MASTER EXCHANGE AGREEMENT Dated as of March 7, 2006 by and among PHH FUNDING, LLC CHESAPEAKE FINANCE HOLDINGS LLC D.L. PETERSON TRUST
Exhibit
10.4
Dated
as
of March 7, 2006
by
and
among
PHH
FUNDING, LLC
CHESAPEAKE
FINANCE HOLDINGS LLC
▇.▇.
▇▇▇▇▇▇▇▇ TRUST
Table
of
Contents
Page
|
ARTICLE
I DEFINITIONS
|
2
|
|
|
1.1
|
Capitalized
Terms.
|
2
|
|
1.2
|
Rules
of Interpretation
|
3
|
|
ARTICLE
II GENERAL PROVISIONS FOR EXCHANGES
|
3
|
|
|
2.1
|
Exchange
of Properties
|
3
|
|
2.2
|
Disposition
and Transfer of Relinquished Property; Transfer of Relinquished Property
Subject to Liabilities
|
3
|
|
2.3
|
Acquisition
and Transfer of Replacement Property
|
4
|
|
2.4
|
Assignment
of Agreements.
|
4
|
|
2.5
|
Notice
to Buyers and Sellers
|
5
|
|
2.6
|
Direct
Transfers
|
5
|
|
2.7
|
Exclusivity
|
6
|
|
2.8
|
Records
- Monitoring and Retention
|
6
|
|
2.9
|
Non-Matched
Properties
|
6
|
|
2.10
|
Matching
of Relinquished and Replacement Property
|
7
|
|
ARTICLE
III IDENTIFICATION OF REPLACEMENT PROPERTIES
|
7
|
|
|
3.1
|
Manner
of Deemed Identification
|
7
|
|
3.2
|
Manner
of Written Identification
|
7
|
|
3.3
|
Content
of Written Identification
|
7
|
|
ARTICLE
IV RECEIPT AND DISBURSEMENT OF FUNDS
|
8
|
|
|
4.1
|
Accounts
|
8
|
|
4.2
|
Separation
and Application of Funds in Joint Collection
|
|
|
|
Accounts;
Proceeds from Transfer of Relinquished Property by PHF
|
9
|
|
4.3
|
Payment
for Replacement Property
|
10
|
|
4.4
|
Investment
of Funds in the Reservoir Account
|
12
|
|
4.5
|
Disbursements
from Account
|
12
|
|
4.6
|
Security
Procedures
|
12
|
|
ARTICLE
V INDEMNITY BY EXCHANGOR
|
12
|
|
|
5.1
|
Indemnification
|
12
|
|
5.2
|
Notice
and Defense of Claims
|
13
|
|
5.3
|
Survival
|
13
|
|
5.4
|
No
Setoff
|
13
|
|
ARTICLE
VI REPRESENTATIONS, WARRANTIES AND COVENANTS
|
13
|
|
|
6.1
|
Representations
and Warranties of PHF
|
13
|
|
6.2
|
Representations
and Warranties of Holdings
|
15
|
|
6.3
|
Survival
of Representations and Warranties
|
16
|
|
6.4
|
Covenants
of PHF
|
17
|
|
6.5
|
Treasury
Regulations Disclosure Requirements
|
17
|
ii
|
6.6
|
Maintenance
of Separate Existence
|
17
|
|
6.7
|
Mergers
|
18
|
|
6.8
|
Organizational
Documents
|
18
|
|
6.9
|
No
Other Agreements
|
18
|
|
6.10
|
Other
Business
|
18
|
|
ARTICLE
VII TERM AND COMPENSATION
|
18
|
|
|
7.1
|
Term
|
18
|
|
7.2
|
Compensation
|
19
|
|
ARTICLE
VIII MISCELLANEOUS
|
19
|
|
|
8.1
|
Pending
Litigation
|
19
|
|
8.2
|
Communication
in Writing
|
19
|
|
8.3
|
Further
Assurances
|
20
|
|
8.4
|
Amendments
|
20
|
|
8.5
|
Assignment
|
20
|
|
8.6
|
Successors
and Assigns; No Third-Party Beneficiaries
|
21
|
|
8.7
|
No
Benefit to Others
|
21
|
|
8.8
|
Strict
Performance
|
21
|
|
8.9
|
Time
|
21
|
|
8.10
|
Severability
|
21
|
|
8.11
|
Jury
Trial Waiver
|
22
|
|
8.12
|
Waiver
of Automatic Stay
|
22
|
|
8.13
|
Counterparts
and Telecopied Signatures
|
22
|
|
8.14
|
Entire
Agreement
|
22
|
|
8.15
|
Electronic
Signature
|
22
|
|
8.16
|
Indebtedness
|
23
|
|
8.17
|
Dates,
Descriptions, Values, and Matching
|
23
|
|
8.18
|
Acknowledgment
of Independent Relationship
|
23
|
|
8.19
|
Force
Majeure
|
23
|
|
8.20
|
Consequential
Damages
|
23
|
|
8.21
|
Investment
Losses
|
24
|
|
8.22
|
Governing
Law, Venue and Jury Trial Waiver
|
24
|
|
8.23
|
No
Petitions; Subordination
|
24
|
|
8.24
|
Headings
|
26
|
|
i
|
This
MASTER
EXCHANGE AGREEMENT
(“Agreement”)
is
entered into as of March 7, 2006, by and among PHH FUNDING,
LLC,
a
Delaware limited liability company, (“PHF”),
CHESAPEAKE FINANCE HOLDINGS LLC,
a
Delaware limited liability company (“Holdings”),
