in such other form as is reasonably acceptable to the Issuer (each such report, a “ Receivables Activity Report ”). Such Receivables Activity Report shall include (i) a certification that, to the best of the Servicer’s knowledge, no Unmatured Servicer Default or Servicer Default has occurred and is continuing and (ii) a listing of all new Pool Relocation Management Agreements as identified pursuant to Section 2.1(a) of the Purchase Agreement. In addition to the foregoing, so long as the Series 2007-1 Notes are outstanding, if a Weekly Reporting Event has occurred and is continuing, the Servicer will, upon the request of the Administrative Agent for the Series 2007-1 Noteholders (the “ Series 2007-1 Agent ”), deliver to the Series 2007-1 Agent, concurrently with each such Receivables Activity Report, a computer tape or diskette, in an electronically readable format mutually acceptable to the Servicer and the Series 2007-1 Agent, containing the information from which the Servicer prepared such Receivables Activity Report.

(d) If as of the end of any fiscal quarter a Weekly Reporting Event has occurred, the Servicer shall, commencing on the applicable “ Weekly Reporting Commencement Date ” specified below and continuing until no such Weekly Reporting Event exists for two consecutive fiscal quarters, prepare and deliver to Cartus, CFC, the Transferor, the Issuer, the Indenture Trustee, each Series Enhancer and each Administrative Agent under any Series of

 

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Variable Funding Notes, on or before the fifth Business Day of each calendar week, a report with respect to the last Business Day of the preceding week, substantially in the form provided in the related Supplement or in such other form as is reasonably acceptable to the Issuer (each such report, a “ Weekly Activity Report ”). Such Weekly Activity Report shall include (i) a certification that, to the best of the Servicer’s knowledge, no Unmatured Servicer Default or Servicer Default has occurred and is continuing or, if any such event has occurred and is continuing, a description of such event and the action, if any, that the Servicer proposes to take with respect thereto and (ii) a calculation of the Adjusted Aggregate Receivable Balance based on the most recently available interim reporting derived from financial system-generated data in the Servicer’s financial records. As used herein, the “ Weekly Reporting Commencement Date ” shall mean: (1) with respect to any Weekly Reporting Event which occurs during calendar year 2007 or if the first such Weekly Reporting Event occurs as of the end of a fiscal year, the week immediately following the 135th calendar day after the end of the relevant fiscal quarter; (2) with respect to any other Weekly Reporting Event occurring as of the end of a fiscal year or if the first such Weekly Reporting Event occurs as of the end of any fiscal quarter after calendar year 2007, the week immediately following the 90th calendar day after the end of the relevant fiscal quarter and (3) otherwise, the week immediately following the 45th calendar day after the end of the relevant fiscal quarter.

 

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Section 3.08 Annual Certificate of Servicer . The Servicer shall deliver to Cartus, CFC, the Issuer, the Indenture Trustee, each Rating Agency and any Series Enhancer on or before April 30 of each calendar year, beginning with April 30, 2001, an Officer’s Certificate substantially in the form of Exhibit A.

Section 3.09 Annual Servicing Report of Independent Public Accountants; Copies of Reports Available . On or before April 30 of each calendar year, beginning with April 30, 2001, the Servicer shall cause Protiviti (or such other auditor acceptable to the financial institution acting as administrative agent for the Majority Investors) to furnish a report (addressed to the Issuer and any Series Enhancer) to Cartus, CFC, the Issuer, the Transferor, the Indenture Trustee and any Series Enhancer to the effect that they have applied certain procedures agreed upon with the Servicer and substantially in the form previously provided to the Rating Agencies and examined certain documents and records relating to the servicing of the Receivables and other Transferred Assets under this Agreement and that, on the basis of such agreed-upon procedures, nothing has come to the attention of such accountants that caused them to believe that the servicing (including the allocation of Pool Collections) has not been conducted in compliance with the terms and conditions as set forth in Articles III and IV of this Agreement, other than such exceptions as they believe to be immaterial and such other exceptions as shall be set forth in such statement. Such report shall set forth the agreed-upon procedures performed. Notwithstanding the foregoing, so long as the Series 2007-1 Notes are the only Notes issued under the Indenture and the Servicer complies with the audit provisions set forth in Section 5.01(g) of the related Note Purchase Agreement, the Servicer shall not be required to comply with the foregoing provisions of this Section 3.09.

Section 3.10 Adjustments; Modifications .

(a) If on any day the Unpaid Balance of any Pool Receivable is reduced by the Servicer as a result of any incorrect billings, allowances, chargebacks, credits or any other reductions or cancellations, in each case that result from the acts or omissions of the Servicer, that are unrelated to the ability of the related Obligor to pay such Pool Receivable (each such reduction, a “ Servicer Dilution Adjustment ”), then the Servicer shall deposit the amount of such Servicer Dilution Adjustment in cash in the Collection Account and shall report such amount on the next Receivables Activity Report and Weekly Activity Report, if applicable.

(b) So long as no Unmatured Servicer Default or Servicer Default shall have occurred and be continuing, the Servicer may adjust, and may permit each Sub-Servicer appointed by it pursuant to Section 3.01(b) to adjust, the outstanding unpaid balance of any Pool Receivable in accordance with the Credit and Collection Policy and the terms of this Agreement, provided that (i) such adjustment would not cause or result in an Eligible Receivable becoming ineligible and (ii) either the Servicer makes the related Servicer Dilution Adjustment payment pursuant to this Section 3.10 or Cartus or CFC makes the related Originator Adjustment payment pursuant to Section 4.3(b) of the Purchase Agreement or Section 4.3(b) of the Receivables Purchase Agreement, as applicable. The Servicer shall, or shall cause the applicable Sub-Servicer to, write off Pool Receivables from time to time in accordance with the terms of this Agreement and the terms of the Credit and Collection Policy, and such a write-off shall not give rise to any obligation to make a Servicer Dilution Adjustment. Notwithstanding the foregoing,

 

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the maturity date of an Equity Loan may be extended beyond the original due date in accordance with the Credit and Collection Policy, and such Equity Loan shall, notwithstanding clause (j) of the definition of Eligible Receivable, be an Eligible Receivable so long as (i) such extension was made for reasons unrelated to the creditworthiness of the Obligor, (ii) the extension period ends not later than (A) the time of sale or (B) the expiration of the offering period for the Homeowner’s acceptance of an offer for sale or (C) the date that is 12 months prior to the Final Stated Maturity Date, whichever first occurs, and (iii) all other requirements for such Receivable to be an Eligible Receivable are satisfied.

(c) If (i) the Servicer makes a deposit into the Collection Account in respect of a collection of a Pool Receivable and such collection was received by the Servicer in the form of a check that is not honored for any reason or (ii) the Servicer makes an error with respect to the amount of any Pool Collection and deposits an amount that is less than or more than the actual amount of such Pool Collection, the Servicer shall appropriately adjust the amount subsequently deposited into the Collection Account to reflect such dishonored check or error. Any Pool Receivable in respect of which a dishonored check is received shall be deemed not to have been paid. Notwithstanding the first two sentences of this paragraph, adjustments made pursuant to this Section 3.10(c) shall not require any change in any report previously delivered pursuant to Section 3.07(c).

(d) The Servicer shall not extend, amend or otherwise modify the terms of any Pool Receivable, or amend, modify or waive any material term or condition related thereto, except as provided in this Section 3.10.

Section 3.11 Escrow Agents . The Servicer shall cause all Home Purchase Contracts and Home Deeds to be delivered to an escrow agent in the applicable jurisdiction, with a notice to such agent of the interests of the Issuer and Indenture Trustee therein.

Section 3.12 Servicer Advances .

(a) In accordance with the Credit and Collection Policy, the Servicer shall make Servicer Advances in connection with the maintenance and marketing of Homes the Receivables relating to which are included in the Transferred Assets, but only to the extent that the Servicer has determined in its reasonable judgment that such advances will be recoverable out of Pool Collections on the Receivable arising as a result of such Servicer Advance.

(b) All Servicer Advances, the Receivables arising from which have not been sold to CFC under the Purchase Agreement, shall be reimbursable in the first instance from Pool Collections relating to the Homes with respect to which such Servicer Advances were made (provided that Home Sale Proceeds will only be applied to reimburse Servicer Advances consistent with Cartus’s practices as of the Closing Date) and, further, to the extent such Servicer Advance has been determined to be a Nonrecoverable Advance, as provided in Section 4.03 of this Agreement and Section 8.04(c)(i) of the Indenture. In consideration of the Issuer’s obligation to reimburse the Servicer from Pool Collections for Servicer Advances, the Receivables arising under the Pool Relocation Management Agreements in respect of such Servicer Advances which have not been sold to CFC under the Purchase Agreement shall be automatically conveyed by the Servicer to the Issuer and included in the Pool Receivables and the Transferred Assets.

 

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Section 3.13 Calculations . Without limiting the generality of the foregoing provisions of this Article III, the Servicer shall perform all calculations necessary in order to determine payments to be made to holders of Notes and deposits to be made to reserves and other Series Accounts in accordance with the Indenture and any Supplement. For the purposes of such calculations, on each Business Day the Servicer shall calculate the Aggregate Employer Balance for each Employer by determining the aggregate Unpaid Balance of the Pool Receivables due from such Employer and then reducing such amount (without duplication) by the amounts described in the definition of Aggregate Employer Balance, including the total amount of Advance Payments received from such Employer, regardless of whether such Advance Payment is related to a Pool Receivable.

Section 3.14 Application of Collections . (a) In accordance with the Credit and Collection Policy, the Servicer shall apply all monies received by or on behalf of any Employer in accordance with the directions of such Employer. The Servicer shall contact the Employer if necessary to obtain such directions, or if such directions cannot be obtained, the Servicer shall apply Pool Collections of such Employer in the order that such Pool Receivables were originated, with the oldest Pool Receivable being paid first. The Servicer shall allocate any collections received under a single Billed Receivable that contains both Receivables included in the Transferred Assets and other amounts owed to Cartus first, to amounts owed in respect of Transferred Assets and then to other receivables.

(b) If at any time the Servicer shall determine that any amount on deposit in the Collection Account does not constitute Pool Collections or the proceeds thereof, the Servicer shall instruct the Indenture Trustee to withdraw such amounts from the Collection Account and to pay such amounts to the Person that the Servicer determines is the Person entitled thereto, as provided in Section 8.04 of the Indenture.

[END OF ARTICLE III ]

 

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ARTICLE IV

ACCOUNTS AND POOL COLLECTIONS

Section 4.01 Establishment of Collection Account . The Servicer, for the benefit of the Indenture Trustee and the holders of the Notes, shall establish and maintain an Eligible Account (including any subaccount thereof) in the name of the Indenture Trustee, bearing a designation clearly indicating that the funds and other property credited thereto are held for the benefit of the Indenture Trustee and the holders of the Notes (the “ Collection Account ”).

The Collection Account shall be under the sole dominion and control of the Indenture Trustee for the benefit of the holders of the Notes. Except as expressly provided in this Agreement or the Indenture, the Servicer agrees that it shall have no right of setoff or banker’s lien against, and no right to otherwise deduct from, any funds held in the Collection Account for any amount owed to it by the Issuer, Cartus, CFC, the Indenture Trustee or any holder of the Notes. If the Collection Account at any time ceases to be an Eligible Account then, within 10 Business Days of the Issuer’s or Servicer’s knowledge thereof, the Issuer or the Servicer shall establish a new Collection Account meeting the conditions specified above, transfer any monies, documents, instruments, investment property, certificates of deposit and other property to such new Collection Account and from the date such new Collection Account is established, it shall be the Collection Account. Pursuant to the authority granted to the Servicer in Section 3.02, the Servicer shall have the power, revocable by the Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and payments from the Collection Account for the purposes of carrying out the Servicer’s duties hereunder.

At the written direction of the Servicer, funds on deposit in the Collection Account shall be invested in Eligible Investments selected by the Servicer. All such Eligible Investments shall be held by the Indenture Trustee for the benefit of the holders of the Notes. Investments of funds representing Pool Collections collected during any Monthly Period shall be invested in Eligible Investments that will mature so that such funds will be available no later than the close of business on the day preceding the monthly Distribution Date following such Monthly Period, in amounts sufficient to the extent of such funds to make the required distributions on such Distribution Date. On each Distribution Date, all interest and other investment earnings (net of losses and investment expenses) on funds on deposit in the Collection Account shall be paid to the Servicer as additional servicing compensation. The Servicer shall bear no responsibility or liability for any losses resulting from investment or reinvestment of any funds in accordance with this Section 4.01 or for the selection of Eligible Investments in accordance with the provisions of this Agreement.

 

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Section 4.02 Pool Collections and Allocations . The Servicer shall instruct the Indenture Trustee to apply all funds on deposit in the Collection Account as described in the Indenture and each Supplement. Except as otherwise provided below, the Servicer shall transfer all Pool Collections and other Transferred Assets consisting of cash or cash equivalents from the Lockbox Accounts into the Collection Account as promptly as possible after the date of receipt of such Pool Collections, but in no event later than the second Business Day following the date of receipt.

Section 4.03 Withdrawals from the Collection Account . On each day the Servicer shall determine the amounts payable to it as reimbursement of any Nonrecoverable Advances pursuant to Section 3.12(b) and the Servicer shall instruct the Indenture Trustee to pay such amounts over to the Servicer pursuant to Section 8.07 of the Indenture. The determination by the Servicer that it has made a Nonrecoverable Advance shall be evidenced by an Officer’s Certificate of the Servicer delivered to the Indenture Trustee and the Issuer. The Indenture Trustee shall be entitled to conclusively rely on the Servicer’s determination that a Servicer Advance is a Nonrecoverable Advance.

[END OF ARTICLE IV]

 

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ARTICLE V

SECURITY INTEREST

Section 5.01 Security Interest . Without prejudice to the provisions of Section 2.01 providing for the absolute transfer of the Transferor’s interest in the Pool Receivables and other Transferred Assets to the Issuer, the Transferor hereby assigns and grants to the Issuer a first priority security interest in the Transferor’s right, title and interest, if any, in, to and under all of the following, whether now or hereafter existing: all Pool Receivables, all other Transferred Assets and all proceeds thereof.

Section 5.02 Enforcement of Rights . The Transferor acknowledges that the Transferred Assets include all rights acquired by the Transferor under the Receivables Purchase Agreement. Accordingly, the Transferor agrees that the Issuer and its assigns (including without limitation the Indenture Trustee) shall have the sole right to enforce the Transferor’s rights and remedies under the Receivables Purchase Agreement (including the rights and remedies of CFC under the Purchase Agreement and the Performance Guaranty).

[END OF ARTICLE V]

 

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ARTICLE VI

OTHER MATTERS RELATING TO THE TRANSFEROR

Section 6.01 Liability of the Transferor . The Transferor shall be liable for all obligations, covenants, representations and warranties of the Transferor arising under or related to this Agreement. Except as provided in the preceding sentence, the Transferor shall be liable only to the extent of the obligations specifically undertaken by it in its capacity as a Transferor.

Section 6.02 Indemnification by the Transferor . Without limiting the foregoing and any other rights that any ARSC Indemnified Party may have hereunder or under applicable law, the Transferor hereby agrees to indemnify the Issuer, each holder of the Notes, the Indenture Trustee and each of the successors, permitted transferees and assigns of the foregoing, and all officers, directors, shareholders, controlling Persons, employees and agents of any of the foregoing (each of the foregoing Persons, an “ ARSC Indemnified Party ”), from and against any and all damages, losses, claims (whether on account of settlements or otherwise, and whether or not the applicable ARSC Indemnified Party is a party to any action or proceeding that gives rise to any ARSC Indemnified Losses), actions, suits, demands, judgments, liabilities (including penalties), obligations or disbursements of any kind or nature and related costs and expenses (including reasonable attorneys’ fees and disbursements) awarded against or incurred by any of them arising out of or as a result of any of the following (all of the foregoing, collectively, “ ARSC Indemnified Losses ”):

(a)(i) any representation or warranty made or deemed made by the Transferor (or any of its respective Authorized Officers) (whether or not made or delivered to the ARSC Indemnified Party) under any of the Transaction Documents contains any untrue statement of a material fact or omits to state material facts necessary to make the statements made, in the light of the circumstances under which such statements were made, not misleading;

(b) the failure by the Transferor to comply with any law, rule or regulation applicable to it with respect to any Transferred Asset;

(c) the failure to vest and maintain vested in the Issuer a first priority perfected ownership or security interest in the Transferred Assets, free and clear of any Lien (other than any Permitted Lien), whether existing at the time of the sale of such Transferred Asset or at any time thereafter;

(d) any failure of the Transferor to perform its duties or obligations in accordance with the provisions of the Transaction Documents;

(e) the failure to file, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to the transfer of any Transferred Asset to the Issuer, whether at the time of any sale or at any subsequent time;

 

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(f) any tax or governmental fee or charge (other than franchise taxes and taxes on or measured by the net income of any holder of the Notes issued by the Issuer under the Indenture), all interest and penalties thereon or with respect thereto, and all out-of-pocket costs and expenses (including the reasonable fees and expenses of counsel in defending against the same) that arise by reason of the purchase or ownership of the Transferred Assets;

(g) any investigation, litigation or proceeding related to any use of the proceeds of any purchase made hereunder; and

(h) any investigation or defense of, or participation in, any legal proceeding relating to the execution, delivery, enforcement, performance or administration of the Transaction Documents or any other document related thereto (whether or not such ARSC Indemnified Party is a party thereto).

Notwithstanding anything to the contrary in this Agreement, any representations, warranties and covenants made by the Transferor in this Agreement or the other Transaction Documents that are qualified by or limited to events or circumstances that have, or are reasonably likely to have, given rise to a Material Adverse Effect (or words of like import) shall (solely for purposes of the indemnification obligations set forth in this Section 6.01) be deemed not to be so qualified or limited.

If for any reason the indemnification provided in this Section 6.02 is unavailable to an ARSC Indemnified Party or is insufficient to hold an ARSC Indemnified Party harmless, then the Transferor shall contribute to the amount paid by such ARSC Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such ARSC Indemnified Party on the one hand, and the Transferor on the other hand, but also the relative fault (if any) of such ARSC Indemnified Party and the Transferor and any other relevant equitable considerations.

Notwithstanding the foregoing, no indemnification payments shall be payable by the Transferor pursuant to this Section 6.02 until all amounts owing by the Issuer under the Indenture have been paid in full and all amounts payable by the Transferor to Cartus under the ARSC Subordinated Note have been paid in full.

Notwithstanding the foregoing, and without prejudice to the rights that the Issuer may have pursuant to the other provisions of this Agreement or the provisions of any of the other Transaction Documents, in no event shall any ARSC Indemnified Party be indemnified for any ARSC Indemnified Losses (i) resulting from negligence or willful misconduct on the part of such ARSC Indemnified Party (or the negligence or willful misconduct on the part of any of such ARSC Indemnified Party’s officers, directors, employees or agents) or (ii) to the extent the same includes ARSC Indemnified Losses in respect of Transferred Assets and reimbursement therefor that would constitute credit recourse to the Transferor, Cartus or CFC (without limiting any rights under the Purchase Agreement) for the amount of any Receivable or other Transferred Asset not paid by the related Obligor.

 

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[END OF ARTICLE VI]

 

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ARTICLE VII

OTHER MATTERS RELATING TO THE SERVICER

Section 7.01 Liability of the Servicer . The Servicer shall be liable under this Article VII only to the extent of the obligations specifically undertaken by the Servicer in its capacity as Servicer.

Section 7.02 Merger or Consolidation of, or Assumption of the Obligations of, the Servicer . The Servicer shall not consolidate with or merge into any other Person or convey, transfer or sell its properties and assets substantially as an entirety to any Person, unless:

(a)(i) the corporation formed by such consolidation or into which the Servicer is merged or the Person that acquires by conveyance, transfer or sale the properties and assets of the Servicer substantially as an entirety is, if the Servicer is not the surviving entity, a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and, if the Servicer is not the surviving entity, such corporation expressly assumes, by an agreement supplemental hereto, executed and delivered to the Issuer and the Transferor, in form satisfactory to the Issuer, the performance of every covenant and obligation of the Servicer hereunder;

(ii) the Servicer has delivered to the Issuer and the Transferor an Officer’s Certificate stating that such consolidation, merger, conveyance, transfer or sale complies with this Section 7.02 and that all conditions precedent herein provided for relating to such transaction have been complied with;

(iii) the Servicer has given the Issuer, the Transferor, CFC, Cartus, and the Indenture Trustee notice of such consolidation, merger or transfer of assets;

(iv) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 3.04 has been breached in any material respect; and

(v) no Unmatured Servicer Default or Servicer Default has occurred and is continuing or would result from the contemplated transaction; and

(vi) any necessary consents of each applicable Series Enhancer have been obtained.

(b) the corporation formed by such consolidation or into which the Servicer is merged or the Person that acquires by conveyance or transfer the properties and assets of the Servicer substantially as an entirety is an Eligible Servicer.

 

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Section 7.03 Limitation on Liability of the Servicer and Others . Except as provided in Section 7.04, neither the Servicer nor any of the directors, officers, employees or agents of the Servicer in its capacity as Servicer shall be under any liability to the Transferor, the Issuer, the Indenture Trustee, the holders of the Notes or any other Person for any action taken or for refraining from the taking of any action in good faith in its capacity as Servicer pursuant to this Agreement; provided , however , that this provision shall not protect the Servicer or any such Person against any liability that otherwise would be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder. The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person (other than the Servicer) with respect to any matters arising hereunder. The Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its duties as Servicer in accordance with this Agreement and that in its reasonable judgment may involve it in any expense or liability. Subject to the terms of the Transaction Documents, the Servicer may, in its sole discretion, undertake any such legal action that it may deem necessary or desirable for the benefit of the holders of the Notes with respect to this Agreement and the rights and duties of the parties hereto and the interests of the holders of the Notes issued by the Issuer under the Indenture.

Section 7.04 Indemnification by the Servicer . The Servicer shall indemnify and hold harmless each of Cartus, CFC, the Transferor, the Issuer, the Indenture Trustee and its directors, officers, employees and agents from and against any and all loss, liability, claim, expense, actions, suits, demands, damage or injury suffered or sustained by reason of (i) any representation or warranty made by the Servicer under any of the Transaction Documents, any Receivables Activity Report, Weekly Activity Report or any other information or report delivered by the Servicer with respect to the Servicer or the Transferred Assets having been untrue or incorrect in any material respect when made or deemed to have been made; or (ii) any acts or omissions of the Servicer pursuant to this Agreement (other than such as may arise from the negligence or willful misconduct of Cartus, CFC, the Transferor, the Issuer and the Indenture Trustee, respectively, and their respective directors, officers, employees and agents), including any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any action, proceeding or claim, that in each case arises from or relates to a breach by the Servicer of its representations, warranties, covenants or agreements hereunder; or (iii) any reduction in the Unpaid Balance of any Pool Receivable as a result of any cash discount or any adjustment by the Servicer, including any such adjustment that gives rise to a Servicer Dilution Adjustment (but not including any write-off of any Receivable) or (iv) any failure of the Servicer to comply with any material applicable law, rule or regulation applicable to it and which relates to the servicing or administration of the Transferred Assets. Indemnification pursuant to this Section 7.04 shall not be payable from the Transferred Assets. The Servicer’s obligations under this Section 7.04 shall survive the termination of this Agreement, the resignation or removal of the Indenture Trustee or the earlier removal or resignation of the Servicer.

 

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Section 7.05 Resignation of the Servicer . The Servicer shall not resign from the obligations and duties hereby imposed on it except (a) upon determination that (i) the performance of its duties hereunder is no longer permissible under applicable law and (ii) there is no reasonable action that the Servicer could take to make the performance of its duties hereunder permissible under applicable law or (b) upon the assumption, by an agreement supplemental hereto, executed and delivered to the Issuer and the Transferor, in form satisfactory to the Issuer and the Majority Investors, of the obligations and duties of the Servicer hereunder by (i) any of its Affiliates that is a direct or indirect wholly owned subsidiary of the Performance Guarantor, subject to reaffirmation by the Performance Guarantor of the Performance Guaranty with respect to such Successor Servicer, or (ii) with the consent of the Majority Investors, by any other entity that qualifies as an Eligible Servicer. Any determination permitting the resignation of the Servicer shall be evidenced as to clause (a) above by an Opinion of Counsel to such effect delivered to the Issuer, the Indenture Trustee and the Transferor. No resignation shall become effective until a Successor Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with Section 9.02. If, as of the date of the determination that the Servicer may no longer act as Servicer under clause (a) above, the Issuer is unable to appoint a Successor Servicer, the Indenture Trustee shall serve as Successor Servicer. Notwithstanding the foregoing, if it is legally unable so to act, the Indenture Trustee shall petition a court of competent jurisdiction to appoint any Eligible Servicer as the Successor Servicer hereunder.

Section 7.06 Access to Certain Documentation and Information Regarding the Receivables . In addition to the access rights provided under Section 3.07(b), the Servicer shall provide to the Issuer and the Indenture Trustee access to the documentation regarding the Lockbox Accounts and the Pool Receivables if the Issuer or the Indenture Trustee is required in connection with the enforcement of the rights of holders of the Notes or by applicable statutes or regulations to review such documentation, such access being afforded without charge but only (a) upon reasonable request (but in no event less than five Business Days), (b) during normal business hours, (c) subject to the Servicer’s normal security and confidentiality procedures and (d) at reasonably accessible offices in the continental United States designated by the Servicer. Nothing in this Section 7.06 shall derogate from the obligation of Cartus, CFC, the Transferor, the Issuer, the Indenture Trustee and the Servicer to observe any applicable law prohibiting disclosure of information regarding the Transferred Employees, and the failure of the Servicer to provide access as provided in this Section 7.06 as a result of such obligation shall not constitute a breach of this Section 7.06.

[END OF ARTICLE VII]

 

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ARTICLE VIII

TERMINATION

Section 8.01 Transfer Termination Events . The following events shall be “ Transfer Termination Events ”:

(a) The occurrence of an Event of Default or an Amortization Event with respect to all Series of Notes; or

(b) Any representation or warranty made by the Transferor under any of the Transaction Documents shall prove to have been untrue or incorrect in any material respect when made or deemed to have been made, such failure could reasonably be expected to have a Material Adverse Effect with respect to the Transferor or the interest of the Issuer or its assigns in the Transferred Assets and such failure remains unremedied for 30 days; or

(c) The Transferor shall fail to perform or observe, as and when required, (i) any term, covenant or agreement contained in this Agreement or any of the other Transaction Documents to which it is a party, and such failure shall remain unremedied for: in the case of a failure to maintain its separate corporate existence pursuant to Section 2.05(e), the covenant to segregate Pool Collections pursuant to Section 2.05(f), the covenant to provide records pursuant to Section 7.1(k), the covenant to file financing or continuation statements pursuant to Section 2.01(d) or the negative covenants of the Transferor set forth in Section 2.06, ten days, or (ii) any other term, covenant or agreement contained in this Agreement or any of the other Transaction Documents to which it is a party, which failure could reasonably be expected to have a Material Adverse Effect with respect to the Transferor or the interest of the Issuer or its assigns in the Transferred Assets, 30 days; or

(d) An Event of Bankruptcy shall have occurred with respect to the Transferor; or

(e) The Transferor’s representation and warranty in Section 2.02(k) shall not be true at any time with respect to a substantial portion of the Transferred Assets; or

(f) Either (i) the Internal Revenue Service shall file notice of a Lien pursuant to Section 6323 of the Code with respect to any of the Transferred Assets and such Lien shall not have been released within five days or, if released, proved to the satisfaction of the Rating Agencies or (ii) the PBGC shall, or shall indicate its intention to, file notice of a Lien pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974 with respect to any of the Transferred Assets; or

(g) A CFC Purchase Termination Event or an ARSC Purchase Termination Event shall have occurred; or

(h) This Agreement shall cease to be in full force and effect for any reason other than in accordance with its terms.

 

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If a Transfer Termination Event occurs, the Transferor shall promptly give notice to the Issuer and the Indenture Trustee of such Transfer Termination Event.

Section 8.02 Transfer Termination . (a) On the Transfer Termination Date, the Transferor shall cease transferring Pool Receivables to the Issuer, provided that any right, title and interest of the Transferor in and to any CFC Designated Receivables arising from any Servicer Advances made thereafter, including any Related Property relating thereto and proceeds thereof, shall continue to be transferred. Notwithstanding any cessation of the transfer to the Issuer of additional Pool Receivables, Pool Receivables transferred to the Issuer prior to the Termination Date and Pool Collections in respect of such Pool Receivables and the related Finance Charges, whenever accrued in respect of such Pool Receivables, shall continue to be property of the Issuer available for pledge by the Issuer under the Indenture.

(b) Upon the occurrence of a Transfer Termination Event, the Issuer and its assignees shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Without limiting the foregoing, the occurrence of a Transfer Termination Event shall not deny to the Issuer or its assignees any remedy in addition to termination of its obligation to make Purchases hereunder to which the Issuer or its assignees may be otherwise appropriately entitled, whether by statute or applicable law, at law or in equity.

[END OF ARTICLE VIII]

 

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ARTICLE IX

SERVICER DEFAULTS

Section 9.01 Servicer Defaults . If any one of the following events (a “ Servicer Default ”) shall occur and be continuing:

(a) any failure on the part of the Servicer to deliver the Receivables Activity Reports or Weekly Activity Report, if applicable required under Section 3.07(c), to make any payment, transfer or deposit, or to give instructions or to give notice to the Issuer or the Indenture Trustee to make such payment, transfer or deposit on or before the date occurring five Business Days after the date such payment, transfer or deposit or such instruction or notice is required to be made or given, as the case may be, under the terms of this Agreement;

(b)(i) failure on the part of the Servicer duly to observe and perform its covenants to give payment instructions to Obligors pursuant to Section 3.05(f); to segregate Pool Collections pursuant to Section 3.05(g), to provide records pursuant to Section 3.07, to file financing or continuation statements provided to it pursuant to Section 3.02, or breach by the Servicer of any of its negative covenants set forth in Section 3.06, which failure or breach continues unremedied for ten calendar days, or (ii) failure on the part of the Servicer duly to observe or perform in any material respect any other covenants or agreements of the Servicer set forth in this Agreement, which failure has a Material Adverse Effect on the rights of the holders of any Series of Notes (determined without giving effect to any third-party credit enhancement) and continues unremedied for a period of 30 days, in each case, after the date on which written notice of such failure, requiring the same to be remedied, has been given to the Servicer by the Issuer, or to the Servicer and the Issuer on behalf of the Majority Investors, or the Servicer shall assign or delegate its duties under this Agreement except as permitted by Sections 3.01(b) and 7.02;

(c) any representation, warranty or certification made by the Servicer in this Agreement or in any other Transaction Document or in any certificate delivered pursuant to this Agreement proves to have been incorrect in any material respect when made, which failure has a Material Adverse Effect on the rights of the holders of any Series of Notes (determined without giving effect to any third-party credit enhancement) and which failure continues unremedied for a period of 30 days after the date on which notice thereof, requiring the same to be remedied, has been given to the Servicer by the Issuer, or to the Servicer and the Issuer on behalf of the Majority Investors; or

(d) an Event of Bankruptcy occurs with respect to the Servicer;

(e) the Performance Guaranty shall cease to be in full force and effect for any reason other than in accordance with its terms; or

(f)(i) Failure of the Servicer or the Performance Guarantor to pay any principal and/or interest in respect of any Indebtedness under the Realogy Credit Agreement or under any other indenture or agreement governing any Indebtedness the principal amount of

 

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which exceeds $25,000,000 and such failure shall continue beyond the applicable grace period, if any, specified in the agreement or instrument governing such Indebtedness; or (ii) the default by the Servicer or the Performance Guarantor in the performance of any term, provision or condition contained in any agreement described in clause (i) above, or the existence of any event or condition with respect to any Indebtedness arising under any such agreement, if the effect of such default, event or condition is to cause, or permit the holder of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity, including without limitation the occurrence of any “Event of Default” under the Realogy Credit Agreement; or (iii) any Indebtedness of the Servicer or the Performance Guarantor in a principal amount exceeding $25,000,000 shall be declared to be due and payable or is required to be prepaid (other than by a regularly scheduled payment or a mandatory redemption or prepayment provision) prior to the scheduled date of maturity thereof;

then, in the event of any such Servicer Default, so long as the Servicer Default shall not have been remedied the Indenture Trustee may, or at the direction of the Majority Investors, the Indenture Trustee shall, by written notice then given to the Servicer (and to the Indenture Trustee if given by the Majority Investors) (a “ Termination Notice ”), terminate all or any part of the rights and obligations of the Servicer as Servicer under this Agreement. Notwithstanding the foregoing, a delay in or failure of performance referred to in clause (a), (b) or (c) for a period of 10 Business Days after the applicable grace period shall not constitute a Servicer Default if such delay or failure could not be prevented by the exercise of reasonable diligence by the Servicer and such delay or failure was caused by an act of God or the public enemy, acts of declared or undeclared war, public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes not within the Servicer’s control. The preceding sentence does not relieve the Servicer from using all commercially reasonable efforts to perform its obligations in a timely manner in accordance with the terms of this Agreement; or

After receipt by the Servicer of a Termination Notice, and on the date that a Successor Servicer is appointed by the Indenture Trustee pursuant to Section 9.03, all authority and power of the Servicer under this Agreement (or, in the case of a partial transfer, such authority and power and a proportional portion of the Servicing Fee as is described in the Termination Notice) shall pass to and be vested in the Successor Servicer (a “ Service Transfer ”); and the Indenture Trustee is hereby authorized and empowered, upon the failure of the Servicer to cooperate, to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all documents and other instruments and to do and accomplish all other acts or things necessary or appropriate to effect the purposes of such Service Transfer. The Servicer agrees to cooperate with the Indenture Trustee and such Successor Servicer in effecting the termination of the responsibilities and rights of the Servicer to conduct servicing hereunder, including the transfer to such Successor Servicer of authority of the Servicer to service the Pool Receivables provided for under this Agreement, including (to the extent transferred) all authority over all Pool Collections that on the date of transfer are held by the Servicer for deposit, or which have been deposited by the Servicer in the Collection Account, or which thereafter are received with respect to the Receivables, and in assisting the Successor Servicer. The Servicer shall within 20 Business Days of such Termination Notice transfer its electronic records relating to the Pool Receivables to the Successor Servicer in such electronic form as the Successor Servicer may reasonably request and shall promptly transfer to the Successor Servicer all other records,

 

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correspondence and documents necessary for the continued servicing of the Receivables in the manner and at such times as the Successor Servicer shall reasonably request. To the extent that compliance with this Section 9.01 requires the Servicer to disclose to the Successor Servicer information of any kind that the Servicer deems to be confidential, the Successor Servicer shall be required to enter into such customary licensing and confidentiality agreements as the Servicer deems reasonably necessary to protect its interests. The Servicer being terminated (or replaced in part) shall bear all costs of the appointment of a Successor Servicer hereunder, including but not limited to those of the Indenture Trustee reasonably allocable to specific employees and overhead, legal fees and expenses, accounting and financial consulting fees and expenses, and costs of amending the Transaction Documents, if necessary.

Section 9.02 Performance by Issuer . If (i) the Transferor or the Servicer fails to perform any of its agreements or obligations under any Transaction Document to which it is a party and does not remedy such failure within the applicable cure period, if any, and (ii) the Issuer in good faith reasonably believes that the performance of such agreements and obligations is necessary or appropriate to protect the interests of the holders of the Notes issued by the Issuer under the Indenture, then the Issuer or its designee shall have the right to perform, or cause performance of, such agreement or obligation, and the reasonable expenses of the Issuer or its designee incurred in connection therewith shall be payable by the Servicer as provided in Section 7.04 (if the Servicer has failed to perform its obligations) or by the Transferor as provided in Section 6.04 (if the Transferor has failed to perform its obligations). If the Transferor or the Servicer fails to file at any time any financing statement or continuation statement or amendment thereto or assignment thereof that it is required to file pursuant to this Agreement or any of the other Transaction Documents to which it is a party, the Issuer or its assigns shall have the right to file, and the Transferor and the Servicer hereby authorize the Issuer or its assigns to file, at the expense of the Transferor, such financing or continuation statements and amendments thereto and assignments thereof with respect to all or any of the Receivables or the other Transferred Assets now existing or hereafter arising in the name of the Transferor.

Section 9.03 Indenture Trustee To Act; Appointment of Successor .

(a) On and after the receipt by the Servicer of a Termination Notice pursuant to Section 9.01, the Servicer shall continue to perform all servicing functions under this Agreement until the date specified in the Termination Notice or otherwise specified by the Indenture Trustee or until a date mutually agreed upon by the Servicer and Indenture Trustee. The Issuer shall select, as promptly as possible after the giving of a Termination Notice, and the Indenture Trustee shall appoint, an Eligible Servicer as a successor servicer (the “ Successor Servicer ”), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Issuer. If a Successor Servicer has not been appointed or has not accepted its appointment at the time when the Servicer ceases to act as Servicer, the Indenture Trustee without further action automatically shall be appointed the Successor Servicer. Notwithstanding the foregoing, the Issuer shall, if the Indenture Trustee is legally unable so to act, petition at the expense of the Servicer a court of competent jurisdiction to appoint any established institution qualifying as an Eligible Servicer as the Successor Servicer hereunder.

 

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(b) Upon its appointment, the Successor Servicer shall be the successor in all respects to the Servicer with respect to servicing functions under this Agreement and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof, and all references in this Agreement to the Servicer shall be deemed to refer to the Successor Servicer. Notwithstanding the foregoing, or anything in this Section 9.03 to the contrary, the Successor Servicer shall have no responsibility or obligation (i) for any representation or warranty of the predecessor Servicer or any other Successor Servicer hereunder or (ii) for any act or omission of either a predecessor or any other Successor Servicer. The Indenture Trustee may conduct any activity required of it as Servicer hereunder through an Affiliate or through an agent. Neither the Indenture Trustee nor any other Successor Servicer shall be deemed to be in default hereunder due to any act or omission of a predecessor Servicer, including but not limited to failure to timely deliver to the Indenture Trustee any instructions pursuant to Section 4.02, any funds required to be deposited with or transferred to the Indenture Trustee, or any breach of its duty to cooperate with a Service Transfer.

(c) All authority and power granted to the Servicer under this Agreement shall automatically cease and terminate upon termination of this Agreement pursuant to Section 10.01, and shall pass to and be vested in the Transferor, and the Transferor is hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all documents and other instruments, and to do and accomplish all other acts or things necessary or appropriate to effect the purposes of such transfer of servicing rights. The Servicer agrees to cooperate with the Transferor in effecting the termination of the responsibilities and rights of the Servicer to conduct servicing of the Receivables and the other Transferred Assets. The Servicer shall transfer its electronic records relating to the Receivables and the other Transferred Assets to the Transferor or its designee in such electronic form as it may reasonably request and shall transfer all other records, correspondence and documents to it in the manner and at such times as it shall reasonably request.

(d) Power of Attorney . The Transferor hereby irrevocably appoints the Issuer to act as the Transferor’s attorney-in-fact, with full authority in the place and stead of the Transferor and in the name of the Transferor or otherwise, from time to time after the occurrence and during the continuance of an Unmatured Servicer Default or a Servicer Default or other termination of the Servicer under Section 9.01 or a Transfer Termination Event, to take at the direction of the Issuer any action and to execute any instrument or document that the Issuer may deem necessary to accomplish the purposes of this Agreement including without limitation:

(i) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Pool Receivable or any other Transferred Asset;

(ii) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (i) above;

(iii) to file any claims or take any action or institute any proceedings that the Issuer in its reasonable determination deems necessary or appropriate for the collection of any of the Pool Receivables or any other Transferred Asset or

 

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otherwise to enforce the rights of the Issuer and the holders of the Notes issued by the Issuer under the Indenture with respect to any of the Pool Receivables or any other Transferred Asset;

(iv) to perform affirmative obligations of the Transferor under any Transaction Document; and

(v) to enforce the rights and remedies of the Transferor under any Transaction Document.

The Transferor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section 9.03(d) is irrevocable and coupled with an interest. The Transferor further agrees that the Issuer may delegate to the Indenture Trustee any of the above-referenced powers to the extent the Issuer, in its sole and absolute discretion, without liability, deems advisable and, upon such delegation, the Indenture Trustee shall, to the extent of any power so delegated, be entitled to exercise the powers herein granted to the Issuer.

Section 9.04 Notification to Holders . Within five Business Days after the Servicer becomes aware of any Servicer Default, the Servicer shall give notice thereof to Cartus, CFC, the Transferor, the Issuer, the Indenture Trustee and any Series Enhancer. Upon any termination or appointment of a Successor Servicer pursuant to this Article IX, the Indenture Trustee shall give prompt notice thereof to the holders of the Notes, Cartus, CFC, the Transferor and the Issuer.

Section 9.05 Marketing Expenses Account . (a) If (i) Cartus is the Servicer, and (ii) either (x) the “Average Days in Inventory” (as defined below) is more than 120 days or (y) a Weekly Reporting Event has occurred, the Issuer will be obligated to establish an account (the “Marketing Expenses Account”) to be established with, and pledged to, the Indenture Trustee and maintain on deposit therein, an amount at least equal to the Required Marketing Expenses Account Amount described below. On any day that the amount on deposit in the Marketing Expenses Account is less than the Required Marketing Expenses Account Amount, the Issuer will be required to deposit an amount into the Marketing Expenses Account equal to such shortfall. On any Distribution Date that the amount on deposit in the Marketing Expenses Account exceeds the Required Marketing Expenses Account Amount, the Issuer will be permitted to withdraw such excess, and any amount so withdrawn shall be transferred to the Collection Account.

(b) The Indenture Trustee will be permitted to withdraw funds from the Marketing Expenses Account (i) if Cartus is the Servicer, to pay for the cost of maintaining and marketing the Homes to the extent that Cartus as Servicer has failed to pay such costs, (ii) to reimburse a successor Servicer for the cost of maintaining and marketing the Homes, but only to the extent such costs were actually incurred, but not paid, by Cartus while acting as the Servicer or to the extent that such costs are attributable to Cartus’ breach of its duties as the Servicer prior to the appointment of a successor Servicer and (iii) to cover the costs of transition of servicing from Cartus to such successor Servicer. Payment of such costs from the Marketing Expenses

 

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Account shall not be deemed to be payment by the Servicer and shall not relieve the Servicer from any liability therefor under the other provisions of this Agreement.

Section 9.06 Lockbox Agreements . If a Servicer Default has occurred and is continuing, or to the extent set forth in any Supplement, upon the occurrence of an Amortization Event with respect to any Series of Notes, the Indenture Trustee, as assignee of the Transferor and the Issuer with respect to the Lockboxes, may give Termination Notices to the Lockbox Banks under the Lockbox Agreements in order to terminate the Servicer’s ability to instruct the Lockbox Banks as to the transfers of funds from the Lockbox Accounts and to instruct the Lockbox Banks to follow the directions of the Indenture Trustee as to all such transfers. In the event the Indenture Trustee gives such Termination Notices, all such transfers from the Lockbox Accounts must be made directly to the Collection Account or, to the extent otherwise permitted under the Indenture or an applicable Supplement, to such other accounts established under the Indenture and/or any Supplement for the benefit of the Noteholders.

[END OF ARTICLE IX]

 

55


ARTICLE X

TERMINATION

Section 10.01 Termination . This Agreement and the respective obligations and responsibilities of Cartus, CFC, the Transferor, the Servicer, the Issuer and the Indenture Trustee created hereby shall terminate, except with respect to the duties described in Section 6.03, Section 7.04 and Section 11.06, on the Final Payout Date.

[END OF ARTICLE X]

 

56


ARTICLE XI

MISCELLANEOUS PROVISIONS

Section 11.01 Amendment .

(a) The provisions of this Agreement may be amended, modified or waived from time to time by the parties hereto, by a written instrument signed by each of them. Notwithstanding the preceding sentence, this Agreement shall be amended by the parties hereto at the direction of the Transferor without the consent of any of the holders of the Notes issued by the Issuer under the Indenture to add, modify or eliminate such provisions as may be necessary or advisable in order to enable all or a portion of the Transferred Assets (i) to qualify as, and to permit an election to be made to cause the Issuer to be treated as, a “financial asset securitization investment trust” as described in the provisions of Section 860L of the Code, and (ii) to avoid the imposition of state or local income or franchise taxes imposed on the Issuer’s property or its income, provided that (i) the Transferor delivers to the Issuer an Officer’s Certificate to the effect that the proposed amendments meet the requirements set forth in this Section 11.01(a) and (ii) such amendment does not affect the rights, duties or obligations of the Issuer hereunder.

(b) Promptly after the execution of any such amendment or consent, the Issuer shall furnish notification of the substance of such amendment to each Rating Agency.

 

57


Section 11.02 Governing Law . THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REFERENCE TO ITS CONFLICT OF LAW PRINCIPLES.

Section 11.03 Notices; Payments . All demands, notices, instructions, directions and communications under this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered at, mailed by certified mail, return receipt requested, or sent by facsimile transmission (i) in the case of Cartus or CFC, to the address provided in the Purchase Agreement or the Receivables Purchase Agreement, respectively, (ii) in the case of the Transferor, to 40 Apple Ridge Road, Suite 4C45, Danbury, Connecticut 06810 (telecopier no. (203) 205-1335), (iii) in the case of the Servicer, to 40 Apple Ridge Road, Danbury Connecticut 06810, Attention: Chief Financial Officer (telecopier no. (203) 205-8136), (iv) in the case of the Issuer, 40 Apple Ridge Road, Suite 4C45, Danbury, Connecticut 06810, Attention: Chief Financial Officer (telecopier no. (203) 205-1335), (v) in the case of the Indenture Trustee 101 Barclay Street, 4W, New York, New York 10286 (telecopier no. (212) 815-2493) and (vi) to any other Person as specified in any Supplement; or, as to each party, at such other address or facsimile number as shall be designated by such party in a written notice to each other party.

Section 11.04 Severability of Provisions . If any one or more of the covenants, agreements, provisions or terms of this Agreement shall for any reason whatsoever be held invalid, then such provisions shall be deemed severable from the remaining provisions of this Agreement and shall in no way affect the validity or enforceability of the remaining provisions or of the rights of the parties to the Transaction Documents.

Section 11.05 Further Assurances . The parties hereto agree to do and perform, from time to time, any and all acts and to execute any and all further instruments required or reasonably requested by the Issuer or any other party hereto more fully to effect the purposes of this Agreement, including the execution of any financing statements or continuation statements relating to the Receivables and the other Transferred Assets for filing under the provisions of the UCC or other applicable law of any applicable jurisdiction.

Section 11.06 Nonpetition Covenant . (a) Notwithstanding any prior termination of this Agreement, Cartus, CFC, the Indenture Trustee, the Servicer, the Transferor and any assignee of the Issuer shall not, prior to the date that is one year and one day after the termination of this Agreement with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Issuer under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Issuer.

(b) Notwithstanding any prior termination of this Agreement, Cartus, CFC, the Servicer, the Indenture Trustee, the Issuer and any assignee of the Issuer shall not, prior to the date that is one year and one day after the termination of this Agreement with respect to the Transferor, acquiesce, petition or otherwise invoke or cause the Transferor to invoke the process

 

58


of any Governmental Authority for the purpose of commencing or sustaining a case against the Transferor under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Transferor or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Transferor.

 

59


Section 11.07 No Waiver; Cumulative Remedies . No failure to exercise, and no delay in exercising, any right, remedy, power or privilege on the part of any party under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under this Agreement, preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided under this Agreement are cumulative and not exhaustive of any rights, remedies, powers and privileges provided by law.

Section 11.08 Counterparts . This Agreement may be executed in two or more counterparts (and by different parties on separate counterparts), each of which shall be an original, but all of which together shall constitute one and the same instrument.

Section 11.09 Third-Party Beneficiaries . This Agreement will inure to the benefit of and be binding upon the parties hereto, the holders of the Notes and their respective successors and permitted assigns. Except as otherwise expressly provided in this Agreement, no other Person will have any right or obligation hereunder.

Section 11.10 Merger and Integration . Except as specifically stated otherwise herein, this Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement. This Agreement may not be modified, amended, waived or supplemented except as provided herein.

Section 11.11 Headings . The headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.

Section 11.12 Confidentiality . The Issuer and the Transferor each agree to maintain the confidentiality of any information regarding Cartus Corporation, Cartus and Realogy obtained in accordance with the terms of this Agreement that is not publicly available; provided , however , that the Issuer or the Transferor may reveal such information (a) as necessary or appropriate in connection with the administration or enforcement of this Agreement or the Issuer’s issuance of Notes under the Indenture or (b) as required by law, government regulation, court proceeding or subpoena. Notwithstanding anything herein to the contrary, none of Cartus Corporation, Cartus nor Realogy shall have any obligation to disclose to the Issuer or its assignees and assigns any personal and confidential information relating to a Transferred Employee.

Section 11.13 Costs, Expenses and Taxes . In addition to the obligations of the Transferor under Article VI , the Transferor agrees to pay on demand:

(a) all reasonable costs and expenses incurred by the Issuer and its assignees in connection with the negotiation, preparation, execution and delivery of, the administration (including periodic auditing), the preservation of any rights under, or the enforcement of, or any breach of, this Agreement (including any amendment, supplement or modification hereto), including without limitation (i) the reasonable fees, expenses and

 

60


disbursements of counsel to any such Persons incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under this Agreement and (ii) all reasonable out-of-pocket expenses (including reasonable fees and expenses of independent accountants) incurred in connection with any review of the Transferor’s books and records prior to the execution and delivery hereof, and

(b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or any amendment, supplement or modification thereto, and agrees to indemnify each ARSC Indemnified Party against any liabilities with respect to, or resulting from, any delay in paying or omission to pay such taxes and fees.

Section 11.14 Submission to Jurisdiction . EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY (a) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (c) IRREVOCABLY APPOINTS CORPORATION SERVICE COMPANY (THE “PROCESS AGENT”), WITH AN OFFICE ON THE DATE HEREOF AT 80 STATE STREET, ALBANY, NEW YORK 12207, UNITED STATES OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT’S ABOVE ADDRESS, AND EACH PARTY HERETO HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH PARTY HERETO AGREES TO ENTER INTO ANY AGREEMENT RELATING TO SUCH APPOINTMENT THAT THE PROCESS AGENT MAY CUSTOMARILY REQUIRE AND TO PAY THE PROCESS AGENT’S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE, EACH PARTY HERETO ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS SPECIFIED PURSUANT TO SECTION 11.03. NOTHING IN THIS SECTION 11.14 SHALL AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF EITHER PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY HERETO OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.

 

61


Section 11.15 Waiver of Jury Trial . EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF EITHER OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

Section 11.16 Acknowledgment and Consent .

(a) The Transferor acknowledges that, from time to time prior to the Termination Date, the Issuer intends to pledge the Transferred Assets to the Indenture Trustee pursuant to the Indenture. The Transferor acknowledges and agrees to each such pledge by the Issuer and consents to the assignment by the Issuer of all or any portion of its right, title and interest in, to and under the Transferred Assets, this Agreement and the other Transaction Documents and all of the Issuer’s rights, remedies, powers and privileges and all claims of the Issuer against the Transferor under or with respect to this Agreement and the other Transaction Documents (whether arising pursuant to the terms of this Agreement or otherwise available at law or in equity), including without limitation (whether or not an Unmatured Servicer Default or a Servicer Default has occurred and is continuing) (i) the right of the Issuer at any time to enforce this Agreement against the Transferor and the obligations of the Transferor hereunder and (ii) the right at any time to give or withhold any and all consents, requests, notices, directions, approvals, demands, extensions or waivers under or with respect to this Agreement, any other Transaction Document or the obligations in respect of the Transferor thereunder, all of which rights, remedies, powers, privileges and claims may be exercised and/or enforced by the Issuer’s successors ands assigns to the same extent as the Issuer may do.

Section 11.17 No Partnership or Joint Venture . Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third Person to create the relationship of principal and agent or of partnership or of joint venture.

Section 11.18 Conversion . Notwithstanding any covenants in this Agreement requiring Cartus, CFC or ARSC to maintain its “corporate existence”, such entity shall be allowed to effect a Conversion subject to the conditions that:

(a)(x) the Person formed by such Conversion (any such Person, the “Surviving Entity”) is an entity organized and existing under the laws of the United States of America or any State thereof, (y) such Surviving Entity expressly assumes, by an agreement in form and substance satisfactory to the applicable transferee and its assignees, performance of every covenant and obligation of such Person under the Transaction Documents to which such Person is a party and (z) such Surviving Entity delivers to the other parties hereto an opinion of counsel that such Surviving Entity is duly organized and validly existing under the laws of its

 

62


organization, has duly executed and delivered such supplemental agreement, and such supplemental agreement is a valid and binding obligation of such Surviving Entity, enforceable against such Surviving Entity in accordance with its terms (subject to customary exceptions relating to bankruptcy and equitable principles) and covering such other matters as the parties hereto may reasonably request;

(b) all actions necessary to maintain the perfection of the security interests or ownership interests created by such Person under the Transaction Documents to which such Person is a party in connection with such Conversion shall have been taken, as evidenced by an opinion of counsel reasonably satisfactory to the parties hereto;

(c) so long as such Person is the Servicer, no Servicer Default or Unmatured Servicer Default is then occurring or would result from such Conversion;

(d) in the case of a Conversion of CFC or ARSC, (x) the organizational documents of any Surviving Entity with respect to CFC or ARSC shall contain limitations on its business activities and requirements for independent directors or managers substantially equivalent to those set forth in its current organizational documents, and (y) Orrick Herrington & Sutcliffe shall have delivered an opinion of counsel reasonably satisfactory to the other parties hereto that such Conversion will not, in and of itself, alter the conclusions set forth in its opinions previously issued in connection with the Transaction Documents with respect to true sale matters, substantive consolidation matters and bankruptcy issues relating to “home sale proceeds” (to the extent such opinions relate to such Person); and

(e) each party hereto shall have received such other documents as such party may reasonably request.

In connection with any such Conversion and the resulting change in name of such entity, Cartus, CFC and/or ARSC, as applicable, shall be required to comply with the name change covenants in the Transaction Documents, except that to the extent 30 days prior written notice of the name change is required, such notice period shall be reduced to five Business Days.

From and after any such Conversion effected in compliance with the above conditions, (a) all references in the Transaction Documents to any Person which has altered its corporate structure to become a limited liability company shall be deemed to be references to the Surviving Entity as successor to such Person, (b) all representations, warranties and covenants in the Transaction Documents which state that any of Cartus, CFC or ARSC is or is required to be a corporation shall be deemed to permit and require the Surviving Entity to be a limited liability company, (c) all references to such Person’s certificate of incorporation, other organizational documents, capital stock, corporate action or other matters relating to its corporate form will be deemed to be references to the organizational documents and analogous matters relating to limited liability companies, (d) all references to such Person’s directors or independent directors will be deemed to be references to the Surviving Entity’s directors, independent directors, managers or independent managers, as the case may be and (e) no representation, warranty or covenant in any Transaction Document shall be deemed to be breached or violated solely as a result of the fact that the Surviving Entity in any Conversion may be disregarded as a separate entity for state, local or federal income tax purposes.

 

63


Section 11.19 Inclusion of Receivables Assigned from Kenosia Funding LLC and Cartus Relocation Corporation . The parties hereto acknowledge and agree that the definition of “Seller Receivables” in the Receivables Purchase Agreement may include certain Receivables (the “Acquired Receivables’) which were neither sold by Cartus to CFC under the Purchase Agreement nor originated by CFC. The parties hereto acknowledge and agree that, for all purposes of the Affected Documents, (i) the Acquired Receivables shall be considered to be CFC Receivables originated by CFC, and shall be deemed to be included in the ARSC Purchased Assets transferred to the Issuer and (ii), notwithstanding anything to the contrary in the Affected Documents, CFC shall be allowed to enter into an assignment agreement with each of Cartus, Kenosia and CRC, the form of which has been approved in writing by the Majority Investors, and to consummate the transfer of the Acquired Receivables along with the Related Property relating to such Acquired Receivables (collectively, the “Acquired Assets”) on the terms and conditions set forth therein. Such conditions shall include evidence of compliance with the Federal Assignment of Claims Act and confirmation from the Rating Agencies that the commercial paper ratings of the Conduit Purchasers under the Note Purchase Agreement will not be reduced or withdrawn by reason of such transaction. The parties hereto further acknowledge and agree that, so long as such Acquired Receivables satisfy all other criteria set forth in the definition of “Eligible Receivable”, such Acquired Receivables shall constitute Eligible Receivables within the meaning of the Receivables Purchase Agreement, the Transfer and Servicing Agreement and the Indenture notwithstanding the fact that such Acquired Receivables were neither sold to CFC under the Purchase Agreement nor otherwise originated by CFC.

[END OF ARTICLE XI]

 

64


IN WITNESS WHEREOF, the Transferor, Cartus, CFC, the Servicer, the Indenture Trustee and the Issuer have caused this Transfer and Servicing Agreement to be duly executed by their respective officers as of the day and year first above written.

 

APPLE RIDGE SERVICES CORPORATION,
as Transferor,

by    
  Name:
  Title:

CARTUS CORPORATION,
as originator and Servicer,

by    
  Name:
  Title:

CARTUS FINANCIAL CORPORATION,
as originator,

by    
  Name:
  Title:

APPLE RIDGE FUNDING LLC,
as transferee,

by    
  Name:
  Title:

[Signature page to Transfer and Servicing Agreement]


THE BANK OF NEW YORK,
as Indenture Trustee,

by    
  Name:
  Title:

[Signature page to Transfer and Servicing Agreement]


SCHEDULE 2.02(m)

to

TRANSFER AND SERVICING AGREEMENT

Dated as of April 25, 2000

Principal Place of Business and

Chief Executive Office of the Transferor

Apple Ridge Services Corporation

40 Apple Ridge Road, Suite 4C45

Danbury, CT 06810

Fax: 203-205-1335

List of Offices Where

the Servicer Keeps Records

Cartus Corporation

40 Apple Ridge Road

Danbury, CT 06810

Cartus Corporation

8081 Royal Ridge Parkway

Suite 200

Irving, TX 75063

Cartus Corporation

27271 Las Ramblas

Mission Viejo, CA 92691

 

S-2.02(m)-1


SCHEDULE 2.02(o)

to

TRANSFER AND SERVICING AGREEMENT

Dated as of April 25, 2000

List of Legal Names

None.

 

S-2.02(o)-1


SCHEDULE 3.04(l)

to

TRANSFER AND SERVICING AGREEMENT

Dated as of April 25, 2000

List of Lockbox Banks

The Bank of New York

Attn.: Suzanne Keith

Corporate Trust-Structured Finance Services

The Bank of New York

101 Barclay Street, 4W

New York, NY 10286

Demand Deposit Account Number and Associated Lockbox Numbers

DDA No.: 52-69938                    Lockbox Nos.: 93358/73049

Mellon Bank, N.A.

Document Control Manager

Three Mellon Bank Center

Room 3119

Pittsburgh, PA 15259

Demand Deposit Account Number and Associated Lockbox Number

 

1.    DDA No.: *CONFIDENTIAL    Lockbox No.: *CONFIDENTIAL
2.    DDA No.: *CONFIDENTIAL    Lockbox No.: *CONFIDENTIAL

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

S-3.04(1)-1


EXHIBIT A

to

TRANSFER AND SERVICING AGREEMENT

Dated as of April 25, 2000

FORM OF ANNUAL SERVICER’S CERTIFICATE

(To be delivered on or before April 30 of

each calendar year beginning with April 30, 2001

pursuant to Section 3.09 of the Transfer and

Servicing Agreement referred to below)

CARTUS CORPORATION

The undersigned, a duly authorized representative of Cartus Corporation, as Servicer (“ Cartus ”), pursuant to the Transfer and Servicing Agreement dated as of April 25, 2000 (as amended and supplemented, the “ Agreement ”), by and between Apple Ridge Services Corporation as Transferor, Cartus as originator and Servicer, Cartus Financial Corporation as originator, Apple Ridge Funding, LLC as transferee, and Bank One, National Association, as Indenture Trustee does, hereby certify that:

1. Cartus is, as of the date hereof, the Servicer under the Agreement.

2. The undersigned is a Servicing Officer who is duly authorized pursuant to the Agreement to execute and deliver this Certificate to the Issuer.

3. A review of the activities of the Servicer during the year ended December 31,              , and of its performance under the Agreement was conducted under my supervision.

4. Based on such review, the Servicer has, or has caused to be, to the best of my knowledge, performed its obligations under the Agreement in all material respects throughout such year and no default in the performance of such obligations has occurred or is continuing except as set forth in paragraph 5 below.

5. The following is a description of each default in the performance of the Servicer’s obligations under the provisions of the Agreement known to me to have been made by the Servicer during the year ended December 31,              which sets forth in detail (i) the nature of each such default, (ii) the action taken by the Servicer, if any, to remedy each such default and (iii) the current status of each such default: [If applicable, insert “None.”]

Capitalized terms used in this Certificate have their respective meanings as set forth in the Agreement.

 

E-A-1


IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this      day of                      , 20          .