and
▇.▇. ▇▇▇▇▇▇▇▇
TRUST,
a
Delaware statutory trust (“▇.▇.
▇▇▇▇▇▇▇▇”
and
collectively with Holdings, the “Exchangor”).
RECITALS
WHEREAS, Exchangor
desires to effect an LKE Program consisting of a series of Exchanges of one
or
more Relinquished Properties for one or more Replacement Properties;
and
WHEREAS,
the
Relinquished Properties as they are sold from time to time will be sold to
various Buyers; and
WHEREAS, the
Replacement Properties as they are purchased from time to time will be purchased
from various Sellers; and
WHEREAS, it
is the
intention of the parties that each disposition of one or more Relinquished
Properties and acquisition of one or more Replacement Properties be effectuated
pursuant to the terms of this Agreement; and
WHEREAS, Exchangor
desires to effectuate each disposition of one or more Relinquished Properties
hereunder and each acquisition of one or more Replacement Properties hereunder
in a manner that will qualify as one or more like-kind exchanges within the
meaning of Section 1031 of the Code and the Treasury Regulations promulgated
thereunder (and any applicable corresponding provisions of state tax
legislation) pursuant to one or more of the “safe harbors” described in Section
1.1031(k)-1(g) of the Treasury Regulations; and
WHEREAS,
Exchangor desires to effectuate the Exchanges in a manner that will qualify
as
an LKE program as described in Revenue Procedure 2003-39, Section 3.02 and
qualify under one or more of the “safe harbors” of Revenue Procedure 2003-39,
Sections 4, 5 and 6; and
WHEREAS,
PHF
desires to act as a Qualified Intermediary to facilitate the Exchanges and
the
LKE Program; and
WHEREAS,
it is
the intention of the parties that, subject to the terms and provisions of this
Agreement, Exchangor assign to PHF, in its capacity as Exchangor’s Qualified
Intermediary, Exchangor’s rights (but not its obligations) with respect to each
Relinquished Property Agreement; and
WHEREAS,
it is
the intention of the parties that, as provided in Section 1.1031(k)-1(g)(4)(iv)
and (v) of the Treasury Regulations, PHF be considered to have acquired the
Relinquished Property from Exchangor and transferred it to the Buyer
notwithstanding that Exchangor will transfer legal title to the Relinquished
Property directly to the Buyer; and
1
WHEREAS,
it is
the intention of the parties that, subject to the terms and provisions of this
Agreement, Exchangor assign to PHF in its capacity as Exchangor’s Qualified
Intermediary, Exchangor’s rights (but not its obligations) with respect to each
Replacement Property Agreement; and
WHEREAS,
it is
the intention of the parties that, as provided in Section
1.1031(k)-(1)(g)(4)(iv) and (v) of the Treasury Regulations, PHF be considered
to have acquired the Replacement Property from the Seller and transferred it
to
Exchangor notwithstanding that the Seller will transfer legal title to the
Replacement Property directly to Exchangor; and
WHEREAS,
it is
the intention of the parties that Exchangor and PHF will establish certain
accounts to facilitate the receipt, sorting and disbursement of funds as may
be
necessary or helpful in the efficient execution of the LKE Program and that
such
accounts shall qualify as “Joint Accounts”; and
WHEREAS,
it is
the intention of the parties to maintain a Reservoir Account and one or more
Joint Collection Accounts and Joint Disbursement Accounts so that for purposes
of the Treasury Regulations the Exchangor not be determined to be in actual
or
constructive receipt of any Relinquished Property Proceeds; and