 

CARTUS CORPORATION,

as Servicer,

By    
  Name:
  Title:

 

E-A-2


EXHIBIT B

to

TRANSFER AND SERVICING AGREEMENT

Dated as of April 25, 2000

FORMS OF LOCKBOX AGREEMENTS

 

E-B-1


EXHIBIT C

SERVICING OFFICERS

Eric Barnes

Anthony Hull

Michael Muller

Paula Wiltshire

 

-i-


Exhibit A-4


CONFORMED COPY

AS AMENDED BY:

 

 

1. Omnibus Amendment, Agreement and Consent dated December 20, 2004.

 

2. Second Omnibus Amendment dated January 31, 2005

 

3. Amendment, Agreement and Consent dated January 30, 2006

 

4. Third Omnibus Amendment, Agreement and Consent dated May 12, 2006

 

5. Fourth Omnibus Amendment dated November 29, 2006

 

6. Fifth Omnibus Amendment dated April 10, 2007

 

 

 

MASTER INDENTURE

 

 

APPLE RIDGE FUNDING LLC

as Issuer,

THE BANK OF NEW YORK

as Indenture Trustee,

and

THE BANK OF NEW YORK

as Paying Agent, Authentication Agent and

Transfer Agent and Registrar

MASTER INDENTURE

Dated as of April 25, 2000

 

 

 


ARTICLE I   
DEFINITIONS   
Section 1.01.    Definitions    2
Section 1.02.    Other Definitional Provisions    15
ARTICLE II   
THE NOTES   
Section 2.01.    Form Generally    16
Section 2.02.    Denominations    16
Section 2.03.    Execution, Authentication and Delivery    16
Section 2.04.    Authentication Agent    17
Section 2.05.    Registration of and Limitations on Transfer and Exchange of Notes    18
Section 2.06.    Mutilated, Destroyed, Lost or Stolen Notes    20
Section 2.07.    Persons Deemed Owners    20
Section 2.08.    Paying Agent    21
Section 2.09.    Cancellation    22
Section 2.10.    New Issuances    22
Section 2.11.    Book-Entry Notes    24
Section 2.12.    Notices to Clearing Agency or Foreign Clearing Agency    25
Section 2.13.    Definitive Notes    25
Section 2.14.    Global Note; Euro-Note Exchange Date    26
Section 2.15.    Representations and Covenants of Paying Agent, Authentication Agent and Transfer Agent and Registrar    26
ARTICLE III   
REPRESENTATIONS AND COVENANTS OF THE ISSUER   
Section 3.01.    Representations and Warranties of the Issuer    26
Section 3.02.    Affirmative Covenants of the Issuer    29
Section 3.03.    Negative Covenants of the Issuer.. From the Effective Date until the termination of this Indenture, the Issuer hereby agrees that it shall not:    31
Section 3.04.    Protection of Pledged Assets    33
Section 3.05.    Opinions as to Pledged Assets    33


Section 3.06.    Obligations Regarding Servicing of Receivables    34
Section 3.07.    Separate Corporate Existence of the Issuer    35
ARTICLE IV   
SATISFACTION AND DISCHARGE   
Section 4.01.    Satisfaction and Discharge of this Indenture    36
Section 4.02.    Application of Trust Money    37
ARTICLE V   
EVENTS OF DEFAULT AND REMEDIES   
Section 5.01.    Events of Default    37
Section 5.02.    Acceleration of Maturity; Rescission and Annulment    38
Section 5.03.    Collection of Indebtedness and Suits for Enforcement by the Indenture Trustee    39
Section 5.04.    Remedies; Priorities    41
Section 5.05.    Sale of Assets    42
Section 5.06.    Limitations on Suits    43
Section 5.07.    Unconditional Right of Noteholders to Receive Principal and Interest    44
Section 5.08.    Restoration of Rights and Remedies    44
Section 5.09.    Rights and Remedies Cumulative    44
Section 5.10.    Delay or Omission Not a Waiver    44
Section 5.11.    Control by Noteholders    44
Section 5.12.    Waiver of Past Defaults    45
Section 5.13.    Undertaking for Costs    46
Section 5.14.    Waiver of Stay or Extension Laws    46
Section 5.15.    Action on Notes    46
ARTICLE VI   
THE INDENTURE TRUSTEE   
Section 6.01.    Duties of the Indenture Trustee    47
Section 6.02.    Notice of Event of Default    48
Section 6.03.    Rights of Indenture Trustee    49
Section 6.04.    Not Responsible for Recitals or Issuance of Notes    50

 

ii


Section 6.05.    May Hold Notes    50
Section 6.06.    Money Held in Trust    50
Section 6.07.    Compensation, Reimbursement and Indemnification    50
Section 6.08.    Replacement of Indenture Trustee    51
Section 6.09.    Successor Indenture Trustee by Merger    52
Section 6.10.    Appointment of Co-Indenture Trustee or Separate Indenture Trustee    52
Section 6.11.    Eligibility; Disqualification    53
Section 6.12.    Representations and Covenants of the Indenture Trustee    54
Section 6.13.    Custody of Pledged Assets and Other Collateral    54
ARTICLE VII   
NOTEHOLDERS’ LIST AND REPORTS BY INDENTURE TRUSTEE   
Section 7.01.    Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders    55
Section 7.02.    Preservation of Information    55
ARTICLE VIII   
ALLOCATION AND APPLICATION OF POOL COLLECTIONS   
Section 8.01.    Collection of Money    55
Section 8.02.    Rights of Noteholders    56
Section 8.03.    Establishment of Accounts    56
Section 8.04.    Pool Collections and Allocations    57
Section 8.05.    Release of Pledged Assets    58
Section 8.06.    Officer’s Certificate    58
Section 8.07.    Money for Note Payments to Be Held in Trust    58
ARTICLE IX   
DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS   
ARTICLE X   
SUPPLEMENTAL INDENTURES   
Section 10.01.    Supplemental Indentures Without Consent of Noteholders    59
Section 10.02.    Supplemental Indentures with Consent of Noteholders    61
Section 10.03.    Execution of Supplemental Indentures    62

 

iii


Section 10.04.    Effect of Supplemental Indenture    63
Section 10.05.    Reference in Notes to Supplemental Indentures    63
ARTICLE XI   
DEFEASANCE   
Section 11.01.    Defeasance    63
ARTICLE XII   
MISCELLANEOUS   
Section 12.01.    Compliance Certificates and Opinions, etc.    65
Section 12.02.    Form of Documents Delivered to Indenture Trustee    66
Section 12.03.    Acts of Noteholders    67
Section 12.04.    Notices to Issuer, Indenture Trustee, Paying Agent, Authentication Agent and Transfer Agent and Registrar    68
Section 12.05.    Notices to Noteholders; Waiver    68
Section 12.06.    Alternate Payment and Notice Provisions    69
Section 12.07.    Effect of Headings and Table of Contents    69
Section 12.08.    Successors and Assigns    69
Section 12.09.    Separability    69
Section 12.10.    Benefits of Indenture    69
Section 12.11.    Legal Holidays    70
Section 12.12.    GOVERNING LAW    70
Section 12.13.    Counterparts    70
Section 12.14.    No Petition    70
Section 12.15.    Provision of Information to Rating Agencies    70
Section 12.16.    Conversion    71
Section 12.17.    Inclusion of Receivables Assigned from Kenosia Funding LLC and Cartus Relocation Corporation    72

 

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This MASTER INDENTURE, dated as of April 25, 2000 (as amended, modified or supplemented from time to time, the “ Indenture ”), by and between APPLE RIDGE FUNDING LLC, a limited liability company organized under the laws of the State of Delaware (together with its permitted successors and assigns, the “ Issuer ”), THE BANK OF NEW YORK, as successor to JPMorgan Chase Bank, N.A., as indenture trustee (herein, together with its successors in the trusts hereunder, the “ Indenture Trustee ”), and THE BANK OF NEW YORK, a New York state banking corporation, as paying agent, authentication agent and transfer agent and registrar (together with its permitted successors and assigns, “ BNY ”). This Indenture may be supplemented at any time and from time to time by an indenture supplement in accordance with Article X hereof (each, an “ Indenture Supplement ”). If a conflict exists between the terms and provisions of this Indenture and any Indenture Supplement, the terms and provisions of the Indenture Supplement shall be controlling with respect to the related Series.

PRELIMINARY STATEMENT

The Issuer has duly authorized the execution and delivery of this Indenture to provide for issuances from time to time of its asset backed notes as provided in this Indenture. All covenants and agreements made by the Issuer herein are for the benefit and security of the Noteholders. The Issuer is entering into this Indenture, and the Indenture Trustee is accepting the trusts created hereby, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

Simultaneously with the delivery of this Indenture the Issuer is entering into the Transfer and Servicing Agreement (the “ Transfer and Servicing Agreement ”) with Apple Ridge Service Corporation, a Delaware corporation, as transferor (the “ Transferor ”), Cartus Financial Corporation (“ CFC ”), a Delaware corporation, as an originator, and Cartus Corporation (“ Cartus ”), a Delaware corporation, as an originator and as servicer (in such capacity, the “ Servicer ”), pursuant to which (a) the Transferor will convey to the Issuer all of its right, title and interest in, to and under the Pledged Assets and (b) the Servicer will agree to service the Pledged Assets and make collections thereon on behalf of the Noteholders. The Pledged Assets were, and in the future will be, originated by either Cartus or Cartus Financial Corporation (each an “ Originator ”). The Pledged Assets originated by Cartus will be purchased by CFC pursuant to the Purchase Agreement. The Pledged Assets originated by CFC, together with those originated by Cartus and purchased by CFC, will be purchased by the Transferor pursuant to the Receivables Purchase Agreement.

Under the Transfer and Servicing Agreement, additional Pledged Assets from time to time will automatically be conveyed thereunder to the Issuer without any further action by either Originator or the Transferor.

GRANTING CLAUSE

The Issuer hereby Grants to the Indenture Trustee, for the benefit of the Holders of the Notes, all of the Issuer’s right, title and interest, whether now owned or hereafter acquired, in,


to and under all of the following: (i) all Receivables; (ii) all Related Property; (iii) all Pool Collections; (iv) the Collection Account (excluding any subaccount of the Collection Account established pursuant to an Indenture Supplement), the Distribution Account, and all money, instruments, investment property and other property credited to or deposited in such accounts; (v) the Performance Guaranty, the Transfer and Servicing Agreement, the Receivables Purchase Agreement and the Purchase Agreement; (vi) all accounts, money, chattel paper, investment property, instruments, documents, deposit accounts, certificates of deposit, letters of credit, advices of credit, general intangibles and goods consisting of, arising from or relating to any of the foregoing; (vii) all other property of the Issuer; and (viii) all proceeds of the foregoing (collectively, the “ Pledged Assets ”); provided, however , that (1) the Pledged Assets shall not include the following, and the following shall not be subject to the lien of this Indenture: (a) Liquidated Receivables, (b) any Receivable as to which Cartus or CFC has paid a Cartus Noncomplying Asset Adjustment or a CFC Noncomplying Asset Adjustment, as applicable, and all proceeds thereof, (c) any amounts paid to the Issuer pursuant to Section 8.04(d) and (d) all proceeds of clauses (a) through (c) of this proviso. Notwithstanding any other provision of this Indenture, the property described in the preceding proviso and the release thereof to the Issuer shall not be subject to the provisions of Section 8.05 or 12.01(b).

ARTICLE I

DEFINITIONS

Section 1.01. Definitions .

Whenever used in this Agreement, the following words and phrases shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

Act ” shall have the meaning specified in Section 12.03(a).

Adjusted Aggregate Receivable Balance ” shall mean, as of any date of determination, the excess of (a) the Aggregate Receivable Balance on such date over (b) the Aggregate Adjustment Amount on such date.

Affiliate ” shall mean, when used with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person. As used in this definition of Affiliate, the term “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a Person, whether through ownership of such Person’s voting securities, by contract or otherwise, and the terms “affiliated,” “controlling” and “controlled” have correlative meanings.

 

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Aggregate Adjustment Amount ” shall mean, as of any date of determination, an amount equal to the sum of (a) the Overconcentration Amount, (b) the Excess Longer Term Receivable Amount, (c) the Excess Special Homes Receivables Amount, (d) the amount, if any, by which the aggregate Unpaid Balance of all Eligible Receivables relating to Homes that have been owned by CFC which are more than 450 but less than 540 days exceeds 1.50% of the sum of the Aggregate Employer Balances of all Eligible Receivables (other than Defaulted Receivables) as of the last day of the Monthly Period immediately preceding the date of calculation plus (e) the amount by which (i) the aggregate Unpaid Balance of all Eligible Receivables relating to Homes that have been owned by CFC which are more than 365 but less than 540 days, less the amount calculated under clause (d) above, exceeds (ii) 5.00% of the sum of the Aggregate Employer Balances of all Eligible Receivables (other than Defaulted Receivables) as of the last day of the Monthly Period immediately preceding the date of calculation plus (f) the aggregate Unpaid Balance of all Eligible Receivables relating to Homes that have been owned by CFC more than 540 days as of the last day of the Monthly Period immediately preceding the date of calculation.

Aggregate Employer Balance ” shall mean, with respect to any Employer at any time, the aggregate Unpaid Balance of the Pool Receivables of such Employer, calculated in the following manner: the Unpaid Balance will be reduced (without duplication), by (a) in the case of any Receivables of such Employer, the amount of any funds received on account of or otherwise in connection therewith, excluding the amount of any Advance Payment made by such Employer with respect to such Receivables or any other obligations of such Employer, and the amount of Home Sale Proceeds received with respect to the related Home (to the extent that they have not previously been applied to reduce the Unpaid Balance of the related Receivable) and (b) in the case of any Receivables of such Employer (including without limitation any Self-Funding Obligor), the amount of any net gains on sales of Homes or other amounts (including without limitation rebates for referral fees, if any, and if allowed by law) that have not yet been remitted to such Employer. For the avoidance of doubt, the Aggregate Employer Balance with respect to any Employer shall include the aggregate Unpaid Balance of any Advance Billing Receivables of such Employer.

Aggregate Receivable Balance ” shall mean, as of any date of determination, the sum of the Aggregate Employer Balances with respect to each Employer under the Pool Relocation Agreements, minus the aggregate Unpaid Balance of all Pool Receivables that are not Eligible Receivables, minus the aggregate Unpaid Balance of all Defaulted Receivables in each case to only the extent such amounts have not already been subtracted in calculating the Aggregate Employer Balances, minus the aggregate dollar amount of Advance Payments made by each such Employer minus the aggregate Unpaid Balance of any Advance Billing Receivables of such Employer plus the amount, if any, (such amount, the “ Net Credit Balance ”) by which (x) the sum of (i) the outstanding Advance Payments received by any Employer with respect to Receivables or any other obligations of such Employer and (ii) the Unpaid Balance of any Advance Billing Receivables of such Employer exceeds (y) the Aggregate Employer Balance with respect to such Employer.

Aggregate Required Asset Amount ” shall mean, on any date of determination, the sum of the Required Asset Amounts with respect to each Series of Notes.

 

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Amortization Event ” with respect to each Series of Notes shall be specified in the related Indenture Supplement.

Amortization Period ” shall mean, with respect to any Series, a period following the Revolving Period during which Pool Collections are distributed to Noteholders, which shall be a controlled amortization period, a rapid amortization period or other amortization period, in each case as defined with respect to such Series in the related Indenture Supplement.

Applicable Series Enhancer ” means each Series Enhancer except to the extent otherwise provided in the relevant Indenture Supplement.

Asset Deficiency ” shall mean, on any date of determination, the amount, if any, by which the Aggregate Required Asset Amount as of such date exceeds the Adjusted Aggregate Receivable Balance as of such date.

Authentication Agent ” shall mean BNY and any successor thereto.

Authorized Officer ” shall mean:

(a) with respect to the Issuer, any officer of the Issuer who is authorized to act for the Issuer in matters relating to the Issuer and who is identified on the list of Authorized Officers (containing the specimen signature of each such Person) delivered by the Issuer to the Indenture Trustee on the initial Closing Date (as such list may be modified or supplemented from time to time thereafter); or

(b) with respect to the Servicer, any officer of the Servicer who is authorized to act for the Servicer in matters relating to the Servicer and who is identified on the list of Authorized Officers (containing the specimen signature of each such Person) delivered by the Servicer to the Indenture Trustee on the initial Closing Date (as such list may be modified or supplemented from time to time thereafter).

Beneficial Owner ” shall mean, with respect to a Book-Entry Note, the Person who is the owner of such Book-Entry Note, as reflected on the books of the Clearing Agency or Foreign Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency or Foreign Clearing Agency (directly as a Clearing Agency Participant or as an Indirect Participant, in accordance with the rules of such Clearing Agency or Foreign Clearing Agency).

BNY ” shall have the meaning set forth in the Preliminary Statement.

Book-Entry Notes ” shall mean beneficial interests in the Notes, ownership and transfers of which shall be made through book entries by a Clearing Agency or Foreign Clearing Agency as described in Section 2.11.

Clearstream Banking ” shall mean Clearstream Banking, société anonyme , a professional depository incorporated under the laws of Luxembourg, and its successors.

 

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Clearing Agency ” shall mean an organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended, and serving as clearing agency for a Series of Book-Entry Notes.

Clearing Agency Participant ” shall mean a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.

Closing Date ” shall mean, with respect to any Series, the closing date specified in the related Indenture Supplement.

Cartus ” shall have the meaning set forth in the preliminary statement to this Indenture.

CFC ” shall have the meaning set forth in the preliminary statements to this Indenture.

Code ” shall mean the Internal Revenue Code of 1986, as amended.

Commission ” shall mean the Securities and Exchange Commission and its successors in interest.

Corporate Trust Office ” shall mean the principal office of the Indenture Trustee at which at any particular time its corporate trust business shall be administered, which office on the date of the execution of this Agreement is located at The Bank of New York, Corporate Trust ABS-NY, 101 Barclay Street, 4W, New York, NY 10286, Attn: Greg Weachock or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders and the Issuer, or the principal corporate trust office of any successor Indenture Trustee (of which address any successor Indenture Trustee shall notify the Noteholders and the Issuer).

Date of Processing ” shall mean, with respect to any transaction, the date on which such transaction is first recorded on the Servicer’s computer master file maintained for the purpose of recording Pool Collections.

Default ” shall mean any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

Defeasance ” shall have the meaning specified in Section 11.01(a).

Defeased Series ” shall have the meaning specified in Section 11.01(a).

Definitive Notes ” shall mean Notes in definitive, fully registered form.

Deposit Date ” shall mean each day on which the Servicer deposits Pool Collections in the Collection Account in accordance with Section 3.02 of the Transfer and Servicing Agreement.

 

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Distribution Account ” shall have the meaning specified in Section 8.03(b).

Distribution Date ” shall mean, with respect to any Series, the date specified in the applicable Indenture Supplement.

Dollars ,” “ $ ” or “ U.S. $ ” shall mean United States dollars.

DTC ” shall mean The Depository Trust Company.

Eligible Receivable ” shall have the meaning specified in the Receivables Purchase Agreement.

Enhancement Agreement ” shall mean any agreement, instrument or document governing the terms of any Series Enhancement or pursuant to which any Series Enhancement is issued or outstanding.

Euroclear Operator ” shall mean Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System.

Event of Default ” shall have the meaning specified in Section 5.01.

Excess Longer Term Receivable Amount ” shall mean, as of any date of determination, an amount equal to the excess , if any, of (a) the aggregate Unpaid Balance of all Billed Receivables that are payable more than 60 days after the original invoice date of such Billed Receivable as of the last day of the Monthly Period immediately preceding the first day of the Interest Period in which such date occurs over (b) an amount equal to 40% of the aggregate Unpaid Balance of all Billed Receivables included in the Aggregate Receivable Balance as of such last day of such Monthly Period.

Excess Special Homes Receivable Amount ” shall mean, as of any date of determination, an amount equal to the excess , if any, of (a) the aggregate Unpaid Balance of all Eligible Receivables arising from Equity Payments or Mortgage Payoffs relating to any Home that qualifies as a “Special Home Transaction” (as such term is defined in the applicable Home Sale Service Supplement), reduced by any Advance Payments identified as relating to such Homes, as of the close of business on the last day of the Monthly Period immediately preceding the first day of the Interest Period in which such date occurs over (b) an amount equal to 10% of the Aggregate Receivable Balance as of such last day of such Monthly Period.

Foreign Clearing Agency ” shall mean Clearstream Banking and the Euroclear Operator.

Global Note ” shall have the meaning specified in Section 2.14.

Grant ” shall mean to mortgage, pledge, bargain, warrant, alienate, remise, release, convey, assign, transfer, create and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to this Indenture. A Grant of the Pledged Assets or of any other agreement or instrument shall include all rights, powers and

 

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options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of the Pledged Assets and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto.

Indenture ” shall have the meaning set forth in the introductory paragraph to this Indenture.

Indenture Supplement ” shall have the meaning set forth in the introductory paragraph to this Indenture.

Indenture Trustee ” shall have the meaning set forth in the introductory paragraph of this Indenture.

Independent ” shall mean, when used with respect to any specified Person, that the Person (a) is in fact independent of the Issuer, any other obligor upon the Notes, the Transferor, CFC, Cartus and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the outstanding equity or debt securities of the Issuer, any such other obligor, the Transferor, CFC, Cartus or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, any such other obligor, the Transferor, CFC, Cartus or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

Independent Certificate ” shall mean a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 12.01, made by an Independent appraiser or other expert, and such opinion or certificate shall state that the signer has read the definition of “Independent” in this Indenture and that the signer is Independent within the meaning thereof.

Independent Director ” shall mean an individual who is an Independent Director as defined in the Limited Liability Company Agreement of the Issuer as in effect on the date of this Indenture.

Ineligible Receivable ” shall mean any Receivable which is not an Eligible Receivable.

Indirect Participant ” shall mean Persons such as securities brokers and dealers, banks and trust companies that clear or maintain a custodial relationship with a participant of DTC, either directly or indirectly.

 

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Insolvency Event ” shall mean, for any Person:

(a) that such Person shall admit in writing its inability, or fail generally, to pay its debts as they become due; or

(b)(i) a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of such Person in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person or for any substantial part of its property, or for the winding-up or liquidation of its affairs and (ii) either such proceedings shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceedings shall occur, provided that the grace period allowed for by this clause (ii) shall not apply to any proceeding instituted by an Affiliate of such Person in furtherance of any of the actions set forth in the preceding clause (i); or

(c) the commencement by such Person of a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or such Person’s consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person or for any substantial part of its property, or any general assignment for the benefit of creditors; or

(d) if such Person is a corporation or a limited liability company, such Person or any Subsidiary of such Person shall take any corporate or limited liability company action in furtherance of any of the actions set forth in the preceding clause (a), (b) or (c).

Interest Period ” with respect to any Series, shall have the meaning set forth in the applicable Indenture Supplement.

Investment Company Act ” shall mean the Investment Company Act of 1940, as amended.

Issuer ” shall have the meaning set forth in the introductory paragraph to this Indenture.

Issuer Order ” shall mean a written order or request signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Indenture Trustee or BNY, as the case may be.

Liquidated Receivable ” shall mean any Receivable the Unpaid Balance of which has been reduced to zero, whether by payment of a Cartus Noncomplying Asset Adjustment or a CFC Noncomplying Asset Adjustment or otherwise.

Majority Investors ” shall mean Noteholders holding Notes evidencing more than 50% of the Outstanding Amount.

 

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Material Adverse Effect ” shall mean, with respect to any event or circumstance, a material adverse effect on (a) the business, financial condition, operations or assets of the Issuer or any Transaction Party, (b) the ability of the Issuer or any Transaction Party to perform its obligations under any Transaction Document to which it is a party, (c) the validity or enforceability of, or collectibility of, amounts payable by the Issuer or any Transaction Party under any Transaction Document to which it is a party, (d) the status, existence, perfection or priority of the interest of the Issuer or any assignee thereof in the Pledged Assets, taken as a whole, in each case free and clear of any Lien (other than a Permitted Lien) or (e) the validity, enforceability or collectibility of all or any substantial portion of the Pledged Assets

Modified Receivable Balance ” shall mean, for any Employer as of any date of determination, an amount equal to the sum of (a) the product of (i) 50% multiplied by (ii) the sum of the aggregate Unpaid Balance of all Eligible Receivables of such Employer included in the Aggregate Employer Balance arising from (A) Equity Payments plus (B) Mortgage Payoffs plus (C) Mortgage Payments that are owing by such Employer plus (b) the aggregate Unpaid Balance of each other Eligible Receivable of such Employer included in the Aggregate Employer Balance, reduced (without duplication) by any Advance Payments and by the Unpaid Balance of any Advance Billing Receivables of such Employer.

Moody’s ” shall mean Moody’s Investors Service.

Monthly Period ” shall mean (i) a calendar month or (ii) with respect to the initial Monthly Period, the period commencing on the Closing Date with respect to the initial Series of Notes and ending on May 31, 2000.

New Issuance ” shall have the meaning specified in Section 2.10.

Note Interest Rate ” shall mean, as of any date of determination and with respect to any Series, the rate at which interest accrues on the Notes of such Series (or formula on the basis of which such rate shall be determined) specified therefor in the related Indenture Supplement.

Note Register ” shall have the meaning specified in Section 2.05.

Noteholder ” or “ Holder ” shall mean the Person in whose name a Note is registered on the Note Register or such other Person deemed to be a “Noteholder” or “Holder” in any related Indenture Supplement.

Notes ” shall mean all Series of Notes issued by the Issuer pursuant to this Indenture and the applicable Indenture Supplement.

NYUCC ” shall have the meaning specified in Section 2.05.

Obligor Limit shall mean, as of any date of determination, (a) with respect to each Obligor having an unsecured long-term debt rating (or equivalent shadow rating) of “A+” or better from S&P and “A1” or better from Moody’s, 6% of the Aggregate Receivable Balance, (b)

 

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with respect to each Obligor having an unsecured long-term debt rating (or equivalent shadow rating) of less than “A+” but “BBB” or better from S&P and less than “A1” but “Baa2” or better from Moody’s, 4% of the Aggregate Receivable Balance, (c) having an unsecured long-term debt rating (or equivalent shadow rating) of “BBB-” from S&P or of “Baa3” from Moody’s, 2% of the Aggregate Receivable Balance and (d) not having an unsecured long-term debt rating (or equivalent) from S&P or Moody’s or having an unsecured long-term debt rating (or equivalent shadow rating) of less than “BBB-” from S&P or of less than “Baa3” from Moody’s, 1% of the Aggregate Receivable Balance; provided , that, for purposes of calculating the Obligor Limits, an Obligor which has a long-term debt rating from only one of S&P and Moody’s will be treated as if it was rated by both agencies at one level below its actual rating; and provided , further that, to the extent set forth in any Supplement, the Noteholders of such Series may in their discretion approve any higher Obligor Limit for any Obligor under such terms and conditions which are acceptable to all Noteholders of such Series; and provided , further that as long as Lockheed Martin has an unsecured long-term debt rating (or equivalent shadow rating) of “BBB” or better from S&P and “Baa2” or better from Moody’s, its Obligor Limit shall be 6% of the Aggregate Receivable Balance; and provided , further , that notwithstanding the foregoing, with respect to Accenture Ltd., so long as Accenture Ltd. has (i) an unsecured long-term debt rating (or equivalent shadow rating) of “A+” or better from S&P and (ii) either no unsecured long-term rating from Moody’s or an unsecured long-term rating of “A1” or better from Moody’s, Accenture Ltd. shall have an Obligor Limit of 6% of the Aggregate Receivable Balance. For purposes of calculating the Obligor Limits, no Obligor shall be deemed to have a debt rating based solely on the rating of any Affiliate unless that Affiliate is contractually obligated on the related Receivable of such Obligor, in which event that Obligor and such Affiliate shall be treated as a single Obligor. If an Obligor’s unsecured long–term debt rating (or equivalent shadow rating) results in two different Obligor Limits (because of differences in the long-term unsecured debt ratings assigned by each of the Rating Agencies), the Obligor Limit for such Obligor will be the lower of the two different Obligor Limits.

Officer’s Certificate ” shall mean, unless otherwise specified in this Agreement, a certificate delivered to the Indenture Trustee or BNY, as the case may be, signed by any Authorized Officer of the Issuer, the Transferor, CFC or the Servicer, as applicable, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 12.01.

Opinion of Counsel ” shall mean a written opinion of counsel, who may be counsel for, or an employee of, the Person providing the opinion and who shall be reasonably acceptable to the Indenture Trustee and each Applicable Series Enhancer, provided that a Tax Opinion shall be an opinion of nationally recognized tax counsel.

Originator ” shall have the meaning set forth in the preliminary statement to this Indenture.

 

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Outstanding ” shall mean, with respect to the Notes as of any date of determination, all Notes authenticated and delivered under this Indenture except:

(i) Notes previously cancelled by the Transfer Agent and Registrar or delivered to the Transfer Agent and Registrar for cancellation;

(ii) Notes or portions thereof the payment for which money in the necessary amount has been previously deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Notes ( provided, however , that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to the applicable Indenture Supplement or provision therefor, satisfactory to the Indenture Trustee, has been made); and

(iii) Notes in exchange for or in lieu of other Notes that have been authenticated and delivered pursuant to this Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held by a protected purchaser;

provided that in determining whether the Holders of the requisite Outstanding Amount of the Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Issuer, any other obligor on the Notes, the Transferor, the Servicer or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding (except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes that a Responsible Officer of the Indenture Trustee actually knows to be so owned shall be so disregarded). Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Issuer, any other obligor on the Notes, the Transferor, CFC, the Servicer or any Affiliate of any of the foregoing Persons. In making any such determination, the Indenture Trustee may rely on the representations of the pledgee and shall not be required to undertake any independent investigation.

Outstanding Amount ” shall mean the aggregate Series Outstanding Amount of all Series of Notes Outstanding at the date of determination.

Overconcentration Amount ” shall mean, as of any date of determination, an amount equal to the sum of: (a) the greater of: (i) the excess, if any, of (A) the aggregate Modified Receivable Balances owing by (or, if less, the Obligor Limits of) the Obligors (excluding Eligible Governmental Obligors) who are the Obligors in respect of the five largest aggregate Modified Receivable Balances over (B) an amount equal to 22.5% of the Aggregate Receivable Balance, and (ii) the excess, if any, of (A) the aggregate Modified Receivable Balances owing by (or, if less, the Obligor Limits of) the Obligors (excluding Eligible Governmental Obligors) who are the Obligors in respect of the ten largest aggregate Modified Receivable Balances over (B) an amount equal to 30% of the Aggregate Receivable Balance; (b) the sum of the aggregate amount with respect to each Obligor (excluding Eligible Governmental Obligors) of the excess, if any, of (i) the aggregate Modified Receivable Balance owing by such Obligor over (ii) the Obligor Limit with respect to such Obligor and (c) the amount by which the aggregate Modified Receivable Balances owing by all Eligible Governmental Obligors exceeds 10% of the Aggregate Receivable Balance.

 

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Paying Agent ” shall mean BNY and any successor thereto.

Person ” shall mean any person or entity, including any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, governmental entity or other entity of any nature.

Pledged Assets ” shall have the meaning set forth in the granting clause of this Indenture.

Pool Collections ” shall mean CFC Collections and Cartus Collections.

Principal Terms ” shall mean, with respect to any Series, (a) the name or designation; (b) the initial principal amount (or method for calculating such amount) and the Series Outstanding Amount; (c) the Note Interest Rate for the Notes of such Series (or method for the determination thereof); (d) the payment date or dates and the date or dates from which interest shall accrue; (e) the method for allocating Pool Collections to Noteholders and the method by which the principal amount for the Notes of such Series shall amortize; (f) the designation of any Series Accounts and the terms governing the operation of any such Series Accounts; (g) the portion of the Servicing Fee allocable to such Series; (h) the Series Enhancer and terms of any of Series Enhancement, if applicable; (i) the terms on which the Notes of such Series may be exchanged for Notes of another Series, repurchased or redeemed by the Issuer or remarketed to other investors; (j) the maturity date; (k) the extent to which the Notes of such Series will be issuable in temporary or permanent global form (and, in such case, the depositary for such global note or notes, the terms and conditions, if any, upon which such global note may be exchanged, in whole or in part, for Definitive Notes, and the manner in which any interest payable on a temporary or global note will be paid); (l) the priority of such Series with respect to any other Series; (m) the Distribution Date; and (n) any other terms of such Series.

Proceeding ” shall mean any suit in equity, action at law or other judicial or administrative proceeding.

Purchase Agreement ” shall mean the purchase agreement dated as of April 25, 2000, between Cartus and CFC, as amended from time to time.

Qualified Account ” shall mean either (a) a segregated account with a Qualified Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), and acting as a trustee for funds deposited in such account, so long as any of the unsecured, unguaranteed senior debt securities of such depository institution shall have a credit rating from each Rating Agency in one of its generic credit rating categories that signifies investment grade.

Qualified Institution ” shall mean (a) a depository institution, which may include the Indenture Trustee (if it is a Paying Agent hereunder), organized under the laws of the United States of America or any one of the States thereof or the District of Columbia, the deposits in which are insured by the Federal Deposit Insurance Corporation and that at all times has a short-term unsecured debt rating of at least A-1 by Standard & Poor’s and P-1 by Moody’s or (b) a depository institution acceptable to each Rating Agency.

 

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Rating Agency ” shall mean, with respect to any outstanding Series, each rating agency selected by the Issuer to rate the Notes of such Series, as specified in the applicable Indenture Supplement.

Rating Agency Condition ” shall mean, with respect to any action, that each Rating Agency shall have notified the Issuer, the Servicer, any Series Enhancer and the Indenture Trustee in writing that such action will not result in a reduction or withdrawal of the then existing rating of any outstanding Series with respect to which it is a Rating Agency (both with and without giving effect to any letter of credit , surety bond or insurance policy issued by any Series Enhancer) or, with respect to any outstanding Series not rated by any Rating Agency, such written consent as is specified in the Indenture Supplement for such Series.

Receivables Purchase Agreement ” shall mean the receivables purchase agreement dated as of April 25, 2000, between CFC and the Transferor, as amended from time to time.

Record Date ” shall mean, with respect to any Distribution Date, the last Business Day of the preceding Monthly Period, unless otherwise specified for a Series in the related Indenture Supplement.

Redemption Date ” shall mean, with respect to any Series, the date the Notes of any Series are redeemed in accordance with the related Indenture Supplement.

Required Asset Amount ” shall mean, with respect to any Series of Notes, the required asset amount for such Series of Notes as specified in the related Indenture Supplement.

Revolving Period ” shall have, with respect to each Series, the meaning specified in the related Indenture Supplement.

S&P ” shall mean Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

Series ” shall mean any series of Notes issued pursuant to this Indenture and the related Indenture Supplement.

Series Account ” shall mean any deposit, trust, securities, escrow or similar account maintained for the benefit of the Noteholders of any Series, as specified in any Indenture Supplement.

Series Enhancement ” shall mean the rights and benefits provided to the Issuer or the Noteholders of any Series pursuant to any letter of credit, surety bond, cash collateral account, collateral invested amount, insurance policy, spread account, reserve account, guaranteed rate agreement, maturity liquidity facility, tax protection agreement, interest rate swap agreement, interest rate cap agreement or other similar arrangement. The subordination of any Series to another Series also shall be deemed to be a Series Enhancement.

 

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Series Enhancer ” shall mean the Person or Persons providing any Series Enhancement, other than (except to the extent otherwise provided with respect to any Series in the Indenture Supplement for such Series) the Noteholders of any Series that is subordinated to another Series.

Series Issuance Date ” shall mean, with respect to any Series, the date on which the Notes of such Series are to be originally issued in accordance with Section 2.10 and the related Indenture Supplement.

Series Outstanding Amount ” shall mean, with respect to any Series of Notes, the amount specified as the “Series Outstanding Amount” in the related Indenture Supplement.

Series Percentage ” shall mean, with respect to any Series of Notes and for any date, the percentage specified in the related Indenture Supplement.

Servicer ” shall have the meaning set forth in the preliminary statement to this Indenture.

Tax Opinion ” shall mean, with respect to any action, an Opinion of Counsel to the effect that, for federal income tax purposes, (a) such action will not adversely affect the tax characterization as debt of the Notes of any outstanding Series that were characterized as debt at the time of their issuance, (b) such action will not cause or constitute an event in which gain or loss would be recognized by any Noteholder and (c) in connection with an issuance of Notes pursuant to an Indenture Supplement, except as is otherwise provided in the Indenture Supplement, the Notes of the Series established pursuant to such Indenture Supplement will be properly characterized as debt.

Transaction Documents ” shall mean, with respect to any Series of Notes, the Purchase Agreement, the Receivables Purchase Agreement, the Transfer and Servicing Agreement, the Performance Guaranty, this Indenture, the related Indenture Supplement and any Enhancement Agreement.

Transfer Agent and Registrar ” shall mean BNY and any successor thereto.

Transfer and Servicing Agreement ” shall mean the Transfer and Servicing Agreement, dated as of April 25, 2000, among the Transferor, the Servicer, CFC and the Issuer, as the same may be amended, supplemented or otherwise modified from time to time.

Transferor ” shall have the meaning set forth in the preliminary statement to this Indenture.

Trustee Officer ” shall mean, with respect to the Indenture Trustee, any officer assigned to the Corporate Trust Office, including any officer of the Indenture Trustee having

 

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direct responsibility for the administration of the applicable Transaction Documents, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

Unmatured Amortization Event ” shall mean any occurrence or event which, with the giving of notice, the passage of time or both, would constitute an Amortization Event.

Section 1.02. Other Definitional Provisions .

(a) With respect to any Series, all terms used herein and not otherwise defined herein shall have meanings ascribed to them in the Purchase Agreement, the Receivables Purchase Agreement or the Transfer and Servicing Agreement.

(b) All terms defined in this Indenture shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(c) As used in this Indenture and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Indenture or in any such certificate or other document, and accounting terms partly defined in this Indenture or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles and as in effect on the date of this Indenture. To the extent that the definitions of accounting terms in this Indenture or in any such certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles in the United States, the definitions contained in this Indenture or in any such certificate or other document shall control.

(d) Any reference to each Rating Agency shall only apply to any specific rating agency if such rating agency is then rating any outstanding Series.

(e) Unless otherwise specified, references to any amount as on deposit or outstanding on any particular date shall mean such amount at the close of business on such day.

(f) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Indenture shall refer to this Indenture as a whole and not to any particular provision of this Indenture; references to any subsection, Section, Schedule or Exhibit are references to subsections, Sections, Schedules and Exhibits in or to this Indenture unless otherwise specified; and the term “including” means “including without limitation.”

(g) References herein to the Purchase Agreement, the Receivables Purchase Agreement, the Transfer and Servicing Agreement, this Indenture and the Performance Guaranty shall mean and be references to each such document as amended and modified by that certain Omnibus Amendment, Agreement and Consent dated December 20, 2004, that certain Second Omnibus Amendment dated January 31, 2005, that certain Amendment, Agreement and Consent dated January 30, 2006, that certain Third Omnibus Amendment, Agreement and Consent dated May 12, 2006, that certain Fourth Omnibus Amendment dated November 29, 2006 and that certain Fifth Omnibus Amendment dated April 10, 2007.

 

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ARTICLE II

THE NOTES

Section 2.01. Form Generally .

Any Series of Notes, together with the Authentication Agent’s certificate of authentication related thereto, shall be issued in fully registered form without coupons, and shall be substantially in the form of an exhibit to the related Indenture Supplement with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or such Indenture Supplement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be determined by the officers of the Issuer executing such Notes consistently herewith, as evidenced by their execution of such Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. The terms of any Notes set forth in an exhibit to the related Indenture Supplement are part of the terms of this Indenture, as applicable.

The Definitive Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods, all as determined by the officers executing such Notes, as evidenced by such officers’ execution of such Notes.

Each Note shall be dated as of the date of its authentication.

Section 2.02. Denominations .

Except as otherwise specified in the related Indenture Supplement, the Notes of each Series shall be issued in fully registered form in minimum amounts of $250,000 and in integral multiples of $1,000 in excess thereof (except that one Note of each Series may be issued in a different amount, so long as such amount exceeds the applicable minimum denomination for such Series), and shall be issued upon initial issuance as one or more Notes in an aggregate original principal amount equal to the initial Series Outstanding Amount for such Series.

Section 2.03. Execution, Authentication and Delivery .

Each Note shall be executed by manual or facsimile signature on behalf of the Issuer by an Authorized Officer.

Notes bearing the manual or facsimile signature of an individual who was authorized to sign on behalf of the Issuer at the time when such signature was affixed shall not be rendered invalid, notwithstanding the fact that such individual ceased to be so authorized prior to the authentication and delivery of such Notes or does not hold such office at the date of issuance such Notes.

 

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At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer to the Authentication Agent for authentication and delivery, and the Authentication Agent shall authenticate and deliver such Notes as provided in this Indenture (with the designation provided in the related Indenture Supplement) and not otherwise.

No Note shall be entitled to any benefit under this Indenture or the applicable Indenture Supplement or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by or on behalf of the Authentication Agent by the manual signature of a duly authorized signatory, and such certificate of authentication on any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered under this Indenture.

Section 2.04. Authentication Agent .

(a) The Authentication Agent undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and any Indenture Supplement and no implied covenants or obligations shall be read into this Indenture or such Indenture Supplement against the Authentication Agent. The Issuer may remove the Authentication Agent if the Issuer determines in its sole discretion that the Authentication Agent shall have failed to perform its obligations under this Indenture or any Indenture Supplement in any material respect or for other good reason. The Authentication Agent shall be permitted to resign upon 30 days’ written notice to the Issuer. Upon the removal or resignation of the Authentication Agent, the Issuer shall appoint a successor to act as Authentication Agent. The Issuer shall notify the Indenture Trustee and the Rating Agencies of the removal or resignation of the Authentication Agent and the identity and location of the successor Authentication Agent.

(b) Pursuant to the Transfer and Servicing Agreement, the Issuer shall direct the Servicer to pay to BNY from time to time reasonable compensation for its services and all reasonable out-of-pocket expenses incurred or made by it, including costs of collection. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of BNY’s agents, counsel, accountants and experts. The Issuer shall cause the Servicer to indemnify BNY against any and all loss, liability or expense (including the fees and expenses of either in-house counsel or outside counsel, but not both) incurred by it in connection with the performance of its duties hereunder and under any Indenture Supplement. BNY shall notify the Issuer and the Servicer promptly of any claim for which it may seek indemnity. Failure by BNY to so notify the Issuer and the Servicer shall not relieve the Issuer of its obligations hereunder unless such loss, liability or expense could have been avoided with such prompt notification and then only to the extent of such loss, expense or liability which could have been so avoided. Neither the Issuer nor the Servicer need reimburse any expense or indemnify against any loss, liability or expense incurred by BNY through BNY’s own willful misconduct, negligence or bad faith.

 

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(c) The provisions of Sections 6.01, 6.03, 6.04 and 6.05 shall be applicable to the Authentication Agent.

(d) Pursuant to any appointment made under this Section 2.04, the Notes may have endorsed thereon, in lieu of or in addition to the Authentication Agent’s certificate of authentication, an alternative certificate of authentication in substantially the following form:

“This is one of the Notes described in the within-mentioned Agreement.

 

THE BANK OF NEW YORK,
as Authentication Agent

By:    
  Authorized Signatory”

Section 2.05. Registration of and Limitations on Transfer and Exchange of Notes .

The Transfer Agent and Registrar shall keep a register (the “ Note Register ”) in which the Transfer Agent and Registrar shall provide for the registration of Notes and the registration of transfers of Notes. Upon any resignation of any Transfer Agent and Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Transfer Agent and Registrar. The Issuer shall notify the Indenture Trustee of the identity and location of any successor Transfer Agent and Registrar.

The Indenture Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Transfer Agent and Registrar by an officer thereof as to the names and addresses of the Noteholders and the principal amounts and numbers of such Notes.

Upon surrender for registration of transfer of any Note at the office or agency of the Transfer Agent and Registrar to be maintained as provided in Section 3.02(j), if the requirements of Section 8-401(a) of the New York Uniform Commercial Code (the “ NYUCC ”) are met and any applicable requirements for transfer set forth in the related Indenture Supplement are satisfied, the Issuer shall execute, and upon receipt of such surrendered Note the Authentication Agent shall authenticate and deliver to the Noteholder, in the name of the designated transferee or transferees, one or more new Notes (of the same Series) in any authorized denominations of like aggregate principal amount.

At the option of a Noteholder, Notes may be exchanged for other Notes of the same Series, in any authorized denominations and of like aggregate principal amount, upon

 

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surrender of such Notes to be exchanged at the office or agency of the Transfer Agent and Registrar. Whenever any Notes are so surrendered for exchange, if the requirements of Section 8-401(a) of the NYUCC are met, the Issuer shall execute, and upon receipt of such surrendered Note the Authentication Agent shall authenticate and deliver to the Noteholder, the Notes that the Noteholder making the exchange is entitled to receive.

All Notes issued upon any registration of transfer or exchange of Notes shall evidence the same obligations, evidence the same debt, and be entitled to the same rights and privileges under this Indenture and the related Indenture Supplement as the Notes surrendered upon such registration of transfer or exchange.

Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in a form satisfactory to the Transfer Agent and Registrar duly executed by, the Noteholder thereof or its attorney-in-fact duly authorized in writing, and by such other documents as the Transfer Agent and Registrar may reasonably require.

The registration of transfer of any Note shall be subject to the additional requirements, if any, set forth in the related Indenture Supplement.

No service charge shall be made for any registration of transfer or exchange of Notes, but the Issuer or the Transfer Agent and Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of such Notes.

All Notes surrendered for registration of transfer or exchange shall be cancelled by the Transfer Agent and Registrar and disposed of by the Transfer Agent and Registrar in accordance with its customary procedures. The Transfer Agent and Registrar shall dispose of any Global Note upon its exchange in full for Definitive Notes (of the same Series) in accordance with its customary procedures.

The preceding provisions of this section notwithstanding, the Issuer shall not be required to make, and the Transfer Agent and Registrar need not register, transfers or exchanges of Notes for a period of 20 days preceding the due date for any payment with respect to the Notes.

If and so long as any Series of Notes are listed on the Luxembourg Stock Exchange and such exchange shall so require, the Transfer Agent and Registrar shall, at the discretion of the Issuer, appoint a co-transfer agent and registrar in Luxembourg or another European city. Any reference in this Agreement to the Transfer Agent and Registrar shall include any such co-transfer agent and registrar unless the context otherwise requires. The Transfer Agent and Registrar shall enter into any appropriate agency agreement with any co-transfer agent and registrar not a party to this Indenture, that will implement the provisions of this Indenture that relate to such agent.

 

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Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes .

If (a) any mutilated Note is surrendered to the Transfer Agent and Registrar, or the Transfer Agent and Registrar receives evidence to its reasonable satisfaction of the destruction, loss or theft of any Note and (b) in the case of a destroyed, lost or stolen Note there is delivered to the Transfer Agent and Registrar such security or indemnity as may be required by it to hold the Issuer and the Transfer Agent and Registrar harmless and the requirements of Section 8-405 of the NYUCC are met, then the Issuer shall execute, and the Authentication Agent shall authenticate and deliver, a replacement Note of like tenor (including the same date of issuance) and principal amount, bearing a number not contemporaneously outstanding in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note; provided , however , that if any such mutilated, destroyed, lost or stolen Note shall have become, or within seven days shall be, due and payable, or shall have been selected or called for redemption, the Issuer may pay such Note without surrender thereof instead of issuing a replacement Note, except that any mutilated Note shall be surrendered. After the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, if a protected purchaser of the original Note in lieu of which such replacement Note was issued presents such original Note for payment, the Issuer and the Transfer Agent and Registrar shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person other than a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Transfer Agent and Registrar in connection therewith.

Upon the issuance of any replacement Note under this Section 2.06, the Issuer or the Transfer Agent and Registrar may require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto and any other reasonable expenses (including the fees and expenses of the Transfer Agent and Registrar) in connection therewith.

Every replacement Note issued in replacement of any mutilated, destroyed, lost or stolen Note pursuant to this Section 2.06 shall constitute complete and indefeasible evidence of an obligation of the Issuer as if originally issued, whether or not the mutilated, destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

Section 2.07. Persons Deemed Owners .

Unless otherwise specified in the applicable Indenture Supplement, prior to due presentment for registration of transfer of any Note, the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent, the Transfer Agent and Registrar and any agent of the

 

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foregoing shall treat the Person in whose name any Note is registered as the owner of such Note for all purposes of this Indenture and the applicable Indenture Supplement, whether or not such Note is overdue, and neither the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent, the Transfer Agent and Registrar nor any agent of the foregoing shall be affected by any notice to the contrary.

Section 2.08. Paying Agent .

(a) The Paying Agent shall have the revocable power to withdraw funds and make distributions to Noteholders from the appropriate account or accounts maintained for the benefit of Noteholders as specified in this Indenture or the related Indenture Supplement for any Series. The Issuer may revoke such power and remove the Paying Agent if the Issuer determines in its sole discretion that the Paying Agent shall have failed to perform its obligations under this Indenture in any material respect or for other good cause. The Paying Agent shall be permitted to resign upon 30 days’ written notice to the Issuer. Upon the removal or resignation of the Paying Agent, the Issuer shall appoint a successor to act as Paying Agent (which successor shall be a bank or trust company). Any reference in this Indenture to the Paying Agent shall include any co-paying agent unless the context requires otherwise. The Issuer shall notify the Indenture Trustee, each Applicable Series Enhancer and the Rating Agencies of the removal or the resignation of any Paying Agent and the identity and location of the successor Paying Agent.

(b) If and so long as any Series of Notes are listed on the Luxembourg Stock Exchange or other stock exchange and such exchange shall so require, the Paying Agent shall, at the discretion of the Issuer, appoint a co-paying agent in Luxembourg or other city or country as may be required by such other stock exchange. The Paying Agent shall enter into an appropriate agency agreement with any co-paying agent not a party to this Indenture, which will implement the provisions of this Indenture that relate to such agent.

(c) The Paying Agent agrees that it will:

(i) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and pay such sums to such Persons as herein provided;

(ii) give the Indenture Trustee notice of any default by the Issuer (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes;

(iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent; and

(iv) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

 

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(d) The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct the Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which such sums were held by such Paying Agent and, upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Section 2.09. Cancellation .

All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Transfer Agent and Registrar, be delivered to the Transfer Agent and Registrar and shall be promptly cancelled by it. The Issuer may at any time deliver to the Transfer Agent and Registrar for cancellation any Notes previously authenticated and delivered hereunder that the Issuer may have acquired in any lawful manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Transfer Agent and Registrar. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.09, except as expressly permitted by this Indenture. All cancelled Notes held by the Transfer Agent and Registrar shall be disposed of by the Transfer Agent and Register in accordance with its customary procedures.

Section 2.10. New Issuances .

(a) Pursuant to one or more Indenture Supplements, the Issuer may from time to time issue one or more new Series of Notes (a “ New Issuance ”). The Notes of all outstanding Series shall be equally and ratably entitled to the benefits of this Indenture without preference, priority or distinction, all in accordance with the terms and provisions of this Indenture and the applicable Indenture Supplement, except as provided in the related Indenture Supplement with respect to any Series. Interest on the Notes of all outstanding Series shall be paid on each Distribution Date therefor as specified in the Indenture Supplement relating to such outstanding Series. Principal of the Notes of each outstanding Series shall be paid as specified in the Indenture Supplement relating to such outstanding Series.

(b) On or before the Series Issuance Date for any new Series of Notes, the parties hereto shall execute and deliver an Indenture Supplement specifying the Principal Terms of such Series. The terms of such Indenture Supplement may modify or amend the terms of this Indenture solely as applied to such new Series. The obligation of the Authentication Agent to authenticate and deliver the Notes of any Series to or upon the order of the Issuer (other than any Series issued pursuant to an Indenture Supplement dated as of the date hereof) and the obligation of the Authentication Agent and the Indenture Trustee to execute and deliver the related Indenture Supplement is subject to the satisfaction of the following conditions:

(i) on or before the fifth day immediately preceding the Series Issuance Date, the Issuer shall have given the Indenture Trustee, the Servicer, the Paying Agent, the Authentication Agent, the Transfer Agent and Registrar, each Applicable Series Enhancer and each Rating Agency notice (unless such notice requirement is otherwise waived) of such issuance and the applicable Series Issuance Date;

 

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(ii) the Issuer shall have delivered to the Authentication Agent and the Indenture Trustee any related Indenture Supplement, in form satisfactory to the Authentication Agent and the Indenture Trustee, executed by each party hereto other than the Authentication Agent and the Indenture Trustee;

(iii) the Issuer shall have delivered to the Indenture Trustee any related Enhancement Agreement executed by each of the parties thereto other than the Indenture Trustee;

(iv) the Rating Agency Condition shall have been satisfied with respect to such issuance;

(v) there shall have been delivered to the Indenture Trustee (with a copy to each Rating Agency) (A) the opinion required pursuant to Section 3.05(a) and (B) a Tax Opinion with respect to such issuance, dated the applicable Series Issuance Date.

(vi) the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate of the Issuer to the effect that on the Series Issuance Date after giving effect to the issuance of such new Series of Notes, (A) neither an Amortization Event nor an Unmatured Amortization Event with respect to any Series of Notes nor an Asset Deficiency is continuing or will occur as the result of the issuance of such Series of Notes and (B) all conditions precedent provided in this Indenture and the related Indenture Supplement with respect to the authentication and delivery of the new Series of Notes have been complied with; and

(vii) the Issuer shall have delivered to the Authentication Agent a written order or request signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Authentication Agent authorizing and directing the authentication and delivery of the Notes of such Series by the Authentication Agent.

(c) Upon satisfaction of the above conditions, the Issuer shall execute, and the Authentication Agent shall authenticate and deliver, the Notes of such Series as provided in this Indenture and the applicable Indenture Supplement. Neither the Authentication Agent nor the Indenture Trustee shall be obligated to enter into any such Indenture Supplement that adversely affects the Authentication Agent’s or the Indenture Trustee’s own rights, duties or immunities under this Indenture.

 

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Section 2.11. Book-Entry Notes .

Unless otherwise provided in any related Indenture Supplement, upon original issuance, each Series of Notes shall be issued in the form of typewritten Notes representing the Book-Entry Notes to be delivered to the depository specified in such Indenture Supplement (which shall be the Clearing Agency or Foreign Clearing Agency), by or on behalf of such Series.

Unless otherwise provided in the related Indenture Supplement, the Notes of each Series initially shall be registered in the Note Register in the name of the nominee of the Clearing Agency or Foreign Clearing Agency, as applicable, for such Book Entry Notes and shall be delivered to the Authentication Agent or, pursuant to such Clearing Agency’s or Foreign Clearing Agency’s instructions, held by the Authentication Agent’s agent as custodian for the Clearing Agency or Foreign Clearing Agency.

Unless and until Definitive Notes are issued under the limited circumstances described in Section 2.13, no Beneficial Owner shall be entitled to receive a Definitive Note representing such Beneficial Owner’s interest in such Note. Unless and until Definitive Notes have been issued to the Beneficial Owners pursuant to Section 2.13:

(a) the provisions of this Section 2.11 shall be in full force and effect with respect to each such Series;

(b) the Indenture Trustee shall be entitled to deal with the Clearing Agency or Foreign Clearing Agency and the Clearing Agency Participants for all purposes of this Indenture and any related Indenture Supplement (including the payment of principal of and interest on the Notes of each such Series) as the authorized representatives of the Beneficial Owners;

(c) to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control with respect to each such Series;

(d) the rights of Beneficial Owners of each such Series shall be exercised only through the Clearing Agency or Foreign Clearing Agency and the applicable Clearing Agency Participants and shall be limited to those established by law and agreements between such Beneficial Owners and the Clearing Agency or Foreign Clearing Agency and/or the Clearing Agency Participants. Pursuant to the depository agreement applicable to a Series, unless and until Definitive Notes of such Series are issued pursuant to Section 2.13, the initial Clearing Agency shall make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Notes to such Clearing Agency Participants; and

(e) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of the Holders of Notes evidencing a specified percentage of the Outstanding Amount, the Clearing Agency or Foreign Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Beneficial Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes and has delivered such instructions to the Indenture Trustee.

 

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Section 2.12. Notices to Clearing Agency or Foreign Clearing Agency .

Unless and until Definitive Notes shall have been issued to Beneficial Owners pursuant to Section 2.13, whenever a notice or other communication to the Noteholders is required under this Indenture, the Indenture Trustee shall give such notice or communication to the Clearing Agency or Foreign Clearing Agency, as applicable, for distribution to Beneficial Owners and shall have no obligation to distribute such notice or other communication directly to the Beneficial Owners.

Section 2.13. Definitive Notes .

If (i) (a) the Issuer advises the Indenture Trustee in writing that the Clearing Agency or Foreign Clearing Agency is no longer willing or able to properly discharge its responsibilities as Clearing Agency or Foreign Clearing Agency with respect to the Book-Entry Notes of a given Series and (b) the Issuer is unable to locate and reach an agreement on satisfactory terms with a qualified successor, (ii) the Issuer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or Foreign Clearing Agency with respect to such Series or (iii) after the occurrence of an Event of Default, Beneficial Owners aggregating a majority of the Outstanding Amount of the Notes of such Series advise the Indenture Trustee and the applicable Clearing Agency or Foreign Clearing Agency through the applicable Clearing Agency Participants in writing that the continuation of a book-entry system is no longer in the best interests of the Beneficial Owners of such Series, the Indenture Trustee shall notify (with a copy to the Transfer Agent and Registrar) all Beneficial Owners of such Series of the occurrence of such event and of the availability of Definitive Notes to Beneficial Owners of such Series requesting the same. Upon surrender to the Transfer Agent and Registrar of the Notes of such Series accompanied by registration instructions from the applicable Clearing Agency or Foreign Clearing Agency, the Issuer shall execute, and the Authentication Agent shall authenticate and deliver, Definitive Notes of such Series and shall recognize the registered holders of such Definitive Notes as Noteholders under this Indenture. Neither the Issuer nor the Indenture Trustee shall be liable for any delay in delivery of such instructions, and the Issuer and the Indenture Trustee may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes of such Series, all references herein to obligations imposed upon or to be performed by the applicable Clearing Agency or Foreign Clearing Agency shall be deemed to be imposed upon and performed by the Indenture Trustee to the extent applicable with respect to such Definitive Notes, and the Indenture Trustee and the Paying Agent shall recognize the registered holders of the Definitive Notes of such Series as Noteholders of such Series hereunder. Definitive Notes will be transferable and exchangeable at the offices of the Transfer Agent and Registrar.

 

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Section 2.14. Global Note; Euro-Note Exchange Date .

If specified in the related Indenture Supplement for any Series, Notes initially may be issued in the form of a single temporary Global Note (each, a “ Global Note ”) in the denomination of the initial Series Outstanding Amount and substantially in the form attached to the related Indenture Supplement. Unless otherwise specified in the related Indenture Supplement, the provisions of this Section 2.14 shall apply to such Global Note. Global Notes shall be authenticated by the Authentication Agent upon the same conditions, in substantially the same manner and with the same effect as the Definitive Notes. Global Notes may be exchanged in the manner described in the related Indenture Supplement for Definitive Notes.

Section 2.15. Representations and Covenants of Paying Agent, Authentication Agent and Transfer Agent and Registrar .

BNY, as Paying Agent, Authentication Agent and Transfer Agent and Registrar, represents, warrants and covenants that:

(a) BNY is a banking corporation duly organized and validly existing under the laws of the State of New York;

(b) BNY has full power and authority to deliver and perform this Indenture and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and any Indenture Supplement; and

(c) Each of this Indenture and other Transaction Documents to which it is a party has been duly executed and delivered by BNY and constitutes its legal, valid and binding obligation in accordance with its terms.

ARTICLE III

REPRESENTATIONS AND COVENANTS OF THE ISSUER

Section 3.01. Representations and Warranties of the Issuer . The Issuer hereby makes the representations and warranties set forth in this Section 3.01, in each case as of the date hereof, as of the Effective Date, as of each Series Issuance Date and as of any other date specified in such representation and warranty.

(a) Organization and Good Standing . The Issuer is a limited liability company duly formed and validly existing in good standing under the laws of the State of Delaware and has full power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted.

(b) Due Qualification . The Issuer is duly qualified to do business, is in good standing as a foreign limited liability company and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and in which the failure so to qualify or to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a Material Adverse Effect.

 

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(c) Power and Authority: Due Authorization . The Issuer (i) has all necessary limited liability company power and authority (A) to execute and deliver this Indenture and the other Transaction Documents to which it is a party, (B) to perform its obligations under this Indenture and the other Transaction Documents to which it is a party and (C) to make a Grant of the Pledged Assets to the Indenture Trustee on the terms and subject to the conditions herein provided and (ii) has duly authorized by all necessary action such Grant and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Indenture and the other Transaction Documents to which it is a party.

(d) Binding Obligations . This Indenture (i) constitutes a Grant of a security interest (as defined in the NYUCC) in all of the Issuer’s right, title and interest in, to and under the Pledged Assets, free and clear of any Lien (other than Permitted Liens) to the Indenture Trustee, which is enforceable with respect to the existing Receivables owned by the Issuer and the proceeds thereof upon execution and delivery of this Agreement and which will be enforceable with respect to the Receivables hereafter acquired by the Issuer and the proceeds thereof upon such acquisition by the Issuer and (ii) constitutes, and each other Transaction Document to which the Issuer is a party when duly executed and delivered will constitute, a legal, valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except (A) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (B) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) No Conflict or Violation . The execution, delivery and performance of, and the consummation of the transactions contemplated by, this Indenture and the other Transaction Documents to be signed by the Issuer, and the fulfillment of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under (A) the certificate of formation or the limited liability company agreement of the Issuer or (B) any material indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which the Issuer is a party or by which it or any of its respective properties is bound, (ii) result in the creation or imposition of any Lien (other than Permitted Liens) on any of the Pledged Assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust, or other material agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any federal, state, local or foreign law (including without limitation, Environmental Laws) or any decision, decree, order, rule or regulation applicable to the Issuer or of any Governmental Authority having jurisdiction over the Issuer, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(f) Litigation and Other Proceedings . (i) There is no action, suit, proceeding or investigation pending or, to the best knowledge of the Issuer, threatened, against the Issuer

 

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before any Governmental Authority and (ii) the Issuer is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts the invalidity of this Agreement or any other Transaction Document, (B) seeks to prevent the Grant of any Pledged Asset by the Issuer to the Indenture Trustee, the ownership or acquisition by the Issuer of a material amount of Receivables or the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document, (C) seeks any determination or ruling that, in the reasonable judgment of the Issuer, would materially and adversely affect the performance by the Issuer of its obligations under this Agreement or any other Transaction Document or the validity or enforceability of this Agreement or any other Transaction Document or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect.

(g) Governmental Approvals . Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect, all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Issuer in connection with the Grant of the Pledged Assets or the due execution, delivery and performance by the Issuer of this Indenture or any other Transaction Document to which it is a party and the consummation by the Issuer of the transactions contemplated by this Indenture and the other Transaction Documents to which it is a party have been obtained or made and are in full force and effect; provided , however , that prior to recordation pursuant to Section 8.3 of the Purchase Agreement or the sale of a Home to an Ultimate Buyer, record title to such Home may remain in the name of the related Transferred Employee and no recordation in real estate records of the conveyance of the related Home Purchase Contract or Home Sale Contract shall be made except as otherwise required under Section 2.01(d)(i) of the Transfer and Servicing Agreement.

(h) Margin Regulations . The Issuer is not engaged, principally or as one its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meanings of Regulations T, U and X of the Board of Governors of the Federal Reserve System). The Issuer has not taken and will not take any action to cause the use of proceeds of the Notes to purchase or carry margin stock.

(i) Taxes . The Issuer has filed (or there have been filed on its behalf as a member of a consolidated group) all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be owing by it, other than any such taxes, assessments or charges that are being diligently contested in good faith by appropriate proceedings, for which adequate reserves in accordance with GAAP have been set aside on its books and that have not given rise to any Liens (other than Permitted Liens); provided , however , that as of the date of this Indenture, the Issuer is a newly established entity and as such has not been required to file any tax returns.

(j) Solvency . After giving effect to the transactions contemplated by this Indenture and the other Transaction Documents, the Issuer is solvent and able to pay its debts as they come due and has adequate capital to conduct its business as presently conducted.

 

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(k) Offices . The principal place of business and chief executive office of the Issuer is located at 40 Apple Ridge Road, Suite 4C45, Danbury, Connecticut 06810.

(l) Investment Company Act . The Issuer is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act.

(m) Accuracy of Financial Information and Other Information . All balance sheets, all statements of operations and of cash flow and other financial data that have been or shall hereafter be furnished by the Issuer to the Indenture Trustee pursuant to Section 3.02 have been prepared in accordance with generally accepted accounting principles (to the extent applicable) and fairly present the financial condition of the Issuer as of the dates thereof. All certificates, reports, statements, documents and other information furnished to the Indenture Trustee by or on behalf of the Issuer pursuant to any provision of this Indenture or any other Transaction Document, or in connection with or pursuant to any amendment or modification of, or waiver under, this Indenture or any other Transaction Document, shall, at the time the same are so furnished, be complete and correct in all material respects on the date the same are furnished to the Indenture Trustee.

(n) Security Interests . No security agreement, financing statement or equivalent security or lien instrument listing the Issuer as debtor covering all or any part of the Pledged Assets is on file or of record in any jurisdiction, except such as may have been filed, recorded or made by the Issuer in favor of the Indenture Trustee on behalf of the Noteholders in connection with this Indenture. This Indenture constitutes a valid and continuing Lien on the Pledged Assets in favor of the Indenture Trustee on behalf of the Noteholders, which Lien will be prior to all other Liens (other than Permitted Liens), will be enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing. The Issuer has taken all action necessary to perfect such security interest.

Section 3.02. Affirmative Covenants of the Issuer . From the Effective Date until the termination of this Indenture, the Issuer hereby agrees that it will perform the covenants and agreements set forth in this Section 3.02.

(a) Financial Reports by the Issuer . As soon as available, but in any event within 120 days after the end of each fiscal year of the Issuer, the Issuer shall deliver to the Indenture Trustee and each Applicable Series Enhancer and the Indenture Trustee shall forward to each Noteholder a copy of the financial statements of the Issuer at the end of such year, prepared in accordance with GAAP.

(b) Books and Records . The Issuer shall keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to the Pledged Assets and its business activities in accordance with generally accepted

 

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accounting principles, and shall permit the Indenture Trustee and each Applicable Series Enhancer to visit and inspect any of its properties, to examine and make abstracts from any of its books and records and to discuss its affairs, finances and accounts with its officers, directors, employees and independent public accountants, all at such reasonable times upon reasonable notice and as often as may reasonably be requested.

(c) Notice of Defaults and Events of Default . The Issuer shall give the Indenture Trustee, each Applicable Series Enhancer and the Rating Agencies prompt written notice of each Default and Event of Default hereunder and the occurrence of any Unmatured Amortization Event or Amortization Event with respect to any Series of Notes and, immediately after obtaining knowledge of any of the following occurrences, written notice of each default on the part of the Servicer or the Transferor of its obligations under the Transfer and Servicing Agreement and each default on the part of Cartus of its obligations under the Purchase Agreement or CFC of its obligations under the Receivables Purchase Agreement, as appropriate, and, in each case, the action, if any, being taken with respect to such default.

(d) Maintenance of Existence . The Issuer shall keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Pledged Assets and each other related instrument or agreement.

(e) Compliance with Laws . The Issuer will comply with the requirements of all applicable laws, rules, regulations and orders of all Governmental Authorities including without limitation Environmental Laws, a violation of which, individually or in the aggregate for all such violations, is reasonably likely to have a Material Adverse Effect.

(f) Rule 144A Information . For so long as any of the Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act of 1933, as amended, the Issuer agrees to provide to any Noteholder or Beneficial Owner, and to any prospective purchaser of Notes designated by such Noteholder or Beneficial Owner upon the request of such Noteholder or Beneficial Owner or prospective purchaser, any information required to be provided to such holder or prospective purchaser to satisfy the conditions set forth in Rule 144A(d)(4) under the Securities Act of 1933, as amended.

(g) Annual Tax Information . Unless otherwise specified in the related Indenture Supplement, on or before January 31 of each calendar year, beginning with calendar year 2001, the Indenture Trustee or the Paying Agent shall furnish to each Person who at any time during the preceding calendar year was a Noteholder of a Series of Notes a statement prepared by or on behalf of the Issuer containing the information that is necessary or desirable to enable the Noteholders to prepare their tax returns. The obligations of the Issuer to prepare and the Indenture Trustee or the Paying Agent to distribute such information shall be deemed to have

 

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been satisfied to the extent that substantially comparable information shall be provided by the Indenture Trustee or the Paying Agent pursuant to any requirements of the Code as from time to time in effect.