WHEREAS,
it is
the intention of the parties hereto that, as provided in
Section 1.1031(b)-1(c) of the Treasury Regulations, consideration received
by the Exchangor, in the form of relief of liabilities (or a transfer subject
to
a liability), shall be offset against consideration given by the Exchangor
in
the form of cash, an assumption of liabilities, or a receipt of property subject
to a liability; and
WHEREAS, Exchangor
and PHF desire and intend this Agreement to satisfy the requirement of a written
agreement referred to in Section 1.1031(k)-1(g)(4)(iii)(B) of the Treasury
Regulations and Section 3.02(3) of Revenue Procedure 2003-39;
NOW,
THEREFORE,
for and
in consideration of the promises contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Capitalized
Terms.
Unless
the context shall otherwise require, capitalized terms used and not defined
herein shall have the meanings assigned thereto in (x) Appendix
A
attached
hereto or (ii) if not defined in Appendix
A,
then in
Schedule
1
to the
Base Indenture.
2
1.2 Rules
of Interpretation.
The
rules of interpretation set forth in Appendix
A
shall
apply to this Agreement.
ARTICLE
II
GENERAL
PROVISIONS FOR EXCHANGES
2.1 Exchange
of Properties.
(a) In
accordance with the terms of this Agreement, PHF agrees to effect each Exchange
hereunder for the benefit of the Exchangor by (a) acquiring one or more
Relinquished Properties from the Exchangor, (b) transferring such Relinquished
Property(ies) to one or more Buyers pursuant to the method described in Section
2.2, (c) acquiring one or more Replacement Properties from one or more
Sellers and (d) transferring such Replacement Property(ies) to the Exchangor
pursuant to the method described in Section 2.3 in transactions intended to
qualify as exchanges in accordance with Section 1031 of the Code. Exchangor
shall be solely responsible for determining the scope of each separate and
distinct Exchange hereunder by matching one or more Relinquished Properties
with
one or more Replacement Properties.
(b) No
transfer by the Exchangor of Relinquished Property pursuant to this Agreement
shall be made unless: (i) on the date of such transfer, each of the
representations and warranties of Holdings in Section 8 of the Loan Agreement
are true and correct on and as of such date and shall be deemed to have been
made on such date with the same effect as though made on and as of such date,
(ii) no Parent Downgrade Event, Loan Event of Default, Potential Loan Event
of
Default, Default, Event of Default, Potential Amortization Event or Amortization
Event shall have occurred and is continuing or would result from the making
of
such transfer, (iii) on the date of such transfer, the only debt secured by
such
Relinquished Property are the Loans and related liabilities arising under the
Loan Agreement, (iv) the representations and warranties of PHF in Article VI
are
true and correct on and as of such date and shall be deemed to have been made
on
such date with the same effect as though made on and as of such date and (v)
the
Termination Date under this Agreement has not occurred. In connection with
any
such transfer, the Exchangor, by making such transfer, shall be deemed to have
represented and warranted to the effect set forth in clauses (ii), (iii) and
(v)
above, Holdings shall be deemed to have represented and warranted to the effect
set forth in clause (i) above and PHF shall be deemed to have represented and
warranted to the effect set forth in clause (iv) above.