(h) Statements as to Compliance . The Issuer shall deliver to the Indenture Trustee, within 120 days after the end of each fiscal year of the Issuer (commencing within 120 days after the end of the fiscal year 2000), an Officer’s Certificate stating, as to the Authorized Officer signing such Officer’s Certificate, that

(i) a review of the activities of the Issuer during the 12-month period ending at the end of such fiscal year (or in the case of the fiscal year ending December 31, 2000, the period from the initial Series Issuance Date to December 31, 2000) and of performance under this Indenture has been made under such Authorized Officer’s supervision, and

(ii) to the best of such Authorized Officer’s knowledge, based on such review, the Issuer has complied with all conditions and covenants under this Indenture throughout such year or, if there has been a default in its compliance with any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof.

(i) Maintenance of Office or Agency . The Issuer shall maintain an office or agency within the Borough of Manhattan, City of New York where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer hereby initially appoints the Transfer Agent and Registrar at its office currently located at 101 Barclay Street, Floor 21 West, New York, New York 10286 (or at such other address as the Transfer Agent and Registrar may designate from time to time by notice to the Issuer, the Indenture Trustee and the Noteholders) to serve as its agent for the foregoing purposes.

(j) Further Instruments and Acts . Upon request of the Indenture Trustee, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

Section 3.03. Negative Covenants of the Issuer . From the Effective Date until the termination of this Indenture, the Issuer hereby agrees that it shall not:

(a) Amendment of Limited Liability Company Agreement . Amend its limited liability company agreement unless, prior to such amendment, each Rating Agency confirms that after such amendment the Rating Agency Condition will be met and each Applicable Series Enhancer consents thereto;

 

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(b) Change in Location of Chief Executive Office . (a) Change the location of its chief executive office or principal place of business (within the meaning of the applicable Uniform Commercial Code) without sixty (60) days’ prior written notice to the Indenture Trustee or (b) change its name or the jurisdiction of its formation without prior written notice to the Indenture Trustee sufficient to allow the Indenture Trustee to execute all filings prepared by the Issuer (including filings of financing statements on form UCC- 1) and recordings necessary to maintain the perfection of the interest of the Indenture Trustee on behalf of the Noteholders in the Pledged Assets pursuant to this Indenture. If the Issuer desires to so change its office or change its name or the jurisdiction of its formation, the Issuer will make any required filings and prior to actually changing its office or its name or the jurisdiction of its formation the Issuer shall deliver to the Indenture Trustee (i) an Officer’s Certificate and (ii) copies of all such required filings with the filing information duly noted thereon by the office in which such filings were made;

(c) Capital Expenditures . Make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty);

(d) No Other Business or Agreements . Engage in any business other than financing, purchasing, owning and selling and managing the Pledged Assets in the manner contemplated by this Indenture and the other Transaction Documents and all activities incidental thereto, or enter into or be a party to any agreement or instrument other than any Transaction Document or documents and agreements incidental thereto;

(e) Consolidation, Merger or Other Form of Combination and Sale of Assets . Enter into any consolidation, merger, joint venture, syndicate or other form of combination with any Person or sell, lease or transfer of otherwise dispose of any assets, including without limitation the Pledged Assets, other than as expressly provided for in the Transaction Documents, or engage in any other transaction, that would result in a change of control of the Issuer;

(f) Guarantees, Loans, Advances and other Liabilities . Except as contemplated by this Indenture or the other Transaction Documents, make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person;

(g) Indebtedness . Issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except as expressly provided for pursuant to the terms of the Transaction Documents and the Notes;

(h) Deduction from Principal and Interest . Claim any credit on, or make any deduction from, the principal and interest payable in respect of the Notes (other than amounts properly withheld from such payments under the Code or applicable state law) or assert any claim against any present or former Noteholder by reason of the payment of any taxes levied or assessed upon any part of the Pledged Assets;

 

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(i) Effectiveness of Indenture, Liens . (i) Permit the validity or effectiveness of this Indenture to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (ii) permit any Lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Pledged Assets or any part thereof or any interest therein or the proceeds thereof or (iii) permit the lien of this Indenture not to constitute a valid first priority perfected security interest in the Pledged Assets; or

(j) Dissolve or Liquidate . Dissolve or liquidate in whole or in part.

Section 3.04. Protection of Pledged Assets .

The Issuer shall from time to time prepare (or cause to be prepared), execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable to:

(a) Grant more effectively all or any portion of the Pledged Assets for the Notes;

(b) maintain or preserve the lien (and the priority thereof) of this Indenture or to carry out more effectively the purposes hereof;

(c) perfect, publish notice of, or protect the validity of, any Grant made or to be made by this Indenture;

(d) enforce any of the Pledged Assets; or

(e) preserve and defend title to the Pledged Assets securing the Notes and the rights therein of the Indenture Trustee and the Noteholders secured thereby against the claims of all persons and parties.

The Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required pursuant to this Section 3.04.

Section 3.05. Opinions as to Pledged Assets .

(a) On the Series Issuance Date relating to any new Series of Notes, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken as is necessary to perfect the lien and security interest of

 

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this Indenture, including without limitation with respect to the recording and filing of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any financing statements and continuation statements, and reciting the details of such action, or stating that in the opinion of such counsel no such action is necessary to maintain the perfection of such lien and security interest.

(b) On or before April 30 in each calendar year, beginning in the year 2001, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken as is necessary to perfect the lien and security interest of this Indenture, including without limitation with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any financing statements and continuation statements, and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain the perfection of such lien and security interest. Such Opinion of Counsel also shall describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any financing statements and continuation statements that, in the opinion of such counsel, will be required to maintain the perfection of the lien and security interest of this Indenture until April 30 in the following calendar year.

Section 3.06. Obligations Regarding Servicing of Receivables .

(a) The Issuer shall not take any action, and shall use its best efforts not to permit any action to be taken by others, that would release any Person from any of such Person’s material covenants or obligations under any instrument or agreement included in the Pledged Assets or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in this Indenture, the Transfer and Servicing Agreement, the Receivables Purchase Agreement, the Purchase Agreement or such other instrument or agreement.

(b) The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by such Person shall be deemed to be action taken by the Issuer. The Issuer shall cause the Servicer to comply with all the Servicer’s obligations under the Transaction Documents to which the Servicer is a party and shall not agree to the resignation of the Servicer from its obligations and duties imposed by the Transfer and Servicing Agreement unless the Majority Investors have consented to such resignation.

(c) The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the other Transaction Documents and in the instruments and agreements relating to the Pledged Assets, including but not limited to filing or causing to be filed all UCC financing statements and continuation statements required to be filed by the terms of this Indenture and the Transfer and Servicing Agreement in accordance with and within the time periods provided for herein and therein.

 

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(d) If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Transfer and Servicing Agreement with respect to the Receivables, the Issuer shall take all reasonable steps available to it to remedy such failure.

(e) Without derogating from the absolute nature of the assignment granted to the Indenture Trustee or the rights of the Indenture Trustee under this Indenture, the Issuer agrees (i) that it will not, without the prior written consent of the Indenture Trustee and the Majority Investors, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, the terms of any Pledged Assets (except to the extent otherwise provided in the Transfer and Servicing Agreement) or the Transaction Documents (except to the extent otherwise provided in the Transaction Documents), or waive timely performance or observance by the Servicer or the Transferor of its obligations under the Transfer and Servicing Agreement, or Cartus of its obligations under the Purchase Agreement or CFC of its obligations under the Receivables Purchase Agreement or the Performance Guarantor of its obligations under the Performance Guaranty executed by it; and (ii) that any such amendment shall not (A) increase or reduce in any manner the amount of, or accelerate or delay the timing of, Pool Collections of payments on the Pledged Assets or distributions that are required to be made for the benefit of the Noteholders or (B) change the definition of Majority Investors, without the consent of the Holders of all the Outstanding Notes. If any such amendment, modification, supplement or waiver shall be so consented to by the Indenture Trustee and the Majority Investors or the Holders of all the Outstanding Notes, as required, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as the Indenture Trustee may deem necessary or appropriate in the circumstances.

Section 3.07. Separate Corporate Existence of the Issuer . The Issuer hereby acknowledges that the parties to the Transaction Documents are entering into the transactions contemplated by the Transaction Documents in reliance on the Issuer’s identity as a legal entity separate from the Originator, the Transferor and the other Cartus Persons. From and after the date hereof until the date of which there are no Notes of any Series Outstanding, the Issuer shall take such actions as shall be required in order that:

(a) The Issuer will conduct its business in office space allocated to it and for which it pays an appropriate rent and overhead allocation;

(b) The Issuer will maintain corporate records and books of account separate from those of each Cartus Person and telephone numbers and stationery that are separate and distinct from those of each Cartus Person;

(c) The Issuer’s assets will be maintained in a manner that facilitates their identification and segregation from those of any Cartus Person;

(d) The Issuer will strictly observe limited liability company formalities in its dealings with the public and with each Cartus Person, and funds or other assets of the Issuer will not be commingled with those of any Cartus Person, except as may be permitted by the Transaction Documents. The Issuer will at all times, in its dealings with the public and with each

 

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Cartus Person, hold itself out and conduct itself as a legal entity separate and distinct from each Cartus Person. The Issuer will not maintain joint bank accounts or other depository accounts to which any Cartus Person (other than the Servicer) has independent access;

(e) The duly admitted members of the Issuer and duly appointed managers or officers of the Issuer will at all times have sole authority to control decisions and actions with respect to the daily business affairs of the Issuer;

(f) Not less than two members of the Issuer’s board of directors will be an Independent Director. The Issuer will observe those provisions in its limited liability company agreement that provide that the Issuer’s board of directors will not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Issuer unless each Independent Director and all other members of the Issuer’s board of directors unanimously approve the taking of such action in writing prior to the taking of such action;

(g) The Issuer will compensate each of its employees, consultants and agents from the Issuer’s own funds for services provided to the Issuer; and

(h) The Issuer will not hold itself out to be responsible for the debts of any Cartus Person.

ARTICLE IV

SATISFACTION AND DISCHARGE

Section 4.01. Satisfaction and Discharge of this Indenture .

This Indenture shall cease to be of further effect with respect to the Notes (except as to (a) rights of registration of transfer and exchange, (b) substitution of mutilated, destroyed, lost or stolen Notes, (c) the rights of Noteholders to receive payments of principal thereof and interest thereon, (d) Sections 3.02(j), 3.03, 3.05, 3.06 and 12.14, (e) the rights and immunities of the Indenture Trustee hereunder, including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.02, the rights and immunities of BNY hereunder, including the rights of BNY under Section 2.04(b) and the obligations of BNY under Section 2.05, 2.06, 2.08 and 2.09 and (g) the rights of Noteholders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee and payable to all or any of them) and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes when:

(i) either

(A) all Notes theretofore authenticated and delivered (other than (1) Notes that have been destroyed, lost or stolen and that have been replaced, or paid as provided in Section 2.06 and (2) Notes for whose full payment money has theretofore been

 

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deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 8.07) have been delivered to the Indenture Trustee for cancellation; or

(B) all Notes not theretofore delivered to the Indenture Trustee for cancellation:

(1) have become due and payable; or

(2) will become due and payable at the maturity date for such Series of Notes;

(ii) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer;

(iii) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel and (if required by the Indenture Trustee) an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 12.01(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; and

(iv) the Rating Agency Condition is satisfied with respect to each Series of Outstanding Notes.

Section 4.02. Application of Trust Money .

All monies deposited with the Indenture Trustee pursuant to Section 4.01 shall be held in trust and applied by it in accordance with the provisions of the Notes, this Indenture and the applicable Indenture Supplement, to make payments, through the Paying Agent, to the Noteholders and for the payment in respect of which such monies have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest; but such monies need not be segregated from other funds except to the extent required herein or required by law.

ARTICLE V

EVENTS OF DEFAULT AND REMEDIES

Section 5.01. Events of Default .

Each of the following events shall be an “ Event of Default ” with respect to any Series of Notes hereunder:

(a) The Issuer shall fail to make any payment of interest on any Note of such Series when due (without giving effect to payments under any Series Enhancement that is a letter of credit, surety bond or financial guaranty insurance policy) and such failure shall remain unremedied for five Business Days; or

 

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(b) The Issuer shall fail to make any payment of the principal of any Note of such Series when due (without giving effect to any payments under any Series Enhancement that is a letter of credit, surety bond or financial guaranty insurance policy); or

(c)(i) The Issuer shall fail to perform or observe, as and when required, any term, covenant or agreement contained in this Indenture or any of the other Transaction Documents on its part to be performed or observed (other than as referred to in Section 5.01(a) or (b) above), (ii) such failure materially and adversely affects the rights of the Noteholders of such Series (determined without giving effect to any Series Enhancement) and (iii) such failure shall remain unremedied for 30 days after written notice thereof (specifying such failure and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder) shall have been given (A) to the Issuer by the Indenture Trustee or (B) to the Issuer and the Indenture Trustee by Noteholders of such Series holding Notes evidencing at least 25% of the Series Outstanding Amount of such Series; or

(d)(i) any representation or warranty made by the Issuer in this Indenture or any of the other Transaction Documents shall prove to have been untrue and incorrect in any material respect when made or deemed to have been made, (ii) such occurrence materially and adversely affects the rights of the Noteholders of such Series (determined without giving effect to any Series Enhancement) and (iii) such occurrence remains unremedied for 30 days after written notice thereof (specifying such failure and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder) shall have been (A) given to the Issuer by the Indenture Trustee or (B) to the Issuer and the Indenture Trustee by Noteholders of such Series holding Notes evidencing at least 25% of the Series Outstanding Amount of such Series; or

(e) An Insolvency Event shall have occurred with respect to the Issuer; or

(f) The Commission or other regulatory body having jurisdiction reaches a final determination that the Issuer is required to be registered under the Investment Company Act.

The Issuer shall deliver to the Indenture Trustee, within five days after the occurrence thereof, written notice in the form of an Officer’s Certificate of any event that with the giving of notice and the lapse of time would become an Event of Default, its status and what action the Issuer is taking or proposes to take with respect thereto.

Section 5.02. Acceleration of Maturity; Rescission and Annulment .

If an Event of Default referred to in clause (e) or (f) of Section 5.01 has occurred, the unpaid principal amount of all Series of Notes, together with interest accrued but unpaid thereon, and all other amounts due to the Noteholders under this Agreement shall immediately

 

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and without further act become due and payable. If an Event of Default referred to in clause (a), (b), (c) or (d) of Section 5.01 shall occur and be continuing with respect to any Series of Notes, then and in every such case the Indenture Trustee or Noteholders holding Notes evidencing a majority of the Series Outstanding Amount of such Series of Notes may declare all the Notes of such Series to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by the Noteholders), and upon any such declaration the unpaid principal amount of such Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

Section 5.03. Collection of Indebtedness and Suits for Enforcement by the Indenture Trustee .

The Issuer covenants that if (i) a default occurs in the payment of any interest on any Note when the same becomes due and payable, and such default continues for a period of five Business Days or (ii) a default is made in the payment of the principal of any Note when the same becomes due and payable, by acceleration or at stated maturity, the Issuer will, upon demand of the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the Holders of such Notes, the entire amount then due and payable on such Notes for principal and interest, with interest on the overdue principal, and to the extent payment at such rate of interest shall be legally enforceable, on overdue installments of interest, at the Note Interest Rate borne by the Notes and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.

If the Issuer shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in its own name and on behalf of the Noteholders of such Series, may institute a proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Issuer or other obligor upon such Notes and collect in the manner provided by law out of the property of the Issuer the moneys adjudged or decreed to be payable.

If an Event of Default occurs and is continuing, the Indenture Trustee may in its discretion, as more particularly provided in Section 5.04, proceed to protect and enforce its rights and the rights of the Noteholders by such appropriate proceedings as the Indenture Trustee deems most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or any Indenture Supplement or in aid of the exercise of any power granted herein or therein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture, any Indenture Supplement or by law.

If there shall be pending, relative to the Issuer or any Person having or claiming an ownership interest in the Pledged Assets, proceedings under the Bankruptcy Code or any other applicable Federal or State bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in the event of any other comparable judicial proceedings relative to the Issuer or to the creditors or property of the Issuer, then the Indenture Trustee shall be entitled and

 

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empowered, by intervention in such proceedings or otherwise and whether or not the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and whether or not the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.03:

(i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred and all advances made by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence, bad faith or willful misconduct) and of the Noteholders allowed in such proceedings;

(ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of the Notes in any election of a trustee, a standby trustee or person performing similar functions in any such proceedings;

(iii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders and of the Indenture Trustee on their behalf; and

(iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders of the Notes allowed in any judicial proceedings relative to the Issuer, its creditors and its property;

and any trustee, receiver, liquidator, custodian or other similar official in any such proceeding is hereby authorized by each of such Noteholders to make payments to the Indenture Trustee and, if the Indenture Trustee consents to the making of payments directly to such Noteholders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith.

Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to, or vote for or accept or adopt on behalf of any Noteholder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such proceeding except to vote for the election of a trustee in bankruptcy or similar person as aforesaid.

All rights of action and of asserting claims under this Indenture or any Indenture Supplement or under any of the Notes may be enforced by the Indenture Trustee without the

 

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possession of any of the Notes or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes.

In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture or any Indenture Supplement to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Noteholder a party to any such proceedings.

Section 5.04. Remedies; Priorities .

(a) If an Event of Default shall have occurred and be continuing with respect to any Series of Outstanding Notes and such Series of Notes has been accelerated under Section 5.02, the Indenture Trustee may institute proceedings to enforce the obligations of the Issuer hereunder and under the Indenture Supplement with respect to such Series of Notes in its own name and on behalf of the Noteholders of such Series for the collection of all amounts then payable on the Notes of such Series or under this Indenture or such Indenture Supplement with respect thereto, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Issuer moneys adjudged due.

(b) If an Event of Default shall have occurred and be continuing with respect to all Series of Outstanding Notes and all Series of Outstanding Notes have been accelerated under Section 5.02, the Indenture Trustee may or, if so directed by the Majority Investors, the Indenture Trustee shall, do one or more of the following:

(i) institute proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Pledged Assets;

(ii) exercise any remedies of a secured party under the NYUCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Notes; and

(iii) in the case of an Event of Default referred to in clause (a) or (b) of Section 5.01, sell the Pledged Assets or rights or interest therein, at one or more public or private sales called and conducted in accordance with Section 5.05;

provided that the Indenture Trustee may not sell or otherwise liquidate the Pledged Assets following an Event of Default referred to in clause (a) or (b) of Section 5.01 unless (A) the proceeds of the sale or liquidation of the Pledged Assets are sufficient to discharge in full all amounts due and unpaid with respect to the Notes, (B) if the Indenture Trustee has determined that the Pledged Assets will not continue to provide sufficient funds for the payment of principal of and interest on the Notes, Holders of Notes evidencing 66 2/3% of the Outstanding Amount,

 

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voting as a single class, consent to such sale or liquidation or (C) Holders of Notes evidencing 100% of the Outstanding Amount consent to such sale or liquidation. In determining such sufficiency or insufficiency with respect to clause (A) and (B), the Indenture Trustee may, but is not required to, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Pledged Assets for such purpose.

(c) If the Indenture Trustee collects any money or property pursuant to this Article V, such money or property shall be held by the Indenture Trustee as additional collateral hereunder and the Indenture Trustee shall pay out such money or property to the Collection Account for distribution in accordance with the provisions of Article VIII.

Section 5.05. Sale of Assets .

(a) The method, manner and time, place and terms of any sale of all of the Pledged Assets pursuant to Section 5.04(b) shall be commercially reasonable. The Indenture Trustee may from time to time postpone any sale by public announcement made at the time and place of such sale. The Indenture Trustee hereby expressly waives its right to any amount fixed by law as compensation for such sale.

(b) In connection with a sale of all of the Pledged Assets pursuant to Section 5.04(b), any Noteholder may bid for and purchase the property offered for sale, and upon compliance with the terms of such sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, deliver any Outstanding Notes or claims for interest thereon in lieu of cash up to the amount that shall, upon distribution of the net proceeds of such sale, be payable thereon.

(c) The Indenture Trustee may bid for and acquire any portion of the Pledged Assets securing the Notes in connection with a public sale thereof, and may pay all or part of the purchase price by crediting against amounts owing to the Indenture Trustee under this Indenture, including without limitation the costs, charges and expenses incurred by the Indenture Trustee in connection with such sale.

(d) The Indenture Trustee shall execute and deliver an appropriate instrument of conveyance transferring its interest in any portion of the Pledged Assets in connection with a sale thereof. In addition, the Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to transfer and convey its interest in any portion of the Pledged Assets in connection with a sale thereof, and to take all action necessary to effect such sale. No purchaser or transferee at such a sale shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies.

 

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Section 5.06. Limitations on Suits .

No Noteholder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or any Indenture Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(a) such Holder has previously given written notice to the Indenture Trustee of a continuing Event of Default;

(b) Noteholders holding Notes evidencing at least 25% of the Series Outstanding Amount of each Series of Outstanding Notes have made written request to the Indenture Trustee to institute such proceeding in respect of such Event of Default in its own name as the Indenture Trustee hereunder;

(c) such Noteholder or Noteholders have offered to the Indenture Trustee indemnity reasonably satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;

(d) the Indenture Trustee has failed to institute such proceedings for 60 days after its receipt of such notice, request and offer of indemnity; and

(e) no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Majority Investors;

it being understood and intended that no one or more Noteholders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Noteholders or to obtain or to seek to obtain priority or preference over any other Noteholders or to enforce any right under this Indenture, except in the manner herein provided.

If the Indenture Trustee receives conflicting or inconsistent requests and indemnity from two or more groups of Noteholders holding Notes, each evidencing less than a majority of the Series Outstanding Amount of each Series of Outstanding Notes, the Indenture Trustee shall act at the direction of the group of Noteholders holding Notes evidencing the greater amount of Notes; provided , however , that, notwithstanding any other provisions of this Indenture, if the Indenture Trustee receives conflicting or inconsistent requests and indemnity from two or more groups of Noteholders holding an equal amount of Notes, the Indenture Trustee in its sole discretion may determine what, if any, action shall be taken.

 

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Section 5.07. Unconditional Right of Noteholders to Receive Principal and Interest .

Notwithstanding any other provision of this Indenture, other than provisions hereof limiting the right to recover amounts due on the Notes to recoveries from the Pledged Assets, the holder of any Note shall have the absolute and unconditional right to receive payment of the principal of and interest on such Note as such principal and interest becomes due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Noteholder.

Section 5.08. Restoration of Rights and Remedies .

If the Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture or any Indenture Supplement and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders shall continue as though no such Proceeding had been instituted.

Section 5.09. Rights and Remedies Cumulative .

No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 5.10. Delay or Omission Not a Waiver .

No delay or omission of the Indenture Trustee or any Noteholder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be.

Section 5.11. Control by Noteholders .

Except as specifically set forth herein, the Majority Investors shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee, provided that

(a) such direction shall not be in conflict with any rule of law or with this Indenture;

 

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(b) if an Event of Default occurs with respect to less than all Series of Outstanding Notes, then the Indenture Trustee’s rights and remedies shall be limited to the rights and remedies pertaining only to those Series of Notes with respect to which such Event of Default has occurred, and the Indenture Trustee shall exercise such rights and remedies at the direction of the Noteholders holding Notes evidencing a majority of the Series Outstanding Amount of all such Series of Notes;

(c) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction; and

(d) such direction shall be in writing;

and provided , further , that subject to Section 6.01, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholders not consenting to such action.

Section 5.12. Waiver of Past Defaults .

Prior to the declaration of the acceleration of the maturity of the Notes of any Series as provided in Section 5.02, Noteholders holding Notes evidencing a majority of the Series Outstanding Amount of such Series of Notes may, on behalf of all such Noteholders, waive any past Default or Event of Default with respect to such Series of Notes and its consequences except a Default (a) in payment of principal of or interest on any of the Notes of such Series or (b) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Note of such Series. In the event of any such waiver, the Issuer, the Indenture Trustee and the Noteholders of such outstanding Series shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. The Issuer shall give prompt written notice of any waiver to the Rating Agencies.

 

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Section 5.13. Undertaking for Costs .

All parties to this Indenture agree, and each Noteholder by such Noteholder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as the Indenture Trustee, the filing by any party litigant in such Proceeding of an undertaking to pay the costs of such Proceeding, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such Proceeding, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided , however , the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder or group of Noteholders, in each case holding Notes evidencing in the aggregate more than 10% of the Series Outstanding Amount of any Series of Notes, or (c) any suit instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this Indenture.

Section 5.14. Waiver of Stay or Extension Laws .

The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture, and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 5.15. Action on Notes .

The Indenture Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Pledged Assets or upon any of the assets of the Issuer.

 

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ARTICLE VI

THE INDENTURE TRUSTEE

Section 6.01. Duties of the Indenture Trustee .

(a) If an Event of Default has occurred and is continuing and a Trustee Officer shall have actual knowledge or written notice of such Event of Default, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b) Except during the continuance of an Event of Default:

(i) the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and

(ii) in the absence of bad faith or negligence on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions and calculations expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; provided , however , that the Indenture Trustee, upon receipt of any resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Indenture Trustee that are specifically required to be furnished pursuant to any provision of this Indenture or any Indenture Supplement, shall examine them to determine whether they substantially conform, without verification of the accuracy of any computations therein, to the requirements of this Indenture or any Indenture Supplement. The Indenture Trustee shall give prompt written notice to the Noteholders and each Rating Agency of any material lack of conformity of any such instrument to the applicable requirements of this Indenture or any Indenture Supplement discovered by the Indenture Trustee that would entitle the Majority Investors to take any action pursuant to this Indenture or any Indenture Supplement if such lack of conformity cannot be cured.

(c) No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) this Section 6.01(c) shall not be construed to limit the effect of Section 6.01(a);

(ii) permissive rights of the Indenture Trustee shall not be construed as duties;

 

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(iii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Trustee Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts;

(iv) the Indenture Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the Indenture and at the direction of the Majority Investors relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or for exercising any trust or power conferred upon the Indenture Trustee under this Indenture; and

(v) no provision of this Indenture or of any Transaction Document shall require the Indenture Trustee to be responsible for the acts or omissions of the Servicer or to act as Successor Servicer until such time as it is required to act as Successor Servicer under this Indenture.

(d) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(e) Each provision of this Indenture that in any way relates to the Indenture Trustee is subject to Sections 6.01(a) and (b).

(f) The Indenture Trustee shall have no responsibility or liability for investment losses on Eligible Investments, except to the extent that the institution acting as Indenture Trustee is an obligor on such Eligible Investment.

(g) The Indenture Trustee shall notify each Rating Agency of any change in any rating of the Notes of any other Rating Agency of which the Indenture Trustee has received written notice pursuant to any of the Transaction Documents.

(h) For all purposes under this Indenture, the Indenture Trustee shall not be deemed to have notice or knowledge of any Event of Default, Servicer Default or Amortization Event unless a Trustee Officer assigned to and working in the Corporate Trust Office of the Indenture Trustee has actual knowledge thereof or has received written notice thereof. For purposes of determining the Indenture Trustee’s responsibility and liability hereunder, any reference to an Event of Default, Servicer Default or Amortization Event shall be construed to refer only to such event of which the Indenture Trustee is deemed to have notice as described in this Section 6.01(h).

Section 6.02. Notice of Event of Default .

Upon the occurrence of any Event of Default of which a Trustee Officer has actual knowledge or has received notice, the Indenture Trustee shall transmit by mail to all Noteholders

 

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as their names and addresses appear on the Note Register and to the Rating Agencies, notice of such Event of Default known to the Indenture Trustee within the later of (i) 30 days after such Event of Default occurs or (ii) ten Business Days after the Indenture Trustee receives such notice or obtains actual notice, if later.

Section 6.03. Rights of Indenture Trustee .

Except as otherwise provided in Section 6.01:

(a) The Indenture Trustee may conclusively rely and shall fully be protected in acting or refraining from acting on any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties.

(b) Whenever in the administration of this Indenture the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee may (unless other evidence be herein specifically prescribed), in the absence of bad faith on its part, rely on an Officer’s Certificate of the Issuer.

(c) The Indenture Trustee may consult with counsel with respect to any action to be taken, suffered or omitted by it hereunder and the written advice of such counsel, obtained in good faith, or any Opinion of Counsel or any Tax Opinion shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith reliance thereon.

(d) The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or to honor the request or direction of any of the Noteholders pursuant to this Indenture, or a Series Enhancer if so authorized by an Indenture Supplement unless such Noteholders or Series Enhancer shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.

(e) The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney.

(f) Subject to Section 6.13 hereof, the Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, Affiliates, attorneys, custodians or nominees; provided , however , that the Indenture Trustee shall continue to be responsible for any (i) misconduct or negligence on the part of any agent, Affiliates, attorney, custodians or nominees appointed by it hereunder and (ii) the supervision of such agents, Affiliates, attorneys, custodians or nominees after such appointment.

 

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(g) The Indenture Trustee shall not be liable for any actions taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights conferred upon the Indenture Trustee by this Indenture.

(h) If the Indenture Trustee is also acting as Paying Agent, Authentication Agent and Transfer Agent and Registrar, the rights and protections afforded to the Indenture Trustee pursuant to this Article VI shall also be afforded to such Paying Agent, Authentication Agent and Transfer Agent and Registrar.

Section 6.04. Not Responsible for Recitals or Issuance of Notes .

The recitals contained herein and in the Notes shall be taken as the statements of the Issuer, and the Indenture Trustee assumes no responsibility for their correctness. The Indenture Trustee makes no representation as to the validity or sufficiency of this Indenture, the other Transaction Documents, the Pledged Assets, the Notes or any related document. The Indenture Trustee shall not be accountable for the use or application by the Issuer of the proceeds from the Notes.

Section 6.05. May Hold Notes .

The Indenture Trustee and any Affiliates, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer, any Cartus Person and their Affiliates, any Series Enhancer, any underwriter or any of the other parties to the Transaction Documents with the same rights it would have if it were not the Indenture Trustee or an Affiliate of the Indenture Trustee.

Section 6.06. Money Held in Trust .

Money held by the Indenture Trustee in trust hereunder need not be segregated from other funds held by the Indenture Trustee in trust hereunder except to the extent required herein or required by law. The Indenture Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed upon in writing by the Indenture Trustee and the Issuer.

Section 6.07. Compensation, Reimbursement and Indemnification .

Pursuant to the Transfer and Servicing Agreement, the Issuer shall direct the Servicer to pay to the Indenture Trustee from time to time reasonable compensation for its services. The Indenture Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall cause the Servicer to reimburse the Indenture

 

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Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts. The Issuer shall cause the Servicer to indemnify the Indenture Trustee against any and all loss, liability or expense (including the fees of either in-house counsel or outside counsel, but not both) incurred by it in connection with the administration of this trust and the performance of its duties hereunder and under any other Transaction Document. The Indenture Trustee shall notify the Issuer and the Servicer promptly of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and the Servicer shall not relieve the Issuer of its obligations hereunder unless such loss, liability or expense could have been avoided with such prompt notification and then only to the extent of such loss, expense or liability which could have been so avoided. Neither the Issuer nor the Servicer need reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct, negligence or bad faith.

When the Indenture Trustee incurs expenses after the occurrence of a Default specified in subsection 5.02(d) with respect to the Issuer, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or similar law.

Section 6.08. Replacement of Indenture Trustee .

No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until the acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may resign at any time by giving 30 days’ written notice to the Issuer. The Majority Investors may remove the Indenture Trustee by so notifying the Indenture Trustee. The Issuer shall remove the Indenture Trustee if:

(a) the Indenture Trustee fails to comply with Section 6.11;

(b) the Indenture Trustee is adjudged a bankrupt or insolvent; or

(c) the Indenture Trustee otherwise becomes legally unable to act.

If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee (who satisfies the requirements of Section 6.11) subject to the consent of the Majority Investors.

A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee, the Issuer and the Servicer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this

 

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Indenture. The successor Indenture Trustee shall mail a notice of its succession to each Series Enhancer and all Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee.

If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Majority Investors may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.

Section 6.09. Successor Indenture Trustee by Merger .

If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee, provided that such corporation or banking association is otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall provide the Rating Agencies and each Series Enhancer with prior written notice of any such transaction.

Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee .

(a) Notwithstanding any other provisions of this Indenture, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Pledged Assets may at the time be located, the Indenture Trustee shall have the power and may execute and deliver at any time all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Pledged Assets, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such title to the Pledged Assets or any part thereof and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11, and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08 but notice shall be given to each Applicable Series Enhancer.

 

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(b) Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

(i) all rights, powers, duties and obligations conferred or imposed on the Indenture Trustee shall be conferred or imposed on, and exercised or performed by, the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Pledged Assets or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;

(ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

(iii) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.

(c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.

(d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

Section 6.11. Eligibility; Disqualification .

The Indenture Trustee shall at all times be a corporation organized and doing business under the laws of the United States or any State thereof authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and having long-term unsecured debt with a rating of at least Baa3 by Moody’s and BBB- by Standard & Poor’s and subject to supervision or examination by federal or state authority, and shall satisfy the requirements for a trustee set forth in paragraph (a)(4)(i) of Rule 3a-7 under the Investment Company Act.

 

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If at any time the Indenture Trustee ceases to be eligible in accordance with the provisions of this Section 6.11, the Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 6.08.

Section 6.12. Representations and Covenants of the Indenture Trustee .

The Indenture Trustee represents, warrants and covenants that:

(a) The Indenture Trustee is duly organized and validly existing under the laws of the jurisdiction of its organization;

(b) The Indenture Trustee has full power and authority to deliver and perform this Indenture and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and other Transaction Documents to which it is a party; and

(c) Each of this Indenture and other Transaction Documents to which it is a party has been duly executed and delivered by the Indenture Trustee and constitutes its legal, valid and binding obligation in accordance with its terms.

Section 6.13. Custody of Pledged Assets and Other Collateral .

The Indenture Trustee shall hold such of the Pledged Assets (and any other collateral that may be granted to the Indenture Trustee) as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit, and advices of credit in the State of Illinois. The Indenture Trustee shall hold such of the Pledged Assets as constitute investment property through a securities intermediary, which securities intermediary shall agree with the Indenture Trustee that (a) such investment property shall at all times be credited to a securities account of the Indenture Trustee, (b) such securities intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise each financial asset credited to such securities account, (c) all property credited to such securities account shall be treated as a financial asset, (d) such securities intermediary shall comply with entitlement orders originated by the Indenture Trustee without the further consent of any other person or entity, (e) such securities intermediary will not agree with any person other than the Indenture Trustee to comply with entitlement orders originated by such other person, (f) such securities accounts and the property credited thereto shall not be subject to any lien, security interest, right of set-off in favor of such securities intermediary or anyone claiming through it (other than the Indenture Trustee), and (g) such agreement shall be governed by the laws of the State of New York. Terms used in the preceding sentence that are defined in the NYUCC and not otherwise defined herein shall have the meaning set forth in the NYUCC. Except as permitted by this Section 6.13, the Indenture Trustee shall not hold Pledged Assets through an agent or a nominee.

 

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ARTICLE VII

NOTEHOLDERS’ LIST AND REPORTS BY INDENTURE TRUSTEE

Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders .

The Issuer shall furnish or cause the Transfer Agent and Registrar to furnish to the Indenture Trustee (a) upon each transfer of a Note, a list of the names, addresses and taxpayer identification numbers of the Noteholders as they appear on the Note Register as of such Record Date, in such form as the Indenture Trustee may reasonably require, and (b) at such other times as the Indenture Trustee may request in writing, within 10 days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided , however , that if the Indenture Trustee is the Transfer Agent and Registrar, the Indenture Trustee shall furnish to the Issuer such list in the same manner prescribed in clause (b) above.

Section 7.02. Preservation of Information .

If the Indenture Trustee is not the Transfer Agent and Registrar, the Indenture Trustee shall preserve the names, addresses and taxpayer identification numbers of the Noteholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01. The Indenture Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished.

ARTICLE VIII

ALLOCATION AND APPLICATION OF POOL COLLECTIONS

Section 8.01. Collection of Money .

Except as otherwise expressly provided herein and in each related Indenture Supplement, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall hold all such money and property received by it in trust for the Noteholders and shall apply it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under the Transfer and Servicing Agreement or any other Transaction Document, the Indenture Trustee may, and upon the request of the Majority Investors shall, take such action

 

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as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate proceedings. Any such action shall be without prejudice to any right to claim an Event of Default under this Indenture and to proceed thereafter as provided in Article V hereof.

Section 8.02. Rights of Noteholders .

The Notes shall represent limited recourse obligations of the Issuer secured by the Pledged Assets, including the benefits of any Series Enhancement issued with respect to any Series of Notes and the right to receive Pool Collections and other amounts at the times and in the amounts specified in this Article VIII or in the applicable Indenture Supplement to be deposited in Collection Account and any Series Accounts (if so specified in the related Indenture Supplement). The Notes do not represent obligations of, or interests in, Cartus, CFC, the Transferor or the Servicer. The Notes are limited in right of payment to Pool Collections on the Pledged Assets and other assets of the Issuer allocable to the Notes as provided herein and in the applicable Indenture Supplement.

Section 8.03. Establishment of Accounts .

(a) Establishment of Collection Account . The Collection Account shall be established and maintained in accordance with the provisions of the Transfer and Servicing Agreement. An Indenture Supplement may establish sub-accounts to the Collection Account as specified in such Indenture Supplement to effect allocations to a Series in accordance with such Indenture Supplement. Funds on deposit in any subaccount of the Collection Account shall not be commingled with (i) funds on deposit in any other subaccount of the Collection Account or (ii) funds on deposit in the Collection Account which have not been allocated to any subaccount of the Collection Account.

(b) Establishment of Distribution Account . The Paying Agent, for the benefit of the Noteholders, shall cause to be established and maintained with the Paying Agent, a non-interest bearing segregated trust account that is a Qualified Account (the “ Distribution Account ”) bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of Noteholders. The Paying Agent shall possess all right, title and interest in all funds on deposit from time to time in the Distribution Account and in all proceeds thereof. The Distribution Account shall be under the sole dominion and control of the Paying Agent for the benefit of Noteholders. If the Distribution Account ceases at any time to be a Qualified Account, the Indenture Trustee shall within 10 Business Days (or such longer period, not to exceed 30 calendar days) establish a new Distribution Account which is a Qualified Account, transfer any funds on deposit in the existing Distribution Account to such new Distribution Account and from the date such new Distribution Account is established, it shall be the “ Distribution Account .”

(c) Establishment of Series Accounts . If so provided in the related Indenture Supplement, the Issuer, for the benefit of the Noteholders and other Person as may be identified

 

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in such Indenture Supplement, shall establish and maintain with the Indenture Trustee or its nominee in the name of the Indenture Trustee one or more Series Accounts, which Series Accounts also shall be Qualified Accounts (unless such requirement is waived in the related Indenture Supplement). Each such Series Account shall bear a designation clearing indicating that the funds deposited therein are held for the benefit of Noteholders of such Series.

Section 8.04. Pool Collections and Allocations .

(a) The Issuer shall cause the Servicer to deposit Pool Collections into the Collection Account as promptly as possible after the receipt in a Lockbox Account of such Pool Collections, but in no event later than the second Business Day following the receipt in a Lockbox Account of such Pool Collections.

(b) The Issuer agrees that if any Pool Collections are received by the Issuer in an account other than the Collection Account, such monies, instruments, cash and other proceeds will not be commingled by the Issuer with any of its other funds or property, if any, but will be held separate and apart therefrom and will be held in trust by the Issuer for, and immediately remitted to, the Indenture Trustee, with any necessary endorsement.

(c) (i) Prior to the allocation of funds as set forth in clause (ii), the Indenture Trustee shall make the distributions set forth in Sections 3.02(c)(vi), 3.12 and 3.14(b) of the Transfer and Servicing Agreement.

(ii) After making the distributions set forth in clause (i), the Indenture Trustee shall allocate all funds on deposit in the Collection Account to each Series based on the Series Percentage of such Series as set forth in the Indenture Supplement related to such Series. Amounts allocated to any Series shall not, except as specified in the related Indenture Supplement, be available to the Noteholders of any other Series. The Indenture Supplement shall specify how amounts allocated to such Series will be applied.

(d) At any time a Series is in its Amortization Period, the Issuer agrees that any Pool Collections that would otherwise be released to the Issuer under the terms of any Indenture Supplement related to any other Series which is not in its Amortization Period, will be allocated to such amortizing Series and used to pay the principal of such amortizing Series. To the extent more than one Series is in its Amortization Period, such funds will be allocated ratably among each amortizing Series based on their respective Series Percentages. Notwithstanding anything to the contrary, no Pool Collections that would otherwise be released to the Issuer shall be paid to an amortizing Series unless the terms of the related Indenture Supplement specifically require the allocation of such funds to such amortizing Series.

(e) On each Deposit Date, except as otherwise provided in an Indenture Supplement, the Indenture Trustee shall pay to the Issuer the remaining funds, if any, on deposit in the Collection Account on such Deposit Date after giving effect to transfers to be made pursuant to Section 8.04(c).

 

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(f) Notwithstanding the preceding provisions of this Section 8.04, so long as no Servicer Default or Event of Default shall have occurred and be continuing and no Amortization Period for any Series of Notes is then in effect, the Trustee shall not be required to make the allocations and determinations set forth in Section 8.04(c) on any date other than a Distribution Date and, so long as no Asset Deficiency exists or would result therefrom, the Trustee is authorized to release to the Issuer, without an accounting from the Servicer, all Pool Collections not required under the terms of any Supplement to be set aside for the benefit of the Noteholders on any other Deposit Date.

Section 8.05. Release of Pledged Assets .

(a) The Indenture Trustee may, and when required by the provisions of this Indenture or the other Transaction Documents shall, execute instruments to release property from the lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture or the Transaction Documents. No party relying on an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies.

(b) The Indenture Trustee shall, at such time as there are no Notes outstanding, release and transfer, without recourse, representation or warranty, all of the Pledged Assets that secured the Notes (other than any cash held for the payment of the Notes pursuant to Section 4.02) to the Issuer.

Section 8.06. Officer’s Certificate .

The Issuer shall provide the Indenture Trustee with at least seven days’ notice when requesting the Indenture Trustee to take any action pursuant to Section 8.05(a), which notice shall be accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Officer’s Certificate stating that such action is authorized hereunder and under the Transaction Documents and will not materially and adversely impair the security for the Notes or the rights of the Noteholders under this Indenture. The Indenture Trustee may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.

Section 8.07. Money for Note Payments to Be Held in Trust .

All payments of amounts due and payable with respect to the Notes that are to be made from amounts withdrawn from the Collection Account shall be made on behalf of the Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so withdrawn from the Collection Account shall be paid over to or at the direction of the Issuer except as provided in this Section 8.07, Section 8.04(d) or in the related Indenture Supplement.

 

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On or before each Distribution Date, in accordance with the instructions of the Servicer, the Indenture Trustee shall deposit or cause to be deposited in the Distribution Account for each outstanding Series an aggregate sum sufficient to pay the amounts then becoming due under the Notes of such outstanding Series, such sum to be held in trust for the benefit of the Persons entitled thereto.

ARTICLE IX

DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS

Distributions shall be made to, and reports shall be provided to, Noteholders as set forth in the applicable Indenture Supplement. The identity of the Noteholders with respect to distributions and reports shall be determined according to the immediately preceding Record Date.

ARTICLE X

SUPPLEMENTAL INDENTURES

Section 10.01. Supplemental Indentures Without Consent of Noteholders .

(a) Without the consent of the Holders of any Notes but with prior notice to the Rating Agencies and each Applicable Series Enhancer and upon satisfaction of the Rating Agency Condition with respect to the Notes of all Series, the Issuer, the Indenture Trustee , the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar, at any time and from time to time, may enter into an indenture or indentures supplemental hereto for any of the following purposes:

(i) to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure, convey and confirm to the Indenture Trustee any property subject, or required to be subjected, to the lien of this Indenture, or to subject to the lien of this Indenture additional property;

(ii) to add to the covenants of the Issuer, for the benefit of the Holders of the Notes, or to surrender any right or power herein conferred upon the Issuer;

(iii) to convey, transfer, assign, mortgage or pledge any property to or with the consent of the Indenture Trustee;

(iv) to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provision herein or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture;

 

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(v) to evidence and provide for the acceptance of the appointment hereunder by a successor indenture trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the Pledged Assets hereunder by more than one trustee, pursuant to the requirements of Article VI;

(vi) to provide for the issuance of one or more new Series of Notes, in accordance with the provisions of Section 2.10; or

(vii) to provide for the termination of any Series Enhancement in accordance with the provisions of the related Indenture Supplement; provided , however , that such action shall not adversely affect in any material respect the interests of any Noteholder, as evidenced by an Officer’s Certificate of an Authorized Officer delivered to the Indenture Trustee (at the Issuer’s expense).

The Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar are hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

(b) The Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar also, without the consent of any Noteholders of any outstanding Series but with prior notice to the Rating Agencies and each Applicable Series Enhancer and upon satisfaction of the Rating Agency Condition and the written consent of each Applicable Series Enhancer with respect to the Notes of all outstanding Series, may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided , however , that the Issuer shall have delivered to the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar an Officer’s Certificate, dated the date of any such action, stating that the Issuer reasonably believes that such action will not have a Material Adverse Effect. Additionally, notwithstanding the preceding sentence, the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar also, without the consent of any Noteholders of any outstanding Series, may enter into an indenture or indentures supplemental hereto to add, modify or eliminate such provisions as may be necessary or advisable in order to enable the Issuer (i) to qualify as, and to permit an election to be made to cause the Issuer to be treated as, a “financial asset securitization investment trust” as described in the provisions of Section 860L of the Code, (ii) to avoid the imposition of state or local income or franchise taxes imposed on the Issuer’s property or its income and (iii) to add, modify or eliminate such provisions as may be necessary and desirable to implement any revisions to the Uniform Commercial Code as in force in the applicable jurisdiction; provided , however , that the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar shall not enter into any such indenture or supplement unless (w) the Issuer delivers to the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar and each Applicable Series Enhancer an Officer’s Certificate dated the date of such

 

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supplemental indenture, stating that the Issuer reasonably believes that such supplemental indenture will not have a Material Adverse Effect, (x) each Rating Agency has notified the Issuer, the Servicer, the Indenture Trustee and each Applicable Series Enhancer in writing that the Rating Agency Condition with respect to each outstanding Series has been satisfied, (y) such amendment does not (without the consent of the Indenture Trustee) affect the rights, duties or obligations of the Indenture Trustee hereunder and (z) such amendment does not (without the consent of the Paying Agent, the Authentication Agent or the Transfer Agent and Registrar, as the case may be) affect the rights, duties or obligations of the Paying Agent, the Authentication Agent or the Transfer Agent and Registrar, as the case may be hereunder.

Section 10.02. Supplemental Indentures with Consent of Noteholders .

The Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar also, with prior notice to the Rating Agencies and with the consent of the Majority Investors, by Act of such Holders delivered to the Issuer and the Indenture Trustee, may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Noteholders of all Series under this Indenture. If an indenture or indentures supplemental hereto affects only the Noteholders of a particular Series of Notes, then the consent of the Holders of a majority of the Series Outstanding Amount of such Series shall be required to such indenture or indenture supplemental. Notwithstanding the foregoing, no supplemental indenture shall, without the consent of Holders of 100% of the Series Outstanding Amount of the Outstanding Notes affected thereby:

(a) change the due date of any payment of principal of or interest on any Note, or reduce the principal amount thereof, the interest rate specified thereon or the redemption price with respect thereto or change any place of payment where, or the coin or currency in which, any Note or any interest thereon is payable;

(b) impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor to the payment of any such amount due on the Notes on or after the respective due dates thereof, as provided in Article V (or, in the case of redemption, on or after the Redemption Date);

(c) reduce the percentage that constitutes a majority of the Series Outstanding Amount of the Notes of any Series the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences as provided for in this Indenture;

(d) reduce the percentage of the Outstanding Amount of the Notes which is required to direct the Indenture Trustee to sell or liquidate the Pledged Assets if the proceeds of such sale would be insufficient to pay the principal amount and accrued but unpaid interest on the Outstanding Notes;

 

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(e) decrease the percentage of the aggregate principal amount of the Notes required to amend the sections of this Indenture that specify the applicable percentage of the aggregate principal amount of the Notes of such Series necessary to amend the Indenture or any Transaction Documents that require such consent;

(f) modify or alter the provisions of this Indenture regarding the voting of Notes held by the Issuer, any other obligor on the Notes, the Transferor, the Servicer or any Affiliate of any of the foregoing Persons; or

(g) permit the creation of any Lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Pledged Assets for any Notes or, except as otherwise permitted or contemplated herein, terminate the lien of this Indenture on any such Pledged Assets at any time subject hereto or deprive the Holder of any Note of the security provided by the lien of this Indenture.

It shall not be necessary for any Act of Noteholders under this Section 10.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

Promptly after the execution by the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar of any Supplement Indenture pursuant to this Section 10.02, the Paying Agent shall mail to the Holders of the Notes to which such supplemental indenture relates written notice setting forth in general terms the substance of such supplement indenture; provided , however , that any failure of the Paying Agent to mail such notice, or any defect therein, shall not in any way impair or affect the validity of any such supplemental indenture.

Section 10.03. Execution of Supplemental Indentures .

In executing, or permitting the additional trusts created by any supplemental indenture permitted by this Article X or the modification thereby of the trusts created by this Indenture, the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar shall be entitled to receive, and subject to Section 6.01, shall be fully protected in relying on, an Officer’s Certificate stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise. The Paying Agent, the Authentication Agent and the Transfer Agent and Registrar, as the case may be, may, but shall not be obligated to, enter into any such supplemental indenture that affects their respective rights, duties, liabilities or immunities under this Indenture or otherwise.

 

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Section 10.04. Effect of Supplemental Indenture .

Upon the execution of any supplemental indenture under this Article X, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes, and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

Section 10.05. Reference in Notes to Supplemental Indentures .

Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article X may, and if required by the Authentication Agent shall, bear a notation in form approved by the Indenture Trustee and the Authentication Agent as to any matter provided for in such supplemental indenture. If the Issuer shall so determine, new Notes modified so as to conform, in the opinion of the Indenture Trustee and the Authentication Agent and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Authentication Agent in exchange for the Outstanding Notes.

ARTICLE XI

DEFEASANCE

Section 11.01. Defeasance .

Notwithstanding anything to the contrary in this Indenture or any Indenture Supplement:

(a) The Issuer may at its option be discharged from its obligations hereunder with respect to any Series or all outstanding Series (each, a “ Defeased Series ”) on the date the applicable conditions set forth in subsection 11.01(c) are satisfied (a “ Defeasance ”); provided , however , that the following rights, obligations, powers, duties and immunities shall survive with respect to each Defeased Series until otherwise terminated or discharged hereunder: (i) the rights of the Holders of Notes of the Defeased Series to receive payments in respect of principal of and interest on such Notes when such payments are due; (ii) the Issuer’s obligations with respect to such Notes under Sections 2.05 and 2.06; (iii) the rights, powers, trusts, duties, and immunities of the Indenture Trustee, the Paying Agent and the Transfer Agent and Registrar hereunder; and (iv) this Section 11.01 and Section 12.14.

(b) Subject to Section 11.01(c), no Pool Collections shall be allocated to any Defeased Series.

 

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(c) The following shall be the conditions precedent to any Defeasance under Section 11.01(a):

(i) the Issuer irrevocably shall have deposited or caused to be deposited with the Indenture Trustee, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Indenture Trustee and any Applicable Series Enhancer, as trust funds in trust for making the payments described below, (A) Dollars in an amount equal to, or (B) Eligible Investments which through the scheduled payment of principal and interest in respect thereof will provide, not later than the due date of payment thereon, money in an amount equal to, or (C) a combination thereof, in each case sufficient to pay and discharge, and which shall be applied by the Indenture Trustee to pay and discharge, all remaining scheduled interest and principal payments on all Outstanding Notes of each Defeased Series and all other amounts owing in respect of such Defeased Series (including all amounts owing under any related Enhancement Agreement to any Series Enhancer) on the dates scheduled for such payments in this Indenture and the applicable Indenture Supplements;

(ii) a statement from a firm of nationally recognized independent public accountants (who also may render other services to the Issuer) to the effect that such deposit is sufficient to pay the amounts specified in clause (i) above;

(iii) prior to its first exercise of its right pursuant to this Section 11.01 with respect to a Defeased Series to substitute money or Eligible Investments for Receivables, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel to the effect that such deposit and termination of obligations will not result in the Issuer being required to register as an “investment company” within the meaning of the Investment Company Act;

(iv) the Issuer shall have delivered to the Indenture Trustee and each Applicable Series Enhancer an Officer’s Certificate of the Issuer stating that the Issuer reasonably believes that such deposit and termination of obligations will not, based on the facts known to such officer at the time of such certification, then cause an Event of Default or Amortization Event with respect to any Series or any event that, with the giving of notice or the lapse of time, would result in the occurrence of a Event of Default or Amortization Event with respect to any Series;

(v) the Rating Agency Condition shall have been satisfied and the Issuer shall have delivered copies of such written notice to the Servicer, the Indenture Trustee and each Applicable Series Enhancer; and

(vi) the Issuer shall have delivered to the Indenture Trustee and each Applicable Series Enhancer a Tax Opinion.

 

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ARTICLE XII

MISCELLANEOUS

Section 12.01. Compliance Certificates and Opinions, etc .

(a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture or any other Transaction Document, the Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section 12.01, except that, in the case of any such application or request as to which the furnishing of specific documents is required by any provision of this Indenture, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

(b)(i) Prior to the deposit of any Pledged Assets or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 12.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the Pledged Assets or other property or securities to be so deposited.

 

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(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (i) above, the Issuer also shall deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to clause (i) above and this clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a certificate need not be furnished with respect to any securities so deposited if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than 10% of the Outstanding Amount of the Notes.

(iii) Other than as provided in the Granting Clause, whenever any property or securities are to be released from the lien of this Indenture, the Issuer also shall furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (iii) above, the Issuer also shall furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities and of all other property, other than as provided in the Granting Clause, or securities released from the lien of this Indenture since the commencement of the then current calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv), equals 10% or more of the Outstanding Amount of the Notes, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than 10% of the then Outstanding Amount of the Notes.

(v) Notwithstanding any provision of this Section 12.01, the Issuer may (A) collect, liquidate, sell or otherwise dispose of Receivables as and to the extent permitted or required by the Transaction Documents and (B) make cash payments out of the Series Accounts as and to the extent permitted or required by the Transaction Documents, and the provisions of the Granting Clause shall apply.

Section 12.02. Form of Documents Delivered to Indenture Trustee .

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

 

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Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such officer’s certificate or opinion is based are erroneous. Any such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer or the Issuer, stating that the information with respect to such factual matters is in the possession of the Servicer or the Issuer, unless such Responsible Officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

In any case in which any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

Section 12.03. Acts of Noteholders .

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent duly appointed in writing and satisfying any requisite percentages as to the minimum number or Dollar value of outstanding principal amount represented by such Noteholders; and except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, to the extent hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “ Act ” of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 12.03.

 

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(b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Indenture Trustee deems sufficient.

(c) The ownership of Notes shall be proved by the Note Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder (and any transferee thereof) of every Note issued upon the registration thereof in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.

Section 12.04. Notices to Issuer, Indenture Trustee, Paying Agent, Authentication Agent and Transfer Agent and Registrar .

All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered at, sent by facsimile to, sent by courier at or mailed by certified or registered mail, return receipt requested, to (a) in the case of the Issuer, to 40 Apple Ridge Road, Suite 4C45, Danbury, Connecticut 06810, Attention: Controller, (b) in the case of the Indenture Trustee, to the Corporate Trust Office, (c) in the case of the Paying Agent, the Authentication Agent or the Transfer Agent and Registrar, to 101 Barclay Street, 4W, New York, New York 10286 and (d) in the case of the Rating Agency for a particular Series, the address, if any, specified in the Indenture Supplement relating to such Series; or, as to each party, at such other address as shall be designated by such party in a written notice to each other party.

Section 12.05. Notices to Noteholders; Waiver .

In any case in which this Indenture provides for notice to Noteholders or a Series Enhancer of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed by registered or certified mail or first class postage prepaid or national overnight courier service to each Noteholder or Series Enhancer affected by such event, at the Noteholder’s address as it appears on the Note Register or at the Series Enhancer’s address for notices set forth in the relevant agreement relating to Series Enhancement, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. If notice to Noteholders or a Series Enhancer is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Person shall affect the sufficiency of such notice with respect to other Persons, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

In any case in which this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee (with a copy to the Paying Agent), but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

 

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If, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee or the Paying Agent, as the case may be, shall be deemed to be a sufficient giving of such notice.

Section 12.06. Alternate Payment and Notice Provisions .

Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Issuer, with the consent of the Paying Agent, may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Indenture for such payments or notices. The Issuer shall furnish to the Indenture Trustee or/and the Paying Agent a copy of each such agreement and the Paying Agent or the Indenture Trustee, as the case may be, shall cause payments to be made and notices to be given in accordance with such agreements.

Section 12.07. Effect of Headings and Table of Contents .

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

Section 12.08. Successors and Assigns .

All covenants and agreements in this Indenture by the Issuer shall bind its successors and assigns, whether so expressed or not.

Section 12.09. Separability .

If any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 12.10. Benefits of Indenture .

Nothing in this Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and their successors hereunder, any Series Enhancer and the Noteholders, any benefit.

 

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Section 12.11. Legal Holidays .

If the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date.

Section 12.12. GOVERNING LAW .

THE INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

Section 12.13. Counterparts .

This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 12.14. No Petition .

The Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar, by entering into this Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree that they will not at any time institute against the Issuer, the Transferor or CFC, or join in any institution against the Issuer, the Transferor or CFC, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, this Indenture or any of the Transaction Documents until the expiration of one year and one day after payment in full of the latest maturing Note issued by the Issuer under this Indenture. This Section shall survive termination of the Indenture.

Section 12.15. Provision of Information to Rating Agencies .

At the request of a Rating Agency, the Indenture Trustee will provide such Rating Agency with any reports and other written information it has received from the Servicer for distribution to Noteholders.

 

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Section 12.16. Conversion . Notwithstanding any covenants in this Agreement requiring Cartus, CFC or ARSC to maintain its “corporate existence”, such entity may elect to convert their status from that of a Delaware corporation to that of a Delaware limited liability company, either by filing a certificate of conversion with the Delaware Secretary of State or by merging with and into a newly formed Delaware limited liability company(such conversion or merger, as applicable, being herein called a “Conversion”) subject to the conditions that:

(a)(x) the Person formed by such Conversion (any such Person, the “Surviving Entity”) is an entity organized and existing under the laws of the United States of America or any State thereof, (y) such Surviving Entity expressly assumes, by an agreement in form and substance satisfactory to the applicable transferee and its assignees, performance of every covenant and obligation of such Person under the Transaction Documents to which such Person is a party and (z) such Surviving Entity delivers to the other parties to the Fifth Omnibus Amendment hereto dated as of April 10, 2007 (such parties, the “Amendment Parties”) an opinion of counsel that such Surviving Entity is duly organized and validly existing under the laws of its organization, has duly executed and delivered such supplemental agreement, and such supplemental agreement is a valid and binding obligation of such Surviving Entity, enforceable against such Surviving Entity in accordance with its terms (subject to customary exceptions relating to bankruptcy and equitable principles) and covering such other matters as the Amendment Parties may reasonably request;

(b) all actions necessary to maintain the perfection of the security interests or ownership interests created by such Person under the Transaction Documents to which such Person is a party in connection with such Conversion shall have been taken, as evidenced by an opinion of counsel reasonably satisfactory to the Amendment Parties;

(c) so long as such Person is the Servicer, no Servicer Default or Unmatured Servicer Default is then occurring or would result from such Conversion;

(d) in the case of a Conversion of CFC or ARSC, (x) the organizational documents of any Surviving Entity with respect to CFC or ARSC shall contain limitations on its business activities and requirements for independent directors or managers substantially equivalent to those set forth in its current organizational documents, and (y) Orrick Herrington & Sutcliffe shall have delivered an opinion of counsel reasonably satisfactory to the Amendment Parties that such Conversion will not, in and of itself, alter the conclusions set forth in its opinions previously issued in connection with the Transaction Documents with respect to true sale matters, substantive consolidation matters and bankruptcy issues relating to “home sale proceeds” (to the extent such opinions relate to such Person); and

(e) each Amendment Party shall have received such other documents as such Amendment Party may reasonably request.

In connection with any such Conversion and the resulting change in name of such entity, Cartus, CFC and/or ARSC, as applicable, shall be required to comply with the name change covenants in the Transaction Documents, except that to the extent 30 days prior written notice of the name change is required, such notice period shall be reduced to five Business Days.

 

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From and after any such Conversion effected in compliance with the above conditions, (a) all references in the Transaction Documents to any Person which has altered its corporate structure to become a limited liability company shall be deemed to be references to the Surviving Entity as successor to such Person, (b) all representations, warranties and covenants in the Transaction Documents which state that any of Cartus, CFC or ARSC is or is required to be a corporation shall be deemed to permit and require the Surviving Entity to be a limited liability company, (c) all references to such Person’s certificate of incorporation, other organizational documents, capital stock, corporate action or other matters relating to its corporate form will be deemed to be references to the organizational documents and analogous matters relating to limited liability companies, (d) all references to such Person’s directors or independent directors will be deemed to be references to the Surviving Entity’s directors, independent directors, managers or independent managers, as the case may be and (e) no representation, warranty or covenant in any Transaction Document shall be deemed to be breached or violated solely as a result of the fact that the Surviving Entity in any Conversion may be disregarded as a separate entity for state, local or federal income tax purposes.

Section 12.17. Inclusion of Receivables Assigned from Kenosia Funding LLC and Cartus Relocation Corporation . The parties hereto acknowledge and agree that the definition of “Seller Receivables” in the Receivables Purchase Agreement may include certain Receivables (the “Acquired Receivables’) which were neither sold by Cartus to CFC under the Purchase Agreement nor originated by CFC. The parties hereto acknowledge and agree that, for all purposes of the Affected Documents, (i) the Acquired Receivables shall be considered to be CFC Receivables originated by CFC, and shall be deemed to be included in the ARSC Purchased Assets transferred to the Issuer and (ii), notwithstanding anything to the contrary in the Affected Documents, CFC shall be allowed to enter into an assignment agreement with each of Cartus, Kenosia and CRC, the form of which has been approved in writing by the Majority Investors, and to consummate the transfer of the Acquired Receivables along with the Related Property relating to such Acquired Receivables (collectively, the “Acquired Assets”) on the terms and conditions set forth therein. Such conditions shall include evidence of compliance with the Federal Assignment of Claims Act and confirmation from the Rating Agencies that the commercial paper ratings of the Conduit Purchasers under the Note Purchase Agreement will not be reduced or withdrawn by reason of such transaction. The parties hereto further acknowledge and agree that, so long as such Acquired Receivables satisfy all other criteria set forth in the definition of “Eligible Receivable”, such Acquired Receivables shall constitute Eligible Receivables within the meaning of the Receivables Purchase Agreement, the Transfer and Servicing Agreement and the Indenture notwithstanding the fact that such Acquired Receivables were neither sold to CFC under the Purchase Agreement nor otherwise originated by CFC.

 

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IN WITNESS WHEREOF, the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent and the Transfer Agent and Registrar have caused this Indenture to be duly executed by their respective officers thereunto duly authorized and attested, all as of the day and year first above written.

 

APPLE RIDGE FUNDING LLC,
as Issuer

By:    
  Name:
  Title:

THE BANK OF NEW YORK,
as Indenture Trustee

By:    
  Name:
  Title:

THE BANK OF NEW YORK,
as Paying Agent, Authentication Agent and Transfer Agent and Registrar

By:    
  Name:
  Title:

[Signature Page to Master Indenture]


DISTRICT OF COLUMBIA    )   
   )    ss.:
COUNTY OF __________    )   

BEFORE ME, the undersigned authority, a Notary Public in and for said County and State, on this day personally appeared                                          known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said Delaware limited liability company and that she/he executed the same as the corporation for the purpose and consideration therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this          day of                      , 2000.

 

   
Notary Public
 
[Seal]

 

My commission expires:
   


STATE OF NEW YORK    )   
   )    ss.:
COUNTY OF NEW YORK    )   

BEFORE ME, the undersigned authority, a Notary Public in and for said County and State, on this day personally appeared Steve M. Husbands known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said national banking organization and that she/he executed the same as the corporation for the purpose and consideration therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this          day of                      , 2000.

 

   
Notary Public
 
[Seal]

 

My commission expires:
   

 


STATE OF NEW YORK    )   
   )    ss.:
COUNTY OF _______    )   

BEFORE ME, the undersigned authority, a Notary Public in and for said County and State, on this day personally appeared known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said New York banking corporation and that she/he executed the same as the corporation for the purpose and consideration therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this          day of                      , 2000.