2.2 Disposition
and Transfer of Relinquished Property; Transfer of Relinquished Property Subject
to Liabilities. (a)
The
Exchangor has entered, and/or from time to time may enter, into one or more
Relinquished Property Agreements with one or more Buyers for the sale of
Relinquished Property. In connection with each Exchange, the Exchangor shall,
in
accordance with Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations and
Section 6.02 of Revenue Procedure 2003-39: (a) assign to PHF all of its
Rights with respect to such Relinquished Property under the applicable
Relinquished Property Agreements in accordance with Section 2.4, such assignment
to be made without recourse to PHF (and PHF agrees to accept such assignments);
(b) notify all parties to the applicable Relinquished Property Agreements in
writing of the assignment in accordance with Section 2.5 prior to or
concurrent with the date of transfer of the Relinquished Property to the
applicable Buyer(s), and (c) transfer its interest in the Relinquished Property
to the applicable Buyer(s) pursuant to the applicable Relinquished Property
Agreements.
3
(b) The
parties to this Agreement acknowledge and agree that the Exchangor shall be
permitted to transfer Relinquished Property Subject to Liabilities. If the
Exchangor transfers Relinquished Property Subject to Liabilities pursuant to
Section 2.2(a), then PHF shall, in accordance with the procedures set forth
in
Section 4.2, repay the related Liabilities Due on Transfer on the Business
Day
on which such sale proceeds are received in a Joint Collection Account;
provided
that if
the amount of such related Liabilities Due on Transfer is greater than the
proceeds received from the sale of such Relinquished Property Subject to
Liabilities, Holdings shall remain obligated to make payment of such excess
amount directly to the holder of such liability to the extent set forth in,
and
in accordance with the terms of, the documents governing such
liabilities.
2.3 Acquisition
and Transfer of Replacement Property.
The
Exchangor has entered, and/or from time to time may enter, into one or more
Replacement Property Agreements with one or more Sellers for the purchase of
Replacement Property. In connection with each Exchange, the Exchangor shall,
in
accordance with Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations and
Section 6.02 of Revenue Procedure 2003-39: (i) assign to PHF its Rights with
respect to the Replacement Property in respect of the Exchange pursuant to
Section 2.4, any such assignment to be made without recourse to PHF (and PHF
agrees to accept such assignments); (ii) notify all parties to the applicable
Replacement Property Agreement in writing of the assignment in accordance with
Section 2.5 prior to or concurrent with the date of transfer of the
Replacement Property from the applicable Seller(s), and (iii) receive an
ownership interest in the Replacement Property from the applicable Seller(s)
pursuant to the applicable Replacement Property Agreement.
2.4 Assignment
of Agreements.
(a) Existing
Agreements.
The
Exchangor hereby assigns to PHF, solely in PHF’s capacity as Qualified
Intermediary, the Exchangor’s Rights, but not its obligations, under each
Relinquished Property Agreement to which the Exchangor is a party as of the
date
hereof, such assignment to be effective only upon the Exchangor’s transfer of
the related Relinquished Property pursuant to Section 2.2 and only with respect
to such Relinquished Property, and PHF hereby agrees to accept such assignment,
solely in its capacity as the Exchangor’s Qualified Intermediary. The Exchangor
hereby assigns to PHF, solely in PHF’s capacity as Qualified Intermediary, the
Exchangor’s Rights, but not its obligations, under each Replacement Property
Agreement to which the Exchangor is a party as of the date hereof with respect
to the related Replacement Property and PHF hereby accepts such assignment,
solely in its capacity as the Exchangor’s Qualified Intermediary.
(b) New
Agreements.
The
Exchangor hereby assigns to PHF, solely in PHF’s capacity as Qualified
Intermediary, the Exchangor’s Rights, but not its obligations, under each
Relinquished Property Agreement that it enters into after the date of this
Agreement, such assignment to be effective only upon the Exchangor’s transfer of
the related Relinquished Property pursuant to Section 2.2 and only with respect
to such Relinquished Property. The Exchangor hereby assigns to PHF, solely
in
PHF’s capacity as Qualified Intermediary, the Exchangor’s Rights, but not its
obligations, under each Replacement Property Agreement that it enters into
after
the date of this Agreement with respect to the Replacement Property. PHF shall
and hereby does accept each assignment pursuant to this Section 2.4(b) from
the
Exchangor, solely in its capacity as the Exchangor’s Qualified
Intermediary.