 

   
Notary Public
 
[Seal]

 

My commission expires:
   


Exhibit A-5


CONFORMED COPY

AS AMENDED BY:

Fifth Omnibus Amendment dated April 10, 2007

PERFORMANCE GUARANTY

This Performance Guaranty (this “ Guaranty ”), dated as of May 12, 2006 and effective on and after the Effective Date (as defined herein), is executed by Realogy Corporation, a Delaware corporation (the “ Performance Guarantor ”) in favor of Cartus Financial Corporation, a Delaware corporation (“ CFC ”), and Apple Ridge Funding LLC, a Delaware limited liability company, as Issuer (the “ Issuer ”) under the Master Indenture dated as of April 25, 2000 (as amended by that certain Omnibus Amendment dated December 20, 2004, that certain Second Omnibus Amendment dated January 31, 2005, that certain Amendment, Agreement and Consent dated January 30, 2006, that certain Third Omnibus Amendment, Agreement and Consent dated May 12, 2006 and as such may be amended, restated, supplemented or otherwise modified from time to time, the “ Indenture ”) among the Issuer, JPMorgan Chase Bank, National Association (successor by merger to Bank One, NA), a national banking association, as indenture trustee and The Bank of New York, as paying agent. Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings ascribed to them in the Indenture or that certain Purchase Agreement dated as of April 25, 2000 (as amended, restated, supplemented or otherwise modified from time to time, the “ Purchase Agreement ”) between CFC and Cartus Corporation, a Delaware corporation (“ Cartus ”).

WHEREAS, Cartus on the Effective Date will be a wholly-owned Subsidiary of the Performance Guarantor and the Performance Guarantor is expected to receive substantial direct and indirect benefits from the transactions contemplated in the Purchase Agreement, the Receivables Purchase Agreement, the Transfer and Servicing Agreement and the Indenture;

WHEREAS, as an inducement for (i) CFC to make purchases under the Purchase Agreement and (ii) the Issuer to acquire the ARSC Purchased Assets under the Transfer and Servicing Agreement, the Performance Guarantor has agreed to guaranty the due and punctual payment and performance of Cartus’s obligations, whether as Originator under the Purchase Agreement or as Servicer under the Transfer and Servicing Agreement;

NOW, THEREFORE, the Performance Guarantor hereby agrees with CFC and the Issuer as follows:

§1. Definitions .

As used herein:

Effective Date ” means, the date on which Realogy Corporation and its subsidiaries cease to be subsidiaries of the entity known on the date of this Guaranty as Cendant Corporation.

Obligations ” means, collectively, all covenants, agreements, terms, conditions and other obligations to be performed and observed by Cartus (whether in its capacity as


Originator under the Purchase Agreement or as Servicer under the Transfer and Servicing Agreement) under the Purchase Agreement or the Transfer and Servicing Agreement, and shall include without limitation the due and punctual payment when due of all sums that are or may become owing by Cartus under the Purchase Agreement or the Transfer and Servicing Agreement, whether in respect of fees, expenses (including counsel fees), indemnified amounts, amounts required to be paid by Cartus pursuant to Section 4.3 of the Purchase Agreement or Section 3.10 of the Transfer and Servicing Agreement, advances required to be made pursuant to Section 3.12 of the Transfer and Servicing Agreement or otherwise, including without limitation any such fees, expenses and other amounts that accrue after the commencement of any Insolvency Proceeding with respect to Cartus (in each case whether or not allowed as a claim in such Insolvency Proceeding).

§2. Guaranty of Obligations . The Performance Guarantor on and after the Effective Date hereby guarantees to CFC and the Issuer (each, a “ Guarantied Party ”), the full and punctual payment and performance by Cartus of all of the Obligations. This Guaranty is, on and after the Effective Date, an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the Obligations and is in no way conditioned upon any requirement that any Guarantied Party first attempt to collect any amounts owing by Cartus to such Guarantied Party from Cartus or resort to any collateral security, any balance of any deposit account or credit on the books of any Guarantied Party in favor of Cartus or any other Person or other means of obtaining payment. Should Cartus default in the payment or performance of any of the Obligations, any Guarantied Party may cause the immediate performance by the Performance Guarantor of the Obligations and cause any payment Obligations to become forthwith due and payable to such Guarantied Party, without demand or notice of any nature (other than as expressly provided herein or in the Transaction Documents), all of which are expressly waived by the Performance Guarantor.

§3. Performance Guarantor’s Further Agreements to Pay . The Performance Guarantor further agrees, as the principal obligor and not as a guarantor only, to pay to each Guarantied Party, forthwith upon demand in funds immediately available to such Guarantied Party, all reasonable costs and expenses (including court costs and legal expenses) incurred or expended by such Guarantied Party in connection with the Obligations, this Guaranty and the enforcement thereof, together with interest on amounts recoverable under this Guaranty from the time when such amounts become due until payment, at a rate of interest (computed for the actual number of days elapsed based on a 360 day year) equal to the rate or interest most recently published in The Wall Street Journal as the “Prime Rate” plus 2%. Changes in the rate payable hereunder shall be effective on each date on which a change in the “Prime Rate” is published.

§4. Waivers by Performance Guarantor; Freedom to Act . The Performance Guarantor waives notice of acceptance of this Guaranty, notice of any action taken or omitted by any Guarantied Party in reliance on this Guaranty, and any requirement that any Guarantied Party be diligent or prompt in making demands under this Guaranty, giving notice of any Purchase Termination Event or Servicer Default (so long as Cartus is the Servicer) or asserting any other rights of any Guarantied Party under this Guaranty. The Performance Guarantor also irrevocably waives all defenses that at any time may be available in respect of the Obligations by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or thereafter in effect. Each Guarantied Party shall be at liberty, without giving notice to or obtaining the

 

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consent of the Performance Guarantor, to deal with Cartus and with each other party who now is or after the date hereof becomes liable in any manner for any of the Obligations, in such manner as such Guarantied Party in its sole discretion deems fit, and to this end the Performance Guarantor agrees that the validity and enforceability of this Guaranty, including without limitation the provisions of Section 7 hereof, shall not be impaired or affected by any of the following: (a) an amendment or modification of, or supplement to, any Transaction Document, including without limitation any extension, modification or renewal of, or indulgence with respect to, or substitution for, the Obligations or any part thereof at any time; (b) any waiver, consent, extension, granting of time, forbearance, indulgence or other action or inaction under or in respect of any Transaction Document or any Obligation (including without limitation with respect to any Purchase Termination Event or Servicer Default (so long as Cartus is the Servicer)) or any right, power or remedy with respect thereto; (c) any Insolvency Proceeding with respect to Cartus or any other Person; (d) any exercise or non-exercise of any right, power or remedy with respect to the Obligations or any part thereof or any Transaction Document, or any collateral securing the Obligations or any part thereof; (e) any law, regulation or order of any jurisdiction affecting any term of any Obligation or rights of Cartus with respect thereto; (f) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any other obligation of any person or entity with respect to the Obligations or any part thereof; (g) any invalidity or any unenforceability of, or any misrepresentation (other than by CFC or the Issuer), irregularity or other defect in, any Transaction Document or any Obligation; (h) the existence of any claim, setoff or other rights that the Performance Guarantor may have at any time against Cartus in connection herewith or any unrelated transaction; (i) any failure on the part of Cartus to perform or comply with any term of the Purchase Agreement, the Transfer and Servicing Agreement or any other Transaction Document; or (j) any other circumstance that might otherwise constitute a defense (other than payment and performance) available to, or a discharge of, a guarantor or Cartus, all whether or not the Performance Guarantor shall have had notice or knowledge of any event or circumstance referred to in the foregoing clauses (a) through (j) of this Section 4.

§5. Unenforceability of Obligations Against Cartus . Notwithstanding (a) any change of ownership of Cartus or any Insolvency Proceeding with respect to Cartus or any other change in the legal status of Cartus; (b) the change in or the imposition of any law, decree, regulation or other governmental act that does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the Obligations; (c) the failure of Cartus or the Performance Guarantor to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with the Obligations or this Guaranty, or to take any other action required in connection with the performance of all obligations pursuant to the Obligations or this Guaranty; or (d) if any of the moneys included in the Obligations have become irrecoverable from Cartus for any other reason other than final payment in full of the payment Obligations in accordance with their terms, this Guaranty shall nevertheless be binding on the Performance Guarantor. This Guaranty shall be in addition to any other guaranty or other security for the Obligations, and it shall not be rendered unenforceable by the invalidity of any such other guaranty or security. In the event of acceleration of the time for payment of any of the Obligations, such amounts then due and owing under the terms of the Purchase Agreement or the Transfer and Servicing Agreement in connection with the Obligations shall be immediately due and payable by the Performance Guarantor.

 

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§6. Representations and Warranties . The Performance Guarantor represents and warrants that:

(a) Organization and Good Standing . The Performance Guarantor is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and has full power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted.

(b) Due Qualification . The Performance Guarantor is duly qualified to do business and is in good standing as a foreign corporation, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and where the failure so to qualify to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a material adverse effect with respect to the Performance Guarantor.

(c) Power and Authority; Due Authorization . The Performance Guarantor has (i) all necessary corporate power and authority to execute and deliver this Guaranty and to perform all its obligations hereunder and (ii) duly authorized by all necessary corporate action the execution, delivery and performance of this Guaranty.

(d) Binding Obligations . This Guaranty constitutes the legal, valid and binding obligation of the Performance Guarantor, enforceable against the Performance Guarantor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) No Conflict or Violation . The execution, delivery and performance of this Guaranty, and the fulfillment of the terms hereof, will not (i) conflict with, violate, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, (A) the certificate of incorporation or the bylaws of the Performance Guarantor or (B) any indenture, loan agreement, mortgage, deed of trust, or other material agreement or instrument to which the Performance Guarantor is a party or by which it or any of its properties is bound or (ii) conflict with or violate any federal, state, local or foreign law or any decision, decree, order, rule or regulation applicable to the Performance Guarantor or any of its properties of any court or of any federal, state, local or foreign regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Performance Guarantor or any of its properties, which conflict or violation described in this clause (ii), individually or in the aggregate, could reasonably be expected to have a material adverse effect on the ability of the Performance Guarantor to perform its obligations under this Guaranty or the validity of enforceability of this Guaranty.

§7. Subordination. The payment of any amounts due with respect to any indebtedness of Cartus now or hereafter owed to the Performance Guarantor is hereby subordinated to the prior payment in full of all the Obligations. The Performance Guarantor

 

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agrees that, after the occurrence and during the continuation of a Cartus Purchase Termination Event or a Servicer Default or an Unmatured Servicer Default (so long as Cartus is the Servicer), the Performance Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of Cartus to it until all of the Obligations shall have been paid and performed in full. If, notwithstanding the foregoing sentence, the Performance Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness while any Obligations are still unperformed or outstanding, such amounts shall be collected, enforced and received by the Performance Guarantor as trustee for the Guarantied Parties and be paid over to the Indenture Trustee on account of the Obligations without affecting in any manner the liability of the Performance Guarantor under the other provisions of this Guaranty. The provisions of this Section 7 shall be supplemental to and not in derogation of any rights and remedies which any Guarantied Party may at any time and from time to time have with respect to the Performance Guarantor.

§8. Performance Guarantor’s Acknowledgment and Agreements.

(a) The Performance Guarantor hereby acknowledges that the Guarantied Parties entered into the transactions contemplated by the Transaction Documents in reliance upon the identity of ARSC, the Issuer and CFC, as a legal entity separate from Cartus and the other CMS Persons. Therefore, from and after the date hereof until one year and one day after the Final Payout Date, the Performance Guarantor will, and will cause each of its Subsidiaries and Affiliates (other than CFC, ARSC and the Issuer) to, take such actions as shall be required in order that the covenants set forth in Section 7.1(e) of the Purchase Agreement are complied with at all times. The Issuer will become and then shall be at all times a wholly-owned subsidiary of the Performance Guarantor.

(b) The Performance Guarantor will make available to Cartus and its subsidiaries and any successor Servicer appointed pursuant to the Transfer and Servicing Agreement (each, a “ Requesting Person ”) all computer equipment services requested or required by a Requesting Person in order to perform such Requesting Person’s duties and exercise its rights under the Transaction Documents so long as such Requesting Person pays the Performance Guarantor a reasonable fee per annum for the equipment services provided; provided , however , that with respect to any computer software licensed from a third party, the Performance Guarantor will be required to make such licenses, sublicenses and/or assignments of such software available only to the extent that provision of the same would not violate the terms of any contracts of Cartus or the Performance Guarantor or any Affiliate thereof with such third party.

(c) The Performance Guarantor agrees that, if at any time after the Effective Date the Issuer ceases to be a wholly-owned subsidiary of the Performance Guarantor, then, in such event, the Performance Guarantor shall cause to be executed a tax sharing agreement between the Issuer and the ultimate parent of the Issuer, in form and substance satisfactory to the Majority Investors.

(d) The Performance Guarantor covenants and agrees to furnish to the “Managing Agents” (as defined in the Note Purchase Agreement for Series 2005-1 (such, agreement, the “Note Purchase Agreement”)) and to the Issuer (i) notice of the occurrence of

 

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any event which has had or would reasonably be expected to have a material adverse effect on its condition or operations, financial or otherwise, and (ii) those financial statements of the Performance Guarantor required by Sections 5.01(c)(vi) and (vii) of the Note Purchase Agreement.

§9. Termination of Guaranty . The Performance Guarantor’s obligations hereunder shall continue in full force and effect until the date that is one year and one day after the Final Payout Date, provided that this Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time payment or other satisfaction of any of the Obligations is rescinded or must otherwise be restored or returned in connection with any Insolvency Proceeding with respect to Cartus or any other Person, or otherwise, as though such payment had not been made or other satisfaction occurred, whether or not any Guarantied Party is in possession of this Guaranty. No invalidity, irregularity or unenforceability by reason of the Bankruptcy Code or any insolvency or other similar law, or any law or order of any government or agency thereof purporting to reduce, amend or otherwise affect the Obligations shall impair, affect, be a defense to or claim against the obligations of the Performance Guarantor under this Guaranty.

§10. Effect of Bankruptcy . This Guaranty shall survive the occurrence of any Insolvency Proceeding with respect to Cartus or any other Person. No automatic stay under the Bankruptcy Code or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes to which Cartus is subject shall postpone the obligations of the Performance Guarantor under this Guaranty.

§11. Successors and Assigns . This Guaranty shall be binding upon the Performance Guarantor and its successors and assigns, and shall inure to the benefit of and be enforceable by CFC, ARSC, the Issuer, the Indenture Trustee and their respective successors, transferees and assigns. The Performance Guarantor hereby acknowledges that this Guaranty will be assigned by the Issuer to the Indenture Trustee. The Performance Guarantor may not assign or transfer any of its obligations hereunder without the prior written consent of CFC, the Issuer and the Indenture Trustee, acting at the direction of the Majority Investors. Without limiting the generality of the foregoing sentence, each Guarantied Party may, to the extent permitted by the Transaction Documents, assign or otherwise transfer all or any portion of its rights and obligations under the Transaction Documents, or sell participations in any interest therein, to any other entity or other Person, and such other entity or other Person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to such Guarantied Party herein.

§12. Amendments and Waivers . No amendment or waiver of any provision of this Guaranty nor consent to any departure by the Performance Guarantor therefrom shall be effective unless the same shall be in writing and signed by CFC, the Issuer and the Indenture Trustee, acting at the direction of the Majority Investors. No failure on the part of any Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

 

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§13. Notices . All notices and other communications called for hereunder shall be made in writing and, unless otherwise specifically provided herein, shall be deemed to have been duly made or given when delivered by hand or mailed first class, postage prepaid, or, in the case of telegraphic, telecopied or telexed notice, when transmitted, answer back received, addressed as follows: (i) if to the Performance Guarantor, 1 Campus Drive, Parsippany, New Jersey 07054, Attention: Treasurer, (ii) if to CFC, at its address for notices set forth in the Purchase Agreement, (iii) if to the Issuer, to its address for notices set forth in the Indenture and (iv) if to the Indenture Trustee, to its address for notices set forth in the Indenture.

§14. GOVERNING LAW . THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

§15. SUBMISSION TO JURISDICTION . EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT, AND HEREBY (a) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (c) IN THE CASE OF THE PERFORMANCE GUARANTOR, IRREVOCABLY APPOINTS CORPORATION SERVICE COMPANY (THE “PROCESS AGENT”), WITH AN OFFICE ON THE DATE HEREOF AT 80 STATE STREET, ALBANY, NEW YORK 12207-2543, UNITED STATES OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE PERFORMANCE GUARANTOR IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT’S ABOVE ADDRESS, AND THE PERFORMANCE GUARANTOR HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. THE PERFORMANCE GUARANTOR AGREES TO ENTER INTO ANY AGREEMENT RELATING TO SUCH APPOINTMENT WHICH THE PROCESS AGENT MAY CUSTOMARILY REQUIRE, AND TO PAY THE PROCESS AGENT’S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE, THE PERFORMANCE GUARANTOR ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OF SUCH PROCESS TO THE PERFORMANCE GUARANTOR AT ITS ADDRESS SPECIFIED HEREIN. NOTHING IN THIS SECTION 15 SHALL AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF EITHER PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY HERETO OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.

 

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§16. WAIVER OF JURY TRIAL . EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS GUARANTY, ANY OTHER TRANSACTION DOCUMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF EITHER OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

§17. Miscellaneous . This Guaranty constitutes the entire agreement of the Performance Guarantor with respect to the matters set forth herein. No failure on the part of any Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Guaranty shall be in addition to any other guaranty of or collateral security for any of the Obligations. The provisions of this Guaranty are severable, and in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of the Performance Guarantor hereunder would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of the Performance Guaranty, the amount of such liability shall, without any further action by the Performance Guarantor, CFC or the Issuer be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding. The invalidity or unenforceability of any one or more sections of this Guaranty shall not affect the validity or enforceability of its remaining provisions. Captions are for ease of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Guaranty shall be equally applicable to the singular and plural forms of the terms defined.

 

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IN WITNESS WHEREOF, the Performance Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.

 

REALOGY CORPORATION
By:    

Name:

Title:

 

 

Acknowledged and Accepted as

of this          day of May, 2006

 

CARTUS FINANCIAL CORPORATION

By    

Name:

Title:

 

 

APPLE RIDGE FUNDING LLC,

as Issuer

By    

Name:

Title:

 

Signature Page to Performance Guaranty

Exhibit 10.13

EXECUTION COPY

 

 

 

AMENDED AND RESTATED

INDENTURE SUPPLEMENT

 

 

APPLE RIDGE FUNDING LLC,

as Issuer,

and

THE BANK OF NEW YORK

as Indenture Trustee, Paying Agent, Authentication Agent and

Transfer Agent and Registrar

SERIES 2007-1 INDENTURE SUPPLEMENT

Dated as of April 10, 2007

Amended and Restated as of July 6, 2007

 

 

 

 

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


ARTICLE I CREATION OF THE SERIES 2007-1 NOTES

  

Section 1.01. Designation

   1

ARTICLE II DEFINITIONS

  

Section 2.01. Definitions

   2

ARTICLE III SERVICING FEE; INCREASES AND REDUCTIONS IN THE SERIES OUTSTANDING AMOUNT

  

Section 3.01. Servicing Fee

   12

Section 3.02. Increases and Reductions in the Series Outstanding Amount

   13

ARTICLE IV RIGHTS OF SERIES 2007-1 NOTEHOLDERS AND ALLOCATION AND APPLICATION OF POOL COLLECTIONS

  

Section 4.01. Pool Collections and Allocations

   13

Section 4.02. Determination of Interest and Monthly Interest

   15

Section 4.03. Determination of Principal Distribution

   16

Section 4.04. Application of Series 2007-1 Collections

   16

Section 4.05. Distribution Account

   18

Section 4.06. Series 2007-1 Principal Subaccount

   18

Section 4.07. Investment Instructions

   19

Section 4.08. Term-Out Period Account

   19

ARTICLE V DELIVERY OF SERIES 2007-1 NOTES; DISTRIBUTIONS; REPORTS TO SERIES 2007-1 NOTEHOLDERS

  

Section 5.01. Delivery and Payment for the Series 2007-1 Notes; Denominations

   20

Section 5.02. Registration; Registration of Transfer and Exchange; Transfer Restrictions

   20

Section 5.03. Definitive Notes

   23

Section 5.04. Distributions

   23

Section 5.05. Reports and Statements to Series 2007-1 Noteholders

   23

ARTICLE VI AMORTIZATION EVENTS

  

Section 6.01. Series 2007-1 Amortization Events

   24

ARTICLE VII OPTIONAL REDEMPTION OF SERIES 2007-1 NOTES

  

Section 7.01. Optional Redemption of Series 2007-1 Notes

   26

ARTICLE VIII MISCELLANEOUS PROVISIONS

  

Section 8.01. Ratification of Agreement

   27

Section 8.02. Counterparts

   27

Section 8.03. Governing Law

   27

Section 8.04. Amendment and Restatement

   27


EXHIBITS

 

EXHIBIT A    Form of Series 2007-1 Note
EXHIBIT B    Form of Monthly Payment Instructions and Notification to the Indenture Trustee and Paying Agent
EXHIBIT C    Form of Monthly Statement
EXHIBIT D    Form of Weekly Activity Report


AMENDED AND RESTATED SERIES 2007-1 INDENTURE SUPPLEMENT, dated as of April 10, 2007 and amended and restated as of July 6, 2007, (as amended, modified, restated or supplemented from time to time, the “ Indenture Supplement ”), by and among APPLE RIDGE FUNDING LLC, a limited liability company organized under the laws of the State of Delaware, as Issuer (together with its permitted successors and assigns, the “ Issuer ”), and THE BANK OF NEW YORK, a New York state banking corporation, as successor to JPMorgan Chase Bank National Association as indenture trustee, and as paying agent, authentication agent and transfer agent and registrar (together with its permitted successors and assigns, “ BNY ” and in its capacity as indenture trustee, the “ Indenture Trustee ”).

Pursuant to Section 2.10 of the Master Indenture, dated as of April 25, 2000 (as amended, modified, restated or supplemented from time to time, the “ Indenture ” and together with the Indenture Supplement, the “ Agreement ”), by and among the Issuer, the Indenture Trustee and BNY, the Issuer may issue one or more Series of Notes the Principal Terms of which shall be set forth in an indenture supplement to the Indenture. In accordance with the terms of the Indenture, the Issuer has created a Series of Notes and specifies the Principal Terms of such Series of Notes in this Indenture Supplement. This Indenture Supplement amends and restates the Series 2007-1 Indenture Supplement dated as of and entered into on April 10, 2007.

GRANTING CLAUSE

The Issuer hereby Grants to the Indenture Trustee, for the benefit of the Holders of the Series 2007-1 Notes, all of the Issuer’s right, title and interest, whether now owned or hereafter acquired, in, to and under: (i) the Series 2007-1 Principal Subaccount, (ii) the Distribution Account (to the extent of Series 2007-1 Collections on deposit therein), (iii) all accounts, money, chattel paper, investment property, instruments, documents, deposit accounts, letters of credit, letter-of-credit rights, general intangibles, goods, oil, gas and other minerals consisting of, arising from, or relating to any of the foregoing and (iv) all proceeds of the foregoing.

ARTICLE I

CREATION OF THE SERIES 2007-1 NOTES

Section 1.01. Designation .

(a) There is hereby created a Series of Notes to be issued pursuant to the Indenture and this Indenture Supplement to be known as the “Apple Ridge Funding LLC Secured Variable Funding Notes, Series 2007-1” or the “Series 2007-1 Notes.”

(b) In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the terms and provisions of this Indenture Supplement shall be controlling.


ARTICLE II

DEFINITIONS

Section 2.01. Definitions .

(a) Whenever used in this Indenture Supplement, the following words and phrases shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and the masculine as well as the feminine and neuter genders of such terms.

Additional Interest ” shall have the meaning set forth in Section 4.02(b) .

Administrative Agent ” shall mean Calyon New York Branch, in its capacity as “Administrative Agent” and “Lead Arranger” for the Purchasers.

Administrative Agent Fee Letter ” means that certain fee letter dated as of the date hereof between the Issuer and the Administrative Agent.

Aggregate Term-Out Deposit Amount ” shall mean the aggregate of the Term-Out Deposit Amounts, if any, then on deposit with the Indenture Trustee pursuant to Section 2.11 and Section 2.12 of the Note Purchase Agreement.

Alternate Base Rate ” shall have the meaning set forth in the Note Purchase Agreement.

Amortization Event ” shall have the meaning set forth in Section 6.01 .

Amortization Period ” shall mean the period commencing at the earliest to occur of (a) the close of business on the Program Termination Date, (b) the close of business on the Scheduled Amortization Date and (c) the close of business on the Business Day immediately preceding the day on which an Amortization Event has occurred, and ending on the date on which (x) the Series Outstanding Amount shall have been paid in full, together with all accrued interest thereon, and (y) all amounts owed to the Administrative Agent, the Managing Agents and the Purchasers under the Indenture Supplement and the Note Purchase Agreement shall have been paid in full.

Applicable Purchaser Group ” shall have the meaning set forth in Section 4.08(a).

Applicable Stress Factor ” shall mean, as of any date of determination, 2.50.

Appraised Value Home ” shall mean a Home purchased by an Originator if the owner of the Home is unsuccessful at contracting to sell the Home prior to the purchase of the Home by the applicable Originator and as to which the purchase price is generally determined by the average of two or more independent appraisals.

Average Days in Inventory ” shall mean, for any Monthly Period, the average number of days the Homes have been owned by each Originator as of the close of business on the last day of such Monthly Period.

 

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Average Days Outstanding ” shall mean, as of the end of any Monthly Period, the sum of:

(a) the product of (i) a fraction, the numerator of which is the aggregate Unpaid Balance of Unsold Home Receivables (net of Advance Payments relating thereto) as of the end of such Monthly Period and the denominator of which is the Aggregate Receivable Balance as of the end of such Monthly Period, multiplied by (ii) the Average Days in Inventory for such Monthly Period, plus

(b) the product of (i) a fraction, the numerator of which is the aggregate Unpaid Balance of Billed Receivables and Unbilled Receivables (net of Advance Payments relating thereto) as of the end of such Monthly Period, and the denominator of which is the Aggregate Receivable Balance as of the end of such Monthly Period, multiplied by (ii) the sum of (A) the average number of days as of the end of such Monthly Period it took to bill Unbilled Receivables once they became billable plus (B) the average number of days Billed Receivables have been outstanding as of the end of such Monthly Period.

For the purposes of the foregoing calculation, Unbilled Receivables are deemed to be billable (x) if the Receivable was previously an Unsold Home Receivable, upon the subsequent sale of the Home by the applicable Originator and (y) if such Receivable relates to services that are not related to Home sales, upon disbursement.

Base Rate Tranche ” shall have the meaning set forth in the Note Purchase Agreement.

Change in Control ” shall mean either that (v) the Issuer ceases to be a wholly-owned subsidiary of Cartus, (w) any of Cartus, CFC, the Transferor or the Issuer ceases to be a wholly-owned subsidiary of the Performance Guarantor, (x) the equity owners of the Performance Guarantor as of the date hereof cease (other than as a result of a “Borrower Qualified IPO” as such term is defined in the Realogy Credit Agreement as in effect on the date hereof) to own, directly or indirectly, at least 51% of the equity interests in, or voting securities of, the Performance Guarantor or (y) following any initial public offering of Realogy common stock, any other Person not an equity owner of the Performance Guarantor as of the date hereof acquires more than 51% of the equity interests in or voting securities of the Performance Guarantor or (z) any other “Change in Control” as defined in the Realogy Credit Agreement.

Commercial Paper Notes ” shall have the meaning set forth in the Note Purchase Agreement.

Committed Purchaser ” shall have the meaning set forth in the Note Purchase Agreement.

Conduit Purchaser ” shall have the meaning set forth in the Note Purchase Agreement.

CP Rate ” shall have the meaning set forth in the Note Purchase Agreement.

CP Tranche ” shall have the meaning set forth in the Note Purchase Agreement.

Decrease ” shall have the meaning set forth in Section 3.02(b) .

 

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Decrease Date ” shall have the meaning set forth in Section 3.02(b) .

Default Ratio ” shall mean, for any Monthly Period, the quotient , expressed as a percentage, of (a) the sum of (i) the aggregate Unpaid Balance of the Receivables that have become Defaulted Receivables in accordance with clause (a) or (c) of the definition of Defaulted Receivable during such Monthly Period plus (ii) the Aggregate Employer Balance of each Employer (reduced by any Advance Payments) whose Receivables have become Defaulted Receivables in accordance with clause (b) of the definition of Defaulted Receivables during such Monthly Period, divided by (b) the aggregate Unpaid Balance of the Billed Receivables generated during the fifth Monthly Period preceding such Monthly Period.

Determination Date ” shall mean, with respect to any Distribution Date, the second Business Day preceding such Distribution Date.

Dilution Ratio ” shall mean, for any Monthly Period, the quotient , expressed as a percentage, of (a) the aggregate amount of reductions to the Unpaid Balances of the Billed Receivables due to offsets, chargebacks, credits, adjustments, rebates and other Originator Dilution Adjustments, Seller Dilution Adjustments and Servicer Dilution Adjustments occurring during such Monthly Period divided by (b) the aggregate Unpaid Balance of the Billed Receivables generated during the fifth Monthly Period preceding such Monthly Period.

Dilution Reserve Ratio ” shall mean, as of any date of determination, the product, expressed as a percentage, of:

(a) the greater of:

(i) the product of (A) the Applicable Stress Factor multiplied by (B) the average of the Dilution Ratios for the three Monthly Periods preceding the first day of the Interest Period in which such date occurs, and

(ii) the highest Dilution Ratio for any Monthly Period over the twelve Monthly Periods preceding the first day of the Interest Period in which such date occurs, multiplied by

(b) a fraction, the numerator of which is the sum of:

(i) the aggregate Unpaid Balance of the Billed Receivables generated during the five Monthly Periods preceding the first day of the Interest Period in which such date occurs plus

(ii) the aggregate Unpaid Balance of the Unbilled Receivables as of the end of the Monthly Period preceding the first day of the Interest Period in which such date occurs,

and the denominator of which is the aggregate Unpaid Balance of the Billed Receivables as of the end of such Monthly Period, multiplied by

(c) a fraction, the numerator of which is equal to the sum of:

(i) the aggregate Unpaid Balance of the Billed Receivables as of the end of such Monthly Period plus

 

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(ii) the aggregate Unpaid Balance of the Unbilled Receivables as of the end of such Monthly Period plus

(iii) the greater of (A) the product of 3.5 multiplied by the average of the Monthly Loss on Sale for such Monthly Period and the two immediately preceding Monthly Periods and (B) 10% of the aggregate Unpaid Balance of Unsold Home Receivables relating to Appraised Value Homes as of the end of such Monthly Period,

and the denominator of which is equal to the aggregate Unpaid Balance of Eligible Receivables as of the end of such Monthly Period minus the Aggregate Adjustment Amount on such date.

The Dilution Reserve Ratio calculated as of any Distribution Date shall continue until (but not including) the next succeeding Distribution Date.

Distribution Date ” shall mean the sixteenth day of each calendar month, or if such sixteenth day is not a Business Day, the next succeeding Business Day.

Eurodollar Rate ” shall have the meaning set forth in the Note Purchase Agreement.

Eurodollar Rate Margin ” shall have the meaning set forth in the Fee Letter.

Eurodollar Tranche ” shall have the meaning set forth in the Note Purchase Agreement.

Facility Fee ” shall have the meaning set forth in the Fee Letter.

Federal Funds Rate ” shall have the meaning set forth in the Note Purchase Agreement.

Fee Letter ” shall mean that certain Amended and Restated Fee Letter of even date herewith executed by and between the Issuer and the Administrative Agent in connection with the Note Purchase Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

Final Stated Maturity Date ” shall mean the earlier of (a) the Distribution Date occurring in April, 2012 and (b) the Distribution Date occurring in the ninth Monthly Period following the Monthly Period in which the Amortization Period commenced.

Increase ” shall mean any funding by the Purchasers pursuant to the Note Purchase Agreement which increases the Series Outstanding Amount.

Increase Date ” shall mean the date on which any Increase is funded.

 

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Initial Series Outstanding Amount ” shall mean, with respect to the Series 2007-1 Notes, $614,500,000.

Interest Period ” shall mean, with respect to each Tranche:

(a) initially the period commencing on the date such Tranche is funded and ending on the last day of the Monthly Period in which such date occurs; and

(b) thereafter each Monthly Period.

Interest Shortfall ” shall have the meaning set forth in Section 4.02(b) .

Liquidity Provider Agreement ” shall have the meaning set forth in the Note Purchase Agreement.

Liquidity Provider ” shall have the meaning set forth in the Note Purchase Agreement.

Loss Reserve Ratio ” shall mean, as of any date of determination, the greatest of:

(a) the percentage equivalent of the product of:

(i) the Applicable Stress Factor multiplied by

(ii) the highest Three Month Average Default Ratio for any Monthly Period over the twelve Monthly Periods preceding the first day of the Interest Period in which such date occurs, multiplied by

(iii) a fraction, the numerator of which is the sum of (A) the aggregate Unpaid Balance of the Billed Receivables generated over the five Monthly Periods preceding the first day of the Interest Period in which such date occurs plus (B) the aggregate Unpaid Balance of the Unbilled Receivables as of the end of the Monthly Period preceding the first day of the Interest Period in which such date occurs, and the denominator of which is the aggregate Unpaid Balance of the Billed Receivables as of the end of such Monthly Period, multiplied by

(iv) a fraction, the numerator of which is equal to the sum of (A) the aggregate Unpaid Balance of Billed Receivables as of the end of the Monthly Period preceding the first day of the Interest Period in which such date occurs plus (B) the aggregate Unpaid Balance of Unbilled Receivables as of the end of such Monthly Period plus (C) the greater of (1) the product of 3.5 multiplied by the average of the Monthly Loss on Sale for such Monthly Period and the two immediately preceding Monthly Periods and (2) 10% of the aggregate Unpaid Balance of Unsold Home Receivables relating to Appraised Value Homes as of the end of such Monthly Period, and the denominator of which is equal to the aggregate Unpaid Balance of Eligible Receivables as of the end of such Monthly Period minus the Aggregate Adjustment Amount on such date;

 

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(b) the product of (i) the Applicable Stress Factor multiplied by (ii) the highest Default Ratio for any Monthly Period over the three Monthly Periods preceding the first day of the Interest Period in which such date occurs; and

(c) 2.5%.

The Loss Reserve Ratio calculated as of any Distribution Date shall continue until (but not including) the next succeeding Distribution Date.

Managing Agent ” shall have the meaning set forth in the Note Purchase Agreement.

Minimum Enhancement Percentage ” shall mean, for any Distribution Date: (i) 9% so long as the Average Days Outstanding is less than 90 days; (ii) 10% if the Average Days Outstanding is greater than or equal to 90 days but less than 100 days and (iii) 11% if the Average Days Outstanding is greater than or equal to 100 days but less than 120 days and (iv) otherwise, 12%.

Monthly Interest ” shall have the meaning set forth in Section 4.02(b) .

Monthly Loss on Sale ” shall equal, for any Monthly Period, for all Homes sold during such Monthly Period, the aggregate of the amounts, if any, by which the purchase price of each such Home paid by CFC or Cartus, as applicable, exceeded the sale price for such Home received by the Servicer (the amount of any such excess with respect to a Home being a “Loss”). The Monthly Loss on Sale for any Monthly Period shall be based on the gross Losses for such Monthly Period without regard to any gains on the sale of other Homes during such Monthly Period.

Monthly Period ” shall mean the period from and including the first day of a calendar month to and including the last day of such calendar month.

Monthly Principal ” shall have the meaning set forth in Section 4.03.

Monthly Program Fees ” shall mean for any Distribution Date the aggregate Facility Fee and Program Fee payable to the Managing Agents under Section 2.03(c) of the Note Purchase Agreement.

Monthly Servicing Fee ” shall have the meaning set forth in Section 3.01 .

Net Credit Losses ” shall mean, for any Monthly Period, an amount equal to the excess, if any, of the estimated losses to be incurred in respect of all Receivables written off by the Servicer in accordance with the Credit and Collection Policy during such Monthly Period over an amount equal to all amounts recovered during such Monthly Period in respect of Receivables written off by the Servicer in accordance with the Credit and Collection Policy during prior Monthly Periods, which amounts exceed the amounts that the Servicer estimated would be recovered in respect of such Receivables. For the avoidance of doubt, “Net Credit Losses” includes the portion of any Receivable which has been written off as uncollectible by the Servicer net of any recoveries thereon.

 

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Note Interest Rate ” when used in the Indenture with respect to Series 2007-1, shall mean, as of any date, the sum of the weighted average of the Series 2007-1 Tranche Rates.

Note Purchase Agreement ” shall mean that certain Note Purchase Agreement dated as of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time) among the Issuer, the Servicer, the Purchasers, the Managing Agents and the Administrative Agent.

Otherwise Released Collections ” shall have the meaning set forth in Section 4.01(d).

Outstanding Tranche Amount ” shall mean, with respect to any Tranche, the portion of the Series Outstanding Amount designated by a Managing Agent as allocable to such Tranche.

Pro Rata Share ” shall have the meaning set forth in the Note Purchase Agreement.

Program Fee ” shall have the meaning set forth in the Fee Letter.

Program Termination Date ” shall have the meaning set forth in the Note Purchase Agreement.

Purchaser Group ” shall have the meaning set forth in the Note Purchase Agreement.

Purchasers ” shall have the meaning set forth in the Note Purchase Agreement.

QIB ” shall have the meaning set forth in Section 5.02(b) .

Rating Agency ” shall mean each of Standard & Poor’s Ratings Services, Moody’s Investors Service and Fitch, Inc.

Rating Agency Condition ” as used in the Indenture with respect to this Indenture Supplement or the Series 2007-1 Notes shall mean, with respect to any action, that each of the Managing Agents shall have consented to such action.

Realogy ” shall mean Realogy Corporation, a Delaware Corporation, and its successors.

Redemption Price ” shall mean, with respect to any Distribution Date, after giving effect to any deposits and distributions otherwise to be made on such Distribution Date, the sum of (i) the Series Outstanding Amount on such Distribution Date plus (ii) Monthly Interest for such Distribution Date and any Monthly Interest previously due but not distributed to the Series 2007-1 Noteholders plus (iii) all Monthly Program Fees plus (iv) any other amounts owed to the Administrative Agent, the Managing Agents and the Purchasers pursuant to this Indenture Supplement or the Note Purchase Agreement.

 

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Required Amount ” shall mean, for any Distribution Date, the sum of (a) the Monthly Interest for such Distribution Date plus (b) any Additional Interest previously accrued and not reimbursed, plus (c) the sum, without duplication, of (i) the Monthly Servicing Fee to be distributed on such Distribution Date plus (ii) any Monthly Servicing Fee previously accrued and not paid plus (iii) the Monthly Program Fees to be distributed on such Distribution Date plus (iv) any Monthly Program Fees previously accrued and not paid plus (v) any expenses and other amounts which are payable under Section 4.04(b)(iv), as notified to the Indenture Trustee, the Issuer and the Servicer by the relevant Managing Agent or the Administrative Agent no later than the Business Day preceding the related Determination Date.

Required Managing Agents ” shall have the meaning set forth in the Note Purchase Agreement.

Required Overcollateralization Amount ” shall mean, as of any date of determination, the amount by which the Series 2007–1 Required Enhancement Amount on such date exceeds the amount on deposit in the Series 2007-1 Principal Subaccount on such date.

Revolving Period ” shall mean the period beginning on the Series 2007-1 Closing Date and ending upon the commencement of the Amortization Period.

Rule 144A ” shall mean Rule 144A under the Securities Act.

Scheduled Amortization Date ” shall mean April 10, 2012.

Securities Act ” shall mean the Securities Act of 1933, as amended.

Series Outstanding Amount ” shall mean, as of any date of determination, an amount equal to (i) the Initial Series Outstanding Amount plus (ii) the aggregate amount of all Increases minus (iii) the aggregate amount of all Decreases minus (iv) without duplication, the aggregate amount of all Monthly Principal previously paid to the Series 2007-1 Noteholders. For the avoidance of doubt, Term-Out Deposit Amounts shall not be deemed to be part of the Series Outstanding Amount for purposes of this Indenture Supplement or the Indenture.

Series Percentage ” shall mean, with respect to any date of determination, the percentage equivalent (which percentage shall never exceed 100%) of a fraction calculated as follows:

(a) during the Revolving Period, the numerator of the fraction will be the Series 2007-1 Required Asset Amount as of the close of business on the immediately preceding day, and the denominator of the fraction will be the greater of (i) the Adjusted Aggregate Receivable Balance as of the end of the prior Monthly Period (or, if a Servicer Default has occurred, as of the end of the immediately preceding day), and (ii) the sum of the numerators used to determine the Series Percentage for each Series of Notes (including the Series 2007-1 Notes) Outstanding at the close of business on the immediately preceding day; and

(b) during the Amortization Period, the numerator of the fraction will be the Series 2007-1 Required Asset Amount as of the close of business on the last day of the Revolving Period, and the denominator of the fraction will be the sum of the numerators used to determine the Series Percentage for each Series of Notes (including the Series 2007-1 Notes) Outstanding at the close of business on the immediately preceding day.

 

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Series 2007-1 ” shall mean the Series of Notes the terms of which are specified in this Indenture Supplement.

Series 2007-1 Allocated Adjusted Aggregate Receivable Balance ” shall mean, as of any date of determination, the lower of (a) the Series 2007-1 Required Asset Amount as of such date and (b) the product of (i) the Adjusted Aggregate Receivable Balance as of the end of the prior Monthly Period multiplied by (ii) the percentage equivalent of a fraction, the numerator of which is the Series 2007-1 Required Asset Amount as of such date and the denominator of which is the sum of (x) the Series 2007-1 Required Asset Amount as of such date plus (y) the aggregate of the Required Asset Amounts with respect to each other Series of Notes as of such date.

Series 2007-1 Asset Amount Deficiency ” shall occur, on any date of determination, if and to the extent the Series 2007-1 Allocated Adjusted Aggregate Receivable Balance as of such date is less than the Series 2007-1 Required Asset Amount as of such date.

Series 2007-1 Closing Date ” shall mean April 10, 2007.

Series 2007-1 Collections ” shall have the meaning set forth in Section 4.01(b) .

Series 2007-1 Note ” shall mean each Note executed by the Issuer and authenticated by the Authentication Agent, substantially in the form of Exhibit A , and any replacement Note in exchange therefor.

Series 2007-1 Noteholder ” shall mean each Person in whose name a Series 2007-1 Note is registered in the Note Register, which shall initially be each Managing Agent on behalf of the Purchasers in the related Purchaser Group.

Series 2007-1 Principal Subaccount ” shall have the meaning set forth in Section 4.06(a) .

Series 2007-1 Required Asset Amount ” shall mean, as of any date of determination, an amount equal to the sum of (a) the Series Outstanding Amount on such date plus (b) the Required Overcollateralization Amount on such date.

Series 2007-1 Required Enhancement Amount ” shall mean, as of any date of determination, an amount equal to the greater of (i) the Series Outstanding Amount on such date multiplied by the Minimum Enhancement Percentage on such date and (ii) an amount equal to the product of (A) the Series Outstanding Amount on such date multiplied by (B) the quotient of (1) the sum of (w) the Loss Reserve Ratio on such date plus (x) the Dilution Reserve Ratio on such date plus (y) the Yield Reserve Ratio on such date plus (z) the Servicing Reserve Ratio on such date divided by (2) one minus the sum of (w) the Loss Reserve Ratio on such date plus (x) the Dilution Reserve Ratio on such date plus (y) the Yield Reserve Ratio on such date plus (z) the Servicing Reserve Ratio on such date; provided , however , that after the declaration or occurrence of an Amortization Event, the Series 2007-1 Required Enhancement Amount shall equal the Series 2007-1 Required Enhancement Amount in effect on the date of the declaration or occurrence of such Amortization Event.

 

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Series 2007-1 Tranche Rate ” shall mean, at any time during an Interest Period (i) with respect to any CP Tranche, the CP Rate, (ii) with respect to any Eurodollar Tranche, the sum of the Eurodollar Rate plus the Eurodollar Rate Margin, and (iii) with respect to any Base Rate Tranche, the Alternate Base Rate, as applicable, provided , however , that, if any principal or interest on the Series 2007-1 Notes is not paid in full when the same shall have become required to be paid, or if any Amortization Event has occurred and is continuing, then the Series 2007-1 Tranche Rate shall be the Alternate Base Rate plus two percent (2.0%) with respect to such deficiency or with respect to any interest accrued on the Series 2007-1 Notes after the occurrence of such Amortization Event.

Servicing Fee ” shall have the meaning set forth in the Transfer and Servicing Agreement.

Servicing Fee Rate ” shall mean 0.75% per annum.

Servicing Reserve Ratio ” shall mean, as of any date of determination, the quotient , expressed as a percentage, of (a) the product of (i) the Applicable Stress Factor multiplied by (ii) the Servicing Fee Rate multiplied by (iii) Average Days Outstanding as of the end of the Monthly Period preceding the first day of the Interest Period in which such date occurs, divided by (b) 360.

Stated Amount ” shall mean $850,000,000 as such amount may be reduced or increased from time to time pursuant to Section 3.02 .

Term-Out Deposit Amount ” shall have the meaning set forth in the Note Purchase Agreement.

Term-Out Period ” shall have the meaning set forth in the Note Purchase Agreement.

Term-Out Period Account ” shall have the meaning set forth in Section 4.08(a).

Three Month Average Default Ratio ” shall mean, for any Monthly Period, the average of the Default Ratios for that Monthly Period and each of the two immediately preceding Monthly Periods.

Three Month Average Dilution Ratio ” shall mean, for any Monthly Period, the average of the Dilution Ratios for that Monthly Period and each of the two immediately preceding Monthly Periods.

Tranche ” shall have the meaning set forth in the Note Purchase Agreement.

Transaction Documents ” shall mean the “Transaction Documents” as defined in the Indenture but shall also include the Note Purchase Agreement, the Fee Letter and the Series 2007-1 Notes.

 

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Transfer Date ” shall mean the Business Day immediately preceding each Distribution Date and each Decrease Date.

Yield Reserve Ratio ” shall mean, as of any date of determination, the quotient expressed as a percentage, of (a) the product of (i) the sum of (A) the product of (1) the Applicable Yield Factor multiplied by (2) the one-month Eurodollar Rate as of the last Business Day of the immediately preceding Monthly Period plus (B) 0.75% multiplied by (ii) 2.50 multiplied by the Average Days Outstanding as of the end of the immediately preceding Monthly Period divided by (b) 360. For purposes of the foregoing, the “Applicable Yield Factor” shall be (i) 1.25 so long as the Average Days in Inventory for Appraised Value Homes for any Monthly Period is less than one hundred twenty (120) days; (ii) 1.75 if the Average Days in Inventory for Appraised Value Homes for any Monthly Period is equal to or greater than one hundred twenty (120) days but less than one hundred fifty (150) days until such time as the Average Days in Inventory for Appraised Value Homes has been reduced to and remained below one hundred twenty (120) days for two (2) consecutive Monthly Periods (iii) 2.5 if the Average Days in Inventory for Appraised Value Homes for any Monthly Period is greater than or equal to one hundred fifty (150) days until such time as the Average Days in Inventory for Appraised Value Homes has been reduced to and remained below one hundred fifty (150) days for two (2) consecutive Monthly Periods.

(b) Each capitalized term defined herein shall relate to the Series 2007-1 Notes and no other Series of Notes issued by the Issuer, unless the context otherwise requires. All capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Indenture, and, if not defined therein, as defined in the Transfer and Servicing Agreement, the Receivables Purchase Agreement or the Purchase Agreement.

(c) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Indenture Supplement shall refer to this Indenture Supplement as a whole and not to any particular provision of this Indenture Supplement; references to any Article, subsection, Section or Exhibit are references to Articles, subsections, Sections and Exhibits in or to this Indenture Supplement unless otherwise specified; and the term “including” means “including without limitation.”

ARTICLE III

SERVICING FEE; INCREASES AND REDUCTIONS IN THE SERIES OUTSTANDING AMOUNT

Section 3.01. Servicing Fee . The Transfer and Servicing Agreement sets forth the full compensation that the Servicer is entitled to receive for its servicing activities. The share of the Servicing Fee allocable to the Series 2007-1 Noteholders with respect to any Distribution Date (the “ Monthly Servicing Fee ”) shall be equal to the product of (a) the Servicing Fee Rate multiplied by (b) the weighted average over the related Monthly Period of the daily sums of the Aggregate Employer Balances for each Employer under the Pool Relocation Agreements multiplied by (c) the average Series Percentage during such Monthly Period. The remainder of the Servicing Fee shall be paid by the noteholders of other Series (as provided in the Indenture Supplement related to such other Series) or the Issuer and in no event shall the Indenture Trustee

 

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or the Series 2007-1 Noteholders be liable for the share of the Servicing Fee to be paid by the Noteholders of such other Series or the Issuer. To the extent that the Monthly Servicing Fee is not paid in full pursuant to the preceding provisions of this Section 3.01 and Section 4.04 , it shall be paid by the Issuer. The Monthly Servicing Fee shall be payable from Series 2007-1 Collections pursuant to, and subject to the priority of payments set forth in, Section 4.04 .

Section 3.02. Increases and Reductions in the Series Outstanding Amount .

(a) At any time during the Revolving Period, the Series Outstanding Amount may be increased from time to time by the funding of Increases subject to the terms and conditions set forth in the Note Purchase Agreement; provided , that, after giving effect thereto, the sum of the Series Outstanding Amount, and the Aggregate Term-Out Deposit Amount may not exceed the Stated Amount. Whenever the Issuer wishes to make an Increase, the Issuer shall give the Indenture Trustee, the Paying Agent and the Managing Agents prior written notice of such Increase not less than two (2) Business Days prior to the proposed Increase Date.

(b) In the event that the Issuer reduces the Series Outstanding Amount of the Series 2007-1 Notes in accordance with the Note Purchase Agreement (each such reduction, a “ Decrease ”), it shall give prompt written notice of such Decrease to the Managing Agents, the Indenture Trustee and the Paying Agent not less than three (3) Business Days prior to the effective date (each such date, a “ Decrease Date ”) of such reduction. All accrued and unpaid interest on the amount of such Decrease, together with the principal amount of such Decrease, shall be due and owing as of the related Decrease Date.

(c) The Series 2007-1 Notes shall evidence the outstanding indebtedness owed from time to time by the Issuer thereunder. Each Managing Agent, on behalf of the Purchasers in the related Purchaser Group, shall be and is hereby authorized to record on the grid attached to its Series 2007-1 Note held by it on behalf of the Purchasers in the related Purchaser Group (or at its option, in its internal books and records) the date and amount of the initial funding of its Pro Rata Share of the Initial Series Outstanding Amount and the date and amount of each Increase, the amount of each repayment of the principal amount represented by such Series 2007-1 Note, the portions of its Series 2007-1 Note that are from time to time allocated to the CP Tranche, any Base Rate Tranche and any Eurodollar Tranche, and any reductions to the Stated Amount; provided , that failure to make any recordation on the grid or records or any error in recordation shall not adversely affect any Purchaser’s rights with respect to its right to receive principal and interest under a Series 2007-1 Note.

ARTICLE IV

RIGHTS OF SERIES 2007-1 NOTEHOLDERS AND ALLOCATION AND APPLICATION OF POOL COLLECTIONS

Section 4.01. Pool Collections and Allocations .

(a) Allocation of Pool Collections . Funds on deposit in the Collection Account in accordance with Section 8.04 of the Indenture shall be allocated and distributed to Series 2007-1 as set forth in the Indenture and this Article IV.

 

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(b) Allocation of Pool Collections to Series 2007-1 . Prior to the close of business on each Transfer Date, the Servicer shall allocate to Series 2007-1 an amount (such amount, the “ Series 2007-1 Collections ”) equal to the product of (i) the amount of Pool Collections deposited in the Collection Account during the preceding Monthly Period (less any amounts permitted to be withdrawn pursuant to Sections 3.02(c)(vi), 3.12 and 3.14(b) of the Transfer and Servicing Agreement) multiplied by (ii) the Series Percentage for such Distribution Date.

(c) Allocation of Series 2007-1 Collections . Prior to the close of business on each Transfer Date, the Servicer shall direct the Indenture Trustee to allocate Series 2007-1 Collections in the amounts and according to the priority set forth below pursuant to Section 8.04 of the Indenture:

(i) From the Collection Account to the Distribution Account for distribution in accordance with Section 4.04(b), an amount equal to the Required Amount for the next succeeding Distribution Date, and if the amount of the Series 2007-1 Collections then on deposit in the Distribution Account exceeds the Required Amount for such Distribution Date, such Series 2007-1 Collections shall be distributed therefrom in accordance with the remaining provisions of this Section 4.01(c) ;

(ii) During the Revolving Period, and during the Amortization Period after the Series 2007-1 Notes have been paid in full, to the Distribution Account for distribution to the Managing Agents on behalf of the holders of the Series 2007-1 Notes, an amount equal to any other amounts (other than principal and interest owed under the Series 2007-1 Notes) owed by the Issuer pursuant to the Note Purchase Agreement;

(iii) During the Revolving Period and during the Amortization Period, if (x) a Series 2007-1 Asset Amount Deficiency has occurred and is continuing, or (y) the application of funds to the payment of the principal of another Series of Notes or the release of funds to the Issuer would result in a Series 2007-1 Asset Amount Deficiency or, during the Revolving Period would otherwise result in the occurrence of an event that, with the passage of time or the giving of notice or both, would become an Amortization Event, all remaining Series 2007-1 Collections shall be transferred to the Series 2007-1 Principal Subaccount up to the amount necessary to eliminate such Series 2007-1 Asset Amount Deficiency or Amortization Event or to fund such Decrease or optional redemption, as applicable;

(iv) If the amount on deposit in the Marketing Expenses Account is less than the Required Marketing Expenses Account Amount, to the Marketing Expense Account, the lesser of (x) the amount of such deficiency and (y) all remaining Series 2007-1 Collections;

(v) On any Decrease Date during the Revolving Period, (i) to the Series 2007-1 Principal Subaccount, the amount of the applicable Decrease and (ii) if such date is other than a Distribution Date, to the Distribution Account for distribution to the Managing Agents on behalf of the holders of the Series 2007-1 Notes, all (x) accrued and unpaid interest on the amount of such Decrease (which amount shall be due and owing as of such date) together with (y) if such Decrease Date is other than an Distribution Date, all funding losses, expenses and liabilities owed under Section 2.09 of the Note Purchase Agreement in connection with any such Decrease.

 

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(vi) During the Revolving Period, (A) if any other Series of Notes is in its Amortization Period and the Indenture Supplement related to such amortizing Series of Notes requires the Issuer to transfer such remaining Series 2007-1 Collections to pay the principal of such other Series of Notes, all remaining Series 2007-1 Collections to the applicable Series Account with respect to such amortizing Series of Notes; provided , that if more than one other Series of Notes is amortizing and the related Indenture Supplement of each such amortizing Series of Notes requires the Issuer to transfer such remaining Series 2007-1 Collections to pay the principal of such other Series of Notes, pro rata to the applicable Series Account of each such other amortizing Series of Notes based on their respective Series Percentages; and (B) if no transfer of the remaining Series 2007-1 Collections is required pursuant to clause (A), all remaining Series 2007-1 Collections to the Issuer free and clear of the lien of the Indenture and without compliance with Section 12.01(b) of the Indenture;

(vii) During the Amortization Period, to the Series 2007-1 Principal Subaccount, the Series 2007-1 Collections on each Deposit Date; provided , however , that the aggregate amount deposited into the Series 2007-1 Principal Subaccount pursuant to this clause on any Deposit Date shall not exceed the Series Outstanding Amount on the immediately preceding Business Day; and

(viii) To the Distribution Account for distribution to the Managing Agents on behalf of the holders of the Series 2007-1 Notes, an amount equal to any other amounts owed by the Issuer pursuant to the Note Purchase Agreement and not paid above.

(d) Prior to the close of business (i) on each Deposit Date when a Series 2007-1 Asset Amount Deficiency has occurred and (ii) on each Deposit Date during the Amortization Period, the Issuer shall deposit Pool Collections allocated to other Series in the Series 2007-1 Principal Subaccount to the extent those Pool Collections would otherwise have been released to the Issuer under the terms of the Indenture Supplement related to such Series (“ Otherwise Released Collections ”). If Series 2007-1 and any other Series are simultaneously in their respective Amortization Periods or otherwise simultaneously requiring such payments, such Otherwise Released Collections shall be allocated ratably between each such Series of Notes (including Series 2007-1) based on their respective Series Percentages.

Section 4.02. Determination of Interest and Monthly Interest .

(a) The amount of interest distributable from the Distribution Account with respect to the Series 2007-1 Notes on any Distribution Date shall be an amount equal to the sum of the Monthly Interest for such Distribution Date, plus any Interest Shortfall and any Additional Interest as determined under Section 4.02(b). The monthly interest for any Tranche shall be an amount equal to the product of (i) a fraction, the numerator of which is the actual number of days during the Interest Period then ending that such Tranche was outstanding and the denominator of

 

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which is 360, multiplied by (ii) the Series 2007-1 Tranche Rate in effect with respect to the related Tranche and multiplied by (iii) the daily average Outstanding Tranche Amount of the related Tranche during the related Interest Period. The amount of interest allocable to the Tranches of any Purchaser Group and due to the Purchasers in the related Purchaser Group shall be determined by each Managing Agent and notified by each Managing Agent to the Administrative Agent, the Servicer, the Issuer, the Paying Agent and the Indenture Trustee in accordance with the procedures set forth in the Note Purchase Agreement.

(b) The “ Monthly Interest ” for any Distribution Date shall mean the sum of the aggregate unpaid amount, if any, of all unpaid interest determined for each Tranche under Section 4.02(a) . On the Determination Date preceding each Distribution Date, the Servicer shall determine the excess (the “ Interest Shortfall ”), if any, of (x) the Monthly Interest for such Distribution Date over (y) the aggregate amount of funds allocated and available to pay such Monthly Interest on such Distribution Date. If the Interest Shortfall with respect to any Distribution Date is greater than zero, then on each subsequent Distribution Date until such Interest Shortfall is fully paid, an additional amount (“ Additional Interest ”) equal to the product of (A) a fraction, the numerator of which is the actual number of days in the related Interest Period and the denominator of which is 360, multiplied by (B) the applicable Series 2007-1 Tranche Rate multiplied by (C) such Interest Shortfall (or the portion thereof that has not been paid to the Series 2007-1 Noteholders from other funds) shall be payable as provided herein with respect to the Series 2007-1 Notes. Notwithstanding anything herein to the contrary, Additional Interest shall be payable or distributed only to the extent permitted by applicable law. From and after the calculation of any Interest Shortfall, Monthly Interest shall be calculated without duplication of any amounts included in the calculation of Additional Interest.

Section 4.03. Determination of Principal Distribution . On any Distribution Date and any Decrease Date for any Tranche (i) during the Revolving Period, if there are funds on deposit in the Series 2007-1 Principal Subaccount, and (ii) during the Amortization Period, the Trustee shall distribute from the Series 2007-1 Principal Subaccount, for application to reduce the Series Outstanding Amount, an amount of principal (the “ Monthly Principal ”), equal to the lesser of (a) the amount on deposit in the Series 2007-1 Principal Subaccount and (b) the Series Outstanding Amount. All Monthly Principal and all Decreases shall be paid to the Purchaser Groups ratably in accordance with their Pro Rata Shares as set forth in the Note Purchase Agreement provided , that, during a Term-Out Period with respect to any Purchaser Group, such Purchaser Group’s allocable share of Monthly Principal shall be deposited into its Term-Out Period Account.

Section 4.04. Application of Series 2007-1 Collections . On each Distribution Date and, if different, on each Decrease Date, as applicable, the Servicer shall instruct the Indenture Trustee in writing (such writing to be substantially in the form of Exhibit B unless otherwise agreed) to apply amounts on deposit in the Collection Account (and any subaccount thereof):

(a) On each Decrease Date (if such Decrease Date is not a Distribution Date), to withdraw from the amounts on deposit in the Distribution Account an amount equal to the amount of interest then due and owing on the Series 2007-1 Notes in accordance with Section 3.02(b) , and to pay such interest to the Series 2007-1 Noteholders pursuant to Section 5.04 .

 

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(b) On each Distribution Date, to transfer amounts on deposit in the Distribution Account in the following order of priority:

(i) An amount equal to the sum of (A) Monthly Interest, if any, for such Distribution Date plus (B) any Interest Shortfall previously accrued and not reimbursed plus (C) any Additional Interest previously accrued and not paid shall be paid to the Series 2007-1 Noteholders on such Distribution Date pursuant to Section 5.04 ;

(ii) An amount equal to the Monthly Program Fees for such Distribution Date shall be distributed to each Managing Agent (ratably in accordance with the amounts owing to each Purchaser Group);

(iii) An amount equal to the sum of (A) the Monthly Servicing Fee for such Distribution Date plus (B) any Monthly Servicing Fee previously accrued and not paid pursuant to this Section 4.04(b)(iii) shall be distributed to the Servicer;

(iv) An amount equal to any out-of-pocket costs and expenses of the Administrative Agent and the Managing Agents relating to enforcement against the Issuer shall be distributed to the Administrative Agent and the Managing Agents (ratably in accordance with the amounts owing to each such Person);

(v) If a Series 2007-1 Asset Amount Deficiency has occurred and is continuing an amount necessary to eliminate such Series 2007-1 Asset Amount Deficiency shall be distributed to the Series 2007-1 Principal Subaccount;

(vi) During the Amortization Period, to the Series 2007-1 Principal Subaccount, for application to reduce the Series Outstanding Amount; and

(vii) An amount equal to all increased costs, fees, expenses and other amounts payable to the Administrative Agent, the Managing Agents and the Purchasers pursuant to the Indenture Supplement and the Note Purchase Agreement shall be distributed to each such Person (ratably in accordance with the amounts owing to each such Person).

(c) To transfer from the Series 2007-1 Principal Subaccount to the Series 2007-1 Noteholders, (i) on each Decrease Date, an amount equal to the amount of the relevant Decrease and (ii) on each Distribution Date when funds are on deposit in the Series 2007-1 Principal Subaccount, an amount equal to the Monthly Principal for such Distribution Date, in each case for payment to the Series 2007-1 Noteholders on such Decrease Date or Distribution Date, as applicable, pursuant to Section 5.04 (ratably in accordance with the amounts owing to each Series 2007-1 Noteholder); provided that during a Term-Out Period with respect to any Purchaser Group, such Purchaser Group’s allocable share of any amounts so transferred from the Series 2007-1 Principal Subaccount shall be deposited into its Term-Out Period Account.

 

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Section 4.05. Distribution Account .

(a) All Series 2007-1 Collections which are distributed to the Distribution Account in accordance with the terms of this Indenture Supplement, together with all proceeds, earnings, income, revenue, dividends and distributions thereof, shall be held therein for the benefit of the Series 2007-1 Noteholders. The Indenture Trustee shall, in accordance with the Indenture, possess all right, title and interest in all monies, instruments, investment property and other property credited from time to time to the Distribution Account (and any subaccount thereof) and in all proceeds, earnings, income, revenue, dividends and distributions thereof. The Distribution Account shall be under the sole dominion and control of the Indenture Trustee for the benefit of the Noteholders. Pursuant to the authority granted to the Servicer in Article III of the Transfer and Servicing Agreement, the Servicer shall have the power, revocable by the Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and payments from the Distribution Account for the purposes of making the payments required under Section 4.04 .

(b) Series 2007-1 Collections which are on deposit in the Distribution Account shall be invested in accordance with Section 4.01 of the Transfer and Servicing Agreement and Section 6.13 of the Indenture. The Indenture Trustee shall bear no responsibility or liability for any losses resulting from investment or reinvestment of any funds in accordance with this Section 4.05(b) nor for the selection of Eligible Investments, except with respect to investments on which the institution acting as Indenture Trustee is an obligor.

Section 4.06. Series 2007-1 Principal Subaccount .

(a) The Issuer, for the benefit of the Series 2007-1 Noteholders, shall establish and maintain with the Indenture Trustee or its nominee in the name of the Indenture Trustee, the Series 2007-1 Principal Subaccount, which shall be a subaccount of the Collection Account (the “ Series 2007-1 Principal Subaccount ”). The Indenture Trustee shall possess all right, title and interest in all monies, instruments, investment property and other property credited from time to time to the Series 2007-1 Principal Subaccount (and any subaccount thereof) and in all proceeds, earnings, income, revenue, dividends and distributions thereof for the benefit of the Series 2007-1 Noteholders. The Series 2007-1 Principal Subaccount shall be under the sole dominion and control of the Indenture Trustee for the benefit of the Series 2007-1 Noteholders. Pursuant to the authority granted to the Servicer in Article III of the Transfer and Servicing Agreement, the Servicer shall have the power, revocable by the Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and payments from the Series 2007-1 Principal Subaccount for the purposes of making the payments required under Section 4.04 .

(b) Funds on deposit in the Series 2007-1 Principal Subaccount shall be invested in accordance with Section 4.01 of the Transfer and Servicing Agreement and Section 6.13 of the Indenture. The Indenture Trustee shall bear no responsibility or liability for any losses resulting from investment or reinvestment of any funds in accordance with this Section 4.06(b) nor for the selection of Eligible Investments, except with respect to investments on which the institution acting as Indenture Trustee is an obligor.

(c) The Indenture Trustee shall withdraw and transfer funds on deposit in the Series 2007-1 Principal Subaccount on each Business Day during the Revolving Period to, or at the direction of, the Issuer if no Series 2007-1 Asset Amount Deficiency has occurred and is continuing and no event that with the passage of time or the giving of notice could become an Amortization Event, including a Series 2007-1 Asset Amount Deficiency, would result from such withdrawal. Any such transfer to the Issuer shall be made free and clear of the lien of the

 

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Indenture and without compliance with Section 12.01(b) of the Indenture. It is expressly understood that, during the Amortization Period, the Indenture Trustee shall not withdraw funds on deposit in the Series 2007-1 Principal Subaccount except to fund payments of Monthly Principal under Section 4.03 and, after the Series 2007-1 Notes have been paid in full, to fund any other payments owed under Section 4.01(c) in the order of priority set forth therein.

Section 4.07. Investment Instructions . Any investment instructions required to be given to the Indenture Trustee pursuant to the terms hereof must be given to the Indenture Trustee no later than 11:00 a.m. (New York City time) on the date such investment is to be made. If the Indenture Trustee receives such investment instruction later than such time, the Indenture Trustee may, but shall have no obligation to, make such investment. If the Indenture Trustee is unable to make an investment required in an investment instruction received by the Indenture Trustee after 11:00 a.m. (New York City time) on such day, such investment shall be made by the Indenture Trustee on the next succeeding Business Day. In no event shall the Indenture Trustee be liable for any investment not made pursuant to investment instructions received after 11:00 a.m. (New York City time) on the day such investment is requested to be made.

Section 4.08. Term-Out Period Account

(a) If a Term-Out Period occurs with respect to any Purchaser Group during the Revolving Period, the Issuer shall, prior to the commencement of such Term-Out Period, establish and maintain with the Indenture Trustee or its nominee in the name of the Indenture Trustee, for the benefit of each such Purchaser Group, a separate account (each such account, a “ Term-Out Period Account ”). The Indenture Trustee shall possess all right, title and interest in all monies, instruments, investment property and other property credited from time to time to each Term-Out Period Account and any subaccount thereof and in all proceeds, earnings, income, revenue, dividends and distributions thereof for the benefit of the Purchaser Group for whose benefit such Term-Out Period Account was established (each such group, the “Applicable Purchaser Group”), and no Series 2007-1 Noteholders not members of such Applicable Purchaser Group shall have any rights therein. Each Term-Out Period Account shall be under the sole dominion and control of the Indenture Trustee for the benefit of the Applicable Purchaser Group. In the event that the Issuer requests an Increase pursuant to Section 3.02(a), then, unless the Indenture Trustee has otherwise been notified by the Managing Agent for the Applicable Purchaser Group that the conditions precedent to such Increase have not been satisfied, the Indenture Trustee shall, on the applicable Increase Date, withdraw from each Term-Out Period Account the Applicable Purchaser Group’s Pro Rata Share of such Increase and make the same available to the Issuer.

(b) Funds on deposit in any Term-Out Period Account shall be invested in overnight investments at the discretion of the Managing Agent. All such investments must qualify as Eligible Investments under the Transfer and Servicing Agreement; provided , that solely for the purposes of this Section 4.08 , any investments of the types described in clauses (b) through (e) and (g) of the definitions thereof shall be deemed to be eligible for so long as the Issuer has a short-term debt or credit rating of at least A-1 by Standard and Poor’s and P-1 by Moody’s. The Indenture Trustee shall bear no responsibility or liability for any losses resulting from investment or reinvestment of any funds in accordance with this Section 4.08(b) nor for the selection of Eligible Investments, except with respect to investments on which the institution acting as Indenture Trustee is an obligor.

 

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(c) On each Distribution Date, the Indenture Trustee shall withdraw from each Term-Out Period Account and distribute to the Managing Agent for the Applicable Purchaser Group for the benefit of the related Committed Purchasers in such Purchaser Group, the lesser of (x) the excess, if any, of all funds on deposit therein over the Term-Out Deposit Amount and (y) all investment earnings thereon since the immediately preceding Distribution Date (or, in the case of the first Distribution Date after the commencement of the Term-Out Period, since the date the Term-Out Period commenced).

(d) If the Amortization Period commences, the Indenture Trustee shall, on the first Distribution Date during the Amortization Period, withdraw and transfer to the Managing Agent for each Applicable Purchaser Group, after making the distributions under the immediately preceding paragraph, all remaining funds then on deposit in the Term-Out Period Account for such Applicable Purchaser Group.

ARTICLE V

DELIVERY OF SERIES 2007-1 NOTES; DISTRIBUTIONS; REPORTS TO SERIES 2007-1 NOTEHOLDERS

Section 5.01. Delivery and Payment for the Series 2007-1 Notes; Denominations . The Issuer shall execute and the Authentication Agent shall authenticate the Series 2007-1 Notes in accordance with Section 2.03 of the Indenture. The Indenture Trustee shall deliver the Series 2007-1 Notes to or upon the order of the Issuer when so authenticated.

Section 5.02. Registration; Registration of Transfer and Exchange; Transfer Restrictions .

(a) The Series 2007-1 Notes have not been registered under the Securities Act or any state securities law. None of the Issuer, the Servicer, the Transfer Agent and Registrar or the Indenture Trustee is obligated to register the Series 2007-1 Notes under the Securities Act or any other securities or “Blue Sky” laws or to take any other action not otherwise required under the Agreement to permit the transfer of the Series 2007-1 Notes without registration.

(b) No transfer of any Series 2007-1 Note or any interest therein (including, without limitation, by pledge or hypothecation) shall be made except in compliance with the restrictions on transfer set forth in this Section 5.02 (including the applicable legend to be set forth on the face of such Series 2007-1 Note as provided in Exhibit A) , in a transaction exempt from the registration requirements of the Securities Act and applicable state securities or “Blue Sky” laws (i) to a person who the transferor reasonably believes is a “qualified institutional buyer” within the meaning thereof in Rule 144A (a “ QIB ”) and (B) that is aware that the resale or other transfer is being made in reliance on Rule 144A.

(c) Each Purchaser and each Holder of the Series 2007-1 Notes, by its acceptance thereof, will be deemed to have acknowledged, represented to and agreed with the Issuer and, in the case of any transferee of any Purchaser, such Purchaser as follows:

(i) It understands that the Series 2007-1 Notes may be offered and may be resold by such Purchaser only to QIBs and subject to the restrictions of Rule 144A.

 

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(ii) It understands that the Series 2007-1 Notes have not been and will not be registered under the Securities Act or any state or other applicable securities law and that no Series 2007-1 Note, or any interest or participation therein, may be offered, sold, pledged or otherwise transferred unless registered pursuant to, or exempt from registration under, the Securities Act and any other applicable securities law.

(iii) It acknowledges that none of the Issuer, the Servicer, the Administrative Agent or any Purchaser or any person representing the Issuer, the Servicer, the Administrative Agent, any Managing Agent or any Purchaser has made any representation to it with respect to the Issuer (except, as to the Issuer, the representations by the Issuer in the Transaction Documents) or the offering or sale of any Series 2007-1 Note. It has had access to such financial and other information concerning the Issuer and the Series 2007-1 Notes as it has deemed necessary in connection with its decision to purchase the Series 2007-1 Notes.

(iv) It acknowledges that each Series 2007-1 Note will bear a legend to the following effect unless the Issuer determines otherwise, consistent with applicable law:

“THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN, MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) TO THE ISSUER OR (2) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A “QIB”) PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT. EACH NOTE OWNER BY ACCEPTING A BENEFICIAL INTEREST IN THIS NOTE, IS DEEMED TO REPRESENT THAT IT IS EITHER A QIB PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.

PRIOR TO PURCHASING THIS NOTE, PURCHASERS SHOULD CONSULT COUNSEL WITH RESPECT TO THE AVAILABILITY AND CONDITIONS OF EXEMPTION FROM THE RESTRICTION ON RESALE OR TRANSFER. THE ISSUER HAS NOT AGREED TO REGISTER THE NOTE UNDER THE SECURITIES ACT, TO QUALIFY THE NOTES UNDER THE SECURITIES LAWS OF ANY STATE OR TO PROVIDE REGISTRATION RIGHTS TO ANY PURCHASER.

AS SET FORTH HEREIN, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.”

 

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(v) If it is acquiring the Series 2007-1 Notes, or any interest or participation therein, as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to such account and that it has full power to make the acknowledgements, representations and agreements contained herein on behalf of each such account.

(vi) It (1) is a QIB, (2) is aware that the sale to it is being made in reliance on Rule 144A and if it is acquiring such Series 2007-1 Note or any interest or participation therein for the account of another QIB, such other QIB is aware that the sale is being made in reliance on Rule 144A and (3) is acquiring such Series 2007-1 Note or any interest or participation therein for its own account or for the account of a QIB.

(vii) It is purchasing such Series 2007-1 Note for its own account, or for one or more investor accounts for which it is acting as fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act, subject to any requirements of law that the disposition of its property or the property of such investor account or accounts be at all times within its or their control and subject to its or their ability to resell such Series 2007-1 Note, or any interest or participation therein, as described herein, in the Indenture and in the Note Purchase Agreement.

(viii) It agrees that if in the future it should offer, sell or otherwise transfer such Series 2007-1 Note or any interest or participation therein, it will do so only (A) to the Issuer (B) pursuant to Rule 144A to a person who it reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, purchasing for its own account or for the account of a QIB, whom it has informed that such offer, sale or other transfer is being made in reliance on Rule 144A.

(ix) It acknowledges that the Issuer, the Administrative Agent, the Purchasers and others will rely on the truth and accuracy of the foregoing acknowledgments, representations and agreements, and agrees that if any of the foregoing acknowledgments, representations and agreements deemed to have been made by it are no longer accurate, it shall promptly notify the Issuer.

(x) With respect to any foreign purchaser claiming an exemption from United States income or withholding tax, that it has delivered to the Paying Agent a true and complete Form W-8 BEN or Form W-8-ECI, indicating such exemption.

(xi) It acknowledges that transfers of such Series 2007-1 Note or any interest or participation therein shall otherwise be subject in all respects to the restrictions applicable thereto contained in the Agreement and the Note Purchase Agreement.

Any transfer, resale, pledge or other transfer of the Series 2007-1 Notes contrary to the restrictions set forth above and in the Indenture shall be deemed void ab initio by the Transfer Agent and Registrar.

 

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(d) Notwithstanding anything to the contrary herein, so long as and provided that the relevant Liquidity Agreement contains a provision which requires such Liquidity Providers to acknowledge and agree with the provisions of Section 5.02(c) hereof, each Conduit Purchaser may at any time sell or grant, to one or more Liquidity Providers party to any Liquidity Agreement, participating interests or security interests in the Series 2007-1 Notes without notice to the Issuer or any other action to be taken on the part of such Conduit Purchaser, the related Liquidity Provider, the Administrative Agent or the applicable Managing Agent on behalf of such Conduit Purchaser.

(e) Notwithstanding anything to the contrary contained herein, the Series 2007-1 Notes and this Indenture Supplement may, with the prior written consent of the Required Managing Agents, be amended or supplemented to modify the restrictions on and procedures for resale and other transfers of the Series 2007-1 Notes to reflect any change in applicable law or regulation (or the interpretation thereof) or in practices relating to the resale or transfer of restricted securities generally. Each Noteholder shall by its acceptance of a Series 2007-1 Note have agreed to any such amendment or supplement.

Section 5.03. Definitive Notes . The Series 2007-1 Notes, upon original issuance, will be issued in definitive, fully registered form, authenticated and delivered in substantially the form attached hereto as Exhibit A . The Series 2007-1 Notes will constitute Definitive Notes within the meaning of the Indenture.

Section 5.04. Distributions .

(a) On each Decrease Date and each Distribution Date, the Paying Agent shall distribute to each Series 2007-1 Noteholder of record on the related Record Date such Series 2007-1 Noteholder’s pro rata share of amounts on deposit in the Distribution Account as are payable to the Series 2007-1 Noteholders pursuant to Section 4.04 .

(b) Distributions to the Series 2007-1 Noteholders hereunder shall be made (i) by wire transfer of immediately available funds and (ii) without presentation or surrender of any Series 2007-1 Note or the making of any notation thereon.

Section 5.05. Reports and Statements to Series 2007-1 Noteholders .

(a) On each Distribution Date, the Paying Agent shall forward to the Series 2007-1 Noteholders a statement substantially in the form of Exhibit C prepared by the Servicer and delivered to the Paying Agent. The Paying Agent shall have no liability for the Servicer’s failure to provide such statement to it.

(b) On or before January 31 of each calendar year, beginning with calendar year 2008, the Paying Agent shall furnish or cause to be furnished to each Person who at any time during the preceding calendar year was a Series 2007-1 Noteholder, a statement prepared by the Servicer containing the information required to be contained in the statement to Series 2007-1 Noteholders, as set forth in paragraph (a) above, aggregated for such calendar year or the applicable portion thereof during which such Person was a Series 2007-1 Noteholder, together with such other information as is required to be provided by an issuer of indebtedness under the Code. Such obligation of the Paying Agent shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Paying Agent pursuant to any requirements of the Code as from time to time in effect.

 

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ARTICLE VI

AMORTIZATION EVENTS

Section 6.01. Series 2007-1 Amortization Events . Upon the occurrence and continuance of any of the following events:

(a) failure on the part of the Issuer to pay principal of and interest on the Series 2007-1 Notes in full on or before the Final Stated Maturity Date, or to pay Monthly Principal or the amount of any Decrease to the extent required under Section 4.03, or to pay accrued interest on the Series 2007-1 Notes in full on any Distribution Date, or to pay accrued Monthly Program Fees on any Distribution Date, and such failure remains unremedied for one Business Day; or

(b) failure on the part of the Issuer to maintain its separate existence as required by Section 3.07 of the Indenture or duly to perform or observe any covenant set forth in Section 3.03(a), (c), (d), (e), (f), (g), (h), (i) or (j) of the Indenture, which failure continues unremedied for a period of ten calendar days; or

(c) failure on the part of the Issuer duly to perform or observe any other covenants or agreements of the Issuer set forth in the Note Purchase Agreement, the Indenture or this Indenture Supplement, which failure continues unremedied for a period of 30 days, in each case, after the date on which written notice of such failure, requiring the same to be remedied, has been given to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture Trustee by the Required Managing Agents; or

(d) any representation or warranty made by the Issuer in the Note Purchase Agreement, this Indenture Supplement or the Indenture proves to have been incorrect in any material respect when made, and continues to be incorrect in any material respect for a period of 30 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture Trustee by the Required Managing Agents; or

(e) a Servicer Default; or

(f) a Cartus Purchase Termination Event (formerly known as a CMSC Purchase Termination Event) under the Purchase Agreement, an ARSC Purchase Termination Event under the Receivables Purchase Agreement or a Transfer Termination Event under the Transfer and Servicing Agreement; or

(g) other than an Event of Default described in clause (v) below, an Event of Default with respect to the Series 2007-1 Notes; or

(h) a Series 2007-1 Asset Amount Deficiency, which Series 2007-1 Asset Amount Deficiency continues for any two consecutive Business Days after actual knowledge thereof by the Servicer or the Issuer or upon the next succeeding Distribution Date, whichever is earlier; or

 

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(i) the amount on deposit in the Marketing Expenses Account is less than the Required Marketing Expenses Account Amount for any five consecutive Business Days after actual knowledge thereof by the Servicer or upon the next succeeding Distribution Date, whichever is earlier; or

(j) the Average Days in Inventory for Appraised Value Homes equals or exceeds one hundred eighty (180) days for any Monthly Period; or

(k) the average of the Average Days in Inventory for Appraised Value Homes for any Monthly Period and for the immediately preceding five Monthly Periods equals or exceeds one hundred fifty (150) days; or

(l) the Average Days in Inventory for Homes other than Appraised Value Homes equals or exceeds sixty (60) days for any Monthly Period; or

(m) the average of the Average Days in Inventory for Homes other than Appraised Value Homes for any Monthly Period and for the immediately preceding five Monthly Periods equals or exceeds forty (40) days; or

(n) the Default Ratio for any Monthly Period exceeds 5.0%, or the Three Month Average Default Ratio for any Monthly Period exceeds 4.0%; or

(o) the Dilution Ratio for any Monthly Period exceeds 1.5%, or the Three Month Average Dilution Ratio for any Monthly Period exceeds 1.0%; or

(p) Net Credit Losses for any Monthly Period exceed $750,000 and for any twelve consecutive Monthly Periods exceed $1,500,000; or

(q) the failure to vest and maintain in the Indenture Trustee a perfected first priority security interest in the Pledged Assets; or

(r) either (i) the Internal Revenue Service files notice of a lien pursuant to Section 6323 of the Internal Revenue Code with respect to any of the ARSC Purchased Assets, and such Lien has not been released within five days or, if released, proved to the satisfaction of the Rating Agencies, or (ii) the PBGC files, or indicates its intention to file a notice of a lien pursuant to Section 4068 of ERISA with respect to any of the Pledged Assets; or

(s) any of the Purchase Agreement, the Receivables Purchase Agreement, the Transfer and Servicing Agreement, the Note Purchase Agreement, the Performance Guarantees, the Indenture, this Indenture Supplement or any related documents cease, for any reason, to be in full force and effect, other than in accordance with its terms; or

(t) a failure on the part of Cartus, as the Servicer, to cooperate with the transfer of the servicing to a successor Servicer following the delivery of a Termination Notice pursuant to the Transfer and Servicing Agreement, which failure is determined by the Required Managing Agents to be material and continues unremedied for a period of ten calendar days after the date on which written notice of such failure, requiring the same to be remedied, has been given to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture Trustee by the Required Managing Agents; or

 

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(u) an Event of Bankruptcy shall occur with respect to the Issuer, the Transferor, Realogy, Cartus or CFC; or

(v) an Event of Default arising from a determination that the Issuer is required to be registered under the Investment Company Act of 1940; or

(w) a Change in Control shall have occurred;

then, (i) in the case of any event described in clauses (a) through (g), (i), (n) through (t), or (w), an “ Amortization Event ” will be deemed to have occurred only if, after the applicable grace period, if any, set forth in such clauses, either the Indenture Trustee (at the direction of the Required Managing Agents) or the Required Managing Agents, in each case by notice then given in writing to the Issuer and the Servicer (and to the Indenture Trustee if given by the Series 2007-1 Noteholder) declare that an Amortization Event has occurred as of the date of such notice, (ii) in the case of any event described in clauses (h), (j), (k), (l) and (m), an Amortization Event will occur at the close of business on the fifth Business Day following the actual knowledge of the Issuer or the Servicer of such event without any notice or other action on the part of the Indenture Trustee or the Series 2007-1 Noteholder unless prior to that time the Required Managing Agents by notice then given in writing to the Issuer, the Servicer and the Indenture Trustee declare that an Amortization Event will not result from the occurrence of such event and (iii) in the case of any event described in clauses (u) or (v), an Amortization Event shall occur immediately upon the occurrence of such event without any notice or other action on the part of the Indenture Trustee or the Series 2007-1 Noteholders.

In addition to the foregoing, if an Amortization Event has occurred, then, at the written direction of the Required Managing Agents, the Indenture Trustee, as assignee of the Transferor and the Issuer with respect to the Lockboxes, may give Termination Notices to the Lockbox Banks in accordance with Section 9.06 of the Transfer and Servicing Agreement.

ARTICLE VII

OPTIONAL REDEMPTION OF SERIES 2007-1 NOTES

Section 7.01. Optional Redemption of Series 2007-1 Notes .

(a) On any Business Day, subject to the provisions of Section 7.01(b) below, the Issuer shall have the option to redeem the Series 2007-1 Notes, at a redemption price equal to (i) if such day is a Distribution Date, the Redemption Price for such Distribution Date or (ii) if such day is not a Distribution Date, the Redemption Price for the immediately succeeding Distribution Date.

(b) The Issuer shall give the Servicer, the Administrative Agent, the Managing Agents and the Indenture Trustee at least thirty (30) days (or such lesser number of days as may be agreed to by the Managing Agents and the Indenture Trustee at such time) prior

 

26


written notice of the date on which the Issuer intends to exercise such optional redemption. Not later than 12:00 noon, New York City time, on such day the Issuer shall deposit into (a) the Series 2007-1 Principal Subaccount in immediately available funds the excess of the principal portion of the Redemption Price over the amount, if any, on deposit in the Series 2007-1 Principal Subaccount and (b) the Distribution Account in immediately available funds the excess of the remaining portions of the Redemption Price over the amount, if any, of the Monthly Interest, Monthly Program Fees and other amounts on deposit in the Distribution Account which are allocable to Series 2007-1 and available for the payment of such amounts. Such redemption option is subject to payment in full of the Redemption Price. Upon payment and distribution of the Redemption Price and the reduction in the Series Outstanding Amount to zero, the Series 2007-1 Notes shall be cancelled, the Series 2007-1 Noteholders shall have no further obligations to fund under the Note Purchase Agreement and the Series 2007-1 Noteholders shall have no further interest in the Pledged Assets. The Redemption Price shall be distributed as set forth in Section 4.04 .

ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 8.01. Ratification of Agreement . As supplemented by this Indenture Supplement, the Indenture is in all respects ratified and confirmed and the Indenture as so supplemented by this Indenture Supplement shall be read, taken and construed as one and the same instrument.

Section 8.02. Counterparts . This Indenture Supplement may be executed in two or more counterparts, and by different parties on separate counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument.

Section 8.03. Governing Law . THIS INDENTURE SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

Section 8.04. Amendment and Restatement . This Indenture Supplement amends and restates in full the terms and provisions of the Series 2007-1 Indenture Supplement dated as of and entered into on April 10, 2007 (the “ Original 2007-1 Supplement ”) and shall not constitute a novation or termination of the Original Supplement or any liens or security interests created thereunder, and all obligations thereunder are in all respects continuing, with only the terms thereof being modified as provided herein. From and after the date hereof, the terms of this Indenture Supplement shall supersede the terms of the Original 2007-1 Supplement in their entirety and each reference in any other Transaction Document to the Original 2007-1 Supplement or any other expression of like import referring to the Original 2007-1 Supplement shall mean and be a reference to this Indenture Supplement.

 

27


IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement to be duly executed and delivered by their respective duly authorized officers on the day and year first above written.

 

APPLE RIDGE FUNDING LLC,

as Issuer

By:   /s/ Eric Barnes
  Name: Eric Barnes
  Title: SVP, CFO

THE BANK OF NEW YORK,

as Indenture Trustee, Paying Agent, Authentication Agent and Transfer Agent and Registrar

By:   /s/ Amy S. Keith
  Name: Amy S. Keith
  Title: Assistant Vice President

Signature Page to Series 2007-1 Supplement


EXHIBIT A

FORM OF NOTE

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN, MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) TO THE ISSUER OR (2) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A “QIB”) PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT. EACH NOTE OWNER BY ACCEPTING A BENEFICIAL INTEREST IN THIS NOTE, IS DEEMED TO REPRESENT THAT IT IS EITHER A QIB PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.

PRIOR TO PURCHASING ANY INTEREST IN THE NOTE, PURCHASERS SHOULD CONSULT COUNSEL WITH RESPECT TO THE AVAILABILITY AND CONDITIONS OF EXEMPTION FROM THE RESTRICTION ON RESALE OR TRANSFER. THE ISSUER HAS NOT AGREED TO REGISTER THE NOTE UNDER THE SECURITIES ACT, TO QUALIFY THE NOTE UNDER THE SECURITIES LAWS OF ANY STATE OR TO PROVIDE REGISTRATION RIGHTS TO ANY PURCHASER.

AS SET FORTH HEREIN, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE SERIES OUTSTANDING AMOUNT WILL BE REDUCED FROM TIME TO TIME BY DISTRIBUTIONS ON THE SERIES 2007-1 NOTES ALLOCABLE TO PRINCIPAL. IN ADDITION, THE SERIES OUTSTANDING AMOUNT MAY BE INCREASED SUBJECT TO CERTAIN TERMS AND CONDITIONS SET FORTH IN THE INDENTURE SUPPLEMENT AND THE NOTE PURCHASE AGREEMENT. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE NOTE, THE OUTSTANDING AMOUNT OF THIS NOTE MAY BE DIFFERENT FROM THE INITIAL OUTSTANDING AMOUNT SHOWN ON THE FACE HEREOF. ANYONE ACQUIRING THIS NOTE MAY ASCERTAIN THE CURRENT OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE BY INQUIRY OF THE PAYING AGENT. ON THE DATE OF THE INITIAL ISSUANCE OF THE NOTE, THE PAYING AGENT IS THE BANK OF NEW YORK.

 

A-1


THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF, AND EACH HOLDER OF A BENEFICIAL INTEREST IN THIS NOTE BY THE ACQUISITION OF A BENEFICIAL INTEREST THEREIN, COVENANTS AND AGREES THAT IT WILL NOT AT ANY TIME INSTITUTE AGAINST THE ISSUER, APPLE RIDGE SERVICES CORPORATION OR CARTUS FINANCIAL CORPORATION OR JOIN IN ANY INSTITUTION AGAINST THE ISSUER, APPLE RIDGE SERVICES CORPORATION OR CARTUS FINANCIAL CORPORATION OF ANY BANKRUPTCY PROCEEDINGS UNDER ANY UNITED STATES FEDERAL OR STATE BANKRUPTCY OR SIMILAR LAW IN CONNECTION WITH ANY OBLIGATIONS RELATING TO THE NOTE OR THE INDENTURE.

THE HOLDER OF THIS NOTE BY ACCEPTANCE OF THIS NOTE AND EACH HOLDER OF A BENEFICIAL INTEREST IN THIS NOTE, BY THE ACQUISITION OF A BENEFICIAL INTEREST THEREIN, AGREE TO TREAT THE NOTE AS INDEBTEDNESS OF THE ISSUER FOR APPLICABLE FEDERAL, STATE, AND LOCAL INCOME AND FRANCHISE TAX LAW AND FOR PURPOSES OF ANY OTHER TAX IMPOSED ON OR MEASURED BY INCOME.

 

A-2


REGISTERED

No. R-[__]

APPLE RIDGE FUNDING LLC

SECURED VARIABLE FUNDING NOTE, SERIES 2007-1

Apple Ridge Funding LLC, a Delaware limited liability company (herein referred to as the “Issuer”), for value received, hereby promises to pay to [                      ], as a Managing Agent for the benefit of its Purchaser Group under the Note Purchase Agreement, or its assigns, subject to the following provisions, a principal sum of [                      ] DOLLARS ($[                      ]), or such greater or lesser amount as determined in accordance with the Indenture, on the earlier of the Final Stated Maturity Date and the Redemption Date, if any. The Issuer will pay interest on the Note with respect to each Interest Period in accordance with Section 4.02 of the Indenture Supplement. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof.

The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note.

Unless the certificate of authentication hereon has been executed by the Authentication Agent whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

This Note is one of a Series of Notes, Series 2007-1, as more fully described on the reverse side hereof.

 

A-3


IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer.

 

APPLE RIDGE FUNDING LLC,

as Issuer

By:    
Name:  
Title:  
Date: [              ], 2007

 

A-4


AUTHENTICATION AGENT’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes designated above and referred to in the within-mentioned Indenture.

 

THE BANK OF NEW YORK, not in its individual capacity but solely as Authentication Agent
By:    
Name:  
Title:  
Date: [              ], 2007

 

A-5


[REVERSE OF NOTE]

This duly authorized Note of the Issuer (herein called the “Note”) is designated as one of its Secured Variable Funding Notes, Series 2007-1 (herein called the “Series 2007-1 Notes”), and is issued under a Master Indenture dated as of April 25, 2000 (such indenture, as amended, and as supplemented by the Series 2007-1 Indenture Supplement dated as of April 10, 2007 among the parties to the Master Indenture (the “Indenture Supplement”), is herein called the “Indenture”), between the Issuer, The Bank of New York, as paying agent, authentication agent and transfer agent, registrar and indenture trustee (the “Indenture Trustee,” which term includes any successor Indenture Trustee under the Indenture). The respective rights and obligations of the Issuer, the Indenture Trustee and the Holder of the Note are set forth in the Indenture. This Note is subject to all terms of the Indenture. All terms used in the Note that are not defined herein shall have the meanings assigned to them in or pursuant to the Indenture, as supplemented or amended.

Payments of interest on and principal of this Note due and payable on any Distribution Date shall be made by wire transfer to the registered Holder of this Note (or one or more predecessor Notes) on the Note Register as of the close of business on each Record Date (the “Registered Holder”). Any reduction in the principal amount of this Note (or any one or more predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon.

As provided in the Indenture, the Series 2007-1 Notes may be prepaid prior to maturity under the circumstances and in the manner set forth therein.

As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Transfer Agent and Registrar duly executed by, the Holder hereof or his attorney-in-fact duly authorized in writing, and such other documents as the Transfer Agent and Registrar may reasonably require, and thereupon one or more new Notes of the same Series of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Note, but the Issuer or the Transfer Agent and Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange.

Each Noteholder by acceptance of this Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee in its individual capacity, any holder of a beneficial interest in the Issuer or the

 

A-6


Indenture Trustee or of any successor or assign of the Indenture Trustee in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity.

Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent, the Transfer Agent and Registrar and any agent of the foregoing shall treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Issuer, the Indenture Trustee, the Paying Agent, the Authentication Agent, the Transfer Agent and Registrar nor any such agent of the foregoing shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Series 2007-1 Notes and other notes issued under the Indenture at any time by the Issuer and the Indenture Trustee with the consent of the Majority Investors. The Indenture also contains provisions permitting the Holders of Series 2007-1 Notes representing specified percentages of the Series Outstanding Amount, on behalf of the Holder of this Note, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver shall be conclusive and binding upon the Holder of this Note and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits, subject to the conditions set forth in the Indenture, the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of any notes issued thereunder or without the consent of holders of any Series of notes not affected thereby.

The term “Issuer” as used in this Note includes any successor to the Issuer under the Indenture.

The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth.

This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, including Section 5-1401 of the New York General Obligations Law, but otherwise without regard to its conflict of law principles.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place, and rate, and in the coin or currency herein prescribed.

 

A-7


Anything herein to the contrary notwithstanding, except as expressly provided in the Transaction Documents, neither the owner of a beneficial interest in the Issuer, nor any of its partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture. The Holder of this Note by the acceptance hereof agrees that, except as expressly provided in the Transaction Documents, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided , however , that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note.

 

A-8


ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

 

   

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

   
(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

 

Dated:               *
  Signature Guaranteed:        

 

* NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

 

A-9


EXHIBIT B

FORM OF MONTHLY PAYMENT INSTRUCTIONS AND

NOTIFICATION TO THE INDENTURE TRUSTEE AND

THE PAYING AGENT

 

 

APPLE RIDGE FUNDING LLC,

SERIES 2007-1

 

 

The undersigned, a duly authorized representative of Cartus Corporation (“ Cartus ”), as servicer under the Transfer and Servicing Agreement, dated as of April 25, 2000 (as amended or supplemented, the “ Transfer and Servicing Agreement ”), by and between Cartus, Apple Ridge Services Corporation, as transferor, Cartus Financial Corporation, as originator, Apple Ridge Funding LLC (the “ Issuer ”), as transferee, and The Bank of New York, as successor to JPMorgan Chase Bank, N.A., a banking corporation organized and existing under the laws of New York (the “ Indenture Trustee ”), as Indenture Trustee, does hereby certify as follows:

1. Capitalized terms used in this Certificate have their respective meanings set forth in the Master Indenture, dated as of April 25, 2000 (as amended or supplemented, the “Master Indenture”), between the Issuer and The Bank of New York (“BONY”), as Indenture Trustee and as Paying Agent, Authentication Agent and Transfer Agent and Registrar, as supplemented by the Series 2007-1 Indenture Supplement, dated as of April 10, 2007, between the Issuer, the Indenture Trustee and BONY (as amended or supplemented, the “Indenture Supplement”), as applicable. Cartus is the Servicer.

2. The undersigned is an Authorized Officer of the Servicer.

 

I. INSTRUCTION TO MAKE A WITHDRAWAL

Pursuant to Section 4.04 of the Indenture Supplement, the Servicer does hereby instruct the Indenture Trustee (i) to make withdrawals from the Distribution Account or the relevant subaccount of the Collection Account on              ,          , which date is [a Distribution Date][a Decrease Date] under the Indenture Supplement, in the aggregate amounts set forth below and (ii) to apply the proceeds of such withdrawals in accordance with Section 4.04:

 

A) If the date is a Decrease Date but not a Distribution Date, pursuant to subsection 4.04(a) :

  

(1) From the Distribution Account to the Series 2007-1 Noteholders, interest due and owing on the Series 2007-1 Notes in accordance with Section 3.02(b) of the Indenture Supplement

   $ _______

 

B-1


B) If the date is a Distribution Date, pursuant to subsection 4.04(b)(i) :

  

(1) From the Distribution Account to the Series 2007-1 Noteholders, Monthly Interest on the outstanding principal balance of the Notes

   $ _______

(2) From the Distribution Account to the Series 2007-1 Noteholders, Interest Shortfall previously accrued and not reimbursed

   $ _______

(3) From the Distribution Account to the Series 2007-1 Noteholders, Additional Interest previously accrued and not reimbursed

   $ _______

Total amount to be transferred from the Distribution Account for payment to the Series 2007-1 Noteholders (B(1) + B(2) + B(3))

   $ _______

C) If the date is a Distribution Date, pursuant to subsection 4.04(b)(ii) :

  

(1) From the Distribution Account to each Managing Agent, Monthly Program Fees

   $ _______

D) If the date is a Distribution Date, pursuant to subsection 4.04(b)(iii) :

  

(1) From the Distribution Account to the Servicer, the Monthly Servicing Fee for such Distribution Date

   $ _______

(2) From the Distribution Account to the Servicer, Monthly Servicing Fee previously accrued and not paid

   $ _______

Total amount to be distributed to the Servicer (D(1) + D(2))

   $ _______

E) If the date is a Distribution Date, pursuant to subsection 4.04(b)(iv) :

  

(1) From the Distribution Account to the Administrative Agent and the Managing Agents, any out-of-pocket costs and expenses of the Administrative Agent and the Managing Agents relating to enforcement against the Issuer

   $ _______

 

B-2


F) If the date is a Distribution Date, pursuant to subsection 4.04(b)(v) :

  

(1) From the Distribution Account to the Series 2007-1 Principal Subaccount, amounts necessary to eliminate any Series 2007-1 Asset Amount Deficiency which has occurred and is continuing on such Distribution Date

   $ _______

G) If the date is a Distribution Date during the Amortization Period, pursuant to subsection 4.04(b)(vi) :

  

(1) From the Distribution Account to the Series 2007-1 Principal Subaccount, for application to reduce the Series Outstanding Amount

   $ _______

H) If the date is a Distribution Date, pursuant to subsection 4.04(b)(vii) :

  

(1) From the Distribution Account to the Administrative Agent, the Managing Agents and the Purchasers pursuant to the Supplement and the Note Purchase Agreement, amounts equal to all increased costs, fees, expenses and other amounts payable to such Persons

   $ _______

I) If the date is a Decrease Date, pursuant to subsection 4.04(c)(i) :

  

(1) From the Series 2007-1 Principal Subaccount to the Series 2007-1 Noteholders, an amount equal to the amount of the relevant Decrease

   $ _______

J) If the date is a Distribution Date and funds are on deposit in the Series 2007-1 Principal Subaccount, pursuant to subsection 4.04(c)(ii) :

  

(1) From the Series 2007-1 Principal Subaccount to the Series 2007-1 Noteholders, an amount equal to the Monthly Principal for such Distribution Date

   $ _______

 

II. INSTRUCTION TO MAKE CERTAIN PAYMENTS

Pursuant to Section 5.04, the Servicer does hereby instruct the Paying Agent to pay in accordance with Section 5.04 from the Distribution Account on                      , which date is a Distribution Date or a Decrease Date under the Indenture Supplement, the following amount as set forth below:

 

A) Pursuant to subsection 5.04(a) :

(1) Interest to be distributed to Series 2007-1 Noteholders

   $ __________

(2) Principal to be distributed to Series 2007-1 Noteholders

   $ __________

 

B-3


IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this      day of              ,              .

 

CARTUS CORPORATION
By:    
  Name:
  Title:

 

B-4


EXHIBIT C

FORM OF MONTHLY STATEMENT

Please see attached.

 

C-1


Apple Ridge Funding LLC, Series 2007-1

Monthly Report—February 2007

Report Distribution Date of xx/xx/07

 

I. Reporting Period

  
  

Monthly Period Beg & End

   2/1/07-2/28/07
  

Distribution Date For Monthly Fees

   03/16/07    

I. Composition of Aggregate Employer Balance by Asset Type

  
   a.    Billed AR Balance    * Confidential
   b.    Equity Loans, Pmts, & Mort Payoffs    * Confidential
   c.    Unbilled    * Confidential
   d.    Aggregate Employer Balance    * Confidential
   e.    Less: Defaulted Receivables    (* Confidential)
   f.    Plus: Net Credit Clients    * Confidential
   g.    Less: Client Advances    (* Confidential)
   h.    Less: ARB of Bankrupt Clients    (* Confidential)
   i.    Less: Non-US Properties    (* Confidential)
   j.    Aggregate Receivable Balance    * Confidential

II. Accounts Receivable Analysis

  

  1. Billed Receivables Aging

  
       a.    Current   
   b.    1 - 30 days past due    * Confidential
   c.    31 - 60 days past due    * Confidential
   d.    61 - 90 days past due    * Confidential
   e.    91 - 120 days past due    * Confidential
   f.    121 - 150 days past due    * Confidential
   g.    Over 150 days past due    * Confidential
   h.    Total Billed Receivables    * Confidential

III. Aggregate Adjustment Amount

  
   a.    Overconcentration Amount    * Confidential
   b.    Excess Longer Term Receivable Amount    * Confidential
   c.    Excess Special Homes Receivable Amount    * Confidential
   d.    Aggregate Unpaid Balance of Eligible Rec related to Homes in inventory > 540    * Confidential
   e.    Total    * Confidential

IV. Adjusted Aggregate Receivable Balance

  
   a.    Ending Aggregate Receivable Balance    * Confidential
   b.    Less: Aggregate Adjustment Amount    (* Confidential)
   c.    Ending Adjusted Aggregate Receivable Balance    697,055,967

V. Available Assets—Series 2005-1 O/S Notes Balance, Total Assets Available

  
   a.    Series 2005-1 Outstanding Notes Balance    * Confidential
   b.    Series 2005-1 Outstanding Pre-Funding Balance    * Confidential
   c.    Total Outstanding (a)+(b)-(c)-(d)    * Confidential
   d.    Total Assets Available    697,055,967

VI. Notes Balances

  
   a.    Series 2005-1 Outstanding Notes Balance    * Confidential

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 as amended.

 

C-2


Apple Ridge Funding LLC, Series 2007-1

Monthly Report—February 2007

 

   b.   

Series 2005-1 Outstanding Pre-Funding Balance

   * Confidential
   c.   

Total Outstanding (a)+(b)-(c )-(d)

   * Confidential
   d.   

Total Notes Limit

   850,000,000
   e.   

Has total notes limit been exceeded

   No

VII. Credit Enhancement

  
  

1. Reserve Ratios—Series 2005-1

  
      a.    Loss Reserve Ratio    * Confidential    %
      b.    Dilution Reserve Ratio    * Confidential    %
      c.    Servicing Reserve Ratio    * Confidential    %
      d.    Yield Reserve Ratio    * Confidential    %
      e.    Total    8.94%
  

2. Required Enhancement Amount—Series 2005-1

      a.    Equals (e) / (1 - (e))    * Confidential    %
      b.    Minimum enhancement amount    * Confidential    %
      c.    Outstanding Amount of Notes    * Confidential
      d.    Required Enhancement Amount ( {greater of (a) and (b)} * (c) )    * Confidential
  

3. Required Overcollateralization Amount—Series 2005-1

      a.    Required Enhancement Amount—Series 2005-1    * Confidential
      c.    Opening Principal Subaccount balance    * Confidential
      d.    Required Overcollateralization Amount ( a-b-c)    * Confidential
  

4. Required Asset Amount—Series 2005-1

      a.    Outstanding Amount of the Series 2005-1 Notes    649,785,714
      b.    Required Overcollateralization Amount    * Confidential
      c.    Required Asset Amount (a+b)    * Confidential
   5.   

Asset Amount Deficiency, if any, as to the related Distribution Date

   (* Confidential)
     

Total Asset Deficiency

   (* Confidential)

VIII. Amortization Events

  
  

1. Average Days in Inventory for Appraised Value Homes

   Pass
      a.    Average for any Monthly Period must be < 180 days    * Confidential
      b.    Average for any Monthly Period and for the immediately preceding 5 Monthly Periods must be < 150 days    * Confidential
  

2. Average Days in Inventory for other than Appraised Value Homes

   Pass
      a.    Average for any Monthly Period must be < 60 days    * Confidential
      b.    Average for any Monthly Period and for the immediately preceding 5 Monthly Periods must be < 40 days    * Confidential
  

3. Default Ratio

   Pass
      a.    Default Ratio for any Monthly Period must be <= 5.0%    * Confidential    %
      b.    Three Month Average Default Ratio must be <= 4.0%    * Confidential    %
  

4. Dilution Ratio

   Pass
      a.    Dilution Ratio for any Monthly Period must be <= 1.5%    * Confidential    %
      b.    Three Month Average Dilution Ratio must be <= 1%    * Confidential    %

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 as amended.

 

C-3


Apple Ridge Funding LLC, Series 2007-1

Monthly Report—February 2007

 

  

5. Net Credit Losses

   Pass
      a.    Net Credit Losses for any Monthly Period must be <= $750,000    * Confidential
      b.    Net Credit Losses for any 12 consecutive Monthly Periods must be <= $1,500,000    * Confidential
  

6. Borrowings available (Paydowns required)

  
      a.    Enhancement Rate    * Confidential    %
      b.    Ending Adjusted Aggregate Receivable Balance    * Confidential
      c.    Max CP Availability    * Confidential
      d.    Total Outstanding Debt    * Confidential
      e.    Amount Available for borrowing (required paydown)    (* Confidential)

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 as amended.

 

C-4


EXHIBIT D

FORM OF WEEKLY ACTIVITY REPORT

Please see attached.

 

D-1


Apple Ridge Funding LLC, Series 2007-1

Weekly Report for the period ending xx/xx/xx

Report Distribution Date of xx/xx/07

 

I. Reporting Period

  
  

Prior Settlement Report Period

   xx/xx/07-xx/xx/07
  

Weekly Report for the period ending xx/xx/xx

   xx/xx/2007    

I. Composition of Aggregate Employer Balance by Asset Type

   a.    Billed AR Balance    * Confidential
   b.    Equity Loans, Pmts, & Mort Payoffs    * Confidential
   c.    Unbilled    * Confidential
   d.    Aggregate Employer Balance    * Confidential
   e.    Less: Defaulted Receivables    (* Confidential)
   f.    Plus: Net Credit Clients    * Confidential
   g.    Less: Client Advances    (* Confidential)
   h.    Less: ARB of Bankrupt Clients    (* Confidential)
   i.    Less: Non-US Properties    (* Confidential)
   j.    Aggregate Receivable Balance    * Confidential

II. Accounts Receivable Analysis

  1. Billed Receivables Aging

       a.    Current   
   b.    1 - 30 days past due    * Confidential
   c.    31 - 60 days past due    * Confidential
   d.    61 - 90 days past due    * Confidential
   e.    91 - 120 days past due    * Confidential
   f.    121 - 150 days past due    * Confidential
   g.    Over 150 days past due    * Confidential
   h.    Total Billed Receivables    * Confidential

III. Aggregate Adjustment Amount

   a.    Overconcentration Amount    * Confidential
   b.    Excess Longer Term Receivable Amount    * Confidential
   c.    Excess Special Homes Receivable Amount    * Confidential
   d.    Aggregate Unpaid Balance of Eligible Rec related to Homes in inventory > 540    * Confidential
   e.    Total    * Confidential

IV. Adjusted Aggregate Receivable Balance

   a.    Ending Aggregate Receivable Balance    * Confidential
   b.    Less: Aggregate Adjustment Amount    (* Confidential)
   c.    Ending Adjusted Aggregate Receivable Balance    697,055,967

V. Available Assets—Series 2005-1 O/S Notes Balance, Total Assets Available

   a.    Series 2005-1 Outstanding Notes Balance    * Confidential
   b.    Series 2005-1 Outstanding Pre-Funding Balance    * Confidential
   c.    Total Outstanding (a)+(b)-(c)-(d)    * Confidential
   d.    Total Assets Available    697,055,967

VI. Notes Balances

  
   a.    Series 2005-1 Outstanding Notes Balance    * Confidential
   b.    Series 2005-1 Outstanding Pre-Funding Balance    * Confidential

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 as amended.

 

D-2


Apple Ridge Funding LLC, Series 2007-1

Weekly Report for the period ending xx/xx/xx

Report Distribution Date of xx/xx/07

 

I. Reporting Period

  

  Prior Settlement Report Period

   xx/xx/07-xx/xx/07
   c.   

Total Outstanding (a)+(b)-(c )-(d)

   * Confidential    
   d.   

Total Notes Limit

   850,000,000
   e.   

Has total notes limit been exceeded

   No

VII. Credit Enhancement

  
  

1. Reserve Ratios—Series 2005-1

      a.    Loss Reserve Ratio    * Confidential    %
      b.    Dilution Reserve Ratio    * Confidential    %
      c.    Servicing Reserve Ratio    * Confidential    %
      d.    Yield Reserve Ratio    * Confidential    %
      e.    Total    8.94%
  

2. Required Enhancement Amount—Series 2005-1

      a.    Equals (e) / (1 - (e))    * Confidential    %
      b.    Minimum enhancement amount    * Confidential    %
      c.    Outstanding Amount of Notes    * Confidential
      d.    Required Enhancement Amount ( {greater of (a) and (b)} * (c) )    * Confidential
  

3. Required Overcollateralization Amount—Series 2005-1

      a.    Required Enhancement Amount—Series 2005-1    * Confidential
      c.    Opening Principal Subaccount balance    * Confidential
      d.    Required Overcollateralization Amount ( a-b-c)    * Confidential
  

4. Required Asset Amount—Series 2005-1

      a.    Outstanding Amount of the Series 2005-1 Notes    649,785,714
      b.    Required Overcollateralization Amount    * Confidential
      c.    Required Asset Amount (a+b)    * Confidential
   5   

Asset Amount Deficiency, if any, as to the related Distribution Date

   (* Confidential)
     

Total Asset Deficiency

   (* Confidential)

VIII. Amortization Events

  
  

1. Average Days in Inventory for Appraised Value Homes

   Pass
      a.    Average for any Monthly Period must be < 180 days    * Confidential
      b.    Average for any Monthly Period and for the immediately preceding 5 Monthly Periods must be < 150 days    * Confidential
  

2. Average Days in Inventory for other than Appraised Value Homes

   Pass
      a.    Average for any Monthly Period must be < 60 days    * Confidential
      b.    Average for any Monthly Period and for the immediately preceding 5 Monthly Periods must be < 40 days    * Confidential
  

3. Default Ratio

   Pass
      a.    Default Ratio for any Monthly Period must be <= 5.0%    * Confidential    %
      b.    Three Month Average Default Ratio must be <= 4.0%    * Confidential    %
  

4. Dilution Ratio

   Pass

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 as amended.

 

D-3


Apple Ridge Funding LLC, Series 2007-1

Weekly Report for the period ending xx/xx/xx

Report Distribution Date of xx/xx/07

 

I. Reporting Period

  

  Prior Settlement Report Period

   xx/xx/07-xx/xx/07
      a.    Dilution Ratio for any Monthly Period must be <= 1.5%    * Confidential    %
      b.    Three Month Average Dilution Ratio must be <= 1%    * Confidential    %
  

5. Net Credit Losses

   Pass
      a.    Net Credit Losses for any Monthly Period must be <= $750,000    * Confidential
      b.    Net Credit Losses for any 12 consecutive Monthly Periods must be <= $1,500,000    * Confidential
  

6. Borrowings available (Paydowns required)

  
      a.    Max CP Availability based on last settlement report period    * Confidential
      b.    Enhancement Rate    * Confidential    %
      c.    Ending Adjusted Aggregate Receivable Balance    * Confidential
      d.    Max CP Availability    * Confidential
      e.    Total Outstanding Debt    * Confidential
      f.    Amount Available for borrowing (required paydown)    (* Confidential)

* The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 as amended.

 

D-4

Exhibit 10.14

EXECUTION COPY

 

 

 

AMENDED AND RESTATED

NOTE PURCHASE AGREEMENT

(Secured Variable Funding Notes, Series 2007-1)

Dated as of April 10, 2007

Amended and Restated as of July 6, 2007

Among

APPLE RIDGE FUNDING LLC

as Issuer,

CARTUS CORPORATION,

as Servicer,

THE COMMERCIAL PAPER CONDUITS FROM TIME TO TIME PARTY HERETO,

as the Conduit Purchasers,

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO,

as Committed Purchasers,

THE PERSONS FROM TIME TO TIME PARTY HERETO,

as Managing Agents,

and

CALYON NEW YORK BRANCH,

as Administrative Agent and Lead Arranger

 

 

 


ARTICLE I DEFINITIONS

  

SECTION 1.01. Certain Defined Terms

   1

SECTION 1.02. Other Terms

   7

SECTION 1.03. Computation of Time Periods

   7

ARTICLE II PURCHASE AND SALE OF SERIES 2007-1 NOTES

  

SECTION 2.01. Purchase and Transfer of Series 2007-1 Notes

   8

SECTION 2.02. Increases and Reductions to the Series Outstanding Amount

   8

SECTION 2.03. Calculation and Payment of Interest and Fees

   10

SECTION 2.04. Tranches

   10

SECTION 2.05. Reductions and Increases to Stated Amount

   11

SECTION 2.06. Increased Costs

   12

SECTION 2.07. Increased Capital

   12

SECTION 2.08. Taxes

   13

SECTION 2.09. Funding Losses

   15

SECTION 2.10. Nonrecourse Obligations

   15

SECTION 2.11. Extension of Term

   15

ARTICLE III CONDITIONS PRECEDENT

  

SECTION 3.01. Conditions Precedent to Purchase

   16

SECTION 3.02. Conditions Precedent to each Increase

   17

ARTICLE IV REPRESENTATIONS AND WARRANTIES

  

SECTION 4.01. Representations and Warranties of the Issuer

   18

ARTICLE V COVENANTS AND INDEMNITIES

  

SECTION 5.01. Covenants of the Issuer and Servicer

   20

SECTION 5.02. Indemnification

   25

ARTICLE VI THE ADMINISTRATIVE AGENT AND THE MANAGING AGENTS

  

SECTION 6.01. Authorization and Action

   25

SECTION 6.02. Administrative Agent’s Reliance, Etc.

   25

SECTION 6.03. Administrative Agent and Affiliates

   26

SECTION 6.04. Purchase Decision

   26

SECTION 6.05. Indemnification of the Administrative Agent

   26

SECTION 6.06. Successor Administrative Agent

   27

SECTION 6.07. Authorization and Action of Managing Agents

   27

SECTION 6.08. Successor Managing Agent

   28

SECTION 6.09. Payments by a Managing Agent

   28

ARTICLE VII MISCELLANEOUS

  

SECTION 7.01. Amendments, Waivers and Consents, Etc.

   28

SECTION 7.02. Notices

   29

SECTION 7.03. No Waiver; Remedies; Rights of Purchasers, Etc.

   29

SECTION 7.04. Binding Effect; Assignability

   29

SECTION 7.05. Securities Laws; Series 2007-1 Note as Evidence of Indebtedness

   30

SECTION 7.06. SUBMISSION TO JURISDICTION

   30

SECTION 7.07. GOVERNING LAW; WAIVER OF JURY TRIAL

   31

SECTION 7.08. Costs and Expenses

   31

SECTION 7.09. No Proceedings

   32

 

i


SECTION 7.10. Execution in Counterparts; Severability

   32

SECTION 7.11. Limited Recourse Obligations

   32

SECTION 7.12. Confidentiality

   33

SECTION 7.13. Amendment and Restatement

   33

SECTION 7.14. Consent to Series Supplement

   34

SCHEDULES AND EXHIBITS

  

SCHEDULE I

  

Conditions Precedent Documents

  

SCHEDULE II

  

Purchaser Group Information

  

SCHEDULE III

  

Notice Information

  

EXHIBIT A

  

Form of Assignment and Acceptance

  

EXHIBIT B

  

Form of Increase Request

  

EXHIBIT C

  

Form of Stated Amount Reduction Notice

  

EXHIBIT D

  

Form of Stated Amount Increase Notice

  

 

ii


AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

(Secured Variable Funding Notes, Series 2007-1)

Dated as of April 10, 2007

Amended and Restated as of July 6, 2007

APPLE RIDGE FUNDING LLC, a Delaware limited liability company, as Issuer, CARTUS CORPORATION, a Delaware corporation, as Servicer, THE COMMERCIAL PAPER CONDUITS FROM TIME TO TIME PARTY HERETO, as Conduit Purchasers, THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO, as Committed Purchasers, THE PERSONS FROM TIME TO TIME PARTY HERETO, as Managing Agents and CALYON NEW YORK BRANCH, (“Calyon”), in its capacity as administrative agent for the Purchasers (in such capacity, the “ Administrative Agent ”) and as Lead Arranger agree as follows:

WHEREAS, the Issuer has entered into that certain Indenture (as defined below) which provides for the issuance of Notes from time to time and the Purchasers desire to purchase a Series of Notes to be issued pursuant to the Series Supplement described below;

WHEREAS, the Issuer, Calyon and certain Conduit Purchasers party hereto have previously entered into that certain Note Purchase Agreement dated as of April 10, 2007 (the “ Original 2007-1 Note Purchase Agreement ”) relating to the Series 2007-1 Notes and, in connection with certain assignments by Calyon and such Conduit Purchasers to the other Purchasers party hereto, the Issuer, Calyon and the other parties hereto have agreed to enter into this Agreement for the purposes of amending and restating the terms of the Original 2007-1 Note Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Defined Terms . Unless otherwise defined herein, capitalized terms used in this Agreement have the meanings set forth in the Indenture or the Series Supplement (each as defined below), as applicable. In addition, the following terms have the following respective meanings:

Administrative Agent ” is defined in the preamble.

Agreement ” means this Note Purchase Agreement, as the same may from time to time be amended, restated, supplemented or otherwise modified.


Alternate Base Rate ” means, with respect to any Interest Period, the daily average of a fluctuating interest rate per annum as shall be in effect from time to time during such Interest Period, which rate shall at all times be equal to the higher of: (i) the rate of interest announced publicly in New York City by the Administrative Agent from time to time as the Administrative Agent’s base rate for borrowings in United States dollars; and (ii) the sum of the Federal Funds Rate and the Eurodollar Rate Margin in effect at such time.

Assignment and Acceptance Agreement ” means an Assignment and Acceptance Agreement in substantially the form of Exhibit A hereto pursuant to which any Purchaser assigns all or a portion of its rights and obligations under this Agreement and the other Transaction Documents.

Base Rate Tranche ” means a Tranche for which interest is calculated by reference to the Alternate Base Rate.

Closing Date ” means April 10, 2007.

Commercial Paper Notes ” means, with respect to any Conduit Purchaser, the commercial paper notes issued by such Conduit Purchaser allocated in whole or in part by its related Managing Agent to fund the investment of such Conduit Purchaser in the Series 2007-1 Notes.

Commitment ” means (i) with respect to each Committed Purchaser, the commitment of such Committed Purchaser to purchase an interest in the Series 2007-1 Notes on the Closing Date and to fund Increases on any Increase Date in accordance herewith in an amount not to exceed the dollar amount set forth opposite such Committed Purchaser’s name under the heading “Commitment” on Schedule II attached hereto, as such amount may be increased or reduced pursuant to Section 2.05 of this Agreement, minus the dollar amount of any Commitment or portion thereof assigned by such Committed Purchaser in accordance with this Agreement, plus the dollar amount of any increase to such Committed Purchaser’s commitment consented to by such Committed Purchaser prior to the time of determination and (ii) with respect to any assignee of a Committed Purchaser pursuant to an Assignment and Acceptance Agreement, the commitment of such assignee to purchase an interest in the Series 2007-1 Notes and to fund Increases on any Increase Date in accordance herewith in an amount not to exceed such assignee’s commitment, minus the dollar amount of such commitment or portion thereof assigned by such assignee pursuant to an Assignment and Acceptance prior to the time of determination.

Commitment Termination Date ” means July 3, 2008, or such later date to which the Commitment Termination Date may be extended in accordance with Section 2.11 of this Agreement.

Committed Percentage ” means, for each Committed Purchaser within any Purchaser Group, with respect to any date of determination, (i) a fraction (expressed as a percentage) having as its numerator the Commitment of such Committed Purchaser as of such date and as its denominator the sum of the Commitments of all Committed Purchasers within the related Purchaser Group as of such date or (ii) such other percentage as is agreed to by such Committed Purchaser and its Managing Agent so long as the sum of the Committed Percentages for all Committed Purchasers within the same Purchaser Group remains at 100%.

 

2


Committed Purchaser ” means, with respect to any Purchaser Group, each of the financial institutions specified as such on Schedule II to this Agreement or in the applicable Assignment and Acceptance Agreement pursuant to which such Person becomes a party hereto and their respective successors and permitted assigns, and “Committed Purchasers” shall mean, collectively, all of the foregoing.

Conduit Purchaser ” means, with respect any Purchaser Group, each Person specified as such on Schedule II to this Agreement or in the Assignment and Acceptance Agreement pursuant to which such Person became a party hereto and their respective successors and permitted assigns (including any related Permitted Conduit Assignee), and “Conduit Purchasers” shall mean, collectively, all of the foregoing.

CP Disruption ” means the inability of any Conduit Purchaser, at any time, whether as a result of a prohibition or any other event or circumstance whatsoever, to raise funds through the issuance of its Commercial Paper Notes in the United States commercial paper market.

CP Rate ” means, with respect to any Conduit Purchaser for any Interest Period and the related CP Tranche, a rate per annum equal to the sum of (i) the rate (or if more than one rate, the weighted average of the rates) determined by converting to an interest-bearing equivalent rate per annum, the discount rate (or rates) at which Commercial Paper Notes issued to fund or maintain such CP Tranche, as the case may be, may be sold by any placement agent or commercial paper dealer selected by its related Managing Agent (as agreed between each such agent or dealer and such Managing Agent), plus (ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Commercial Paper Notes, expressed as a percentage of such face amount and converted to an interest-bearing equivalent rate per annum.

Effective Restatement Date ” means July 6, 2007.

CP Tranche ” means a Tranche for which interest is calculated by reference to the CP Rate.

Eurodollar Determination Date ” means, for any Interest Period, the second Business Day prior to the commencement of such Interest Period.

Eurodollar Rate ” means, for any Tranche for any Interest Period, a rate per annum equal to the London interbank offered rate for deposits in United States dollars in an amount comparable to such Tranche and for a period equal to such Interest Period which appears on Reuters Screen LIBOR01 Page (or any successor page) as of 11:00 a.m., London time, on the related Eurodollar Determination Date, divided by the remainder of one minus the Eurodollar Reserve Percentage applicable during such Interest Period, if any. If such rate does not appear on Reuters Screen LIBOR01 Page (or any successor page), the rate for such day will be determined on the basis of the rates at which deposits in United States dollars in an amount comparable to such Tranche and for a period equal to such Interest Period are offered to the Administrative Agent at approximately 11:00 a.m., London time, on such Eurodollar Determination Date by prime banks in the London interbank market.

 

3


Eurodollar Rate Disruption Event ” means, for any Owner, for any Interest Period, any of the following: (i) a determination by such Owner that it would be contrary to law or the directive of any central bank or other governmental authority to obtain United States dollars in the London interbank market to fund or maintain its investment in the Series 2007-1 Notes for such Interest Period, (ii) the inability of such Owner, by reason of circumstances affecting the London interbank market generally, to obtain United States dollars in such market to fund its investment in the Series 2007-1 Notes for such Interest Period or (iii) a determination by such Owner that the maintenance of its investment in the Series 2007-1 Notes for such Interest Period at the Eurodollar Rate will not adequately and fairly reflect the cost to such Owner of funding such investment at such rate.

Eurodollar Reserve Percentage ” means, as of any day, the percentage (expressed as a decimal) in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirements applicable to “Eurocurrency Liabilities” pursuant to Regulation D or any other applicable regulation of the Board of Governors of the Federal Reserve System (or any successor) which prescribes reserve requirements applicable to “Eurocurrency Liabilities” as currently defined in Regulation D.

Eurodollar Tranche ” means a Tranche for which interest is calculated by reference to the Eurodollar Rate.

Facility Fee Rate ” has the meaning set forth in the Fee Letter.

Federal Bankruptcy Code ” means the federal bankruptcy code of the United States of America codified in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

Federal Funds Rate ” means, for any day, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

Fifth Omnibus Amendment ” means that certain Fifth Omnibus Amendment of even date herewith by and among Cartus, CFC, the Transferor, Realogy, the Indenture Trustee, the Administrative Agent and the initial Conduit Purchasers and Committed Purchasers party hereto.

Increase Request ” means a request for an Increase in substantially the form attached hereto as Exhibit B.

Indemnified Party ” is defined in Section 5.02.

 

4


Indenture ” means that certain Master Indenture dated as of April 25, 2000 among the Issuer, The Bank of New York (as successor to JPMorgan Chase Bank, National Association), as Indenture Trustee and The Bank of New York, as Paying Agent, Authentication Agent and Transfer Agent and Registrar, as amended, restated, supplemented or otherwise modified from time to time.

Lien ” has the meaning given in the Purchase Agreement.

Liquidity Provider ” means the Person or Persons which provide liquidity support to a Conduit Purchaser pursuant to a Liquidity Provider Agreement.

Liquidity Provider Agreement ” means an agreement between a Conduit Purchaser and a Liquidity Provider evidencing the obligation of such Liquidity Provider to provide liquidity support to such Conduit Purchaser in connection with the issuance by such Conduit Purchaser of Commercial Paper Notes.

Managing Agent ” means with respect to any Purchaser Group, the Person identified as such on Schedule II to this Agreement or in the Assignment and Acceptance Agreement pursuant to which the members of such Purchaser Group became parties hereto.

Nonrenewing Group ” means any Purchaser Group, the Managing Agent for which has not consented to an extension of the Commitment Termination Date requested by the Issuer in accordance with Section 2.11 .

Nonrenewing Purchaser ” means any Committed Purchaser which is a member of a Nonrenewing Group.

Other Taxes ” is defined in Section 2.08.

Owner ” means (a) each Conduit Purchaser, (b) each Committed Purchaser, (c) each Liquidity Provider, Program Support Provider or other Person that has purchased, or has entered into a commitment to purchase, the Series 2007-1 Notes or an interest therein from a Conduit Purchaser pursuant to a Liquidity Provider Agreement, Program Support Agreement or otherwise, and (d) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to any Conduit Purchaser.

Permitted Conduit Assignee ” means, with respect to any Purchaser Group, any commercial paper conduit administered by the Managing Agent for such Purchaser Group or any of its Affiliates.

Permitted Lien ” has the meaning given in the Purchase Agreement.

Program Support Agreement ” means an agreement between a Conduit Purchaser and a Program Support Provider evidencing the obligation of such Program Support Provider to provide liquidity or credit enhancement or asset purchase facilities for or in respect of any assets or liabilities of such Conduit Purchaser in connection with the issuance by such Conduit Purchaser of Commercial Paper Notes.

Program Support Provider ” means the Person or Persons who will provide program support to a Conduit Purchaser pursuant to a Program Support Agreement.

 

5


Program Termination Date ” means April 10, 2012.

Pro Rata Share ” means, for a Purchaser Group at any time of determination, a fraction (expressed as a percentage) having the Purchaser Group Limit for such Purchaser Group as its numerator and the Stated Amount as its denominator; provided , however, that if any Purchaser fails to fund any amount as required hereunder, “Pro Rata Share” shall mean, for purposes of making all distributions hereunder, a fraction (expressed as a percentage) having the portion of the Series Outstanding Amount funded by each Purchaser Group as its numerator and the Series Outstanding Amount as its denominator.

Purchase ” means the purchase of the Series 2007-1 Notes by the Purchasers from the Issuer on the Closing Date.

Purchaser Group ” means each group of Purchasers consisting of one or more Conduit Purchasers and any Permitted Conduit Assignees of such Conduit Purchasers, the related Committed Purchasers, the related Liquidity Provider(s) and Program Support Provider(s), if any, the related Managing Agent and their respective permitted assigns.

Purchaser Group Limit ” means (i) with respect to each Purchaser Group existing on the date hereof, the amount set forth opposite the name of such Purchaser Group on Schedule II attached hereto, as such amount may be increased or decreased pursuant to Section 2.05 hereof, or reduced pursuant to Section 7.04(c) hereof and (ii) with respect to any other Purchaser Group, the amount indicated in the Assignment and Acceptance Agreement pursuant to which the members of such Purchaser Group become parties to this Agreement, as such amount may be increased or decreased pursuant to Section 2.05 hereof, or reduced pursuant to Section 7.04(c) hereof.

Purchaser ” means, a Conduit Purchaser or Committed Purchaser as the context requires and “Purchasers” means collectively, the Conduit Purchasers and the Committed Purchasers.

Rate Type ” means the Eurodollar Rate, the Alternate Base Rate or the CP Rate.

Realogy ” means Realogy Corporation, a Delaware corporation, and its successors.

Reported EBITDA ” has the meaning given in the Transfer and Servicing Agreement.

Required Managing Agents ” means, at any time, Managing Agents representing Purchaser Groups which hold Series 2007-1 Notes that represent at least 66 2/3% of the Series Outstanding Amount or, if the Series Outstanding Amount is zero, Managing Agents representing Purchaser Groups with Pro Rata Shares of not less than 66 2/3%.

Series 2007-1 Notes ” has the meaning given in the Series Supplement.

 

6


Series Supplement ” means the Amended and Restated Series 2007-1 Indenture Supplement of even date herewith, among the Issuer, The Bank of New York, as Indenture Trustee and The Bank of New York, as Paying Agent, Authentication Agent and Transfer Agent and Registrar, supplementing the Indenture, as the same may be amended, restated, supplemented or otherwise modified from time to time.

Solvent ” means, with respect to any Person and as of any particular date, (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.

Taxes ” is defined in Section 2.08(a).

Term-Out Deposit Amount ” means, as of any date of determination in respect of any Nonrenewing Group, the amount deposited by the related Nonrenewing Purchasers into their Term-Out Period Account pursuant to Section 2.11 minus the amount of any Increases funded through withdrawals from such Term-Out Period Account pursuant to Section 4.08 of the Series Supplement plus the amount of any Decreases or other payments of Monthly Principal transferred from the Series 2007-1 Principal Subaccount to such Term-Out Period Account under Section 4.03 of the Series Supplement.

Term-Out Period ” means, with respect to any Nonrenewing Group and any Nonrenewing Purchaser, the period commencing on the date, if any, on which such Nonrenewing Group establishes its Term-Out Period Account and makes the initial deposit therein pursuant to Section 2.11 of this Agreement and ending on the commencement of the Amortization Period.

Tranche ” is defined in Section 2.04.

UCC ” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.

SECTION 1.02. Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles in the United States. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” means “including without limitation.”

SECTION 1.03. Computation of Time Periods . Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

 

7


ARTICLE II

PURCHASE AND SALE OF SERIES 2007-1 NOTES

SECTION 2.01. Purchase and Transfer of Series 2007-1 Notes .

(a) On the terms and subject to the conditions set forth in this Agreement, the Indenture and the Series Supplement, and in reliance on the covenants, representations and agreements set forth herein and therein, on the Closing Date (i) the Issuer agreed to sell, transfer and deliver to Calyon, as Managing Agent on behalf of the Purchasers in its Purchaser Group and (ii) Atlantic Asset Securitization LLC, (“ Atlantic ”), acting through Calyon as Managing Agent, may, in its discretion, and Calyon New York Branch, acting through Calyon as Managing Agent, shall, if Atlantic determines not to so purchase, purchase from the Issuer, on the date hereof, the Series 2007-1 Note issued to its related Managing Agent having an aggregate maximum face amount equal to the applicable Purchaser Group Limit. Without limiting any other provision of this Agreement, the obligation of any Purchaser to purchase an interest in a Series 2007-1 Note is subject to the satisfaction of the conditions precedent set forth in Section 3.01 hereof.

(b) On the Closing Date, the Issuer delivered to Calyon, as Managing Agent on behalf of the Purchasers in its Purchaser Group, a Series 2007-1 Note, dated as of the Closing Date, registered in the name of such Managing Agent having a face amount equal to the Purchaser Group Limit of its Purchaser Group, and duly authenticated by the Authentication Agent in accordance with the provisions of the Indenture against delivery by such Managing Agent, on behalf of the Purchasers in the related Purchaser Group, to the Issuer of such Purchaser Group’s Pro Rata Share of the Initial Series Outstanding Amount.

(c) On the Effective Restatement Date, concurrently with the effectiveness of the Assignment and Acceptance Agreement dated as of such date, Calyon will deliver to the Indenture Trustee for cancellation the Series 2007-1 Note issued on the Closing Date, and the Indenture Trustee will authenticate and deliver to each Managing Agent (including Calyon) party hereto, on behalf of the Purchasers in its Purchaser Group, a Series 2007-1 Note, dated as of the Effective Restatement Date, registered in the name of such Managing Agent having a face amount equal to the Purchaser Group Limit of its Purchaser Group, and duly authenticated by the Authentication Agent in accordance with the provisions of the Indenture.

SECTION 2.02. Increases and Reductions to the Series Outstanding Amount .

(a) Subject to the terms and conditions set forth in this Agreement and in the Series Supplement, the Issuer may, in its discretion, at any time during the Revolving Period deliver to the Indenture Trustee, each Managing Agent and the Administrative Agent, an Increase Request not less than two Business Days prior to the applicable Increase Date, provided , that:

(i) after giving effect to such Increase, (A) the Series Outstanding Amount shall not exceed the Stated Amount at such time; (B) the Pro Rata Share of the Series Outstanding Amount funded by each Purchaser Group shall not exceed its Purchaser Group Limit and (C) the portion of the Series Outstanding Amount funded by any Committed Purchaser shall not exceed its Commitment;

 

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(ii) the Increase Request shall specify: (A) the proposed date of the requested Increase, (B) the amount of the requested Increase (which shall be in a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof or, such other amounts as may be agreed among the Issuer and the Managing Agents), (C) the bank account to which the funds from such Increase should be sent and (D) the requested Rate Type(s); and

(iii) if such Increase would cause the Series 2007-1 Required Asset Amount to be greater than the Series 2007-1 Allocated Adjusted Aggregate Receivable Balance as shown on the most recent Receivables Activity Report (or, if less, the Series 2007-1 Allocated Adjusted Aggregate Receivable Balance shown on the most recent Weekly Activity Report, if applicable), each Managing Agent must have received an interim servicing report, in a form to be mutually agreed upon by the Issuer and the Managing Agents, based on the most recently available interim reporting, which demonstrates that such Increase will not cause a Series 2007-1 Asset Amount Deficiency to occur.

(b) Subject to the terms and conditions set forth in this Agreement (including Section 3.02 hereof) and the Series Supplement, on each Increase Date the Conduit Purchasers in each Purchaser Group, acting through the related Managing Agent, may (but are not committed to) at the request of the Issuer pursuant to an Increase Request, fund such Purchaser Group’s Pro Rata Share of the requested Increase in amounts to be allocated among such Conduit Purchasers by the related Managing Agent. If any Conduit Purchaser chooses at any time not to fund its portion of such Purchaser Group’s Pro Rata Share of a requested Increase when requested by the Issuer, on the applicable Increase Date, the related Committed Purchasers, acting through the related Managing Agent, shall, subject to the conditions set forth in Section 3.02 hereof, fund their respective Committed Percentages of the related Purchaser Group’s Pro Rata Share of the amount of such Increase. Each funding of a Purchaser Group’s Pro Rata Share of an Increase shall be paid by the related Purchasers to an account designated by the related Managing Agent, provided that during a Term-Out Period, any Nonrenewing Purchaser’s share of such Increase shall be funded from its Term-Out Period Account in accordance with Section 4.08 of the Series Supplement. Each Managing Agent shall deliver its Purchaser Group’s Pro Rata Share of the amount of each Increase to the Issuer in U.S. Dollars in immediately available funds by 1:00 p.m. (New York City time) on the related Increase Date to an account designated by the Issuer prior to the Increase Date. Each Increase funded by the Purchasers hereunder shall represent an increase in the Series Outstanding Amount. Each Managing Agent shall provide prompt notice to the Issuer and each other Managing Agent if any Conduit Purchaser in its Purchaser Group elects not to fund its share of any Increase.

 

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(c) Subject to the terms and conditions set forth in the Series Supplement, at any time during the Revolving Period, in addition to the optional redemption provisions set forth in Section 7.01 of the Series Supplement, the Issuer shall have the right to reduce the Series Outstanding Amount by at least $10,000,000 (or such other amounts as may be agreed among the Issuer and the Managing Agents) by causing Series 2007-1 Collections to be allocated to the Series 2007-1 Principal Subaccount for application towards principal payments of the Series 2007-1 Notes; provided , that (i) the Issuer shall give at least two (2) Business Days prior written notice to the Managing Agents, the Administrative Agent and the Indenture Trustee in respect of such reduction; (ii) such reduction of the Series Outstanding Amount shall be applied to reduce the outstanding principal amount of the Series 2007-1 Note held by each Purchaser Group ratably in accordance with its Pro Rata Share and (iii) unless the date of such reduction is a Distribution Date, the Issuer shall pay to the Managing Agents (for the account of the Purchasers in the related Purchaser Group), the amount of any funding losses incurred by the Purchasers in connection with such reduction in accordance with Section 2.09 of this Agreement.

SECTION 2.03. Calculation and Payment of Interest and Fees .

(a) Each Managing Agent shall, on or prior to the first day of each Interest Period, notify the Indenture Trustee and the Servicer of the Series 2007-1 Tranche Rate which will be applicable to each Tranche during such Interest Period and Managing Agent shall, no later than the Business Day preceding the next Determination Date, notify such parties of the total interest to be paid for each such Tranche and the total Monthly Program Fees to be paid to its Purchaser Group on the relevant Distribution Date.

(b) Interest on each Tranche during each Interest Period shall accrue at the applicable Series 2007-1 Tranche Rate for such Interest Period and all accrued and unpaid interest on each Tranche shall be payable on each Distribution Date in accordance with the terms of the Series Supplement. Interest with respect to any Tranche due but not paid on any Distribution Date will be due on the next succeeding Distribution Date together with Additional Interest as calculated in accordance with the terms of the Series Supplement.

(c) The Issuer shall pay to each Managing Agent, for the account of the Purchasers in the related Purchaser Group, the Facility Fee and Program Fee pursuant to the Fee Letter. The Facility Fee and the Program Fee will constitute “Monthly Program Fees” as defined in the Series Supplement and shall be due and payable on each Distribution Date pursuant to Section 4.04 of the Series Supplement.

SECTION 2.04. Tranches .

(a) Each funding made by the Purchasers in the same Purchaser Group on any Increase Date having one Rate Type shall be referred to herein as a “Tranche”. The Issuer shall select the Rate Type(s) to apply to each Tranche for the related Interest Period in the related Increase Request; provided , however , that

(i) the selection of such Rate Type(s) shall be subject to the approval of each Managing Agent in its sole and absolute discretion;

(ii) if any Managing Agent notifies the Issuer and the Servicer that a CP Disruption has occurred, the Eurodollar Rate shall automatically apply to any CP Tranche from and after such notice until such Managing Agent notifies the Issuer and the Servicer that such CP Disruption has ceased (it being agreed that each Managing Agent shall give the Issuer and the Servicer prompt notice that any such CP Disruption has ceased); and

 

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(iii) any portion of the Series Outstanding Amount that is not allocated to a CP Tranche shall be a Eurodollar Tranche unless: (A) on or prior to the first day of the next related Interest Period, such Managing Agent has given the Issuer and the Servicer notice that a Eurodollar Rate Disruption Event has occurred and such Managing Agent shall not have subsequently notified the Servicer and the Issuer that such Eurodollar Rate Disruption Event no longer exists (it being agreed that each Managing Agent shall give the Issuer and the Servicer prompt notice that any such Eurodollar Rate Disruption Event no longer exists); (B) such Managing Agent did not receive notice that such Tranche was to be a Eurodollar Tranche by 11:00 A.M. (New York City time) on the second Business Day preceding the first day of such Interest Period; or (C) the Outstanding Tranche Amount of such Tranche is less than $1,000,000, in any of which events such Tranche shall be a Base Rate Tranche.

The Administrative Agent shall promptly, upon the request of any party, notify each Managing Agent, the Issuer and the Servicer of the Eurodollar Rate applicable to any Eurodollar Tranche or the Alternate Base Rate applicable to any Base Rate Tranche.

(b) The Managing Agents may at any time after the occurrence and during the continuance of any Amortization Event, or at any time after the Amortization Period has commenced either (i) divide any Tranche into two or more Tranches having an aggregate Outstanding Tranche Amount equal to the Outstanding Tranche Amount of such divided Tranche, or (ii) combine any two or more Tranches into a single Tranche having an Outstanding Tranche Amount equal to the aggregate of the Outstanding Tranche Amounts of such Tranches; provided , however , that no Tranche owned by any Conduit Purchaser may be combined with a Tranche owned by any other Purchaser and no Tranche held by the Committed Purchasers in any Purchaser Group may be combined with any Tranche held by the Committed Purchasers in any other Purchaser Group; and provided further that if any such Tranche is requested to become a Eurodollar Tranche, such notice must be received at least two Business Days’ prior to the last day of the Tranche Period for such Tranche.

SECTION 2.05. Reductions and Increases to Stated Amount .

(a) The Issuer may at any time, upon at least two (2) Business Days’ prior written notice to each Managing Agent, the Indenture Trustee and the Administrative Agent, such notice to be in the form of Exhibit C hereto, terminate in whole or reduce in part the Stated Amount; provided , however , that each partial reduction shall (i) be in an amount equal to $5,000,000 or an integral multiple thereof, (ii) reduce each Purchaser Group Limit hereunder ratably in accordance with the respective Purchaser Group’s Pro Rata Share of such reduction to the Stated Amount and (iii) reduce each Committed Purchaser’s Commitment ratably within their respective Purchaser Group in accordance with each Committed Purchaser’s Committed Percentage.

 

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(b) The Issuer may, from time to time upon at least thirty (30) days’ prior written notice to each Managing Agent, the Indenture Trustee and the Administrative Agent, request an increase to the Stated Amount. Each such notice shall be substantially in the form of Exhibit D hereto (each a “ Stated Amount Increase Notice ”) and shall specify (i) the proposed date such increase shall become effective, (ii) the proposed amount of such increase, which amount shall be at least $25,000,000; (iii) the identity of the Purchaser Group(s) (and members thereof) whose Purchaser Group Limit(s) will be increased in connection therewith; (iv) the identity of all Committed Purchasers in such Purchaser Group and the amount of their respective Commitments after giving effect to such increase in the Stated Amount; and (v) a recalculation of the Pro Rata Shares which will become effective upon such increase in the Stated Amount. No such increase shall become effective unless and until (x) either (i) the Commitments of the Committed Purchasers in such Purchaser Group have been increased by the amount of such increase in the Stated Amount, as evidenced by the Managing Agent for such Purchaser Group and each of the Purchasers in such Purchaser Group executing such Stated Amount Increase Notice or (ii) one or more additional Purchaser Groups have become parties to this Agreement by executing a joinder agreement in form and substance reasonably acceptable to the Required Managing Agents and the Issuer. Notwithstanding anything to the contrary set forth herein, nothing contained in this Agreement shall constitute a commitment on the part of any Purchaser hereunder to agree to any such increase, or to assume or increase any obligation to the Issuer at any time.

SECTION 2.06. Increased Costs . If, after the date hereof due to either the introduction of or any change in, or in the interpretation of, (i) any law or regulation by the Governmental Authority that promulgated or administers compliance with such law or regulation (other than laws or regulations with respect to income taxes, branch profits or franchise taxes based on income or gross receipts) or (ii) any guideline or request from any central bank or other Governmental Authority or similar agency, including, without limitation, the Financial Accounting Standards Board (“ FASB ”) or any comparable entity (whether or not having the force of law), any reserve or deposit or similar requirement shall be imposed, modified or deemed applicable, any basis of taxation shall be changed (other than as a result of a change in laws and regulations with respect to income tax branch profits or franchise taxes) or any other condition shall be imposed, and there shall be any increase in the cost to any Owner of making, funding, or maintaining the principal outstanding under, a Series 2007-1 Note or in the cost to any Owner of agreeing to make, fund, or maintain any principal outstanding under, a Series 2007-1 Note, then the Issuer shall from time to time, upon demand by any such Owner, by the submission of the certificate described below, pay to such Owner, additional amounts sufficient to compensate such Owner for such increased cost; provided , however , that before making any such demand, such Owner has agreed to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to take such steps (including the designation of a different applicable lending office) as would avoid the need for, or reduce the amount of, such additional cost and would not, in the judgment of such Owner, be otherwise disadvantageous to such Owner. A certificate setting forth in reasonable detail the reasons for and the amount of such increased cost submitted to the Issuer and the Indenture Trustee by the relevant Owner, or the related Managing Agent on behalf of such Owner, shall be conclusive and binding for all purposes, absent manifest error.

 

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SECTION 2.07. Increased Capital . If any Owner determines that compliance with any law or regulation or any guideline or request or any written interpretation from any central bank or other Governmental Authority or similar agency, including, without limitation, FASB or any comparable entity (whether or not having the force of law) which is introduced, implemented or received by such Owner after the date hereof, affects or would affect capital adequacy or the amount of capital required or expected to be maintained by such Owner or any corporation controlling such Owner and that the amount of such capital is increased as a result of the existence of this Agreement, the Series Supplement or the obligations of a Liquidity Provider under a Liquidity Provider Agreement or the obligations of a Program Support Provider under a Program Support Agreement, or has or would have the effect of reducing such Owner’s rate of return on capital then, upon demand by any such Owner, by the submission of the certificate described below, the Issuer shall pay to such Owner, from time to time, as specified by such Owner, additional amounts sufficient to compensate such Owner in light of such circumstances, to the extent that such Owner reasonably determines such increase in capital to be allocable to a Series 2007-1 Note or the existence of this Agreement, the Series Supplement, any Liquidity Provider’s obligations under a Liquidity Provider Agreement or any Program Support Provider’s obligations under a Program Support Agreement. In determining such amounts, such Owner may use any reasonable averaging and attribution methods, consistent with the averaging and attribution methods generally used by such Owner in connection with commitments of that type. A certificate as to such amounts submitted to the Issuer and the Indenture Trustee by the relevant Owner, or by the related Managing Agent on behalf of such Owner, setting forth the basis therefor and calculation thereof in reasonable detail, shall be conclusive and binding for all purposes, absent manifest error.

SECTION 2.08. Taxes .

(a) All payments made by the Issuer under this Agreement, the Series Supplement, the Fee Letter and any Series 2007-1 Note to or for the benefit of a Series 2007-1 Noteholder, the Administrative Agent or any Owner shall be made, to the extent allowed by law, free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority having taxing authority (excluding income taxes, branch profits or franchise taxes based on income or gross receipts) imposed on such Person as a result of any present or former connection between the jurisdiction of the government or taxing authority imposing such tax or any political subdivision or taxing authority thereof or therein and such Person (other than any connection arising solely from such Person having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement, the Series Supplement or a Series 2007-1 Note or any other related document to which such Person is a party) (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called “ Taxes ”). If any Taxes are required to be withheld from any amounts payable to or under the Series 2007-1 Note, (i) the sum payable by the Issuer shall be increased as may be necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 2.08), the relevant Person receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Issuer shall make such deductions, and (iii) the Issuer shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law.

(b) In addition, the Issuer 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 any Liquidity Provider Agreement (hereinafter “ Other Taxes ”).

 

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(c) Subject to the provisions set forth in this Section 2.08, the Issuer will indemnify each Purchaser, the Administrative Agent and each Owner 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 2.08) paid by such Purchaser, the Administrative Agent and each Owner and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, provided , that such Purchaser, the Administrative Agent or such Owner, in making a demand for indemnity, shall provide the Issuer with a certificate from the relevant taxing authority or from a responsible officer of such Person stating or otherwise evidencing that such Person 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. Whenever any Taxes are payable by the Issuer, within 30 days thereafter the Issuer shall send to the applicable Purchaser, the Administrative Agent and any applicable Owner a certified copy of an original official receipt received by the Issuer showing payment thereof. If the Issuer fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the applicable Purchaser, the Administrative Agent and any applicable Owner the required receipts or other required documentary evidence, the Issuer shall indemnify such Person for any incremental Taxes, interest or penalties that such Person is legally required to pay as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement, the Series Supplement and the payment of the Series 2007-1 Notes.

(d) On or before the date it becomes a Series 2007-1 Noteholder (and, so long as it may properly do so, periodically thereafter, as may be required by applicable law, to keep forms up to date), any Series 2007-1 Noteholder that is organized under the laws of a jurisdiction outside the United States of America shall deliver to the Indenture Trustee and the Paying Agent any certificates, documents or other evidence that shall be required by the Internal Revenue Code or Treasury Regulations issued pursuant thereto to establish its exemption from existing United States federal withholding requirements, including (i) two original copies of Internal Revenue Service Form W-8 BEN or Form W-8-ECI or successor applicable form, properly completed and duly executed by such Series 2007-1 Noteholder certifying that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes.

(e) If any such Series 2007-1 Noteholder does not comply with Section 2.08(d), amounts payable to such Series 2007-1 Noteholder under this Section 2.08 shall be limited to amounts that would have been payable under this section if such Series 2007-1 Noteholder had so complied.

(f) All Taxes and Other Taxes owing under this Section 2.08 shall be payable in accordance with Section 7.11.

 

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SECTION 2.09. Funding Losses .

(a) If, for any reason, a principal payment with respect to any CP Tranche or any Eurodollar Tranche shall occur on any date which is not the last day of the applicable Interest Period, the Issuer shall compensate each Purchaser, upon demand, for all funding losses by paying to such Purchaser an amount equal to the sum of (i) the amount of interest which would have accrued on the relevant Tranche but for such prepayment through the last day of the relevant Interest Period less the interest earned by such Purchaser by investing such funds in investments permissible (in the case of the Conduit Purchaser) for the commercial paper program of the Conduit Purchaser and (ii) all reasonable out-of-pocket expenses which such Purchaser may sustain or incur as a consequence of such prepayment. Such amounts shall be payable by the Issuer pursuant to Section 4.01(c) of the Series Supplement.

(b) In addition to the foregoing, the Issuer shall compensate each Owner, upon its written demand, for all losses, expenses and liabilities on account of any liquidation or reemployment of deposits or other funds acquired by such party to make, fund or maintain a Tranche, (i) if by reason of the acts or omissions of the Issuer, the funding of any CP Tranche or Eurodollar Tranche does not occur on a date specified therefor in the relevant funding request; (ii) if for any reason any payment, prepayment or conversion of principal of any CP Tranche or Eurodollar Tranche occurs on a date which is not the last day of the Interest Period for such Tranche or (iii) as a consequence of any required conversion of any CP Tranche or Eurodollar Tranche to a Tranche for which interest is calculated at another Rate Type prior to the last day of the Interest Period for the relevant Tranche. A certificate setting forth in reasonable detail the reasons for and the amount of such demand submitted to the Issuer by such Owner, shall be conclusive and binding for all purposes, absent manifest error. Such amounts shall be payable by the Issuer pursuant to Section 4.01(c) of the Series Supplement.

SECTION 2.10. Nonrecourse Obligations . Notwithstanding any provision in any other Section of this Agreement to the contrary, the obligation of the Issuer to pay any amounts payable to a Purchaser or any other Owner pursuant to Sections 2.06, 2.07, 2.08, 2.09, 5.02 and 7.08 of this Agreement shall be without recourse to the Issuer (or its assignee, if applicable), the Servicer (or any Person acting on behalf of any of them), the Indenture Trustee or any other Owner or any affiliate, officer or director of any of them, and the obligation of the Issuer to pay any amounts hereunder shall be limited solely to the application of Pool Collections and other amounts (collectively, the “ Available Amounts ”) required to be distributed to the Managing Agents, on behalf of the related Purchasers, in the Indenture and the Series Supplement, to the extent that such amounts are available for distribution. In the event that amounts payable to a Purchaser or any other Owner pursuant to this Agreement exceed the Available Amounts, the excess of the amounts due hereunder (and subject to this Section 2.10) over the Available Amounts paid shall not constitute a “claim” under Section 101(5) of the Federal Bankruptcy Code against the applicable party until such time as such party has Available Amounts.

SECTION 2.11. Extension of Term . (a) The Issuer may, at any time during the period which is no more than sixty (60) days or less than forty-five (45) days immediately preceding the Commitment Termination Date (as such Termination Date may have previously been extended pursuant to this Section 2.11), request that the then applicable Commitment Termination Date (the “ Existing Termination Date ”) be extended for an additional period of 364 days. Any such request shall be in writing and delivered to each Managing Agent, and shall be

 

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subject to the following conditions: (a) at no time will any Committed Purchaser’s Commitment have a remaining term of more than 364 days (or if less, the number of days remaining between the Existing Termination Date and the Program Termination Date) and, if any such request would result in any Committed Purchaser’s Commitment having a remaining term of more than 364 days or extending beyond the Program Termination Date, such request shall be deemed to have been made for such number of days so that, after giving effect to such extension on the date requested, such remaining term will not exceed 364 days and will not extend beyond the Program Termination Date, and (b) none of the Committed Purchasers shall have any obligation to extend the Commitment Termination Date at any time. Each Managing Agent will (on behalf of the related Committed Purchasers) respond to any such request by providing a response to the Issuer, the Servicer and each other Managing Agent not later than thirty (30) days prior to the Existing Termination Date, provided , that a failure by any Managing Agent to respond on or before the thirtieth day prior to the Existing Termination Date shall be deemed to be a rejection of the requested extension.

(a) If fewer than 100% of the Managing Agents have consented to the proposed extension of the Existing Termination Date, then a Term-Out Period shall be deemed to have commenced with respect to each Nonrenewing Group and: (i) on or before the Existing Termination Date, the Issuer shall establish with the Indenture Trustee or its nominee in the name of the Indenture Trustee for the benefit of the Nonrenewing Group, a Term-Out Period Account; (ii) each Committed Purchaser which is a member of such Nonrenewing Group shall, and hereby severally agrees to, purchase from each Conduit Purchaser within such Nonrenewing Group such Committed Purchaser’s Commitment Percentage times the outstanding CP Tranches of such Conduit Purchaser for a purchase price equal to the full outstanding amount thereof plus accrued and unpaid interest thereon; (iii) each such Conduit Purchaser hereby agrees to sell such CP Tranches to such Committed Purchasers on the terms set forth in the immediately preceding clause; and (iv) each Committed Purchaser which is a member of such Nonrenewing Group shall, and each such Committed Purchaser hereby severally agrees to, fund a deposit into such Term-Out Period Account in an amount equal to such Committed Purchaser’s Commitment Percentage times the excess of (A) the Purchaser Group Limit of the Nonrenewing Group over (B) the sum of the Outstanding Tranche Amounts for each Tranche funded by the Purchasers in such Nonrenewing Group.

ARTICLE III

CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Purchase . The Purchase is subject to the satisfaction of each of the following conditions on or prior to the Closing Date (any or all of which (except Section 3.01(e)) may be waived by the Managing Agents in their sole and absolute discretion:

(a) The Managing Agents shall have received on or before the date hereof each of the items listed on Schedule I hereto, each (unless otherwise indicated) dated the date hereof, in form and substance reasonably satisfactory to the Managing Agents;

 

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(b) The Series Supplement shall have become effective in accordance with its terms;

(c) All of the conditions precedent set forth in the Indenture to the issuance of the Series 2007-1 Notes shall have been satisfied and all of the terms, covenants, agreements and conditions of this Agreement, the Indenture, the Series Supplement and each other Transaction Document to be complied with and performed by Cartus, CFC, the Issuer, the Transferor, the Servicer, Realogy or the Indenture Trustee, as the case may be, by the date hereof shall have been complied with or otherwise waived by the Managing Agents;

(d) Each of the representations and warranties of Cartus, CFC, the Issuer, the Transferor, the Servicer, Realogy or the Indenture Trustee made in this Agreement, the Indenture, the Series Supplement and each other Transaction Document shall be true and correct in all material respects as of the date hereof as though made as of such time (except to the extent that they expressly relate to an earlier or later time);

(e) No Amortization Event, Servicer Default or Event of Default or event that with the giving of notice or lapse of time or both would constitute such an Amortization Event, Servicer Default or Event of Default shall have occurred and be continuing (before and after giving effect to the Purchase);

(f) Immediately after giving effect to the Purchase, no Series 2007-1 Asset Amount Deficiency shall exist and be continuing;

(g) All fees required to be paid on or prior to the date hereof in accordance with the Fee Letter and the Administrative Agent Fee Letter shall have been paid in full in accordance with the terms thereof; and

(h) Each Managing Agent shall have received a written confirmation from each of the Rating Agencies that the Purchase hereunder will not result in a downgrade or withdrawal of the rating of the Commercial Paper Notes of the Conduit Purchasers in the related Purchaser Group or shall have confirmed to the Administrative Agent that no such written confirmation from the Rating Agencies is necessary to maintain such rating.

SECTION 3.02. Conditions Precedent to each Increase . The funding of any Increase under this Agreement shall be subject to the satisfaction, as of the applicable Increase Date, of each of the following conditions:

(a) Each of the representations and warranties of Cartus, CFC, the Issuer, the Transferor, the Servicer, Realogy or the Indenture Trustee made in this Agreement, the Indenture, the Series Supplement and each other Transaction Document shall be true and correct in all material respects as of the date hereof as though made as of such time (except to the extent that they expressly relate to an earlier or later time); and

(b) No Amortization Event, Servicer Default or Event of Default or event that with the giving of notice or lapse of time or both would constitute such an Amortization Event, Servicer Default or Event of Default shall have occurred and be continuing (before and after giving effect to such Increase); and

 

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(c) Immediately after giving effect to such Increase, no Series 2007-1 Asset Amount Deficiency shall exist and be continuing; and

(d) Each of this Agreement, the Series Supplement, the Series 2007-1 Notes and each other Transaction Document shall remain in full force and effect; and

(e) Each Managing Agent shall have received such other approvals, documents, agreements, certificates or opinions as they may reasonably request.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Issuer . Each of the representations and warranties made by the Issuer as of the Closing Date pursuant to the Indenture and the Series Supplement is incorporated herein by reference for the benefit of the Purchasers, the Managing Agents and the Administrative Agent. In addition, the Issuer hereby represents and warrants to the Purchasers, the Managing Agents and the Administrative Agent as of the Closing Date and each date of any Increase that:

(a) The Series 2007-1 Notes have been duly and validly authorized, and when duly executed and authenticated in accordance with the terms of the Indenture and the Series Supplement, and when duly delivered to and paid for by the Purchasers in accordance with this Agreement, will be duly and validly issued and outstanding and will be entitled to the benefits of the Indenture, the Series Supplement and this Agreement.

(b) Each of the Indenture, the Series Supplement and, assuming the due authorization, execution and delivery by each of the other parties thereto, this Agreement and the Series Supplement, is in full force and effect and no default or other event or circumstance has occurred thereunder or in connection therewith that could result in the termination of any such agreement or any other interruption of the ongoing performance of the obligations by the Issuer under each such agreement.

(c) Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 7.05 and their compliance with the agreements set forth therein, it is not necessary, in connection with the offer, sale and delivery of the Series 2007-1 Notes to the Purchasers, to register the Series 2007-1 Notes under the Securities Act or to qualify the Indenture or the Series Supplement under the Trust Indenture Act of 1939, as amended;

(d) The Issuer is a limited liability company duly formed and validly existing in good standing under the laws of the State of Delaware and has full power and authority to own its properties and to conduct its business as such properties are presently owned and as such business is presently conducted, is qualified to do business and is in good standing as a foreign limited liability company and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and in which the failure so to qualify or to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a Material Adverse Effect;

 

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(e) The Issuer (i) has all necessary limited liability company power and authority (A) to execute and deliver this Agreement, the Series 2007-1 Notes, the Series Supplement and the other Transaction Documents to which it is a party and (B) to perform its obligations under this Agreement, the Series 2007-1 Notes, the Series Supplement and the other Transaction Documents to which it is a party and (ii) has duly authorized by all necessary action the execution, delivery and performance by it of, and the consummation by it of the transactions provided for in, this Agreement, the Series 2007-1 Notes, the Series Supplement and the other Transaction Documents to which it is a party. Each of this Agreement, the Series 2007-1 Notes and the Series Supplement constitute the legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with its terms, except (A) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (B) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(f) The execution, delivery and performance by it of, and the consummation by it of the transactions contemplated by, this Agreement, the Series 2007-1 Notes, the Series Supplement and the other Transaction Documents to which it is a party, and the fulfillment by it of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under (A) the certificate of formation or the limited liability company agreement of the Issuer or (B) any material indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which the Issuer is a party or by which it or any of its respective properties is bound, (ii) result in the creation or imposition of any Lien (other than Permitted Liens) on any of the Pledged Assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust, or other material agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any federal, state, local or foreign law (including without limitation, Environmental Laws) or any decision, decree, order, rule or regulation applicable to the Issuer or of any Governmental Authority having jurisdiction over the Issuer, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(g) (i) There is no action, suit, proceeding or investigation pending or, to the best knowledge of the Issuer, threatened, against the Issuer before any Governmental Authority and (ii) the Issuer is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts the invalidity of this Agreement, the Series 2007-1 Notes, the Series Supplement or any other Transaction Document, (B) seeks to prevent the consummation of any of the transactions contemplated by this Agreement, the Series 2007-1 Notes, the Series Supplement or any other Transaction Document, (C) seeks any determination or ruling that, in the reasonable judgment of the Issuer, would materially and adversely affect the performance by the Issuer of its obligations under this Agreement, the Series 2007-1 Notes, the Series Supplement or any other Transaction Document or the validity or enforceability of this Agreement, the Series 2007-1 Notes, the Series Supplement or any other Transaction Document or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect.

 

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(h) Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect, all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Issuer in connection with the due execution, delivery and performance by the Issuer of this Agreement, the Series 2007-1 Notes, the Series Supplement or any other Transaction Document to which it is a party and the consummation by the Issuer of the transactions contemplated by this Agreement, the Series 2007-1 Notes, the Series Supplement and the other Transaction Documents to which it is a party have been obtained or made and are in full force and effect.

(i) The Issuer is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended;

(j) On and immediately after the Closing Date, the Issuer (after giving effect to the issuance of the Series 2007-1 Notes) will remain Solvent.

(k) No proceeds of the Purchase or any Increase hereunder will be used (i) for a purpose that 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.

(l) As of the Closing Date and as of each Increase Date, unless otherwise previously disclosed to the Managing Agents, the written information furnished by the Issuer pursuant to or in connection with any Transaction Document or any transaction contemplated herein or therein was, as of the date originally furnished, true and correct in all material respects and not otherwise materially misleading.

ARTICLE V

COVENANTS AND INDEMNITIES

SECTION 5.01. Covenants of the Issuer and Servicer . Unless the Managing Agents shall otherwise consent in writing:

(a) Each of the Issuer and the Servicer will perform and observe for the benefit of the Owners each of the covenants and agreements required to be performed or observed by it in the Transaction Documents to which it is a party.

(b) The Servicer hereby covenants and agrees to furnish to each Managing Agent: (i) promptly after the execution thereof, copies of all amendments of and waivers with respect to the Transaction Documents and (ii) copies of all financial and other reports that the Servicer is required to furnish pursuant to Sections 3.07(c), 3.08 and 3.09 of the Transfer and Servicing Agreement.

 

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(c) The Issuer hereby covenants and agrees to furnish or cause to be furnished to each Managing Agent:

(i) as soon as available and in any event within 55 days after the end of each of the first three fiscal quarters of each fiscal year of Realogy, copies of the unaudited consolidated balance sheets of Realogy and its consolidated subsidiaries, the related unaudited statements of cash flow for Realogy and the related unaudited statements of earnings and stockholders’ equity of Realogy in each case for such fiscal quarter and for the period from the beginning of such fiscal year through the end of such fiscal quarter and certified by the chief financial officer or a vice president responsible for financial administration of Realogy, all of the foregoing to be prepared in conformity with GAAP applied consistently throughout the periods reflected therein (subject to normal year-end adjustments and without footnote disclosures);

(ii) as soon as available and in any event within 100 days after the end of each fiscal year of Realogy, copies of the consolidated balance sheet of Realogy and its consolidated subsidiaries as at the end of such fiscal year and the related statements of earnings and cash flows and stockholders’ equity of Realogy and its consolidated subsidiaries for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year and prepared in conformity with GAAP applied consistently throughout the periods reflected therein, certified by independent certified public accountants of nationally recognized standing in the United States of America as shall be selected by Realogy;

(iii) promptly after the filing thereof, and concurrently with the delivery to any creditors of Realogy, copies of all reports on Form 8-K which Realogy files with the Securities and Exchange Commission or any national securities exchange;

(iv) as soon as available and in any event within 55 days after the end of each of the first three fiscal quarters of each fiscal year of Cartus, copies of the unaudited consolidated balance sheets of Cartus and its consolidated subsidiaries and copies of the statements of earnings of Cartus and its consolidated subsidiaries, in each case for such fiscal quarter and for the period from the beginning of such fiscal year through the end of such fiscal quarter and certified by the chief financial officer or controller of Cartus, all of the foregoing to be prepared in accordance with Cartus’s customary management accounting practices as in effect on the date hereof and need not be prepared in conformity with GAAP; and

(v) as soon as available and in any event within 120 days after the end of each fiscal year of Cartus, copies of the unaudited balance sheet and copies of the statements of earnings of Cartus and its consolidated subsidiaries, in each case certified by the chief financial officer or controller of Cartus, all of the foregoing to be prepared in accordance with Cartus’s customary management accounting practices as in effect on the date hereof and need not be prepared in conformity with GAAP.

As long as Realogy is required or permitted to file reports under the Securities Exchange Act of 1934, as amended, a copy of its report on Form 10-K shall satisfy the requirements of Section 5.01(c)(ii) of this Agreement and a copy of its report on Form 10-Q shall satisfy the requirements of Section 5.01(c)(i) of this Agreement. Information required to be delivered pursuant to Section 5.01(c)(i), (ii) and (iii) shall be deemed to have been delivered on the date on which it has been posted on (i) Realogy’s website on the Internet at www.realogy.com or (ii)  sec.gov/edgar/searchedgar/webusers.htm .

 

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(d) The Servicer shall prepare and deliver to each Managing Agent, (i) a copy of each Receivables Activity Report and, if applicable, each Weekly Activity Report, prepared and delivered by the Servicer pursuant to the Transfer and Servicing Agreement, together with a certificate of a vice president responsible for financial administration of the Servicer to the effect that, to the knowledge of the Servicer, no Amortization Event or event or circumstance which, with the giving of notice or the passage of time or both, would constitute an Amortization Event shall have occurred and be continuing (which certification may be made directly on such Receivables Activity Report or Weekly Activity Report, as applicable) or, if any such event shall have occurred and be continuing, specifying in reasonable detail the nature thereof and the action, if any, taken or proposed to be taken by the Servicer with respect thereto.

(e) The Issuer shall furnish to the Managing Agents:

(i) promptly, and in any event within one (1) Business Day, after the Issuer obtains knowledge of the occurrence of any Amortization Event, or event or circumstance which, with the giving of notice or the passage of time, or both, would constitute an Amortization Event, a written statement of an Authorized Officer of the Issuer describing such event and the action, if any, that such Person proposes to take with respect thereto, in each case in reasonable detail;

(ii) notice of the occurrence of any event or events which have had or would reasonably be expected to have a material adverse effect on the condition or operations, financial or otherwise, of any of Cartus, CFC, the Transferor, the Issuer or the Servicer;

(iii) copies of each report (including, without limitation, each Receivables Activity Report), notice, opinion of counsel, officer’s certificate or financial statement delivered or required to be delivered by the Issuer to any Person (including, without limitation, any Applicable Series Enhancer) under the Transaction Documents, at the time the Issuer delivers or is required to deliver the same thereunder, and

(iv) promptly upon request by any Managing Agent, such other information, documents, records or reports with respect to the Pledged Assets, the Transaction Documents or the condition or operations, financial or otherwise, of any of Cartus, CFC, the Transferor, the Issuer, the Servicer or Realogy as any Managing Agent may from time to time reasonably request.

(f) The Servicer shall furnish to the Managing Agents:

(i) promptly, and in any event within one (1) Business Day, after the Servicer obtains knowledge of the occurrence of any Amortization Event, or event or circumstance which, with the giving of notice or the passage of time, or both, would constitute an Amortization Event, a written statement of an Authorized Officer of the Servicer describing such event and the action, if any, that the Servicer proposes to take with respect thereto, in each case in reasonable detail;

 

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(ii) notice of the occurrence of any event or events which have had or would reasonably be expected to have a material adverse effect on the condition or operations, financial or otherwise, of the Servicer;

(iii) copies of each report (including, without limitation, each Receivables Activity Report), notice, opinion of counsel, officer’s certificate or financial statement delivered or required to be delivered by the Servicer to any Person (including, without limitation, any Applicable Series Enhancer) under the Transaction Documents, at the time the Servicer delivers or is required to deliver the same thereunder, and

(iv) promptly upon request by any Managing Agent, such other information, documents, records or reports with respect to the Pledged Assets, the Transaction Documents or the condition or operations, financial or otherwise, of any of the Servicer or Realogy as any Managing Agent may from time to time reasonably request.

(g) Upon reasonable prior notice and during regular business hours, the Servicer will permit independent certified public accountants selected by the Administrative Agent and which have agreed to follow the scope of an audit approved by the Required Managing Agents, (i) to examine and make copies of and abstracts from, and to conduct accounting reviews of, all records, files, books of account, data bases and information in the possession or under the control of the Servicer relating to the Receivables and the other Pledged Assets and (ii) to visit the offices and properties of the Servicer for the purpose of examining any materials described in the preceding clause (i) and to discuss matters relating to the Receivables and the other Pledged Assets or the performance by the Servicer of its obligations under any Transaction Document to which it is a party with any Authorized Officers of the Servicer having knowledge of such matters; provided , however , that (A) such audits will occur no more frequently than twice per year unless a Servicer Default has occurred and is continuing and (B) after the occurrence of a Servicer Default, the Administrative Agent and each Managing Agent or their respective agents and representatives shall be permitted upon reasonable prior notice and during regular business hours to conduct such audits at any time without any limitation as to number. The Servicer will pay all costs and expenses reasonably incurred by such Managing Agent in connection with (i) the first audit in any calendar year conducted pursuant to this Section 5.01(g) and (ii) if a Servicer Default has occurred and is continuing, each other audit conducted by or on behalf of the Administrative Agent or any Managing Agent pursuant to this Section 5.01(g).

(h) The Issuer shall instruct the Indenture Trustee, upon redemption, or payment in full, of all amounts payable in respect of the Series 2007-1 Notes pursuant to the terms thereof and of the Indenture, to furnish to the Managing Agents a notice of such redemption.

 

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(i) The Issuer shall provide or cause to be provided to each Managing Agent a complete set of the Transaction Documents and an executed original copy of each document executed in connection therewith within sixty (60) days after the Closing Date.

(j) The Transferor shall hold, either directly or indirectly 100% of the membership interests of the Issuer while the Series 2007-1 Notes are outstanding. The Transferor shall not sell, pledge or otherwise transfer such membership interests without the prior written consent of the Required Managing Agents.

(k) CFC shall hold, either directly or indirectly, 100% of the common stock of the Transferor while the Series 2007-1 Notes are outstanding. CFC shall not sell, pledge or otherwise transfer such common stock without the prior written consent of the Required Managing Agents.

(l) Cartus shall hold, either directly or indirectly, 100% of the common stock of CFC while the Series 2007-1 Notes are outstanding. Cartus shall not sell, pledge or otherwise transfer such common stock without the prior written consent of the Required Managing Agents unless the debt secured by such pledge was incurred in compliance with Section 7.3(j) of the Purchase Agreement and the terms of such pledge include provisions to the effect that (i) the pledgee has no right, title or interest in or to any assets of CFC other than its rights to receive, as assignee of Cartus, any dividends or other distributions properly declared and paid or made in respect of CFC’s common stock and (ii) the pledgee agrees, that it will not: (x) until after the payment in full of the Notes, exercise any rights it may have under such pledge to foreclose on such stock or to exercise voting rights with respect thereto, including any rights to nominate, elect or remove the independent members of the board of directors or managers of CFC or rights to amend its organizational documents and (y) until one year and one day after payment in full of the Notes, exercise any rights it may have to institute a voluntary bankruptcy proceeding on behalf of CFC.

(m) Neither the Issuer nor the Servicer shall waive, modify or amend, or consent to any waiver, modification or amendment of, any of the terms, provisions or conditions of any of the Transaction Documents or the Lockbox Agreements or the form of, and information required to be reported in, the Receivables Activity Report without the prior written consent of the Required Managing Agents. The Issuer hereby covenants and agrees to furnish, and to cause CFC and the Transferor to furnish to each Managing Agent promptly after the execution thereof, copies of all amendments of and waivers with respect to the Transaction Documents or the Lockbox Agreements. The Issuer shall not amend its certificate of formation or limited liability company agreement without the prior written consent of the Required Managing Agents.

(n) Except as provided in the Fifth Omnibus Amendment, neither the Issuer nor the Servicer shall consolidate with or merge with or into any other Person or convey, transfer or sell all or substantially all of its properties or assets to any other Person without the prior written consent of the Required Managing Agents.

 

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(o) Until the Series Outstanding Amount has been reduced to zero, if the Indenture requires the Issuer to obtain the prior consent of an Applicable Series Enhancer to any amendment to the Transaction Documents or the taking of (or refraining from taking) any other action, the Issuer shall not take such action (or refrain from taking such action) unless it has received the prior written consent of the Required Managing Agents.

SECTION 5.02. Indemnification . The Issuer shall indemnify and hold harmless each Owner, the Administrative Agent, each Managing Agent and their respective officers, directors, employees, agents and representatives (each an “ Indemnified Party ” and collectively, the “ Indemnified Parties ”), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including legal and accounting fees), or disbursements of any kind or nature whatsoever (collectively, “ Losses ”) as incurred (payable promptly upon written request), for or on account of or arising from or in connection with or otherwise with respect to any breach of any representation or warranty of the Issuer in this Agreement or in any certificate delivered pursuant hereto, or for any failure to comply with any Transaction Document, or failure to maintain a first priority security interest in the Collateral, excluding however (i) Losses to the extent resulting from the gross negligence or willful misconduct of the Indemnified Party and (ii) recourse for Receivables which are uncollectible solely due to the Obligor’s financial inability to pay. Such Losses shall be payable in accordance with Section 7.11 of this Agreement.

ARTICLE VI

THE ADMINISTRATIVE AGENT AND THE MANAGING AGENTS

SECTION 6.01. Authorization and Action . Each Purchaser hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and any related agreement, instrument and document as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent reserves the right, in its sole discretion, but subject to such restrictions as may be set forth with respect to the Purchasers in this Agreement or any related agreement, instrument or document, to exercise any rights and remedies under this Agreement or any related agreement, instrument or document executed and delivered pursuant hereto, or pursuant to applicable law, and also to agree to any amendment, modification or waiver of this Agreement or any related agreement, instrument and document, in each instance, on behalf of the Purchasers. Notwithstanding anything herein or elsewhere to the contrary, the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. The appointment and authority of the Administrative Agent hereunder shall terminate on the date after the Amortization Period has commenced on which the Series Outstanding Amount has been reduced to zero and all other amounts owed by the Issuer under this Agreement have been paid in full.

SECTION 6.02. Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to any Purchaser for any action taken or omitted to be taken by it or them as Administrative Agent under or in connection with this Agreement or any related agreement, instrument or document except for its or their own gross negligence or willful misconduct. Without limiting the foregoing, the Administrative Agent: (a) may consult with legal counsel (including counsel for

 

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the Issuer, the Servicer, any Managing Agent or the Indenture Trustee), independent public accountants and other experts selected by it and shall not be liable to the Purchaser for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to the Purchasers and shall not be responsible to the Purchasers for any statements, warranties or representations made in or in connection with this Agreement or in connection with any related agreement, instrument or document; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any related agreement, instrument or document on the part of the Issuer, the Indenture Trustee, the Servicer or any Purchaser or Managing Agent or to inspect the property (including the books and records) of the Issuer, the Indenture Trustee, the Servicer, any Purchaser or any Managing Agent; (d) shall not be responsible to the Purchasers for the due execution, legality, validity, enforceability, genuineness or sufficiency of value of this Agreement or any related agreement, instrument or document; (e) shall not be deemed to be acting as any Purchaser’s trustee or otherwise in a fiduciary capacity hereunder or in connection with any related agreement, instrument or document; and (f) shall incur no liability to any Purchaser under or in respect of this Agreement or any related agreement, instrument or document by acting upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by telex or facsimile) believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 6.03. Administrative Agent and Affiliates . To the extent that the Administrative Agent or any of its Affiliates shall become a Series 2007-1 Noteholder, the Administrative Agent or such Affiliate, in such capacity, shall have the same rights and powers under this Agreement and each related agreement, instrument and document as would any Purchaser and may exercise the same as though it were not the Administrative Agent, or such Affiliate, as the case may be. The Administrative Agent and its Affiliates may generally engage in any kind of business with the Issuer, the Servicer, the Managing Agents, the Indenture Trustee, the Transferor, Cartus, CFC, Realogy or any of their respective Affiliates and any Person who may do business with or own securities of any of the foregoing, all as if it were not the Administrative Agent or such Affiliate, as the case may be, and without any duty to account therefor to any Purchaser.

SECTION 6.04. Purchase Decision . Each Purchaser acknowledges that it has, independently and without reliance upon the Administrative Agent or any of its Affiliates, and based on such documents and information as it has deemed appropriate, made its own evaluation and decision to enter into this Agreement and to purchase the Series 2007-1 Notes. Each Purchaser also acknowledges that it will, independently and without reliance upon the Administrative Agent or any of its Affiliates, and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under this Agreement or any related agreement, instrument or other document.

SECTION 6.05. Indemnification of the Administrative Agent . The Committed Purchasers severally agree to indemnify the Administrative Agent, ratably in accordance with their respective Committed Percentages from time to time, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this

 

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Agreement or any related agreement, instrument or document or any action taken or omitted by the Administrative Agent under this Agreement, or any related agreement, instrument or document; provided , however , that no Committed Purchaser shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Committed Purchasers severally (to the extent the Administrative Agent is not reimbursed by the Issuer or the Servicer for such expenses) agree to reimburse the Administrative Agent, ratably in accordance with their Committed Percentages from time to time, promptly upon demand, for any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent at the request or at the direction of the Required Managing Agents in connection with the administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any related agreement, instrument or document.

SECTION 6.06. Successor Administrative Agent . The Administrative Agent may resign at any time by giving thirty (30) days’ notice thereof to the Managing Agents, the Issuer, the Servicer and the Indenture Trustee and such resignation shall become effective upon the appointment and acceptance of a successor Administrative Agent as described below. Upon any such resignation, the Managing Agents shall have the right to appoint a successor Administrative Agent approved by the Issuer and the Servicer (which approval will not be unreasonably withheld, delayed or conditioned). If no successor Administrative Agent shall have been so appointed by the Managing Agents and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Managing Agents, appoint a successor Administrative Agent approved by the Issuer and the Servicer (which approval will not be unreasonably withheld, delayed or conditioned), which successor Administrative Agent shall be (a) either (i) a commercial bank having a combined capital and surplus of at least $250,000,000 or (ii) an Affiliate of such bank and (b) experienced in the types of transactions contemplated by this Agreement. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article VI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder.

SECTION 6.07. Authorization and Action of Managing Agents . Each Conduit Purchaser and each Committed Purchaser of each Purchaser Group hereby appoints and authorizes the Managing Agent with respect to such Purchaser Group to take such action as agent on its behalf and to exercise such powers under this Agreement, the Series Supplement, the Indenture and the other related documents as are delegated to the Managing Agents by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. In furtherance, and without limiting the generality, of the foregoing, each Conduit Purchaser and each Committed Purchaser hereby appoints the related Managing Agent as its agent to execute and deliver all further instruments and documents, and agrees to take all further action that the

 

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related Managing Agent may deem necessary or appropriate or that a Conduit Purchaser or a Committed Purchaser may reasonably request in order to perfect, protect or more fully evidence the interests of such Purchasers hereunder, or to enable any of them to exercise or enforce any of their respective rights hereunder or under the related Series 2007-1 Notes and such other instruments or notices, as may be necessary or appropriate for the purposes stated hereinabove.

SECTION 6.08. Successor Managing Agent . A Managing Agent may resign at any time, effective upon the appointment and acceptance of a successor Managing Agent as provided below, by giving written notice thereof to each other Managing Agent, each related Conduit Purchaser, each related Committed Purchaser, the Issuer and the Servicer. Upon any such resignation, the members of the related Purchaser Group acting jointly shall appoint a successor Managing Agent. Upon the acceptance of any appointment as Managing Agent hereunder by a successor Managing Agent, such successor Managing Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Managing Agent, and the retiring Managing Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Managing Agent’s resignation hereunder as Managing Agent, the provisions of this Article VI shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Managing Agent under this Agreement. The successor Managing Agent shall promptly notify the Issuer, the Servicer and the Indenture Trustee of its appointment hereunder.

SECTION 6.09. Payments by a Managing Agent . Unless specifically allocated to a Conduit Purchaser or a Committed Purchaser pursuant to the terms of this Agreement, all amounts received by a Managing Agent on behalf of the related Purchasers shall be paid by such Managing Agent to such Purchasers (at the account specified in writing to such Managing Agent) on the Business Day received by such Managing Agent, unless such amounts are received after 2:00 p.m. (New York time) on such Business Day, in which case such Managing Agent shall use its reasonable efforts to pay such amounts, on such Business Day, but, in any event, shall pay such amounts not later than 11:00 a.m. (New York time) the following Business Day.

ARTICLE VII

MISCELLANEOUS

SECTION 7.01. Amendments, Waivers and Consents, Etc. No amendment to or waiver of any provision of this Agreement nor consent to any departure by the Issuer therefrom, shall in any event be effective unless the same shall be in writing and signed by (a) the Issuer and the Required Managing Agents (with respect to an amendment) or (b) the Required Managing Agents (with respect to a waiver or consent by them) or the Issuer (with respect to a waiver or consent by it), as the case may be, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; in each case of (a) and (b), provided that the Issuer shall have given prior written notice to the Rating Agencies of each such amendment or waiver, and provided further that, without the prior written consent of each affected Purchaser, no amendment or waiver shall: (i) reduce the amount of principal or Monthly Interest that is payable on account of the Series 2007-1 Notes or delay any scheduled date for payment thereof; (ii) increase the Stated Amount of the Series 2007-1 Notes

 

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or the Commitment of any Committed Purchaser hereunder; (iii) modify any yield protection or indemnity provision which expressly inures to the benefit of the Owners or its assignees or participants, (iv) modify the calculation of the Series 2007-1 Required Enhancement Amount or change (directly or indirectly) the definitions of “Minimum Enhancement Percentage”, “Loss Reserve Ratio”, “Dilution Reserve Ratio”, “Servicing Reserve Ratio” or “Yield Reserve Ratio” or any defined term used in such definitions or employed in the calculation of such amounts, (v) reduce the Fees or amounts owed to any Nonrenewing Purchaser in respect of its Term-Out Deposit Amounts or delay any scheduled date for payment thereof, (vi) release the Performance Guarantor for obligations under the Performance Guaranty or (vii) modify the provisions of this Section 7.01. This Agreement and the other agreements, instruments and documents executed and delivered pursuant hereto contain a final and complete integration of all prior expressions by the parties hereto and thereto with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties hereto and thereto with respect to the subject matter hereof and thereof, superseding all prior oral or written understandings.

SECTION 7.02. Notices . All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including telex communication and communication by facsimile copy) and mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth under its name on Schedule III or at such other address as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, upon receipt, or in the case of delivery by mail, five (5) days after being deposited in the United States mails, or, in the case of notice by telex, when telexed against receipt of answer back, or in the case of notice by facsimile copy, when verbal communication of receipt is obtained.

SECTION 7.03. No Waiver; Remedies; Rights of Purchasers, Etc . No failure on the part of the Administrative Agent, the Purchasers, the Managing Agents or the Issuer to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 7.04. Binding Effect; Assignability .

(a) This Agreement shall be binding upon and inure to the benefit of, each of the Issuer, the Administrative Agent, the Purchasers, the Managing Agents and their respective successors and permitted assigns, subject to the further provisions of this Section 7.04.

(b) The Issuer shall not assign any of its rights and obligations hereunder or any interest herein without the prior written consent of the Managing Agents.

(c) Subject to the terms and provisions of the Series Supplement, a Purchaser may, assign or sell undivided participation interests of its rights and obligations hereunder or under a Series 2007-1 Note or any interest herein or in the Series 2007-1 Notes to any Person (including, without limitation, a sale by any Conduit Purchaser to its related Liquidity Providers or Program Support Providers). Any assignment or sale of a participation interest by a Purchaser to a Person (other than a Liquidity Provider or Program Support Provider) pursuant to this

 

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Section 7.04(c) shall be effected pursuant to an Assignment and Acceptance Agreement in substantially the form of Exhibit A hereto. Notwithstanding the foregoing, a Purchaser shall, so long as no Amortization Event has occurred and is continuing, obtain the consent of the Issuer (such consent not to be unreasonably withheld, delayed or conditioned) in connection with an assignment of its obligations hereunder and under a Series 2007-1 Note to any Person other than a sale by a Conduit Purchaser to (i) another commercial paper conduit managed by the related Managing Agent or (ii) any Liquidity Provider or Program Support Provider.

(d) The Administrative Agent may assign at any time its rights and obligations hereunder to an Affiliate without the consent of the Purchasers or the Issuer and such assignment shall be effective upon written notice thereof to the Purchasers, the Issuer, the Servicer and the Indenture Trustee.

(e) This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until the date on which all Commitments to fund hereunder have been terminated and the Series Outstanding Amount has been paid in full; provided , however , that the rights and remedies with respect to any breach of any representation and warranty made by the Issuer pursuant to Article V and, the rights and remedies described in Sections 2.06 , 2.07 , 2.08 , 2.09, 5.02 , 7.08 , 7.09 , 7.11 and 7.12 shall be continuing and shall survive any termination of this Agreement.

SECTION 7.05. Securities Laws; Series 2007-1 Note as Evidence of Indebtedness .

(a) Each Purchaser hereby acknowledges and agrees and represents and warrants that the Series 2007-1 Note purchased by it pursuant to this Agreement will be acquired for investment only and not with a view to any public distribution thereof nor with any intent of conducting any initial resale thereof under Rule 144A or analogous private offering exemption, and that such Purchaser will not offer to sell or otherwise dispose of a Series 2007-1 Note so acquired by it (or any interest therein) in violation of any of the registration requirements of the Securities Act or any applicable state or other securities laws. Each Purchaser also acknowledges the restrictions on ownership and transfers set forth in Section 5.02 of the Series Supplement and agrees to all terms thereof. Without limiting the foregoing, each Purchaser hereby makes the representations and warranties and agrees to the covenants required of Noteholders under Section 5.02 of the Series Supplement.

(b) It is the intent of the Issuer and each Purchaser that, for federal, state, foreign and local income and franchise tax purposes, the Series 2007-1 Notes will be indebtedness of the Issuer secured by the Pledged Assets. The Issuer and each Purchaser agree to treat the Series 2007-1 Notes for purposes of all federal, state and local income and franchise taxes and for any other tax imposed on or measured by income as indebtedness of the Issuer.

SECTION 7.06. SUBMISSION TO JURISDICTION . EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,

 

30


AND HEREBY (a) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (c) IRREVOCABLY APPOINTS CORPORATION SERVICE COMPANY (THE “PROCESS AGENT”), WITH AN OFFICE ON THE DATE HEREOF AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, UNITED STATES OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT’S ABOVE ADDRESS, AND EACH PARTY HERETO HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH PARTY HERETO AGREES TO ENTER INTO ANY AGREEMENT RELATING TO SUCH APPOINTMENT THAT THE PROCESS AGENT MAY CUSTOMARILY REQUIRE AND TO PAY THE PROCESS AGENT’S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE, EACH PARTY HERETO ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS SPECIFIED PURSUANT TO SECTION 7.02. NOTHING IN THIS SECTION 7.06 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY HERETO OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.

SECTION 7.07. GOVERNING LAW; WAIVER OF JURY TRIAL . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AMONG THE ISSUER AND ANY PURCHASER OR THE ADMINISTRATIVE AGENT ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

SECTION 7.08. Costs and Expenses . The Issuer agrees to pay on demand to (i) the Administrative Agent, each Managing Agent and each Purchaser all reasonable costs and expenses in connection with the preparation, execution, delivery and administration (including rating agency fees, costs and expenses and all out-of-pocket costs and expenses incurred in connection with due diligence) of this Agreement, the Series Supplement, the Liquidity Provider Agreements and the other documents to be delivered by the Issuer or each Purchaser in connection herewith and therewith, including, without limitation, the reasonable

 

31


fees and out-of-pocket expenses of counsel for each of the Administrative Agent, each Purchaser and Liquidity Provider with respect thereto and with respect to advising each of the Administrative Agent, each Managing Agent and each Purchaser, as to its respective rights and remedies under this Agreement and the other documents delivered hereunder or in connection herewith and (ii) to the Administrative Agent, each Managing Agent and each Purchaser, all reasonable costs and expenses, if any (including reasonable counsel fees and expenses), in connection with the enforcement of this Agreement, and the other documents delivered hereunder or in connection herewith. Such costs and expenses shall be payable in accordance with Section 7.11 of this Agreement.

SECTION 7.09. No Proceedings .

(a) The Issuer, the Servicer, the Administrative Agent, each Managing Agent and each Purchaser each hereby agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any federal or state bankruptcy or similar law for one year and a day after the latest maturing Commercial Paper Note issued by such Conduit Purchaser has been paid.

(b) Each Purchaser, each Managing Agent and the Administrative Agent each hereby agrees that it will not institute against, or join any other Person in instituting against, the Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any federal or state bankruptcy or similar law for one year and a day after the latest maturing Note issued by the Issuer has been paid.

SECTION 7.10. Execution in 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. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or the validity, legality and enforceability of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

SECTION 7.11. Limited Recourse Obligations .

(a) Notwithstanding any provision in any other section of this Agreement to the contrary, the Purchasers, the Managing Agents and the Administrative Agent each hereby acknowledge and agree that the Issuer’s payment obligations under Sections 2.06, 2.07, 2.08, 2.09, 5.02 and 7.08 shall be without recourse to the Servicer or the Indenture Trustee (or any Affiliate, officer, director, employee or agent of any of them) and shall be limited to the extent of funds available for payment of the foregoing amounts under Section 4.01(c) of the Series Supplement.

(b) Anything contained in this Agreement or any other Transaction Document to the contrary notwithstanding, all payments to be made by any Conduit Purchaser under this Agreement shall be made by such Conduit Purchaser solely from available cash, which shall be limited to the (a) proceeds of collections and other amounts payable by or on behalf of the Issuer

 

32


to such Conduit Purchaser in connection with any of the Transaction Documents and (b) proceeds of the issuance of Commercial Paper Notes (collectively “Available Funds”). No recourse shall be had against any Conduit Purchaser personally or against any incorporator, shareholder, officer, director or employee of such Conduit Purchaser with respect to any of the covenants, agreements, representations or warranties of such Conduit Purchaser contained in this Agreement, or any other Transaction Document, it being understood that such covenants, representations or warranties are enforceable only to the extent of Available Funds. The Administrative Agent, each Managing Agent and each Committed Purchaser hereby acknowledge that, pursuant to the terms and conditions of this Agreement and the other Transaction Documents, no Conduit Purchaser shall be required to make any payments to the Administrative Agent any Managing Agent or any Committed Purchaser, either as compensation for services rendered, reimbursement for out of pocket expenses, indemnification, or otherwise, except to the extent such Conduit Purchaser has Available Funds to make such payment.

SECTION 7.12. Confidentiality . Each Purchaser, Managing Agent and the Administrative Agent agree to maintain the confidentiality of any and all information regarding the Originator, Realogy, Cartus, CFC, ARSC and the Issuer obtained in accordance with the terms of this Agreement or provided to the Managing Agents and the Administrative Agent in contemplation of entering into this Agreement and that is, in either such case, not publicly available (including, without limitation, financial and operational information and reports concerning the above-described parties and/or the Receivables); provided , however , that any Purchaser, Managing Agent and/or the Administrative Agent may reveal such information (a) (i) as necessary or appropriate in connection with the administration or enforcement of this Agreement or such Purchaser’s funding of its purchase of a Series 2007-1 Note hereunder and (ii) as necessary or appropriate in connection with obtaining any Acknowledgement Letter under Section 7.3(j) of the Purchase Agreement from other creditors of Cartus (b) as required by law, government regulation, court proceeding or subpoena, (c) to applicable Rating Agencies, any Liquidity Provider, Program Support Provider, participant, assignee or potential Liquidity Provider, Program Support Provider, participant or assignee or (d) to legal counsel and auditors of such Purchaser and the Administrative Agent. Notwithstanding anything herein to the contrary, none of the Originator, Realogy, Cartus, CFC, ARSC or the Issuer shall have any obligation to disclose to any Purchaser, Managing Agent or the Administrative Agent or their assignees any personal and confidential information relating to a Transferred Employee. Anything herein to the contrary notwithstanding, each party hereto and any successor or assign of any of the foregoing (and each employee, representative or other agent of any of the foregoing) may disclose to any and all Persons, without limitation of any kind, the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are or have been provided to any of the foregoing relating to such tax treatment or tax structure, and it is hereby confirmed that each of the foregoing have been so authorized since the commencement of discussions regarding the transactions.

SECTION 7.13. Amendment and Restatement . This Agreement amends and restates in full the terms and provisions of the Original 2007-1 Note Purchase Agreement and shall not constitute a novation or termination of the Original Note Purchase Agreement or any liens or security interests created thereunder, and all obligations thereunder are in all respects

 

33


continuing, with only the terms thereof being modified as provided herein. From and after the date hereof, the terms of this agreement shall supersede the terms of the Original 2007-1 Note Purchase Agreement in their entirety and each reference in any other Transaction Document to the Original 2007-1 Note Purchase Agreement or any other expression of like import referring to the Original 2007-1 Note Purchase Agreement shall mean and be a reference to this Agreement.

SECTION 7.14. Consent to Series Supplement . Each of the Issuer, Calyon and the Conduit Purchasers which have previously entered into the Original 2007-1 Note Purchase Agreement, by executing this Agreement as amended and restated as of July 6, 2007, hereby consents to any and all amendments to the Original 2007-1 Note Purchase Agreement contained herein, and hereby further consents to the amendment and restatement of the Series 2007-1 Supplement dated as of April 10, 2007 (the “ Prior Series Supplement ”) and consents to any amendments to the Prior Series Supplement which are contained in the Series Supplement (as defined herein).

 

34


IN WITNESS WHEREOF, the parties have caused this Amended and Restated Note Purchase Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

APPLE RIDGE FUNDING LLC, as Issuer
By:   /s/ Eric Barnes
Name:   Eric Barnes
Title:   SVP, CFO

 

CARTUS CORPORATION, as Servicer
By:   /s/ Eric Barnes
Name:   Eric Barnes
Title:   SVP, CFO


CALYON NEW YORK BRANCH, as Administrative Agent and a Managing Agent
By:   /s/ Kostantina Kourmpetis
Name:   Kostantina Kourmpetis
Title:   Managing Director
By:   /s/ Sam Pilcer
Name:   Sam Pilcer
Title:   Managing Director

 

CALYON NEW YORK BRANCH,

as a Committed Purchaser

By:   /s/ Kostantina Kourmpetis
Name:   Kostantina Kourmpetis
Title:   Managing Director
By:   /s/ Sam Pilcer
Name:   Sam Pilcer
Title:   Managing Director

 

ATLANTIC ASSET SECURITIZATION LLC, as a

Conduit Purchaser

By:   /s/ Kostantina Kourmpetis
Name:   Kostantina Kourmpetis
Title:   Managing Director
By:   /s/ Sam Pilcer
Name:   Sam Pilcer
Title:   Managing Director


LAFAYETTE ASSET SECURITIZATION LLC,

as a Conduit Purchaser

By:   /s/ Kostantina Kourmpetis
Name:   Kostantina Kourmpetis
Title:   Managing Director
By:   /s/ Sam Pilcer
Name:   Sam Pilcer
Title:   Managing Director


MIZUHO CORPORATE BANK, LTD., as

Managing Agent

By:   /s/ James Fayen
Name:   James Fayen
Title:   Deputy General Counsel

 

WORKING CAPITAL MANAGEMENT CO. L.P.,

as a Conduit Purchaser and Committed Purchaser

By:   /s/ Hiroyuki Kasama
Name:   Hiroyuki Kasama
Title:   Attorney-In-Fact


THE BANK OF NOVA SCOTIA, as a Committed Purchaser and as Managing Agent
By:   /s/ Michael Eden
Name:   Michael Eden
Title:   Director

 

LIBERTY STREET FUNDING LLC, as a Conduit Purchaser
By:   /s/ Jill A. Gordon
Name:   Jill A. Gordon
Title:   Vice President


BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, as a Managing Agent
BY:   /s/ Robert Fleisher
Name:   Robert Fleisher
Title:   Director

 

BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, as a Committed Purchaser
BY:   /s/ PaulGox
Name:   Paul Gox
Title:   Director

 

BLACK FOREST FUNDING CORP., as a Conduit Purchaser
BY:   /s/ Philip A. Marrone
Name:   Philip A. Marrone
Title:   Vice President


SMBC SECURITIES, INC., as a Managing Agent
By:   /s/ Tetsuya Tonoike
Name:   Tetsuya Tonoike
Title:   President

 

SUMITOMO MITSUI BANKING CORPORATION, as a Committed Purchaser
By:   /s/ Yoshihiro Hyakutome
Name:   Yoshihiro Hyakutome
Title:   General Manager

 

MANHATTAN ASSET FUNDING COMPANY LLC, as a Conduit Purchaser

By: MAF RECEIVABLES CORP., its Member

By:   /s/ Philip A. Martone
Name:   Philip A. Martone
Title:   Vice President


SCHEDULE I

CONDITIONS PRECEDENT DOCUMENTS

Attached


Amended and Restated Series 2007-1 Note Purchase Agreement and Assignment

Apple Ridge Funding LLC,

July 6, 2007

 

 

CLOSING INDEX

 

 

Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Indenture. All items listed in bold, italic font are to be delivered by the Issuer or its counsel. All items listed in SMALL CAPS ARE TO BE DELIVERED BY T HE B ANK OF N EW Y ORK .

Principal Documents

1. Sixth Omnibus Amendment, Agreement and Consent (the Omnibus Amendment ), dated as of July 6, 2007, and containing the following:

(a) Amendments to the following documents:

1. Transfer and Servicing Agreement , dated as of April 25, 2000 (the “ Transfer and Servicing Agreement ”) among Apple Ridge Services Corporation (“ ARSC ”) as Transferor, Cartus Corporation (“ Cartus ”), as Originator and Servicer, Cartus Financial Corporation (“ CFC ”) as Originator and Apple Ridge Funding LLC (the “ Issuer ”) as Transferee, and The Bank of New York (“ BNY ”) as Indenture Trustee.

(b) Acceptance of Conformed Copies

 

EXHIBITS    A    Conformed Purchase Agreement , dated as of April 25, 2000, between Cartus as Originator and CFC as Buyer.
   B    Conformed Receivables Purchase Agreement , dated as of April 25, 2000 between CFC as Seller and ARSC as Buyer.
   C    Conformed Transfer and Servicing Agreement , dated as of April 25, 2000 among ARSC as Transferor, Cartus, as Originator and Servicer, CFC as Originator and the Issuer as Transferee, and the Indenture Trustee.
   D    Conformed Master Indenture , dated as of April 25, 2000 between the Issuer and BNY as Indenture Trustee, Paying Agent, Authentication Agent, Transfer Agent and Registrar.
   E    Conformed Performance Guaranty dated as of May 12, 2006 by Realogy Corporation (“Realogy”) in favor of CFC and the Issuer.


2. Amended and Restated Note Purchase Agreement relating to the Notes, dated July 6, 2007 (the “ Note Purchase Agreement ”) among the Issuer, Cartus, Atlantic Asset Securitization LLC, LaFayette Asset Securitization LLC, Financial Institutions and Managing Agents from time to time party thereto, and Calyon New York Branch as Administrative Agent for the Purchasers named therein.

 

SCHEDULES    I    Conditions Precedent Documents
   II    Purchaser Group Information
   III    Notice Information
EXHIBITS    A    Form of Assignment and Acceptance
   B    Form of Increase Request
   C    Form of Stated Amount Reduction Notice
   D    Form of Stated Amount Increase Notice

Notes; Other Documents

3. Amended and Restated Series 2007-1 Indenture Supplement , dated as of July 6, 2007 (the “ Supplement ” and together with the Master Indenture, the “ Indenture ”) among the Issuer, the Indenture Trustee and the Bank of New York.

 

EXHIBITS    A    Form of Variable Funding Note
   B   

Form of Monthly Payment Instructions and Notification to the Indenture Trustee

and the Paying Agent

   C    Form of Monthly Statement
   D    Form of Weekly Activity Report

4. Variable Funding Notes

(a) Amended and Restated - Calyon New York Branch

(b) Mizuho Corporate Bank, Ltd.

(c) The Bank of Nova Scotia

(d) Sumitomo Mitsui Banking Corporation

(e) Bayerische Hypo- und Vereinsbank AG, New York Branch

5. Assignment and Acceptance relating to the Notes, dated July 6, 2007 (the “ Assignment and Acceptance ”) among Atlantic Asset Securitization LLC, LaFayette Asset Securitization LLC, Financial Institutions and Managing Agents from time to time party thereto, and Calyon New York Branch as Administrative Agent for the Purchasers named therein.

 

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Reliance Letters *

Opinions

6. Reliance Letter for Opinion of Bruce Perlman, general counsel to Cartus, CFC, ARSC and the Issuer.

7. Reliance Letter for Opinion of general counsel to Realogy .

8. Reliance Letter for Opinion of Richards Layton & Finger, P.A., special Delaware counsel to Cartus, CFC, ARSC and the Issuer, regarding UCC perfection issues.

9. Reliance Letter of Orrick, Herrington & Sutcliffe LLP, special counsel to Cartus, CFC, ARSC and the Issuer, regarding:

(a) opinions dated April 10, 2007 regarding (i) enforceability and certain corporate matters and (ii) UCC creation issues;

(b) opinions dated July 31, 2006 regarding substantive non-consolidation matters with respect to CFC, ARSC, Cartus and the Issuer; and

(c) opinions dated January 31, 2005 regarding (i) “true sale” matters with respect to the transfer of receivables by Cartus and (ii) certain bankruptcy issues with respect to Home Sale Proceeds.

Miscellaneous

10. Return of Note from Calyon New York Branch of 2007-1 Series for Cancellation.

11. Order to the Trustee from Apple Ridge Funding LLC and Calyon New York Branch to transfer, register, authenticate and deliver the Notes

12. Officer’s Certificate pursuant to Section 10.03 of the Indenture

13. Amended and Restated Fee Letter

Liquidity Documents

14. Liquidity Documents.

(a) Calyon New York Branch Liquidity Asset Purchase Agreement for Atlantic Asset Securitization LLC.

(b) Calyon New York Branch Liquidity Asset Purchase Agreement for LaFayette Asset Securitization LLC.

 

*

Reliance Letters may be delivered post-closing.

 

3


(c) The Bank of Nova Scotia Liquidity Asset Purchase Agreement for Liberty Street Funding LLC.

(d) Sumitomo Mitsui Banking Corporation Liquidity Asset Purchase Agreement for Manhattan Asset Funding Company LLC.

(e) Bayerische Hypo- und Vereinsbank AG, New York Branch Asset Purchase Agreement for Black Forest Funding Corp.

Documents Related to the USPS/FDIC Assignment

1. Assignment Agreement (the Kenosia Assignment Agreement ) dated as of July 16, 2007, among Cartus, Cartus Relocation Corporation ( CRC ), CFC and Kenosia Funding, LLC, as assignor ( Kenosia ).

2. Opinion of Orrick, Herrington & Sutcliffe LLP, special counsel to Cartus, CRC, CFC and Kenosia in connection with the execution and delivery of the Kenosia Assignment Agreement.

3. Opinion of Richards Layton & Finger, P.A., special counsel to Kenosia in connection with the Kenosia Assignment Agreement.

 

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SCHEDULE II

PURCHASER GROUP INFORMATION

 

Managing Agent

  

Conduit Purchaser(s)

  

Committed Purchaser(s)

   Commitment(s)    Purchaser Group Limit
Calyon New York Branch    Atlantic Asset Securitization LLC; LaFayette Asset Securitization LLC    Calyon New York Branch    $ 225,000,000    $ 225,000,000
Mizuho Corporate Bank, Ltd.    Working Capital Management Co. LP    Working Capital Management Co. LP    $ 200,000,000    $ 200,000,000
The Bank of Nova Scotia    Liberty Street Funding LLC    The Bank of Nova Scotia    $ 125,000,000    $ 125,000,000
SMBC Securities, Inc.    Manhattan Asset Funding Company LLC    Sumitomo Mitsui Banking Corporation    $ 100,000,000    $ 100,000,000
Bayerische Hypo-und Vereinsbank AG, New York Branch    Black Forest Funding Corp.    Bayerische Hypo- und Vereinsbank AG, New York Branch    $ 200,000,000    $ 200,000,000


SCHEDULE III

NOTICE INFORMATION

 

Apple Ridge Funding LLC

40 Apple Ridge Road, Suite 4C45

Danbury, Connecticut 06810

Attention: Controller

Telephone: 203-205-3056

Facsimile: 203-205-1335

  

Working Capital Management Co. L.P.

c/o Mizuho Corporate Bank, Ltd.

1251 Avenue of Americas #3100,

Securitization Department

New York, NY, 10020

Attention: Collette Orion & Fumio Okuhira

Telephone: 212-282-3633 & 212-282-3645

Facsimile: 212-282-4105

Email: collette.orion@mizuhocbus.com

             fumio.okuhira@mizuhocbus.com


Cartus Corporation

40 Apple Ridge Road

Danbury, Connecticut 06810

Attention: Controller

Telephone: 203-205-3400

Facsimile: 203-205-3704

  

The Bank of Nova Scotia

1 Liberty Plaza, 26th Floor

New York, NY 10006

 

For Credit Matters :

Attention: Michael Eden, Director

Telephone: (212) 225-5007

Facsimile: (212) 225-5274

email:  michael_eden@scotiacapital.com

 

For Fundings, Paydowns, and Invoices :

Attention: Vilma Pindling

Telephone: (212) 225-5410

Facsimile: (212) 225-6465

email:  vilma_pindling@scotiacapital.com

 

For Monthly Reporting and Compliance :

Attention: William Sun

Telephone: (212) 225-5331

Facsimile: (212) 225-5290

email:  william_sun@scotiacapital.com

email:  liberty_street@scotiacapital.com

 

Liberty Street Funding LLC

c/o 1 Liberty Plaza, 26th Floor

New York, NY 10006

 

For Credit Matters :

Attention: Michael Eden, Director

Telephone: (212) 225-5007

Facsimile: (212) 225-5274

email:  michael_eden@scotiacapital.com

 

For Fundings, Paydowns, and Invoices :

Attention: Vilma Pindling

Telephone: (212) 225-5410

Facsimile: (212) 225-6465

email:  vilma_pindling@scotiacapital.com

 

For Monthly Reporting and Compliance :

Attention: William Sun

Telephone: (212) 225-5331

Facsimile: (212) 225-5290

email:  william_sun@scotiacapital.com

email:  liberty_street@scotiacapital.com


Calyon New York Branch

1301 Avenue of the Americas

New York, New York 10019

Attention: Matthew Croghan

Telephone: 212-261-7819

Facsimile: 212-459-3258

  

Liberty Street Funding LLC

c/o Global Securitization Services, LLC

445 Broadhollow Road, Suite 239

Melville, New York 11747

Attention: Andrew L. Stidd

Telephone: 631-587-4700

Facsimile: 212-302-8767

Atlantic Asset Securitization LLC

c/o Lord Securities Corporation

48 Wall Street

New York, New York 10005

Attention: Benjamin B. Abedine

Telephone: 212-346-9019

Facsimile: 212-346-9012

  

SMBC Securities, Inc.

SMBC Securities, Inc.

277 Park Ave

New York, NY 10172

Attention: Vice-President,

                  Asset Securitization Group

Telephone: 212-224-5347

Facsimile: 212-224-5191

LaFayette Asset Securitization LLC

c/o Global Securitization Services

114 West 47 Street

Suite 1715

New York, NY 10036

Telephone: (212) 302-5151 ext. 23

Facsimile: (212) 302-8767

Email: fbilotta@gssnyc.com

  

Manhattan Asset Funding Company LLC

c/o SMBC Securities, Inc.

277 Park Ave

New York, NY 10172

Attention: Vice-President,

                  Asset Securitization Group

Telephone: 212-224-5347

Facsimile: 212-224-5191

Mizuho Corporate Bank, Ltd.

1251 Avenue of Americas #3100,

Securitization Department

New York, NY, 10020

Attention: Collette Orion & Fumio Okuhira

Telephone: 212-282-3633 & 212-282-3645

Facsimile: 212-282-4105

Email: collette.orion@mizuhocbus.com

             fumio.okuhira@mizuhocbus.com

  

Sumitomo Mitsui Banking Corporation

277 Park Ave

New York, NY 10172

Attention: Vice-President,

                  Asset Securitization Group

Telephone: 212-224-5349

Facsimile: 212-224-5191

Black Forest Funding Corp.

c/o HVB

150 E. 42nd Street

New York, NY 10017

Attention: Susan Abbass & Rebecca Tyrpa

Telephone: 212-672-5699 / 212-672-5484

Facsimile: 212-672-5593

Email: susan_abbass@hvbamericas.com

             Rebecca_tyrpa@hvbamericas.com

  

Bayerische Hypo- und Vereinsbank AG, New York Branch

150 E. 42nd Street

New York, NY 10017

Attention: Robert Fleisher & Shawn Pierce

Telephone: 212-672-5570 / 212-672-5779

Facsimile: 212-672-5521

Email: Robert_Fleisher@hvbamericas.com

             Shawn_Pierce@hvbamericas.com


EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE

[Date]

ASSIGNMENT AND ACCEPTANCE, dated                                                   (this “ Assignment and Acceptance ”), among                                                    (“ Assignor ”) and                                                   (“ Assignee ”).

Reference is made to the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 and amended and restated as of July 6, 2007, (the “Note Purchase Agreement”), among Apple Ridge Funding LLC, as Issuer, Cartus Corporation, as Servicer, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent. Capitalized terms defined in the Note Purchase Agreement are used herein with the same meanings.

1. (a) Assignor hereby sells and assigns, without recourse to Assignee, and Assignee hereby purchases and assumes, without recourse to, or representation or warranty of any kind (except as set forth below) from Assignor, effective as of the Effective Date (as defined below), a          % interest (the “ Assigned Interest ”) in all of Assignor’s rights and obligations under the Note Purchase Agreement and under any other “Transaction Documents” (as defined below), including, without limitation, the Series 2007-1 Note, together with the rights of Assignor to payment in respect of outstanding principal and accrued and unpaid interest relating to such Assigned Interest.

(b) From and after the Effective Date, (i) Assignee shall be a party to and be bound by the provisions of the Note Purchase Agreement and, to the extent of the interests assigned pursuant to this Assignment and Acceptance, have the rights and obligations of a Committed Purchaser thereunder and under the (x) Indenture and (y) the Series Supplement (the Note Purchase Agreement, the Indenture, the Series Supplement and related documents, collectively, the “ Transaction Documents ”), and (ii) to the extent of the interests assigned by this Assignment and Acceptance, Assignor shall relinquish its rights and be released from its obligations under the Note Purchase Agreement and the other Transaction Documents.

2. Assignor hereby represents and warrants that the Assigned Interest to be sold hereby is owned by Assignor free and clear of any liens, claims or encumbrances created by Assignor. Except as otherwise set forth in the foregoing sentence, or as otherwise agreed in writing by Assignor, Assignor makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Note Purchase Agreement, the Series 2007-1 Notes or any other Transaction Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Note Purchase Agreement, the Series 2007-1 Notes or any other Transaction Document or the condition or value of any Pledged Assets or the creation, perfection or priority of any interest therein created under the Transaction Documents, or (ii) the business condition (financial or otherwise), operations, properties or prospects of the Issuer, the Servicer or any Affiliate of either the Issuer or the Servicer or the performance or observance by any party of any of its obligations under any Transaction Document.

4. Assignee hereby (i) confirms that it has received a copy of the Note Purchase Agreement, the Indenture, the Series Supplement and such other Transaction Documents and other documents and information requested by it, and that it has, independently and without reliance upon the Administrative Agent, Assignor or any other Purchaser, and based on such documentation and information as it has deemed appropriate, made its own decision to enter into this Assignment and Acceptance; (ii) agrees that it shall, independently and without reliance upon the Administrative Agent, Assignor, any Purchaser or


any Managing Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under any of the Transaction Documents; (iii) confirms that it is eligible to be an assignee Committed Purchaser under the terms of the Note Purchase Agreement; (iv) appoints and authorizes each of the Administrative Agent and the Indenture Trustee to take such action on its behalf and to exercise such powers and discretion under the Note Purchase Agreement and the other Transaction Documents as are delegated to the Administrative Agent and/or the Indenture Trustee by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; (v) agrees that it shall perform in accordance with their terms all of the obligations that by the terms of the Note Purchase Agreement are required to be performed by it as a Committed Purchaser; (vi) specifies as its address for notices, the offices set forth beneath its name on the signature page hereof; [and] (vii) represents and warrants that this Assignment and Acceptance has been duly authorized, executed and delivered by the Assignee pursuant to its corporate powers and constitutes the legal, valid and binding obligation of the Assignee; and (viii) in the event that Assignee is organized under the laws of a jurisdiction other than the United States or a state thereof, represents and warrants that [attached to this Assignment and Acceptance are] [Assignee has previously delivered to each of the Administrative Agent and the Indenture Trustee] the forms and certificates required pursuant to Section 2.08(d) of the Note Purchase Agreement, in each case accurately completed and duly executed, pursuant to which forms and certificates each of the Issuer, the Servicer and the Indenture Trustee may make payments to, and deposit funds to or for the account of, the Assignee hereunder and under the other Transaction Documents without any deduction or withholding for or on account of any tax or with such withholding or deduction at a reduced rate.]

5. The effective date for this Assignment and Acceptance shall be the later of:

(i) the date on which the Agent accepts this Assignment and Acceptance, and

(ii)                                  , 200__

(the later of such dates being the “ Effective Date ”).

6. Upon such acceptance by the Administrative Agent, and from and after the Effective Date, the Administrative Agent and the Indenture Trustee shall make all payments under the Note Purchase Agreement and the Assigned Interests assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to Assignee. Assignor and Assignee shall make all appropriate adjustments in payments under the Note Purchase Agreement and the Assigned Interests for periods prior to the Effective Date directly between themselves.

7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


Legal Name of Assignor:        
Legal Name of Assignee:        
Assignee’s Address for Notices:        
       
       

(A) Immediately after giving effect to this Assignment and Acceptance the amount of Assignee’s Commitment is $                          .

(B) Immediately after giving effect to this Assignment and Acceptance the aggregate amount of Assignor’s Commitment is $                          .

 

The terms set forth herein are hereby agreed to:
                                                                      , as Assignor
By:    
Name:  
Title:  

 

                                                                      , as Assignee
By:    
Name:  
Title:  

Calyon New York Branch,

as Administrative Agent

By:    
Name:  
Title:  
Apple Ridge Funding LLC, as Issuer
By:    
Name:  
Title:  


EXHIBIT B

FORM OF INCREASE NOTICE

The Bank of New York

as Indenture Trustee

Calyon New York Branch,

as Administrative Agent

[ Names of Managing Agents ]

 

Re:    Apple Ridge Funding LLC,
   Secured Variable Funding Notes, Series 2007-1

Ladies and Gentlemen:

Pursuant to Section 2.02 of the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 as amended and restated on July 6, 2007 (the “Agreement”), among Apple Ridge Funding LLC, as Issuer, Cartus Corporation, as Servicer, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent, the Issuer hereby irrevocably requests an Increase in the Series Outstanding Amount as follows. Terms used herein are used as defined in or for purposes of the Agreement.

 

  1. The requested amount of such Increase is $                          .

 

  2. The requested Increase Date is                          .

 

  3. The requested Rate Type(s) [is][are]                          .

 

  4. All conditions precedent to the Increase set forth in Section 3.02 of the Agreement have been satisfied.

 

  5. From the Monthly Report Section XVI (6):

Adjusted Aggregate Receivable Balance (as of last report):                              

Required Asset Amount (after giving effect to Increase):                                  

The proceeds of such Increase shall be remitted on the Increase Date in immediately available funds to [ specify payment instructions ].

 

Very truly yours,
Apple Ridge Funding LLC
By:    
Name:  
Title:  


EXHIBIT C

FORM OF STATED AMOUNT REDUCTION REQUEST

[ Date ]

The Bank of New York

as Indenture Trustee

Calyon New York Branch,

as Administrative Agent

[ Names of Managing Agents ]

 

Re:    Apple Ridge Funding LLC,
   Secured Variable Funding Notes, Series 2007-1

Ladies and Gentlemen:

Pursuant to Section 2.05 of the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 as amended and restated on July 6, 2007 (the “Agreement”), among Apple Ridge Funding LLC, as Issuer, Cartus Corporation, as Servicer, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent, the Issuer hereby irrevocably requests a reduction in the Stated Amount as follows. Terms used herein are used as defined in or for purposes of the Agreement.

 

  1. The requested amount of such reduction is $                          .

 

  2. The requested date of such reduction is                          .

 

Very truly yours,
Apple Ridge Funding LLC
By:    
Name:  
Title:  


EXHIBIT D

FORM OF STATED AMOUNT INCREASE REQUEST

[ Date ]

The Bank of New York

as Indenture Trustee

Calyon New York Branch,

as Administrative Agent

[ Names of Managing Agents ]

 

Re:    Apple Ridge Funding LLC,
   Secured Variable Funding Notes, Series 2007-1

Ladies and Gentlemen:

Pursuant to Section 2.05 of the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 as amended and restated on July 6, 2007 (the “Agreement”), among Apple Ridge Funding LLC, as Issuer, Cartus Corporation, as Servicer, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent, the Issuer hereby irrevocably requests an Increase in the Stated Amount as follows. Terms used herein are used as defined in or for purposes of the Agreement.

 

  1. The requested amount of such increase is $                          .

 

  2. The requested date of such increase is                              .

 

  3. The Purchaser Group(s) whose Purchaser Group Limit(s) will be increased are                  .

 

  4. The Committed Purchaser(s) whose Commitment(s) will be increased are                          .

 

  5. After giving effect to the increase, the Pro Rata Shares will be                                               .

 

Very truly yours,
Apple Ridge Funding LLC
By:    
Name:  
Title:  

Exhibit 10.15

 

AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

(Secured Variable Funding Notes, Series 2002-1)

Dated as of April 10, 2007

Among

KENOSIA FUNDING, LLC

as Issuer,

CARTUS CORPORATION,

as Originator and as Servicer,

CARTUS RELOCATION CORPORATION,

as an Originator

THE COMMERCIAL PAPER CONDUITS FROM TIME TO TIME PARTY HERETO,

as the Conduit Purchasers,

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO,

as Committed Purchasers,

THE PERSONS FROM TIME TO TIME PARTY HERETO,

as Managing Agents,

and

CALYON NEW YORK BRANCH,

as Administrative Agent and Lead Arranger

 

 


ARTICLE I DEFINITIONS

  
 

SECTION 1.01.

   Certain Defined Terms    2
 

SECTION 1.02.

   Other Terms    9
 

SECTION 1.03.

   Computation of Time Periods    9

ARTICLE II PURCHASE AND SALE OF SERIES 2002-1 NOTES

  
 

SECTION 2.01.

   Purchase and Transfer of Series 2002-1 Notes.    9
 

SECTION 2.02.

   Increases and Reductions to the Outstanding Amount    10
 

SECTION 2.03.

   Calculation and Payment of Interest and Fees    12
 

SECTION 2.04.

   Tranches    12
 

SECTION 2.05.

   Reductions and Increases to Stated Amount    13
 

SECTION 2.06.

   Increased Costs    14
 

SECTION 2.07.

   Increased Capital    14
 

SECTION 2.08.

   Taxes    15
 

SECTION 2.09.

   Funding Losses    16
 

SECTION 2.10.

   Nonrecourse Obligations    17

ARTICLE III CONDITIONS PRECEDENT

  
 

SECTION 3.01.

   Conditions Precedent to Purchase    17
 

SECTION 3.02.

   Conditions Precedent to each Increase    18

ARTICLE IV REPRESENTATIONS AND WARRANTIES

  
 

SECTION 4.01.

   Representations and Warranties of the Issuer    18
 

SECTION 4.02.

   Representations and Warranties of the Cartus Persons    21

ARTICLE V COVENANTS AND INDEMNITIES

  
 

SECTION 5.01.

   Covenants of the Issuer and Servicer    22
 

SECTION 5.02.

   Indemnification    26

ARTICLE VI THE ADMINISTRATIVE AGENT AND THE MANAGING AGENTS

  
 

SECTION 6.01.

   Authorization and Action    26
 

SECTION 6.02.

   Administrative Agent's Reliance, Etc    27
 

SECTION 6.03.

   Administrative Agent and Affiliates    27
 

SECTION 6.04.

   Purchase Decision    28
 

SECTION 6.05.

   Indemnification of the Administrative Agent    28
 

SECTION 6.06.

   Successor Administrative Agent    28
 

SECTION 6.07.

   Authorization and Action of Managing Agents    29
 

SECTION 6.08.

   Successor Managing Agent    29
 

SECTION 6.09.

   Payments by a Managing Agent    29

ARTICLE VII MISCELLANEOUS

  
 

SECTION 7.01.

   Amendments, Waivers and Consents, Etc    30
 

SECTION 7.02.

   Notices    30
 

SECTION 7.03.

   No Waiver; Remedies; Rights of Purchasers, Etc    30
 

SECTION 7.04.

   Binding Effect; Assignability    31
 

SECTION 7.05.

   Securities Laws; Series 2002-1 Note as Evidence of Indebtedness    31
 

SECTION 7.06.

   SUBMISSION TO JURISDICTION    32
 

SECTION 7.07.

   GOVERNING LAW; WAIVER OF JURY TRIAL    33
 

SECTION 7.08.

   Costs and Expenses    33
 

SECTION 7.09.

   No Proceedings    33

 

i


 

SECTION 7.10.

   Execution in Counterparts; Severability    33
 

SECTION 7.11.

   Limited Recourse Obligations    34
 

SECTION 7.12.

   Confidentiality    34

SCHEDULES AND EXHIBITS

 

SCHEDULE I

   Conditions Precedent Documents

SCHEDULE II

   Purchaser Group Information

SCHEDULE III

   Notice Information

EXHIBIT A

   Form of Assignment and Acceptance

EXHIBIT B

   Form of Increase Request

EXHIBIT C

   Form of Stated Amount Reduction Notice

EXHIBIT D

   Form of Stated Amount Increase Notice

 

ii


AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

(Secured Variable Funding Notes, Series 2002-1)

Dated as of April 10, 2007

KENOSIA FUNDING, LLC, a Delaware limited liability company, as Issuer, CARTUS CORPORATION, a Delaware corporation (“Cartus”), as Originator and as Servicer, CARTUS RELOCATION CORPORATION, as an Originator (“CRC” and together with Cartus, in its capacity as an Originator, “Originators”), THE COMMERCIAL PAPER CONDUITS FROM TIME TO TIME PARTY HERETO, as Conduit Purchasers, THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO, as Committed Purchasers, THE PERSONS FROM TIME TO TIME PARTY HERETO, as Managing Agents and CALYON NEW YORK BRANCH, (“Calyon”), in its capacity as administrative agent for the Purchasers (in such capacity, the “ Administrative Agent ”) and as Lead Arranger (in such capacity, the “ Lead Arranger ”) agree as follows:

WHEREAS, the Issuer has entered into that certain Indenture (as defined below) pursuant to which the Issuer issued that certain Series 2002-1 Note (the “ Existing Series 2002-1 Note ”) in favor of Gotham Funding Corporation (“ Gotham ”); and

WHEREAS, the Issuer, Cartus and CRC previously entered into that certain Note Purchase Agreement dated as of March 7, 2002 (as amended, the “ Original Note Purchase Agreement ”) with Gotham, as the Purchaser, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“BTM”), as Administrative Agent, pursuant to which Gotham purchased the Existing Series 2002-1 Note and agreed to fund certain “Increases” thereunder from time to time; and

WHEREAS, pursuant to that certain Assignment and Acceptance Agreement (the “ BTM Assignment ”) of even date herewith, (i) BTM and Gotham, collectively, have assigned to Calyon and to Atlantic Asset Securitization LLC, (“ Atlantic ”), all of their right, title and interest in and to the Original Note Purchase Agreement and the Existing Series 2002-1 Note and (ii) Calyon and Atlantic have agreed to assume all of the duties and obligations of BTM and Gotham under the Original Note Purchase Agreement; and

WHEREAS, Atlantic may wish to enter into an Assignment and Acceptance Agreement (as defined below) in the future in order to syndicate to other Conduit Purchasers its interests in the Series 2002-1 Notes; and

WHEREAS, in connection with the foregoing, the parties hereto have agreed to amend and restate the Original Note Purchase Agreement pursuant to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Original Note Purchase Agreement is hereby amended and restated in its entirety as set forth below and the parties hereto agree as follows:


ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Defined Terms . Unless otherwise defined herein, capitalized terms used in this Agreement have the meanings set forth in the Indenture (as defined below). In addition, the following terms have the following respective meanings:

Administrative Agent ” is defined in the preamble.

Agreement ” means this Amended and Restated Note Purchase Agreement, as the same may from time to time be amended, restated, supplemented or otherwise modified.

Assignment and Acceptance Agreement ” means an Assignment and Acceptance Agreement in substantially the form of Exhibit A hereto pursuant to which any Purchaser assigns all or a portion of its rights and obligations under this Agreement and the other Transaction Documents.

Atlantic ” is defined in the preamble.

Available Amounts ” is defined in Section 2.10.

Available Funds ” is defined in Section 7.11(b).

Base Rate ” means, with respect to any Interest Period, the daily average of a fluctuating interest rate per annum as shall be in effect from time to time during such Interest Period, which rate shall at all times be equal to the higher of: (i) the rate of interest announced publicly in New York City by the Administrative Agent from time to time as the Administrative Agent’s base rate for borrowings in United States dollars; and (ii) one half of one percent per annum above the Federal Funds Rate.

Base Rate Tranche ” means a Tranche for which interest is calculated by reference to the Base Rate.

BTM ” is defined in the preamble.

BTM Assignment ” is defined in the preamble.

Calyon ” is defined in the preamble.

Cartus ” is defined in the preamble.

Cartus Person ” means each of the Originators and the Servicer.

Commercial Paper Notes ” means, with respect to any Conduit Purchaser, the commercial paper notes issued by such Conduit Purchaser allocated in whole or in part by its related Managing Agent to fund the investment of such Conduit Purchaser in the Series 2002-1 Notes.

 

2


Commitment ” means (i) with respect to each Committed Purchaser, the commitment of such Committed Purchaser to purchase an interest in the Series 2002-1 Notes on the Effective Date and to fund Increases on any Increase Date in accordance herewith in an amount not to exceed the dollar amount set forth opposite such Committed Purchaser’s name under the heading “Commitment” on Schedule II attached hereto, as such amount may be increased or reduced pursuant to Section 2.05 of this Agreement, minus the dollar amount of any Commitment or portion thereof assigned by such Committed Purchaser in accordance with this Agreement, plus the dollar amount of any increase to such Committed Purchaser’s commitment consented to by such Committed Purchaser prior to the time of determination and (ii) with respect to any assignee of a Committed Purchaser pursuant to an Assignment and Acceptance Agreement, the commitment of such assignee to purchase an interest in the Series 2002-1 Notes and to fund Increases on any Increase Date in accordance herewith in an amount not to exceed such assignee’s commitment, minus the dollar amount of such commitment or portion thereof assigned by such assignee pursuant to an Assignment and Acceptance prior to the time of determination.

Commitment Termination Date ” means April 10, 2012.

Committed Percentage ” means, for each Committed Purchaser within any Purchaser Group, with respect to any date of determination, (i) a fraction (expressed as a percentage) having as its numerator the Commitment of such Committed Purchaser as of such date and as its denominator the sum of the Commitments of all Committed Purchasers within the related Purchaser Group as of such date or (ii) such other percentage as is agreed to by such Committed Purchaser and its Managing Agent so long as the sum of the Committed Percentages for all Committed Purchasers within the same Purchaser Group remains at 100%.

Committed Purchaser ” means, with respect to any Purchaser Group, each of the financial institutions specified as such on Schedule II to this Agreement or in the applicable Assignment and Acceptance Agreement pursuant to which such Person becomes a party hereto and their respective successors and permitted assigns, and “Committed Purchasers” shall mean, collectively, all of the foregoing.

Conduit Purchaser ” means, with respect any Purchaser Group, each Person specified as such on Schedule II to this Agreement or in the Assignment and Acceptance Agreement pursuant to which such Person became a party hereto and their respective successors and permitted assigns (including any related Permitted Conduit Assignee), and “Conduit Purchasers” shall mean, collectively, all of the foregoing.

CP Disruption ” means the inability of any Conduit Purchaser, at any time, whether as a result of a prohibition or any other event or circumstance whatsoever, to raise funds through the issuance of its Commercial Paper Notes in the United States commercial paper market.

CP Rate ” means, with respect to any Conduit Purchaser for any Interest Period and the related CP Tranche, a rate per annum equal to the sum of (i) the rate (or if more than one rate, the weighted average of the rates) determined by converting to an interest-bearing equivalent rate per annum, the discount rate (or rates) at which Commercial Paper Notes issued

 

3


to fund or maintain such CP Tranche, as the case may be, may be sold by any placement agent or commercial paper dealer selected by its related Managing Agent (as agreed between each such agent or dealer and such Managing Agent), plus (ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Commercial Paper Notes, expressed as a percentage of such face amount and converted to an interest-bearing equivalent rate per annum.

CP Tranche ” means a Tranche for which interest is calculated by reference to the CP Rate.

CRC ” is defined in the preamble.

Decrease ” shall mean any reduction in the Outstanding Amount pursuant to Section 2.02(c).

Decrease Date ” shall mean the date on which any reduction to the Outstanding Amount pursuant to Section 2.02(c) is distributed to the Noteholders under Section 9.04 of the Indenture.

Effective Date ” means April 10, 2007.

Environmental Laws ” is defined in the Purchase Agreement.

Eurodollar Reporting Date ” means, for any Interest Period, the second Business Day prior to the commencement of such Interest Period.

Eurodollar Rate ” means, for any Tranche for any Interest Period, a rate per annum equal to the sum of (i) the London Interbank Offered Rate for deposits in United States dollars in an amount comparable to such Tranche and for a period equal to such Interest Period which appears on Reuters Screen LIBOR01 Page (or any successor page) as of 11:00 a.m., London time, on the related Eurodollar Reporting Date, divided by the remainder of one minus the Eurodollar Reserve Percentage applicable during such Interest Period, if any, plus (ii) the Eurodollar Rate Margin. If such London Interbank Offered Rate does not appear on Reuters Screen LIBOR01 Page (or any successor page), the rate for such day will be determined on the basis of the rates at which deposits in United States dollars in an amount comparable to such Tranche and for a period equal to such Interest Period are offered to the Administrative Agent at approximately 11:00 a.m., London time, on such Eurodollar Reporting Date by prime banks in the London interbank market.

Eurodollar Rate Disruption Event ” means, for any Owner, for any Interest Period, any of the following: (i) a determination by such Owner that it would be contrary to law or the directive of any central bank or other governmental authority to obtain United States dollars in the London interbank market to fund or maintain its investment in the Series 2002-1 Notes for such Interest Period, (ii) the inability of such Owner, by reason of circumstances affecting the London interbank market generally, to obtain United States dollars in such market to fund its investment in the Series 2002-1 Notes for such Interest Period or (iii) a determination by such Owner that the maintenance of its investment in the Series 2002-1 Notes for such Interest Period at the Eurodollar Rate will not adequately and fairly reflect the cost to such Owner of funding such investment at such rate.

 

4


Eurodollar Rate Margin ” is defined in the Fee Letter.

Eurodollar Reserve Percentage ” means, as of any day, the percentage (expressed as a decimal) in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirements applicable to “Eurocurrency Liabilities” pursuant to Regulation D or any other applicable regulation of the Board of Governors of the Federal Reserve System (or any successor) which prescribes reserve requirements applicable to “Eurocurrency Liabilities” as currently defined in Regulation D.

Eurodollar Tranche ” means a Tranche for which interest is calculated by reference to the Eurodollar Rate.

Existing Series 2002-1 Note ” is defined in the preamble.

Facility Fee ” is defined in the Fee Letter.

Federal Bankruptcy Code ” means the federal bankruptcy code of the United States of America codified in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

Federal Funds Rate ” means, for any day, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

Fee Collections ” is defined in the Fee Receivables Purchase Agreement.

Fee Letter ” means the Fee Letter of even date herewith between Calyon and the Issuer.

Fifth Omnibus Amendment ” means that certain Fifth Omnibus Amendment and Agreement, dated as of even date herewith, among Cartus, CRC, the Issuer, the Trustee, Calyon, Atlantic, and Realogy.

Gotham ” is defined in the preamble.

Governmental Authority ” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

5


Increase ” shall mean any funding by the Purchasers pursuant to Section 2.02(a) which increases the Outstanding Amount.

Increase Date ” shall mean the date on which any Increase is funded.

Increase Request ” means a request for an Increase in substantially the form attached hereto as Exhibit B.

Indemnified Party ” is defined in Section 5.02.

Indemnity Amounts ” means all indemnities and analogous payment due from the Issuer under Section 2.08, Section 5.02, and/or Section 7.08 of this Agreement.

Indenture ” means that certain Indenture dated as of March 7, 2002 among the Issuer, and The Bank of New York, as Trustee, paying agent, authentication agent, transfer agent, and registrar, as amended through the Fifth Omnibus Amendment, and as hereafter amended, restated, supplemented or otherwise modified from time to time.

Lead Arranger ” is defined in the preamble.

Lien ” has the meaning given in the Fee Receivables Purchase Agreement.

Liquidity Provider ” means the Person or Persons which provide liquidity support to a Conduit Purchaser pursuant to a Liquidity Provider Agreement.

Liquidity Provider Agreement ” means an agreement between a Conduit Purchaser and a Liquidity Provider evidencing the obligation of such Liquidity Provider to provide liquidity support to such Conduit Purchaser in connection with the issuance by such Conduit Purchaser of Commercial Paper Notes.

Lockbox Agreement ” is defined in the Servicing Agreement.

Losses ” is defined in Section 5.02.

Managing Agent ” means with respect to any Purchaser Group, the Person identified as such on Schedule II to this Agreement or in the Assignment and Acceptance Agreement pursuant to which the members of such Purchaser Group became parties hereto.

Monthly Originator Report ” has the meaning given in the Servicing Agreement.

Notes ” means the Series 2002-1 Notes.

Original Note Purchase Agreement ” is defined in the preamble.

Originator ” is defined in the preamble.

Other Taxes ” is defined in Section 2.08.

 

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Owner ” means (a) each Conduit Purchaser, (b) each Committed Purchaser, (c) each Liquidity Provider, Program Support Provider or other Person that has purchased, or has entered into a commitment to purchase, the Series 2002-1 Notes or an interest therein from a Conduit Purchaser pursuant to a Liquidity Provider Agreement, Program Support Agreement or otherwise, and (d) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to any Conduit Purchaser.

Performance Guarantor ” means Realogy.

Performance Guaranty ” means that certain Amended and Restated Guaranty from Realogy dated as of even date herewith.

Permitted Conduit Assignee ” means, with respect to any Purchaser Group, any commercial paper conduit administered by the Managing Agent for such Purchaser Group or any of its Affiliates.

Permitted Lien ” has the meaning given in the Purchase Agreement.

Pool Collections ” is defined in the Receivables Purchase Agreement.

Process Agent ” is defined in Section 7.06.

Program Fee ” is defined in the Fee Letter.

Program Support Agreement ” means an agreement between a Conduit Purchaser and a Program Support Provider evidencing the obligation of such Program Support Provider to provide liquidity or credit enhancement or asset purchase facilities for or in respect of any assets or liabilities of such Conduit Purchaser in connection with the issuance by such Conduit Purchaser of Commercial Paper Notes.

Program Support Provider ” means the Person or Persons who will provide program support to a Conduit Purchaser pursuant to a Program Support Agreement.

Pro Rata Share ” means, for a Purchaser Group at any time of determination, a fraction (expressed as a percentage) having the Purchaser Group Limit for such Purchaser Group as its numerator and the Stated Amount as its denominator; provided , however, that if any Purchaser fails to fund any amount as required hereunder, “Pro Rata Share” shall mean, for purposes of making all distributions hereunder, a fraction (expressed as a percentage) having the portion of the Outstanding Amount funded by each Purchaser Group as its numerator and the Outstanding Amount as its denominator.

Purchase ” means the purchase of the Series 2002-1 Notes from Gotham by the Purchasers on the Effective Date.

Purchase Agreement ” means that certain “CMGFSC Purchase Agreement” dated March 7, 2002, between Cartus Corporation and Cartus Relocation Corporation, as amended through the Fifth Omnibus Amendment, and as hereafter amended, restated, supplemented, or otherwise modified from time to time.

 

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Purchaser ” means, a Conduit Purchaser or Committed Purchaser as the context requires and “Purchasers” means collectively, the Conduit Purchasers and the Committed Purchasers.

Purchaser Group ” means each group of Purchasers consisting of one or more Conduit Purchasers and any Permitted Conduit Assignees of such Conduit Purchasers, the related Committed Purchasers, the related Liquidity Provider(s) and Program Support Provider(s), if any, the related Managing Agent and their respective permitted assigns.

Purchaser Group Limit ” means (i) with respect to each Purchaser Group existing on the date hereof, the amount set forth opposite the name of such Purchaser Group on Schedule II attached hereto, as such amount may be increased or decreased pursuant to Section 2.05 hereof, or reduced pursuant to Section 7.04(c) hereof and (ii) with respect to any other Purchaser Group, the amount indicated in the Assignment and Acceptance Agreement pursuant to which the members of such Purchaser Group become parties to this Agreement, as such amount may be increased or decreased pursuant to Section 2.05 hereof, or reduced pursuant to Section 7.04(c) hereof.

Rate Type ” means the Eurodollar Rate, the Base Rate or the CP Rate.

Rating Agencies ” means, collectively, Fitch, Moody’s and Standard & Poor’s, and their respective successors in interest.

Realogy ” means Realogy Corporation, a Delaware corporation, and its successors.

Receivable ” is defined in the Purchase Agreement.

Reporting Date ” is defined in the Servicing Agreement.

Required Managing Agents ” means, at any time, Managing Agents representing Purchaser Groups which hold Series 2002-1 Notes that represent at least 66  2 / 3 % of the Outstanding Amount or, if the Outstanding Amount is zero, Managing Agents representing Purchaser Groups with Pro Rata Shares of not less than 66  2 / 3 %.

Revolving Period ” shall mean the period beginning on the Effective Date and ending upon the commencement of the Amortization Period.

Series 2002-1 Notes ” means the Notes executed hereunder in substitution for the Existing Series 2002-1 Note.

Servicer ” is defined in the preamble.

Servicer Default ” is defined in the Servicing Agreement.

Solvent ” means, with respect to any Person and as of any particular date, (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing

 

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debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.

Stated Amount Increase Notice ” is defined in Section 2.05(b).

Taxes ” is defined in Section 2.08(a).

Tranche ” is defined in Section 2.04.

Transferred Employee ” is defined in the Purchase Agreement.

UCC ” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.

Weekly Activity Report ” has the meaning given in Section 3.07(d) of the Servicing Agreement.

Yield Protection Amount ” means any amounts owing by the Issuer under Section 2.06 or 2.07 of this Agreement.

SECTION 1.02. Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles in the United States. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” means “including without limitation.”

SECTION 1.03. Computation of Time Periods . Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

ARTICLE II

PURCHASE AND SALE OF SERIES 2002-1 NOTES

SECTION 2.01. Purchase and Transfer of Series 2002-1 Notes .

(a) On the terms and subject to the conditions set forth in this Agreement and the BTM Assignment, and in reliance on the covenants, representations and agreements set forth herein and therein, on the Effective Date (i) Atlantic Asset Securitization LLC, (“ Atlantic ”),

 

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acting through Calyon as Managing Agent, may, in its discretion, and Calyon New York Branch, acting through Calyon as Managing Agent, shall, if Atlantic determines not to so purchase, purchase from BTM, on the date hereof, the Existing Series 2002-1 Notes issued to its related Managing Agent having an aggregate maximum face amount equal to the applicable Purchaser Group Limit. Without limiting any other provision of this Agreement, the obligation of Calyon or Atlantic to acquire an interest in the Existing Series 2002-1 Note is subject to the satisfaction of the conditions precedent set forth in Section 3.01 hereof.

(b) On the Effective Date, the Issuer will cause the Trustee to, upon surrender to the Trustee of the Existing Series 2002-1 Note, deliver to Calyon, as Managing Agent on behalf of the Purchasers in its Purchaser Group, a replacement Series 2002-1 Note, dated as of the Effective Date, registered in the name of such Managing Agent, having a face amount equal to the Purchaser Group Limit of its Purchaser Group, and duly authenticated by the Authentication Agent in accordance with the provisions of the Indenture upon delivery to the Trustee of the Existing Series 2002-1 Notes. Such Series 2002-1 Note shall be delivered in exchange for, and in payment for, and not in payment of, the Existing Series 2002-1 Note and is not intended to constitute a novation thereof. The Series 2002-1 Notes shall mature and be payable in full on the Final Stated Maturity Date unless the maturity thereof is accelerated pursuant to Section 5.02 of the Indenture.

(c) The Series 2002-1 Notes shall be issued in registered form, shall evidence the outstanding indebtedness owed from time to time by the Issuer thereunder and shall be payable at the times and in the amounts required under the Indenture. Each Managing Agent, on behalf of the Purchasers in the related Purchaser Group, shall be and is hereby authorized to record on the grid attached to its Series 2002-1 Note held by it on behalf of the Purchasers in the related Purchaser Group (or at its option, in its internal books and records) the date and amount of the initial funding of its Pro Rata Share of the Outstanding Amount and the date and amount of each Increase, the amount of each repayment of the principal amount represented by such Series 2002-1 Note, the portions of its Series 2002-1 Note that are from time to time allocated to the CP Tranche, any Base Rate Tranche and any Eurodollar Tranche, and any reductions to the Stated Amount; provided , that failure to make any recordation on the grid or records or any error in recordation shall not adversely affect any Purchaser’s rights with respect to its right to receive principal and interest under a Series 2002-1 Note.

SECTION 2.02. Increases and Reductions to the Outstanding Amount .

(a) Subject to the terms and conditions set forth in this Agreement and in the Indenture, the Issuer may, in its discretion, at any time during the Revolving Period deliver to the Trustee, each Managing Agent and the Administrative Agent, an Increase Request not less than two Business Days prior to the applicable Increase Date, provided , that:

(i) after giving effect to such Increase, (A) the Outstanding Amount shall not exceed the Stated Amount at such time; (B) the Pro Rata Share of the Outstanding Amount funded by each Purchaser Group shall not exceed its Purchaser Group Limit and (C) the portion of the Outstanding Amount funded by any Committed Purchaser shall not exceed its Commitment;

 

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(ii) the Increase Request shall specify: (A) the proposed date of the requested Increase, (B) the amount of the requested Increase (which shall be in a minimum amount of $1,000,000 or an integral multiple of $1,000,000 in excess thereof or, such other amounts as may be agreed among the Issuer and the Managing Agents), (C) the bank account to which the funds from such Increase should be sent and (D) the requested Rate Type(s); and

(iii) if such Increase would cause the Required Asset Amount to be greater than the Net Receivables Balance as shown on the most recent Monthly Originator Report (or, if less, the Net Receivables Balance shown on the most recent Weekly Activity Report, if applicable), each Managing Agent must have received an interim servicing report, in a form to be mutually agreed upon by the Issuer and the Managing Agents, based on the most recently available interim reporting, which demonstrates that such Increase will not cause an Asset Amount Deficiency to occur.

(b) Subject to the terms and conditions set forth in this Agreement (including Section 3.02 hereof) and the Indenture, on each Increase Date the Conduit Purchasers in each Purchaser Group, acting through the related Managing Agent, may (but are not committed to) at the request of the Issuer pursuant to an Increase Request, fund such Purchaser Group’s Pro Rata Share of the requested Increase in amounts to be allocated among such Conduit Purchasers by the related Managing Agent. If any Conduit Purchaser chooses at any time not to fund its portion of such Purchaser Group’s Pro Rata Share of a requested Increase when requested by the Issuer, on the applicable Increase Date, the related Committed Purchasers, acting through the related Managing Agent, shall, subject to the conditions set forth in Section 3.02 hereof, fund their respective Committed Percentages of the related Purchaser Group’s Pro Rata Share of the amount of such Increase. Each funding of a Purchaser Group’s Pro Rata Share of an Increase shall be paid by the related Purchasers to an account designated by the related Managing Agent. Each Managing Agent shall deliver its Purchaser Group’s Pro Rata Share of the amount of each Increase to the Issuer in U.S. Dollars in immediately available funds by 1:00 p.m. (New York City time) on the related Increase Date to an account designated by the Issuer prior to the Increase Date. Each Increase funded by the Purchasers hereunder shall represent an increase in the Outstanding Amount. Each Managing Agent shall provide prompt notice to the Issuer and each other Managing Agent if any Conduit Purchaser in its Purchaser Group elects not to fund its share of any Increase.

(c) Subject to the terms and conditions set forth in the Indenture, at any time during the Revolving Period, in addition to the optional redemption provisions set forth in Section 12.02 of the Indenture, the Issuer shall have the right to reduce the Outstanding Amount by at least $1,000,000 (or such other amounts as may be agreed among the Issuer and the Managing Agents) by causing Pool Collections and/or Fee Collections to be allocated to the Principal Subaccount for application towards principal payments of the Series 2002-1 Notes; provided , that (i) the Issuer shall give at least two (2) Business Days prior written notice to the Managing Agents, the Administrative Agent and the Trustee in respect of such reduction; (ii) such reduction of the Outstanding Amount shall be applied to reduce the outstanding principal amount of the Series 2002-1 Note held by each Purchaser Group ratably in accordance with its Pro Rata Share and (iii) unless the date of such reduction is a Distribution Date, the Issuer shall pay to the Managing Agents (for the account of the Purchasers in the related Purchaser Group), the amount of any funding losses incurred by the Purchasers in connection with such reduction in accordance with Section 2.09 of this Agreement.

 

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SECTION 2.03. Calculation and Payment of Interest and Fees .

(a) Each Managing Agent shall, on or prior to the first day of each Interest Period, notify the Trustee and the Servicer of the Tranche Rate which will be applicable to each Tranche during such Interest Period and such Managing Agent shall, no later than the Business Day preceding the next Reporting Date, notify such parties of the total interest to be paid for each such Tranche and the total Monthly Program Fees to be paid to its Purchaser Group on the relevant Distribution Date.

(b) Interest on each Tranche during each Interest Period shall accrue at the applicable Tranche Rate for such Interest Period and all accrued and unpaid interest on each Tranche shall be payable on each Distribution Date in accordance with the terms of the Indenture. Interest with respect to any Tranche due but not paid on any Distribution Date will be due on the next succeeding Distribution Date together with Additional Interest as calculated in accordance with the terms of the Indenture.

(c) The Issuer shall pay to each Managing Agent, for the account of the Purchasers in the related Purchaser Group, the Facility Fee and Program Fee pursuant to the Fee Letter. The Facility Fee and the Program Fee will constitute “Monthly Program Fees” as defined in the Indenture and shall be due and payable on each Distribution Date pursuant to Section 9.04 of the Indenture.

SECTION 2.04. Tranches .

(a) Each funding made by the Purchasers in the same Purchaser Group on any Increase Date having one Rate Type shall be referred to herein as a “Tranche”. The Issuer shall select the Rate Type(s) to apply to each Tranche for the related Interest Period in the related Increase Request; provided , however , that

(i) the selection of such Rate Type(s) shall be subject to the approval of each Managing Agent in its sole and absolute discretion;

(ii) if any Managing Agent notifies the Issuer and the Servicer that a CP Disruption has occurred, the Eurodollar Rate shall automatically apply to any CP Tranche from and after such notice until such Managing Agent notifies the Issuer and the Servicer that such CP Disruption has ceased (it being agreed that each Managing Agent shall give the Issuer and the Servicer prompt notice that any such CP Disruption has ceased); and

(iii) any portion of the Outstanding Amount that is not allocated to a CP Tranche shall be a Eurodollar Tranche unless: (A) on or prior to the first day of the next related Interest Period, such Managing Agent has given the Issuer and the Servicer notice that a Eurodollar Rate Disruption Event has occurred and such Managing Agent shall not have subsequently notified the Servicer and the Issuer that such Eurodollar Rate Disruption Event no longer exists (it being agreed that each Managing Agent shall give

 

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the Issuer and the Servicer prompt notice that any such Eurodollar Rate Disruption Event no longer exists); (B) such Managing Agent did not receive notice that such Tranche was to be a Eurodollar Tranche by 11:00 A.M. (New York City time) on the second Business Day preceding the first day of such Interest Period; or (C) the Outstanding Tranche Amount of such Tranche is less than $1,000,000, in any of which events such Tranche shall be a Base Rate Tranche.

The Administrative Agent shall promptly, upon the request of any party, notify each Managing Agent, the Issuer and the Servicer of the Eurodollar Rate applicable to any Eurodollar Tranche or the Base Rate applicable to any Base Rate Tranche.

(b) The Managing Agents may at any time after the occurrence and during the continuance of any Amortization Event, or at any time after the Amortization Period has commenced either (i) divide any Tranche into two or more Tranches having an aggregate Outstanding Tranche Amount equal to the Outstanding Tranche Amount of such divided Tranche, or (ii) combine any two or more Tranches into a single Tranche having an Outstanding Tranche Amount equal to the aggregate of the Outstanding Tranche Amounts of such Tranches; provided , however , that no Tranche owned by any Conduit Purchaser may be combined with a Tranche owned by any other Purchaser and no Tranche held by the Committed Purchasers in any Purchaser Group may be combined with any Tranche held by the Committed Purchasers in any other Purchaser Group; and provided further that if any such Tranche is requested to become a Eurodollar Tranche, such notice must be received at least two Business Days’ prior to the last day of the Tranche Period for such Tranche.

SECTION 2.05. Reductions and Increases to Stated Amount .

(a) The Issuer may at any time, upon at least two (2) Business Days’ prior written notice to each Managing Agent, the Trustee and the Administrative Agent, such notice to be in the form of Exhibit C hereto, terminate in whole or reduce in part the Stated Amount; provided , however , that each partial reduction shall (i) be in an amount equal to $5,000,000 or an integral multiple thereof, (ii) reduce each Purchaser Group Limit hereunder ratably in accordance with the respective Purchaser Group’s Pro Rata Share of such reduction to the Stated Amount and (iii) reduce each Committed Purchaser’s Commitment ratably within their respective Purchaser Group in accordance with each Committed Purchaser’s Committed Percentage.

(b) The Issuer may, from time to time upon at least thirty (30) days’ prior written notice to each Managing Agent, the Trustee and the Administrative Agent, request an increase to the Stated Amount. Each such notice shall be substantially in the form of Exhibit D hereto (each a “ Stated Amount Increase Notice ”) and shall specify (i) the proposed date such increase shall become effective, (ii) the proposed amount of such increase, which amount shall be at least $5,000,000; (iii) the identity of the Purchaser Group(s) (and members thereof) whose Purchaser Group Limit(s) will be increased in connection therewith; (iv) the identity of all Committed Purchasers in such Purchaser Group and the amount of their respective Commitments after giving effect to such increase in the Stated Amount; and (v) a recalculation of the Pro Rata Shares which will become effective upon such increase in the Stated Amount. No such increase shall become effective unless and until (x) either (i) the Commitments of the Committed Purchasers in such Purchaser Group have been increased by the amount of such increase in the Stated Amount, as evidenced by the Managing Agent for such Purchaser Group and each of the

 

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Purchasers in such Purchaser Group executing such Stated Amount Increase Notice or (ii) one or more additional Purchaser Groups have become parties to this Agreement by executing a joinder agreement in form and substance reasonably acceptable to the Required Managing Agents and the Issuer. Notwithstanding anything to the contrary set forth herein, nothing contained in this Agreement shall constitute a commitment on the part of any Purchaser hereunder to agree to any such increase, or to assume or increase any obligation to the Issuer at any time.

SECTION 2.06. Increased Costs . If, after the date hereof due to either the introduction of or any change in, or in the interpretation of, (i) any law or regulation by the Governmental Authority that promulgated or administers compliance with such law or regulation (other than laws or regulations with respect to income taxes, branch profits or franchise taxes based on income or gross receipts) or (ii) any guideline or request from any central bank or other Governmental Authority or similar agency, including, without limitation, the Financial Accounting Standards Board (“FASB”) or any comparable entity (whether or not having the force of law), any reserve or deposit or similar requirement shall be imposed, modified or deemed applicable, any basis of taxation shall be changed (other than as a result of a change in laws and regulations with respect to income tax, branch profits or franchise taxes) or any other condition shall be imposed, and there shall be any increase in the cost to any Owner of making, funding, or maintaining the principal outstanding under, a Series 2002-1 Note or in the cost to any Owner of agreeing to make, fund, or maintain any principal outstanding under, a Series 2002-1 Note, then the Issuer shall from time to time, upon demand by any such Owner, by the submission of the certificate described below, pay to such Owner, additional amounts sufficient to compensate such Owner for such increased cost; provided , however , that before making any such demand, such Owner has agreed to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to take such steps (including the designation of a different applicable lending office) as would avoid the need for, or reduce the amount of, such additional cost and would not, in the judgment of such Owner, be otherwise disadvantageous to such Owner. A certificate setting forth in reasonable detail the reasons for and the amount of such increased cost submitted to the Issuer and the Trustee by the relevant Owner, or the related Managing Agent on behalf of such Owner, shall be conclusive and binding for all purposes, absent manifest error.

SECTION 2.07. Increased Capital . If any Owner determines that compliance with any law or regulation or any guideline or request or any written interpretation from any central bank or other Governmental Authority or similar agency, including, without limitation, FASB or any comparable entity (whether or not having the force of law) which is introduced, implemented or received by such Owner after the date hereof, affects or would affect capital adequacy or the amount of capital required or expected to be maintained by such Owner or any corporation controlling such Owner and that the amount of such capital is increased as a result of the existence of this Agreement, the Indenture or the obligations of a Liquidity Provider under a Liquidity Provider Agreement or the obligations of a Program Support Provider under a Program Support Agreement, or has or would have the effect of reducing such Owner’s rate of return on capital then, upon demand by any such Owner, by the submission of the certificate described below, the Issuer shall pay to such Owner, from time to time, as specified by such Owner, additional amounts sufficient to compensate such Owner in light of such circumstances, to the extent that such Owner reasonably determines such increase in capital to be allocable to a Series 2002-1 Note or the existence of this Agreement, the Indenture, any Liquidity Provider’s

 

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obligations under a Liquidity Provider Agreement or any Program Support Provider’s obligations under a Program Support Agreement. In determining such amounts, such Owner may use any reasonable averaging and attribution methods, consistent with the averaging and attribution methods generally used by such Owner in connection with commitments of that type. A certificate as to such amounts submitted to the Issuer and the Trustee by the relevant Owner, or by the related Managing Agent on behalf of such Owner, setting forth the basis therefor and calculation thereof in reasonable detail, shall be conclusive and binding for all purposes, absent manifest error.

SECTION 2.08. Taxes .

(a) All payments made by the Issuer under this Agreement, the Indenture, the Fee Letter and any Series 2002-1 Note to or for the benefit of a Series Noteholder, the Administrative Agent or any Owner shall be made, to the extent allowed by law, free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority having taxing authority (excluding income taxes, branch profits or franchise taxes based on income or gross receipts) imposed on such Person as a result of any present or former connection between the jurisdiction of the government or taxing authority imposing such tax or any political subdivision or taxing authority thereof or therein and such Person (other than any connection arising solely from such Person having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement, the Indenture or a Series 2002-1 Note or any other related document to which such Person is a party) (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called “ Taxes ”). If any Taxes are required to be withheld from any amounts payable to or under the Series 2002-1 Note, (i) the sum payable by the Issuer shall be increased as may be necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 2.08), the relevant Person receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Issuer shall make such deductions, and (iii) the Issuer shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law.

(b) In addition, the Issuer 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 any Liquidity Provider Agreement (hereinafter “ Other Taxes ”).

(c) Subject to the provisions set forth in this Section 2.08, the Issuer will indemnify each Purchaser, the Administrative Agent and each Owner 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 2.08) paid by such Purchaser, the Administrative Agent and each Owner and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, provided , that such Purchaser, the Administrative Agent or such Owner, in making a demand for indemnity, shall provide the Issuer with a certificate from the relevant taxing authority or from a responsible officer of such Person stating or otherwise evidencing that such Person has made payment of such Taxes or Other Taxes and will provide a copy of or extract from documentation, if available, furnished by such

 

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taxing authority evidencing assertion or payment of such Taxes or Other Taxes. Whenever any Taxes are payable by the Issuer, within 30 days thereafter the Issuer shall send to the applicable Purchaser, the Administrative Agent and any applicable Owner a certified copy of an original official receipt received by the Issuer showing payment thereof. If the Issuer fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the applicable Purchaser, the Administrative Agent and any applicable Owner the required receipts or other required documentary evidence, the Issuer shall indemnify such Person for any incremental Taxes, interest or penalties that such Person is legally required to pay as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement, the Indenture and the payment of the Series 2002-1 Notes.

(d) On or before the date it becomes a Noteholder (and, so long as it may properly do so, periodically thereafter, as may be required by applicable law, to keep forms up to date), any Noteholder that is organized under the laws of a jurisdiction outside the United States of America shall deliver to the Servicer, the Trustee and the Paying Agent any certificates, documents or other evidence that shall be required by the Internal Revenue Code or Treasury Regulations issued pursuant thereto to establish its exemption from existing United States federal withholding requirements, including (i) two original copies of Internal Revenue Service Form W-8 BEN or Form W-8-ECI or successor applicable form, properly completed and duly executed by such Noteholder certifying that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes.

(e) If any such Series Noteholder does not comply with Section 2.08(d), amounts payable to such Series Noteholder under this Section 2.08 shall be limited to amounts that would have been payable under this section if such Series Noteholder had so complied.

(f) All Taxes and Other Taxes owing under this Section 2.08 shall be payable in accordance with Section 7.11.

SECTION 2.09. Funding Losses .

(a) If, for any reason, a principal payment with respect to any CP Tranche or any Eurodollar Tranche shall occur on any date which is not the last day of the applicable Interest Period, the Issuer shall compensate each Purchaser, upon demand, for all funding losses by paying to such Purchaser an amount equal to the sum of (i) the amount of interest which would have accrued on the relevant Tranche but for such prepayment through the last day of the relevant Interest Period less the interest earned by such Purchaser by investing such funds in investments permissible (in the case of the Conduit Purchaser) for the commercial paper program of the Conduit Purchaser and (ii) all reasonable out-of-pocket expenses which such Purchaser may sustain or incur as a consequence of such prepayment. Such amounts shall be payable as Breakage Amounts by the Issuer pursuant to Section 9.04 of the Indenture.

(b) In addition to the foregoing, the Issuer shall compensate each Owner, upon its written demand, for all losses, expenses and liabilities on account of any liquidation or reemployment of deposits or other funds acquired by such party to make, fund or maintain a Tranche, (i) if by reason of the acts or omissions of the Issuer, the funding of any CP Tranche or Eurodollar Tranche does not occur on a date specified therefor in the relevant funding request;

 

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(ii) if for any reason any payment, prepayment or conversion of principal of any CP Tranche or Eurodollar Tranche occurs on a date which is not the last day of the Interest Period for such Tranche or (iii) as a consequence of any required conversion of any CP Tranche or Eurodollar Tranche to a Tranche for which interest is calculated at another Rate Type prior to the last day of the Interest Period for the relevant Tranche. A certificate setting forth in reasonable detail the reasons for and the amount of such demand submitted to the Issuer by such Owner, shall be conclusive and binding for all purposes, absent manifest error. Such amounts shall be payable as Breakage Amounts by the Issuer pursuant to Section 9.04 of the Indenture.

SECTION 2.10. Nonrecourse Obligations . Notwithstanding any provision in any other Section of this Agreement to the contrary, the obligation of the Issuer to pay any amounts payable to a Purchaser or any other Owner pursuant to Sections 2.06, 2.07, 2.08, 2.09, 5.02 and 7.08 of this Agreement shall be without recourse to the Issuer (or its assignee, if applicable), the Servicer (or any Person acting on behalf of any of them), the Trustee or any other Owner or any affiliate, officer or director of any of them, and the obligation of the Issuer to pay any amounts hereunder shall be limited solely to the application of Pool Collections and other amounts (collectively, the “ Available Amounts ”) required to be distributed to the Managing Agents, on behalf of the related Purchasers, in the Indenture, to the extent that such amounts are available for distribution. In the event that amounts payable to a Purchaser or any other Owner pursuant to this Agreement exceed the Available Amounts, the excess of the amounts due hereunder (and subject to this Section 2.10) over the Available Amounts paid shall not constitute a “claim” under Section 101(5) of the Federal Bankruptcy Code against the applicable party until such time as such party has Available Amounts.

ARTICLE III

CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Purchase . The Purchase is subject to the satisfaction of each of the following conditions on or prior to the Effective Date (any or all of which (except Section 3.01(c)) may be waived by the Managing Agents in their sole and absolute discretion:

(a) The Managing Agents shall have received on or before the date hereof each of the items listed on Schedule I hereto, each (unless otherwise indicated) dated the date hereof, in form and substance reasonably satisfactory to the Managing Agents;

(b) Each of the representations and warranties of Cartus, CRC, the Issuer, the Servicer, Realogy or the Trustee made in this Agreement, the Indenture, and each other Transaction Document shall be true and correct in all material respects as of the date hereof as though made as of such time (except to the extent that they expressly relate to an earlier or later time);

(c) No Amortization Event, Servicer Default or Event of Default or event that with the giving of notice or lapse of time or both would constitute such an Amortization Event, Servicer Default or Event of Default shall have occurred and be continuing (before and after giving effect to the Purchase);

 

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(d) Immediately after giving effect to the Purchase, no Asset Amount Deficiency shall exist and be continuing;

(e) All fees required to be paid on or prior to the date hereof in accordance with the Fee Letter and the Administrative Agent Fee Letter shall have been paid in full in accordance with the terms thereof; and

(f) Each Managing Agent shall have received a written confirmation from each of the Rating Agencies that the Purchase hereunder will not result in a downgrade or withdrawal of the rating of the Commercial Paper Notes of the Conduit Purchasers in the related Purchaser Group or shall have confirmed to the Administrative Agent that no such written confirmation from the Rating Agencies is necessary to maintain such rating.

SECTION 3.02. Conditions Precedent to each Increase . The funding of any Increase under this Agreement shall be subject to the satisfaction, as of the applicable Increase Date, of each of the following conditions:

(a) Each of the representations and warranties of Cartus, CRC, the Issuer, the Servicer, Realogy or the Trustee made in this Agreement, the Indenture, and each other Transaction Document shall be true and correct in all material respects as of the date hereof as though made as of such time (except to the extent that they expressly relate to an earlier or later time); and

(b) No Amortization Event, Servicer Default or Event of Default or event that with the giving of notice or lapse of time or both would constitute such an Amortization Event, Servicer Default or Event of Default shall have occurred and be continuing (before and after giving effect to such Increase); and

(c) Immediately after giving effect to such Increase, no Asset Amount Deficiency shall exist and be continuing; and

(d) Each of this Agreement, the Indenture, the Series 2002-1 Notes and each other Transaction Document shall remain in full force and effect; and

(e) Each Managing Agent shall have received such other approvals, documents, agreements, certificates or opinions as they may reasonably request.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Issuer . Each of the representations and warranties made by the Issuer as of the Effective Date pursuant to the Indenture is incorporated herein by reference and all such representations and warranties are remade as of the Effective Date for the benefit of the Purchasers, the Managing Agents and the Administrative Agent. In addition, the Issuer hereby represents and warrants to the Purchasers, the Managing Agents and the Administrative Agent as of the Effective Date and each date of any Increase that:

 

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(a) The Existing Series 2002-1 Notes have been duly and validly authorized, have been duly and validly issued and outstanding and are entitled to the benefits of the Indenture, and this Agreement.

(b) Each of the Indenture, and, assuming the due authorization, execution and delivery by each of the other parties thereto, this Agreement, is in full force and effect and no default or other event or circumstance has occurred thereunder or in connection therewith that could result in the termination of any such agreement or any other interruption of the ongoing performance of the obligations by the Issuer under each such agreement.

(c) Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 7.05 and their compliance with the agreements set forth therein, it is not necessary, in connection with the offer, sale and delivery of the Series 2002-1 Notes to the Purchasers, to register the Series 2002-1 Notes under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended;

(d) The Issuer is a limited liability company duly formed and validly existing in good standing under the laws of the State of Delaware and has full power and authority to own its properties and to conduct its business as such properties are presently owned and as such business is presently conducted, is qualified to do business and is in good standing as a foreign limited liability company and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and in which the failure so to qualify or to obtain such licenses and approvals or to preserve and maintain such qualification, licenses or approvals could reasonably be expected to give rise to a Material Adverse Effect;

(e) The Issuer (i) has all necessary limited liability company power and authority (A) to execute and deliver this Agreement, the Series 2002-1 Notes, the Fifth Omnibus Amendment and the other Transaction Documents to which it is a party and (B) to perform its obligations under this Agreement, the Series 2002-1 Notes, the Indenture and the other Transaction Documents to which it is a party (as modified by the Fifth Omnibus Amendment) and (ii) has duly authorized by all necessary action the execution, delivery and performance by it of, and the consummation by it of the transactions provided for in, this Agreement, the Series 2002-1 Notes, the Indenture and the other Transaction Documents (as modified by the Fifth Omnibus Amendment) to which it is a party. Each of this Agreement, the Series 2002-1 Notes and the Indenture constitute the legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with its terms, except (A) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (B) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(f) The execution, delivery and performance by it of, and the consummation by it of the transactions contemplated by, this Agreement, the Series 2002-1 Notes, the Indenture, the Fifth Omnibus Amendment and the other Transaction Documents to which it is a party, and the fulfillment by it of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of

 

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time or both) a default under (A) the certificate of formation or the limited liability company agreement of the Issuer or (B) any material indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which the Issuer is a party or by which it or any of its respective properties is bound, (ii) result in the creation or imposition of any Lien (other than Permitted Liens) on any of the Pledged Assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust, or other material agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any federal, state, local or foreign law (including without limitation, Environmental Laws) or any decision, decree, order, rule or regulation applicable to the Issuer or of any Governmental Authority having jurisdiction over the Issuer, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(g) (i) There is no action, suit, proceeding or investigation pending or, to the best knowledge of the Issuer, threatened, against the Issuer before any Governmental Authority and (ii) the Issuer is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts the invalidity of this Agreement, the Series 2002-1 Notes, the Indenture, the Fifth Omnibus Amendment or any other Transaction Document, (B) seeks to prevent the consummation of any of the transactions contemplated by this Agreement, the Series 2002-1 Notes, the Fifth Omnibus Amendment, the Indenture or any other Transaction Document, (C) seeks any determination or ruling that, in the reasonable judgment of the Issuer, would materially and adversely affect the performance by the Issuer of its obligations under this Agreement, the Series 2002-1 Notes, the Indenture or any other Transaction Document or the validity or enforceability of this Agreement, the Series 2002-1 Notes, the Indenture, the Fifth Omnibus Amendment or any other Transaction Document or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect.

(h) Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect, all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by the Issuer in connection with the due execution, delivery and performance by the Issuer of this Agreement, the Series 2002-1 Notes, the Indenture, the Fifth Omnibus Amendment or any other Transaction Document to which it is a party and the consummation by the Issuer of the transactions contemplated by this Agreement, the Series 2002-1 Notes and the other Transaction Documents to which it is a party have been obtained or made and are in full force and effect.

(i) The Issuer is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended;

(j) On and immediately after the Effective Date, the Issuer (after giving effect to the issuance of the Series 2002-1 Notes) will remain Solvent.

(k) No proceeds of the Purchase or any Increase hereunder will be used (i) for a purpose that violates, or would be inconsistent with, Regulation T, U or X promulgated by the

 

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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.

(l) As of the Effective Date and as of each Increase Date, unless otherwise previously disclosed to the Managing Agents, the written information furnished by the Issuer pursuant to or in connection with any Transaction Document or any transaction contemplated herein or therein was, as of the date originally furnished, true and correct in all material respects and not otherwise materially misleading.

SECTION 4.02. Representations and Warranties of the Cartus Persons . Each Originator and the Servicer hereby represents and warrants (as to itself only and not as to the other) as follows:

(a) Such Cartus Person (i) has all necessary corporate power and authority (A) to execute and deliver this Agreement, the Fifth Omnibus Amendment and the other Transaction Documents to which it is a party, and (B) to perform its obligations under this Agreement and the other Transaction Documents to which it is a party (as amended by the Fifth Omnibus Amendment) and (ii) has duly authorized by all necessary action the execution, delivery and performance by it of, and the consummation by it of the transactions provided for in, this Agreement, the Fifth Omnibus Amendment and the other Transaction Documents to which it is a party. Each of this Agreement, the Fifth Omnibus Amendment and the Transaction Documents to which it is a party (as amended by the Fifth Omnibus Amendment) constitute the legal, valid and binding obligations of such Cartus Person enforceable against such Cartus Person in accordance with its terms, except (A) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (B) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(b) The execution, delivery and performance by such Cartus Person of, and the consummation by it of the transactions contemplated by, this Agreement, the Fifth Omnibus Amendment and the other Transaction Documents to which it is a party, and the fulfillment by it of the terms hereof and thereof, will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under (A) its certificate of incorporation or (B) any material indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which such Cartus Person is a party or by which it or any of its respective properties is bound, (ii) result in the creation or imposition of any Lien (other than Permitted Liens) on any of its assets pursuant to the terms of any such material indenture, loan agreement, mortgage, deed of trust, or other material agreement or instrument other than this Agreement and the other Transaction Documents or (iii) conflict with or violate any federal, state, local or foreign law (including without limitation, Environmental Laws) or any decision, decree, order, rule or regulation applicable to such Cartus Person or of any Governmental Authority having jurisdiction over such Cartus Person, which conflict or violation described in this clause (iii), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to such Cartus Person.

 

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(c) (i) There is no action, suit, proceeding or investigation pending or, to the best knowledge of such Cartus Person, threatened, against such Cartus Person before any Governmental Authority and (ii) such Cartus Person is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts the invalidity of this Agreement, the Fifth Omnibus Amendment or any other Transaction Document to which such Cartus Person is a party, (B) seeks to prevent the consummation of any of the transactions contemplated by this Agreement, the Fifth Omnibus Amendment or any other Transaction Document to which such Cartus Person is a party, (C) seeks any determination or ruling that, in the reasonable judgment of such Cartus Person, would materially and adversely affect the performance by such Cartus Person of its obligations under this Agreement or any other Transaction Document to which it is a party or the validity or enforceability of this Agreement, the Fifth Omnibus Amendment or any other Transaction Document to which it is a party or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect with respect to such Cartus Person.

(d) Except where the failure to obtain or make such authorization, consent, order, approval or action could not reasonably be expected to have a Material Adverse Effect with respect to such Cartus Person, all authorizations, consents, orders and approvals of, or other actions by, any Governmental Authority that are required to be obtained by such Cartus Person in connection with the due execution, delivery and performance by such Cartus Person of the Fifth Omnibus Amendment or any other Transaction Document to which it is a party and the consummation by such Cartus Person of the transactions contemplated by this Agreement, the Fifth Omnibus Amendment and the other Transaction Documents to which it is a party have been obtained or made and are in full force and effect.

ARTICLE V

COVENANTS AND INDEMNITIES

SECTION 5.01. Covenants of the Issuer and Servicer . Unless the Managing Agents shall otherwise consent in writing:

(a) Each of the Issuer and the Servicer will perform and observe for the benefit of the Owners each of the covenants and agreements required to be performed or observed by it in the Transaction Documents to which it is a party.

(b) The Servicer hereby covenants and agrees to furnish to each Managing Agent: (i) promptly after the execution thereof, copies of all amendments of and waivers with respect to the Transaction Documents and (ii) copies of all financial and other reports that the Servicer is required to furnish pursuant to Sections 3.07(c), 3.07(d), 3.08 and 3.09 of the Servicing Agreement.

(c) The Issuer hereby covenants and agrees to furnish or cause to be furnished to each Managing Agent:

(i) as soon as available and in any event within 55 days after the end of each of the first three fiscal quarters of each fiscal year of Realogy, copies of the

 

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unaudited consolidated balance sheets of Realogy and its consolidated subsidiaries, the related unaudited statements of cash flow for Realogy and the related unaudited statements of earnings and stockholders’ equity of Realogy in each case for such fiscal quarter and for the period from the beginning of such fiscal year through the end of such fiscal quarter and certified by the chief financial officer or a vice president responsible for financial administration of Realogy, all of the foregoing to be prepared in conformity with GAAP applied consistently throughout the periods reflected therein (subject to normal year-end adjustments and without footnote disclosures);

(ii) as soon as available and in any event within 100 days after the end of each fiscal year of Realogy, copies of the consolidated balance sheet of Realogy and its consolidated subsidiaries as at the end of such fiscal year and the related statements of earnings and cash flows and stockholders’ equity of Realogy and its consolidated subsidiaries for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year and prepared in conformity with GAAP applied consistently throughout the periods reflected therein, certified by independent certified public accountants of nationally recognized standing in the United States of America as shall be selected by Realogy;

(iii) promptly after the filing thereof, and concurrently with the delivery to any creditors of Realogy, copies of all reports on Form 8-K which Realogy files with the Securities and Exchange Commission or any national securities exchange;

(iv) as soon as available and in any event within 55 days after the end of each of the first three fiscal quarters of each fiscal year of Cartus, copies of the unaudited consolidated balance sheets of Cartus and its consolidated subsidiaries and copies of the statements of earnings of Cartus and its consolidated subsidiaries, in each case for such fiscal quarter and for the period from the beginning of such fiscal year through the end of such fiscal quarter and certified by the chief financial officer or controller of Cartus, all of the foregoing to be prepared in accordance with Cartus’s customary management accounting practices as in effect on the date hereof and need not be prepared in conformity with GAAP; and

(v) as soon as available and in any event within 120 days after the end of each fiscal year of Cartus, copies of the unaudited balance sheet and copies of the statements of earnings of Cartus and its consolidated subsidiaries, in each case certified by the chief financial officer or controller of Cartus, all of the foregoing to be prepared in accordance with Cartus’s customary management accounting practices as in effect on the date hereof and need not be prepared in conformity with GAAP;

As long as Realogy is required or permitted to file reports under the Securities Exchange Act of 1934, as amended, a copy of its report on Form 10-K shall satisfy the requirements of Section 5.01(c)(ii) of this Agreement and a copy of its report on Form 10-Q shall satisfy the requirements of Section 5.01(c)(i) of this Agreement. Information required to be delivered pursuant to Section 5.01(c)(i), (ii) and (iii) shall be deemed to have been delivered on the date on which it has been posted on (i) Realogy’s website on the Internet at www.realogy.com or (ii)  sec.gov/edgar/searchedgar/webusers.htm .

 

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(d) The Servicer shall prepare and deliver to each Managing Agent, (i) a copy of each Monthly Originator Report and, if applicable, each Weekly Activity Report, prepared and delivered by the Servicer pursuant to the Servicing Agreement, together with a certificate of a vice president responsible for financial administration of the Servicer to the effect that, to the knowledge of the Servicer, no Amortization Event or event or circumstance which, with the giving of notice or the passage of time or both, would constitute an Amortization Event shall have occurred and be continuing (which certification may be made directly on such Monthly Originator Report or Weekly Activity Report, as applicable) or, if any such event shall have occurred and be continuing, specifying in reasonable detail the nature thereof and the action, if any, taken or proposed to be taken by the Servicer with respect thereto;

(e) The Issuer shall furnish to the Managing Agents:

(i) promptly, and in any event within one (1) Business Day, after the Issuer obtains knowledge of the occurrence of any Amortization Event, or event or circumstance which, with the giving of notice or the passage of time, or both, would constitute an Amortization Event, a written statement of an Authorized Officer of the Issuer describing such event and the action, if any, that such Person proposes to take with respect thereto, in each case in reasonable detail;

(ii) notice of the occurrence of any event or events which have had or would reasonably be expected to have a Material Adverse Effect on the condition or operations, financial or otherwise, of any of Cartus, CRC, the Issuer or the Servicer;

(iii) copies of each report (including, without limitation, each Monthly Originator Report), notice, opinion of counsel, officer’s certificate or financial statement delivered or required to be delivered by the Issuer to any Person under the Transaction Documents, at the time the Issuer delivers or is required to deliver the same thereunder, and

(iv) promptly upon request by any Managing Agent, such other information, documents, records or reports with respect to the Pledged Assets, the Transaction Documents or the condition or operations, financial or otherwise, of any of Cartus, CRC, the Issuer, the Servicer or Realogy as any Managing Agent may from time to time reasonably request.

(f) The Servicer shall furnish to the Managing Agents:

(i) promptly, and in any event within one (1) Business Day, after the Servicer obtains knowledge of the occurrence of any Amortization Event, or event or circumstance which, with the giving of notice or the passage of time, or both, would constitute an Amortization Event, a written statement of an Authorized Officer of the Servicer describing such event and the action, if any, that the Servicer proposes to take with respect thereto, in each case in reasonable detail;

(ii) notice of the occurrence of any event or events which have had or would reasonably be expected to have a material adverse effect on the condition or operations, financial or otherwise, of the Servicer;

 

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(iii) copies of each report (including, without limitation, each Monthly Originator Report), notice, opinion of counsel, officer’s certificate or financial statement delivered or required to be delivered by the Servicer to any Person under the Transaction Documents, at the time the Servicer delivers or is required to deliver the same thereunder, and

(iv) promptly upon request by any Managing Agent, such other information, documents, records or reports with respect to the Pledged Assets, the Transaction Documents or the condition or operations, financial or otherwise, of any of the Servicer or Realogy as any Managing Agent may from time to time reasonably request.

(g) Upon reasonable prior notice and during regular business hours, the Servicer will permit Protiviti or other independent certified public accountants selected by the Administrative Agent and which have agreed to follow the scope of an audit approved by the Required Managing Agents, (i) to examine and make copies of and abstracts from, and to conduct accounting reviews of, all records, files, books of account, data bases and information in the possession or under the control of the Servicer relating to the Receivables and the other Pledged Assets and (ii) to visit the offices and properties of the Servicer for the purpose of examining any materials described in the preceding clause (i) and to discuss matters relating to the Receivables and the other Pledged Assets or the performance by the Servicer of its obligations under any Transaction Document to which it is a party with any Authorized Officers of the Servicer having knowledge of such matters; provided , however , that (A) such audits will occur no more frequently than twice per year unless a Servicer Default has occurred and is continuing and (B) after the occurrence of a Servicer Default, the Administrative Agent and each Managing Agent or their respective agents and representatives shall be permitted upon reasonable prior notice and during regular business hours to conduct such audits at any time without any limitation as to number. The Servicer will pay all costs and expenses reasonably incurred by such Managing Agent in connection with (i) the first audit in any calendar year conducted pursuant to this Section 5.01(g) and (ii) if a Servicer Default has occurred and is continuing, each other audit conducted by or on behalf of the Administrative Agent or any Managing Agent pursuant to this Section 5.01(g).

(h) The Issuer shall instruct the Trustee, upon redemption, or payment in full, of all amounts payable in respect of the Series 2002-1 Notes pursuant to the terms thereof and of the Indenture, to furnish to the Managing Agents a notice of such redemption.

(i) The Issuer shall provide or cause to be provided to each Managing Agent a complete set of the Transaction Documents and an executed original copy of each document executed in connection therewith within sixty (60) days after the Effective Date.

(j) CRC shall hold, either directly or indirectly 100% of the membership interests of the Issuer while the Series 2002-1 Notes are outstanding. CRC shall not sell, pledge or otherwise transfer such membership interests without the prior written consent of the Required Managing Agents.

 

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(k) Cartus shall hold, either directly or indirectly, 100% of the common stock of CRC while the Series 2002-1 Notes are outstanding. Cartus shall not sell, pledge or otherwise transfer such common stock without the prior written consent of the Required Managing Agents unless the debt secured by such pledge was incurred in compliance with Section 7.3(j) of the Purchase Agreement and the terms of such pledge include provisions to the effect that (i) the pledgee has no right, title or interest in or to any assets of CRC other than its rights to receive, as assignee of Cartus, any dividends or other distributions properly declared and paid or made in respect of CRC’s common stock and (ii) the pledgee agrees, that it will not: (x) until after the payment in full of the Notes, exercise any rights it may have under such pledge to foreclose on such stock or to exercise voting rights with respect thereto, including any rights to nominate, elect or remove the independent members of the board of directors or managers of CRC or rights to amend its organizational documents and (y) until one year and one day have elapsed since the payment in full of the Notes, exercise any voting rights it may have to institute or volunteer bankruptcy proceeding on behalf of CRC.

(l) Except as provided in the Fifth Omnibus Amendment, neither the Issuer nor the Servicer shall consolidate with or merge with or into any other Person or convey, transfer or sell all or substantially all of its properties or assets to any other Person without the prior written consent of the Required Managing Agents.

(m) Until the Outstanding Amount has been reduced to zero, if the Indenture requires the Issuer to obtain the prior consent of the Purchaser to any amendment to the Transaction Documents or the taking of (or refraining from taking) any other action, the Issuer shall not take such action (or refrain from taking such action) unless it has received the prior written consent of the Required Managing Agents.

SECTION 5.02. Indemnification . The Issuer shall indemnify and hold harmless each Owner, the Administrative Agent, each Managing Agent and their respective officers, directors, employees, agents and representatives (each an “ Indemnified Party ” and collectively, the “ Indemnified Parties ”), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including legal and accounting fees), or disbursements of any kind or nature whatsoever (collectively, “ Losses ”) as incurred (payable promptly upon written request), for or on account of or arising from or in connection with or otherwise with respect to any breach of any representation or warranty of the Issuer in this Agreement or in any certificate delivered pursuant hereto, or for any failure to comply with any Transaction Document, or failure to maintain a first priority security interest in the Pledged Assets, excluding however (i) Losses to the extent resulting from the gross negligence or willful misconduct of the Indemnified Party and (ii) recourse for Receivables which are uncollectible solely due to the Obligor’s financial inability to pay. Such Losses shall be payable in accordance with Section 7.11 of this Agreement.

ARTICLE VI

THE ADMINISTRATIVE AGENT AND THE MANAGING AGENTS

SECTION 6.01. Authorization and Action . Each Purchaser hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise

 

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such powers under this Agreement and any related agreement, instrument and document as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent reserves the right, in its sole discretion, but subject to such restrictions as may be set forth with respect to the Purchasers in this Agreement or any related agreement, instrument or document, to exercise any rights and remedies under this Agreement or any related agreement, instrument or document executed and delivered pursuant hereto, or pursuant to applicable law, and also to agree to any amendment, modification or waiver of this Agreement or any related agreement, instrument and document, in each instance, on behalf of the Purchasers. Notwithstanding anything herein or elsewhere to the contrary, the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. The appointment and authority of the Administrative Agent hereunder shall terminate on the date after the Amortization Period has commenced on which the Outstanding Amount has been reduced to zero and all other amounts owed by the Issuer under this Agreement have been paid in full.

SECTION 6.02. Administrative Agent’s Reliance, Etc . Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to any Purchaser for any action taken or omitted to be taken by it or them as Administrative Agent under or in connection with this Agreement or any related agreement, instrument or document except for its or their own gross negligence or willful misconduct. Without limiting the foregoing, the Administrative Agent: (a) may consult with legal counsel (including counsel for the Issuer, the Servicer, any Managing Agent or the Trustee), independent public accountants and other experts selected by it and shall not be liable to the Purchaser for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to the Purchasers and shall not be responsible to the Purchasers for any statements, warranties or representations made in or in connection with this Agreement or in connection with any related agreement, instrument or document; (c) shall not have any duty to the Purchasers to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any related agreement, instrument or document on the part of the Issuer, the Trustee, the Servicer or any Purchaser or Managing Agent or to inspect the property (including the books and records) of the Issuer, the Trustee, the Servicer, any Purchaser or any Managing Agent; (d) shall not be responsible to the Purchasers for the due execution, legality, validity, enforceability, genuineness or sufficiency of value of this Agreement or any related agreement, instrument or document; (e) shall not be deemed to be acting as any Purchaser’s trustee or otherwise in a fiduciary capacity hereunder or in connection with any related agreement, instrument or document; and (f) shall incur no liability to any Purchaser under or in respect of this Agreement or any related agreement, instrument or document by acting upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by telex or facsimile) believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 6.03. Administrative Agent and Affiliates . To the extent that the Administrative Agent or any of its Affiliates shall become a Noteholder, the Administrative Agent or such Affiliate, in such capacity, shall have the same rights and powers under this Agreement and each related agreement, instrument and document as would any Purchaser and may exercise the same as though it were not the Administrative Agent, or such Affiliate, as the

 

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case may be. The Administrative Agent and its Affiliates may generally engage in any kind of business with the Issuer, the Servicer, the Managing Agents, the Trustee, Cartus, CRC, Realogy or any of their respective Affiliates and any Person who may do business with or own securities of any of the foregoing, all as if it were not the Administrative Agent or such Affiliate, as the case may be, and without any duty to account therefor to any Purchaser.

SECTION 6.04. Purchase Decision . Each Purchaser acknowledges that it has, independently and without reliance upon the Administrative Agent or any of its Affiliates, and based on such documents and information as it has deemed appropriate, made its own evaluation and decision to enter into this Agreement and to purchase the Series 2002-1 Notes. Each Purchaser also acknowledges that it will, independently and without reliance upon the Administrative Agent or any of its Affiliates, and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under this Agreement or any related agreement, instrument or other document.

SECTION 6.05. Indemnification of the Administrative Agent . The Committed Purchasers severally agree to indemnify the Administrative Agent, ratably in accordance with their respective Committed Percentages from time to time, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any related agreement, instrument or document or any action taken or omitted by the Administrative Agent under this Agreement, or any related agreement, instrument or document; provided , however , that no Committed Purchaser shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Committed Purchasers severally (to the extent the Administrative Agent is not reimbursed by the Issuer or the Servicer for such expenses) agree to reimburse the Administrative Agent, ratably in accordance with their Committed Percentages from time to time, promptly upon demand, for any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent at the request or at the direction of the Required Managing Agents in connection with the administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any related agreement, instrument or document.

SECTION 6.06. Successor Administrative Agent . The Administrative Agent may resign at any time by giving thirty (30) days’ notice thereof to the Managing Agents, the Issuer, the Servicer and the Trustee and such resignation shall become effective upon the appointment and acceptance of a successor Administrative Agent as described below. Upon any such resignation, the Managing Agents shall have the right to appoint a successor Administrative Agent approved by the Issuer and the Servicer (which approval will not be unreasonably withheld, delayed or conditioned). If no successor Administrative Agent shall have been so appointed by the Managing Agents and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Managing Agents, appoint a successor Administrative Agent approved by the Issuer and the Servicer (which approval will not be

 

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unreasonably withheld, delayed or conditioned), which successor Administrative Agent shall be (a) either (i) a commercial bank having a combined capital and surplus of at least $250,000,000 or (ii) an Affiliate of such bank and (b) experienced in the types of transactions contemplated by this Agreement. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article VI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder.

SECTION 6.07. Authorization and Action of Managing Agents . Each Conduit Purchaser and each Committed Purchaser of each Purchaser Group hereby appoints and authorizes the Managing Agent with respect to such Purchaser Group to take such action as agent on its behalf and to exercise such powers under this Agreement, the Indenture and the other related documents as are delegated to the Managing Agents by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. In furtherance, and without limiting the generality, of the foregoing, each Conduit Purchaser and each Committed Purchaser hereby appoints the related Managing Agent as its agent to execute and deliver all further instruments and documents, and agrees to take all further action that the related Managing Agent may deem necessary or appropriate or that a Conduit Purchaser or a Committed Purchaser may reasonably request in order to perfect, protect or more fully evidence the interests of such Purchasers hereunder, or to enable any of them to exercise or enforce any of their respective rights hereunder or under the related Series 2002-1 Notes and such other instruments or notices, as may be necessary or appropriate for the purposes stated hereinabove.

SECTION 6.08. Successor Managing Agent . A Managing Agent may resign at any time, effective upon the appointment and acceptance of a successor Managing Agent as provided below, by giving written notice thereof to each other Managing Agent, each related Conduit Purchaser, each related Committed Purchaser, the Issuer and the Servicer. Upon any such resignation, the members of the related Purchaser Group acting jointly shall appoint a successor Managing Agent. Upon the acceptance of any appointment as Managing Agent hereunder by a successor Managing Agent, such successor Managing Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Managing Agent, and the retiring Managing Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Managing Agent’s resignation hereunder as Managing Agent, the provisions of this Article VI shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Managing Agent under this Agreement. The successor Managing Agent shall promptly notify the Issuer, the Servicer and the Trustee of its appointment hereunder.

SECTION 6.09. Payments by a Managing Agent . Unless specifically allocated to a Conduit Purchaser or a Committed Purchaser pursuant to the terms of this Agreement, all amounts received by a Managing Agent on behalf of the related Purchasers shall be paid by such Managing Agent to such Purchasers (at the account specified in writing to such Managing Agent) on the Business Day received by such Managing Agent, unless such amounts are received after 2:00 p.m. (New York time) on such Business Day, in which case such

 

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Managing Agent shall use its reasonable efforts to pay such amounts, on such Business Day, but, in any event, shall pay such amounts not later than 11:00 a.m. (New York time) the following Business Day.

ARTICLE VII

MISCELLANEOUS

SECTION 7.01. Amendments, Waivers and Consents, Etc . No amendment to or waiver of any provision of this Agreement nor consent to any departure by the Issuer therefrom, shall in any event be effective unless the same shall be in writing and signed by (a) the Issuer, Cartus, CRC, and the Required Managing Agents (with respect to an amendment) or (b) the Required Managing Agents (with respect to a waiver or consent by them) or the Issuer, Cartus, or CRC (with respect to a waiver or consent by it), as the case may be, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; in each case of (a) and (b), provided , that without the prior written consent of each affected Purchaser, no amendment or waiver shall: (i) reduce the amount of principal or Monthly Interest that is payable on account of the Series 2002-1 Notes or delay any scheduled date for payment thereof; (ii) increase the Stated Amount of the Series 2002-1 Notes or the Commitment of any Committed Purchaser hereunder; (iii) modify any yield protection or indemnity provision which expressly inures to the benefit of the Owners or its assignees or participants; (iv) modify the calculation of the Required Enhancement Amount or change (directly or indirectly) any definitions used in the calculation thereof, or any defined term used in such definitions or employed in the calculation of such amounts; (v) reduce the Monthly Program Fees or delay any scheduled date for payment thereof; (vi) release the Performance Guarantor for obligations under the Performance Guaranty; or (vii) modify the provisions of this Section 7.01. This Agreement and the other agreements, instruments and documents executed and delivered pursuant hereto contain a final and complete integration of all prior expressions by the parties hereto and thereto with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties hereto and thereto with respect to the subject matter hereof and thereof, superseding all prior oral or written understandings.

SECTION 7.02. Notices . All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including telex communication and communication by facsimile copy) and mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth under its name on Schedule III or at such other address as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, upon receipt, or in the case of delivery by mail, five (5) days after being deposited in the United States mails, or, in the case of notice by telex, when telexed against receipt of answer back, or in the case of notice by facsimile copy, when verbal communication of receipt is obtained.

SECTION 7.03. No Waiver; Remedies; Rights of Purchasers, Etc . No failure on the part of the Administrative Agent, the Purchasers, the Managing Agents, the Issuer, CRC, or Cartus to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

 

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SECTION 7.04. Binding Effect; Assignability .

(a) This Agreement shall be binding upon and inure to the benefit of, each of the Issuer, the Administrative Agent, the Purchasers, the Managing Agents and their respective successors and permitted assigns, subject to the further provisions of this Section 7.04.

(b) The Issuer shall not assign any of its rights and obligations hereunder or any interest herein without the prior written consent of the Managing Agents.

(c) Subject to the terms and provisions of the Indenture, a Purchaser may, assign or sell undivided participation interests of its rights and obligations hereunder or under a Series 2002-1 Note or any interest herein or in the Series 2002-1 Notes to any Person (including, without limitation, a sale by any Conduit Purchaser to its related Liquidity Providers or Program Support Providers). Any assignment or sale of a participation interest by a Purchaser to a Person (other than a Liquidity Provider or Program Support Provider) pursuant to this Section 7.04(c) shall be effected pursuant to an Assignment and Acceptance Agreement in substantially the form of Exhibit A hereto. Notwithstanding the foregoing, a Purchaser shall, so long as no Amortization Event has occurred and is continuing, obtain the consent of the Issuer (such consent not to be unreasonably withheld, delayed or conditioned) in connection with an assignment of its obligations hereunder and under a Series 2002-1 Note to any Person other than a sale by a Conduit Purchaser to (i) another commercial paper conduit managed by the related Managing Agent or (ii) any Liquidity Provider or Program Support Provider.

(d) The Administrative Agent may assign at any time its rights and obligations hereunder to an Affiliate without the consent of the Purchasers or the Issuer and such assignment shall be effective upon written notice thereof to the Purchasers, the Issuer, the Servicer and the Trustee.

(e) This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until the date on which all Commitments to fund hereunder have been terminated and the Outstanding Amount has been paid in full; provided , however , that the rights and remedies with respect to any breach of any representation and warranty made by the Issuer pursuant to Article V and, the rights and remedies described in Sections 2.06, 2.07, 2.08, 2.09, 5.02, 7.08, 7.09, 7.11 and 7.12 shall be continuing and shall survive any termination of this Agreement.

SECTION 7.05. Securities Laws; Series 2002-1 Note as Evidence of Indebtedness .

(a) Each Purchaser hereby acknowledges and agrees and represents and warrants that the Series 2002-1 Note purchased by it will be acquired for investment only and not with a view to any public distribution thereof nor with any intent of conducting any initial resale thereof under Rule 144A or analogous private offering exemption, and that such Purchaser will not offer to sell or otherwise dispose of a Series 2002-1 Note so acquired by it (or any interest therein) in violation of any of the registration requirements of the Securities Act or any

 

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applicable state or other securities laws. Each Purchaser also acknowledges the restrictions on ownership and transfers set forth in Section 2.05 of the Indenture and agrees to all terms thereof. Without limiting the foregoing, each Purchaser hereby makes the representations and warranties and agrees to the covenants required of Noteholders under Section 2.05 of the Indenture.

(b) Each Purchaser hereby further represents, warrants and agrees that it is a “qualified institutional buyer” as defined in Rule 144A of the Securities Act (a “QIB”) and that it will not transfer the Series 2002-1 Notes or any interest therein to any Person other than another QIB.

(c) It is the intent of the Issuer and each Purchaser that, for federal, state, foreign and local income and franchise tax purposes, the Series 2002-1 Notes will be indebtedness of the Issuer secured by the Pledged Assets. The Issuer and each Purchaser agree to treat the Series 2002-1 Notes for purposes of all federal, state and local income and franchise taxes and for any other tax imposed on or measured by income as indebtedness of the Issuer.

SECTION 7.06. SUBMISSION TO JURISDICTION . EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK, OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY (a) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (c) IRREVOCABLY APPOINTS CORPORATION SERVICE COMPANY (THE “PROCESS AGENT”), WITH AN OFFICE ON THE DATE HEREOF AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, UNITED STATES OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT’S ABOVE ADDRESS, AND EACH PARTY HERETO HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH PARTY HERETO AGREES TO ENTER INTO ANY AGREEMENT RELATING TO SUCH APPOINTMENT THAT THE PROCESS AGENT MAY CUSTOMARILY REQUIRE AND TO PAY THE PROCESS AGENT’S CUSTOMARY FEES UPON DEMAND. AS AN ALTERNATIVE METHOD OF SERVICE, EACH PARTY HERETO ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS SPECIFIED PURSUANT TO SECTION 7.02. NOTHING IN THIS SECTION 7.06 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTY HERETO OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.

 

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SECTION 7.07. GOVERNING LAW; WAIVER OF JURY TRIAL . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AMONG THE ISSUER AND ANY PURCHASER OR THE ADMINISTRATIVE AGENT ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

SECTION 7.08. Costs and Expenses . The Issuer agrees to pay on demand to (i) the Administrative Agent, each Managing Agent and each Purchaser all reasonable costs and expenses in connection with the preparation, execution, delivery and administration (including rating agency fees, costs and expenses and all out-of-pocket costs and expenses incurred in connection with due diligence) of this Agreement, the Indenture, the Liquidity Provider Agreements and the other documents to be delivered by the Issuer or each Purchaser in connection herewith and therewith, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for each of the Administrative Agent, each Purchaser and Liquidity Provider with respect thereto and with respect to advising each of the Administrative Agent, each Managing Agent and each Purchaser, as to its respective rights and remedies under this Agreement and the other documents delivered hereunder or in connection herewith and (ii) to the Administrative Agent, each Managing Agent and each Purchaser, all reasonable costs and expenses, if any (including reasonable counsel fees and expenses), in connection with the enforcement of this Agreement, and the other documents delivered hereunder or in connection herewith. Such costs and expenses shall be payable in accordance with Section 7.11 of this Agreement.

SECTION 7.09. No Proceedings .

(a) The Issuer, the Servicer, the Administrative Agent, each Managing Agent and each Purchaser each hereby agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any federal or state bankruptcy or similar law for one year and a day after the latest maturing Commercial Paper Note issued by such Conduit Purchaser has been paid.

(b) Each Purchaser, each Managing Agent and the Administrative Agent each hereby agrees that it will not institute against, or join any other Person in instituting against, the Issuer or CRC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any federal or state bankruptcy or similar law for one year and a day after the latest maturing Note issued by the Issuer has been paid.

SECTION 7.10. Execution in Counterparts; Severability . This Agreement may be executed in any number of counterparts and by different parties hereto in separate

 

33


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. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or the validity, legality and enforceability of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

SECTION 7.11. Limited Recourse Obligations .

(a) Notwithstanding any provision in any other section of this Agreement to the contrary, the Purchasers, the Managing Agents and the Administrative Agent each hereby acknowledge and agree that the Issuer’s payment obligations under Sections 2.06, 2.07, 2.08, 2.09, 5.02 and 7.08 shall be without recourse to the Servicer or the Trustee (or any Affiliate, officer, director, employee or agent of any of them) and shall be limited to the extent of funds available for payment of the foregoing amounts under Section 9.04 of the Indenture.

(b) Anything contained in this Agreement or any other Transaction Document to the contrary notwithstanding, all payments to be made by any Conduit Purchaser under this Agreement shall be made by such Conduit Purchaser solely from available cash, which shall be limited to the (a) proceeds of collections and other amounts payable by or on behalf of the Issuer to such Conduit Purchaser in connection with any of the Transaction Documents and (b) proceeds of the issuance of Commercial Paper Notes (collectively “ Available Funds ”). No recourse shall be had against any Conduit Purchaser personally or against any incorporator, shareholder, officer, director or employee of such Conduit Purchaser with respect to any of the covenants, agreements, representations or warranties of such Conduit Purchaser contained in this Agreement, or any other Transaction Document, it being understood that such covenants, representations or warranties are enforceable only to the extent of Available Funds. The Administrative Agent, each Managing Agent and each Committed Purchaser hereby acknowledge that, pursuant to the terms and conditions of this Agreement and the other Transaction Documents, no Conduit Purchaser shall be required to make any payments to the Administrative Agent any Managing Agent or any Committed Purchaser, either as compensation for services rendered, reimbursement for out of pocket expenses, indemnification, or otherwise, except to the extent such Conduit Purchaser has Available Funds to make such payment.

SECTION 7.12. Confidentiality . Each Purchaser, Managing Agent and the Administrative Agent agree to maintain the confidentiality of any and all information regarding Realogy, Cartus, CRC, and the Issuer obtained in accordance with the terms of this Agreement or provided to the Managing Agents and the Administrative Agent in contemplation of entering into this Agreement and that is, in either such case, not publicly available (including, without limitation, financial and operational information and reports concerning the above-described parties and/or the Receivables); provided, however, that any Purchaser, Managing Agent and/or the Administrative Agent may reveal such information (a) (i) as necessary or appropriate in connection with the administration or enforcement of this Agreement or such Purchaser’s funding of its purchase of a Series 2002-1 Note hereunder and (ii) as necessary or appropriate in connection with obtaining any Acknowledgement Letter under Section 7.3(j) of the Purchase Agreement from other creditors of Cartus (b) as required by law, government regulation, court proceeding or subpoena, (c) to applicable Rating Agencies, any Liquidity Provider, Program

 

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Support Provider, participant, assignee or potential Liquidity Provider, Program Support Provider, participant or assignee or (d) to legal counsel and auditors of such Purchaser and the Administrative Agent. Notwithstanding anything herein to the contrary, none of Realogy, Cartus, CRC or the Issuer shall have any obligation to disclose to any Purchaser, Managing Agent or the Administrative Agent or their assignees any personal and confidential information relating to a Transferred Employee. Anything herein to the contrary notwithstanding, each party hereto and any successor or assign of any of the foregoing (and each employee, representative or other agent of any of the foregoing) may disclose to any and all Persons, without limitation of any kind, the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are or have been provided to any of the foregoing relating to such tax treatment or tax structure, and it is hereby confirmed that each of the foregoing have been so authorized since the commencement of discussions regarding the transactions.

 

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IN WITNESS WHEREOF, the parties have caused this Note Purchase Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

KENOSIA FUNDING, LLC,

as Issuer

By:  

/s/ Eric Barnes

Name:   Eric Barnes
Title:   SVP, CFO

 

CARTUS CORPORATION,

as Originator and Servicer

By:  

/s/ Eric Barnes

Name:   Eric Barnes
Title:   SVP, CFO

 

CARTUS RELOCATION CORPORATION,

as Originator

By:  

/s/ Eric Barnes

Name:   Eric Barnes
Title:   SVP, CFO

 

CALYON NEW YORK BRANCH,

as Administrative Agent, Lead Arranger,

Committed Purchaser, and Managing Agent

By:  

/s/ Konstantina Kourmpetis

Name:   Konstantina Kourmpetis
Title:   Managing Director

 

By:  

/s/ Richard McBride

Name:   Richard McBride
Title:   Director

[Signature Page to Note Purchase Agreement]


ATLANTIC ASSET SECURITIZATION LLC,

as a Conduit Purchaser

By:  

/s/ Konstantina Kourmpetis

Name:   Konstantina Kourmpetis
Title:   Managing Director

 

By:  

/s/ Richard McBride

Name:   Richard McBride
Title:   Director

[Signature Page to Note Purchase Agreement]


SCHEDULE I

CONDITIONS PRECEDENT DOCUMENTS

Attached


4/4/07

$175,000,000

Kenosia Funding LLC,

Secured Variable Funding Notes, Series 2002-1

BTM-Calyon Assignment and Amendments

April 10, 2007

 

 

CLOSING INDEX

 

 

Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Indenture. All items listed in bold, italic font are to be delivered by the Issuer or its counsel and all items listed in italic, underlined font are to be delivered by Richards, Layton & Finger (“ RLF ”) . All items listed in SMALL CAPS ARE TO BE DELIVERED BY T HE B ANK OF N EW Y ORK .

Principal Documents

1. Fifth Omnibus Amendment, Agreement and Consent (the “Omnibus Amendment” ), dated as of April 10, 2007, and concerning the following documents:

1. Purchase Agreement , dated as of March 7, 2002 (the “ Purchase Agreement ”), between Cartus Corporation (“ Cartus ”) as Originator and Cartus Relocation Corporation (“ CRC ”) as Buyer.

2. Receivables Purchase Agreement , dated as of March 7, 2002 (the “ Receivables Purchase Agreement ”) between CRC as Seller and Kenosia Funding, LLC (the “ Issuer ”) as Buyer.

3. Fee Receivables Purchase Agreement , dated as of March 7, 2002 (the “ Fee Receivables Purchase Agreement ”) between Cartus as Seller and the Issuer as Buyer.

4. Servicing Agreement , dated as of March 7, 2002 (the “ Servicing Agreement ”) among Cartus, as Originator and Servicer, CFC as Originator, CRC as Originator, the Issuer and The Bank of New York (“ BNY ”) as Trustee.

5. Indenture , dated as of March 7, 2002 (the “ Indenture ”) between the Issuer and BNY as Trustee and as Paying Agent, Authentication Agent and Transfer Agent and Registrar.

2. Amended and Restated Guaranty from Realogy Corporation (“ Realogy ”),.


3. Assignment and Acceptance Agreement , dated as of April 10, 2007 (the “ Assignment Agreement ” among The Bank of Tokyo Mitsubishi, UFJ, Ltd. (“ BTM ”) and Gotham Funding Corporation (“ Gotham ”) as “Assignors” and Calyon New York Branch (“ Calyon ”) and Atlantic Asset Securitization Corp. (“ Atlantic ”) as Assignees.

4. Amended and Restated Note Purchase Agreement relating to the Series 2002-1 Notes, dated April 10, 2007 (the “ Note Purchase Agreemen t ”) among the Issuer, Cartus, Atlantic, Financial Institutions and Managing Agents from time to time party thereto, and Calyon as Administrative Agent.

 

SCHEDULES    I    Conditions Precedent Documents
   II    Purchaser Group Limits / Commitments
   III    Location of Certain Offices; Organizational and Federal Employer Identification Numbers
EXHIBITS    A    Form of Assignment and Acceptance
   B    Form of Increase Request
   C    Form of Joinder Agreement
   D    Form of Stated Amount Increase Notice

5. Variable Funding Note

(a) Calyon as Managing Agent on behalf of it and Atlantic

6. Subordinated Note made by the Issuer and payable to the order of Cartus.

Kenosia Funding LLC

7. Certified copy of Amended Certificate of Formation from the Secretary of State of the State of Delaware.

8. Good Standing Certificate from the State of Delaware and qualification to do business in Connecticut.

9. Secretary’s Certificate of the Issuer relating to various matters including: (a) Limited Liability Company Agreement and Certificate of Formation of the Issuer; (b) authorizing resolutions of the Board of Directors of the Issuer; and (c) incumbency and specimen signatures of authorized signatories of the Issuer.

10. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by two Vice Presidents of the Issuer, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

11. Officer’s Certificate pursuant to the Indenture, certifying that all conditions precedent provided in the Indenture with respect to the Fifth Omnibus Amendment and the authentication and delivery of the new Note have been complied with.

 

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12. Order to Authenticate and Deliver the Note.

Cartus Corporation

13. Certified copy of Amended Certificate of Incorporation from the Secretary of State of the State of Delaware.

14. Good Standing Certificate from the State of Delaware and qualification to do business in Connecticut.

15. Secretary’s Certificate of Cartus, relating to various matters including: (a) Certificate of Incorporation; (b) Bylaws; (c) authorizing resolutions of the Board of Directors of Cartus; and (d) incumbency and specimen signatures of authorized signatories of Cartus.

16. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by any two of the Chairman of the Board of Directors, the President, any Vice President and the Treasurer of Cartus, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

Cartus Relocation Corporation

17. Certified copy of Amended Certificate of Incorporation from the Secretary of State of the State of Delaware.

18. Good Standing Certificate from the State of Delaware and qualification to do business in Connecticut.

19. Secretary’s Certificate of CRC, relating to various matters including: (a) Certificate of Incorporation; (b) Bylaws; (c) authorizing resolutions of the Board of Directors of CRC; and (d) incumbency and specimen signatures of authorized signatories of CRC.

20. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by any two of the Chairman of the Board of Directors, the President, any Vice President and the Treasurer of CRC, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

Realogy

21. Certified copy of Amended and Restated Certificate of Incorporation from the Secretary of State of the State of Delaware.

22. Good Standing Certificate from the State of Delaware.

23. Secretary’s Certificate of Realogy relating to various matters including: (a) Certificate of Incorporation; (b) Bylaws; (c) authorizing resolutions of the Board of Directors of Realogy; and (d) incumbency and specimen signatures of authorized signatories of Realogy.

 

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24. Officer’s Certificate required pursuant to Section 3.01 of the Note Purchase Agreement, signed by any two of the Chairman of the Board of Directors, the President, any Senior Vice President and the Treasurer of Realogy, relating to (i) truthfulness of representations and warranties, (ii) compliance with all conditions precedent, (iii) no material adverse change, and (iv) no untrue statement of a material nature or omission of a material fact.

Opinions

25. Opinion of Bruce Perlman, general counsel to Cartus, the Issuer, CRC and Kenosia.

26. Opinion of Seth Truwit, interim general counsel to Realogy.

27. Opinion of Orrick, Herrington & Sutcliffe LLP (“ Orrick” ), special counsel to Cartus, CRC and the Issuer, regarding enforceability and certain corporate matters.

28. Reliance Letter from Orrick, special counsel to Cartus, CRC and the Issuer, regarding certain prior opinions on UCC creation issues, enforceability, tax and other corporate matters.

29. Reliance Letter from Richards Layton & Finger, P.A., special Delaware counsel to Cartus, CRC and the Issuer, regarding UCC perfection issues.

30. Opinion of Orrick, special counsel to Cartus, CRC and the Issuer, regarding substantive non-consolidation matters with respect to Cartus, CRC and the Issuer.

31. Opinion of Orrick, special counsel to Cartus, regarding “true sale” matters with respect to the transfer of receivables by Cartus to CRC.

32. Opinion of Orrick, special counsel to Cartus, regarding “true sale” matters with respect to the transfer of receivables by Cartus to the Issuer

33. Opinion of Orrick, special counsel to Cartus, CRC and the Issuer, regarding certain bankruptcy issues with respect to Home Sale Proceeds.

34. R ELIANCE L ETTER FROM T HACHER , P ROFITT &W OOD , C OUNSEL TO BNY, WITH RESPECT TO CERTAIN MATTERS RELATING TO BNY AS P AYING A GENT , A UTHENTICATING A GENT , T RANSFER A GENT AND R EGISTRAR .

Miscellaneous

35. Return of Notes from BTM for Cancellation.

36. Administrative Agent Fee Letter.

37. Fee Letter.

38. Issuer’s Form W-9.

Liquidity Documents

39. Liquidity Asset Purchase Agreement

 

4


SCHEDULE II

PURCHASER GROUP INFORMATION

 

Managing Agent

   Conduit Purchaser(s)    Committed Purchaser(s)    Commitment(s)    Purchaser Group Limit
Calyon New York Branch    Atlantic Asset
Securitization LLC
   Calyon New York Branch    $ 175,000,000    $ 175,000,000


SCHEDULE III

NOTICE INFORMATION

Kenosia Funding, LLC

40 Apple Ridge Road, Suite 4C68

Danbury, Connecticut 06810

Attention: Controller

Telephone: 203-205-3054

Facsimile: 203-205-1335

Cartus Relocation Corporation

40 Apple Ridge Road, Suite 4C68

Danbury, Connecticut 06810

Attention: Controller

Telephone: 203-205-1200

Facsimile: 203-205-1335

Cartus Corporation

40 Apple Ridge Road

Danbury, Connecticut 06810

Attention: Controller

Telephone: 203-205-3400

Facsimile: 203-205-3704

Calyon New York Branch

1301 Avenue of the Americas

New York, New York 10019

Attention: Matthew Croghan

Telephone: 212-261-7819

Facsimile: 212-261-3448

Atlantic Asset Securitization LLC

c/o Lord Securities Corporation

48 Wall Street

New York, New York 10005

Attention: Benjamin B. Abedine

Telephone: 212-346-9019

Facsimile: 212-346-9012


EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE

[Date]

ASSIGNMENT AND ACCEPTANCE, dated                                                   (this “ Assignment and Acceptance ”), among                                                    (“ Assignor ”) and                                                   (“ Assignee ”).

Reference is made to the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 (the “Note Purchase Agreement”), among Kenosia Funding, LLC, as Issuer, Cartus Corporation, as Originator and Servicer, Cartus Relocation Corporation, as Originator, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent and Lead Arranger. Capitalized terms defined in the Note Purchase Agreement are used herein with the same meanings.

1. (a) Assignor hereby sells and assigns, without recourse to Assignee, and Assignee hereby purchases and assumes, without recourse to, or representation or warranty of any kind (except as set forth below) from Assignor, effective as of the Effective Date (as defined below), a          % interest (the “ Assigned Interest ”) in all of Assignor’s rights and obligations under the Note Purchase Agreement and under any other “Transaction Documents” (as defined below), including, without limitation, the Series 2002-1 Note, together with the rights of Assignor to payment in respect of outstanding principal and accrued and unpaid interest relating to such Assigned Interest.

(b) From and after the Effective Date, (i) Assignee shall be a party to and be bound by the provisions of the Note Purchase Agreement and, to the extent of the interests assigned pursuant to this Assignment and Acceptance, have the rights and obligations of a Committed Purchaser thereunder and under the (x) Indenture (the Note Purchase Agreement, the Indenture, and related documents, collectively, the “ Transaction Documents ”), and (ii) to the extent of the interests assigned by this Assignment and Acceptance, Assignor shall relinquish its rights and be released from its obligations under the Note Purchase Agreement and the other Transaction Documents.

2. Assignor hereby represents and warrants that the Assigned Interest to be sold hereby is owned by Assignor free and clear of any liens, claims or encumbrances created by Assignor. Except as otherwise set forth in the foregoing sentence, or as otherwise agreed in writing by Assignor, Assignor makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Note Purchase Agreement, the Series 2002-1 Notes or any other Transaction Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Note Purchase Agreement, the Series 2002-1 Notes or any other Transaction Document or the condition or value of any Pledged Assets or the creation, perfection or priority of any interest therein created under the Transaction Documents, or (ii) the business condition (financial or otherwise), operations, properties or prospects of the Issuer, the Servicer or any Affiliate of either the Issuer or the Servicer or the performance or observance by any party of any of its obligations under any Transaction Document.

4. Assignee hereby (i) confirms that it has received a copy of the Note Purchase Agreement, the Indenture and such other Transaction Documents and other documents and information requested by it, and that it has, independently and without reliance upon the Administrative Agent, Assignor or any other Purchaser, and based on such documentation and information as it has deemed appropriate, made its own decision to enter into this Assignment and Acceptance; (ii) agrees that it shall, independently and without reliance upon the Administrative Agent, Assignor, any Purchaser or any Managing Agent and based on


such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under any of the Transaction Documents; (iii) confirms that it is eligible to be an assignee Committed Purchaser under the terms of the Note Purchase Agreement; (iv) appoints and authorizes each of the Administrative Agent, the Managing Agent, and the Trustee to take such action on its behalf and to exercise such powers and discretion under the Note Purchase Agreement and the other Transaction Documents as are delegated to the Administrative Agent, the Managing Agent, and/or the Trustee by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; (v) agrees that it shall perform in accordance with their terms all of the obligations that by the terms of the Note Purchase Agreement are required to be performed by it as a Committed Purchaser; (vi) specifies as its address for notices, the offices set forth beneath its name on the signature page hereof; [and] (vii) represents and warrants that this Assignment and Acceptance has been duly authorized, executed and delivered by the Assignee pursuant to its corporate powers and constitutes the legal, valid and binding obligation of the Assignee; and (viii) in the event that Assignee is organized under the laws of a jurisdiction other than the United States or a state thereof, represents and warrants that [attached to this Assignment and Acceptance are] [Assignee has previously delivered to each of the Administrative Agent, the Servicer, and the Trustee] the forms and certificates required pursuant to Section 2.08(d) of the Note Purchase Agreement, in each case accurately completed and duly executed, pursuant to which forms and certificates each of the Issuer, the Servicer and the Trustee may make payments to, and deposit funds to or for the account of, the Assignee hereunder and under the other Transaction Documents without any deduction or withholding for or on account of any tax or with such withholding or deduction at a reduced rate.]

5. The effective date for this Assignment and Acceptance shall be the later of:

(i) the date on which the Agent accepts this Assignment and Acceptance, and

(ii)                                  , 200__

(the later of such dates being the “ Effective Date ”).

6. Upon such acceptance by the Administrative Agent, and from and after the Effective Date, the Administrative Agent and the Trustee shall make all payments under the Note Purchase Agreement and the Assigned Interests assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to Assignee. Assignor and Assignee shall make all appropriate adjustments in payments under the Note Purchase Agreement and the Assigned Interests for periods prior to the Effective Date directly between themselves.

7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


Legal Name of Assignor:        
Legal Name of Assignee:        
Assignee’s Address for Notices:        
       
       

(A) Immediately after giving effect to this Assignment and Acceptance the amount of Assignee’s Commitment is $                          .

(B) Immediately after giving effect to this Assignment and Acceptance the aggregate amount of Assignor’s Commitment is $                          .

 

The terms set forth herein are hereby agreed to:
                                                                      , as Assignor
By:    
Name:  
Title:  

 

                                                                      , as Assignee
By:    
Name:  
Title:  

Calyon New York Branch,

as Administrative Agent

By:    
Name:  
Title:  
Kenosia Funding, LLC, as Issuer
By:    
Name:  
Title:  


EXHIBIT B

FORM OF INCREASE NOTICE

The Bank of New York

as Trustee

Calyon New York Branch,

as Administrative Agent

[ Names of Managing Agents ]

 

Re:    Kenosia Funding, LLC,
   Secured Variable Funding Notes, Series 2002-1

Ladies and Gentlemen:

Pursuant to Section 2.02 of the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 (the “Agreement”), among Kenosia Funding, LLC, as Issuer, Cartus Corporation, as Originator and Servicer, Cartus Relocation Corporation, as Originator, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent and Lead Arranger, the Issuer hereby irrevocably requests an Increase in the Outstanding Amount as follows. Terms used herein are used as defined in or for purposes of the Agreement.

 

  1. The requested amount of such Increase is $                          .

 

  2. The requested Increase Date is                          .

 

  3. The requested Rate Type(s) [is][are]                          .

 

  4. All conditions precedent to the Increase set forth in Section 3.02 of the Agreement have been satisfied.

 

  5. From the Monthly Report Section XVI (6):

Adjusted Aggregate Receivable Balance (as of last report):                              

Required Asset Amount (after giving effect to Increase):                                  

The proceeds of such Increase shall be remitted on the Increase Date in immediately available funds to [ specify payment instructions ].

 

Very truly yours,
Kenosia Funding, LLC
By:    

Name:

 

Title:

 


EXHIBIT C

FORM OF STATED AMOUNT REDUCTION REQUEST

[ Date ]

The Bank of New York

as Trustee

Calyon New York Branch,

as Administrative Agent

[ Names of Managing Agents ]

 

Re:    Kenosia Funding, LLC,
   Secured Variable Funding Notes, Series 2002-1

Ladies and Gentlemen:

Pursuant to Section 2.05 of the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 (the “Agreement”), among Kenosia Funding, LLC, as Issuer, Cartus Corporation, as Originator and Servicer, Cartus Relocation Corporation, as Originator, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent and Lead Arranger, the Issuer hereby irrevocably requests a reduction in the Stated Amount as follows. Terms used herein are used as defined in or for purposes of the Agreement.

 

  1. The requested amount of such reduction is $                          .

 

  2. The requested date of such reduction is                          .

 

Very truly yours,
Kenosia Funding, LLC
By:  

 

Name:  
Title:  


EXHIBIT D

FORM OF STATED AMOUNT INCREASE REQUEST

[ Date ]

The Bank of New York

as Trustee

Calyon New York Branch,

as Administrative Agent

[ Names of Managing Agents ]

 

Re:    Kenosia Funding, LLC,
   Secured Variable Funding Notes, Series 2002-1

Ladies and Gentlemen:

Pursuant to Section 2.05 of the Amended and Restated Note Purchase Agreement, dated as of April 10, 2007 (the “Agreement”), among Kenosia Funding, LLC, as Issuer, Cartus Corporation, as Originator and Servicer, Cartus Relocation Corporation, as Originator, the commercial paper conduits from time to time parties thereto, as Conduit Purchasers, the financial institutions from time to time parties thereto, as Committed Purchasers, the Persons from time to time parties thereto, as Managing Agents and Calyon New York Branch, as Administrative Agent and Lead Arranger, the Issuer hereby irrevocably requests an Increase in the Stated Amount as follows. Terms used herein are used as defined in or for purposes of the Agreement.

 

  1. The requested amount of such increase is $                          .

 

  2. The requested date of such increase is                          .

 

  3. The Purchaser Group(s) whose Purchaser Group Limit(s) will be increased are                          .

 

  4. The Committed Purchaser(s) whose Commitment(s) will be increased are                          .

 

  5. After giving effect to the increase, the Pro Rata Shares will be                                                   .

 

Very truly yours,
Kenosia Funding, LLC
By:    

Name:

 

Title:

 

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Richard A. Smith, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Realogy Corporation;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2009

 

/ S /    R ICHARD A. S MITH        
CHIEF EXECUTIVE OFFICER

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Anthony E. Hull, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Realogy Corporation;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2009

 

/ S /    A NTHONY E. H ULL        
CHIEF FINANCIAL OFFICER

Exhibit 32

CERTIFICATION OF CEO AND CFO PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Realogy Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Richard A. Smith, as Chief Executive Officer of the Company, and Anthony E. Hull, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

 

  (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002 be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

/ S /    R ICHARD A. S MITH        

RICHARD A. SMITH

CHIEF EXECUTIVE OFFICER

August 11, 2009

 

/ S /    A NTHONY E. H ULL        

ANTHONY E. HULL

EXECUTIVE VICE PRESIDENT AND

CHIEF FINANCIAL OFFICER

August 11, 2009