4
(c) Revocation
of, or Change in, Assignment.
By
notice to PHF, the Exchangor may revoke its assignment to PHF of its Rights
with
respect to any Replacement Property identified in such notice. Similarly, by
notice to PHF, the Exchangor may cease assigning to PHF the Exchangor’s Rights
pursuant to this Section 2.4 with respect to any of its Relinquished Property
identified in such notice. Not later than the Termination Date, the Exchangor
shall cease assigning to PHF its Rights with respect to any Relinquished
Property arising on or after such date. Any such notices shall only be effective
with respect to property transferred or received after the date on which such
notice is given.
(d) Safe
Harbor.
Each
assignment to PHF made by the Exchangor pursuant to this Section 2.5 is made
pursuant to the assignment Safe Harbor set forth in Section 6.02 of Revenue
Procedure 2003-39 and, except as may be otherwise required by applicable law,
shall be effective when provided in Section 2.4(a) or 2.4(b), as applicable,
without the need for any further actions other than those provided in Sections
2.1, 2.2, 2.3, 2.4(a) and/or 2.4(b) by the Exchangor or PHF with respect to
the
transfer of any Relinquished Property or any Replacement Property.
(e) Limitation
on Rights Transferred to PHF.
Each of
the parties hereto agrees and acknowledges that any assignment to PHF hereunder
shall not give PHF any rights under any Relinquished Property Agreement to
which
the Exchangor is a party relating to the disposition of a Vehicle except the
Rights in respect of a Vehicle that becomes Relinquished Property. PHF hereby
acknowledges that it shall have no interest in any Relinquished Property
Agreement with respect to any Vehicle that is not Relinquished
Property.
2.5 Notice
to Buyers and Sellers.
The
Exchangor represents and agrees that it will provide notice, on or before the
date of the relevant transfer of property, to the other party(ies) to any
Relinquished Property Agreement or any Replacement Property Agreement with
respect to which any of its Rights thereunder have been assigned to PHF that
the
Exchangor’s Rights in such Relinquished Property Agreement or such Replacement
Property Agreement, as the case may be, have been assigned, to the extent set
forth herein, to PHF, as its Qualified Intermediary.
2.6 Direct
Transfers.
(a)
For purposes of this Agreement, PHF shall be considered to have (i)
acquired Relinquished Property from the Exchangor and transferred it to the
Buyer thereof in each case where such Relinquished Property is in fact
transferred by the Exchangor directly to such Buyer pursuant to the relevant
Relinquished Property Agreement in accordance with Section 2.2, and (ii)
acquired Replacement Property from the Seller thereof and transferred it to
the
Exchangor in each case where the Replacement Property is in fact transferred
by
such Seller directly to the Exchangor pursuant to the relevant Replacement
Property Agreement in accordance with Section 2.3, in each case as provided
by
Sections 1.1031(k)-1(g)(4)(iv) and (v) of the Treasury Regulations.
5
(b) The
Exchangor and PHF agree that, as described in the preceding paragraph, all
Relinquished Property and Replacement Property shall be transferred directly
from the Exchangor to the applicable Buyer or directly from the applicable
Seller to the Exchangor, as the case may be. As a result, PHF shall not (i)
take
possession of, (ii) hold legal title to, or (iii) be the owner of, any
Relinquished Property or Replacement Property.
2.7 Exclusivity.
Except
as permitted under this Agreement, PHF agrees that it will not enter into any
agreements or conduct any transactions or other business other than as expressly
contemplated by this Agreement or incidental to the conduct of PHF’s
responsibilities hereunder.
2.8 Records
- Monitoring and Retention.
PHF
agrees that it will monitor and keep, in the manner in which they are received,
detailed and accurate records of the transactions carried out pursuant to this
Agreement provided, and only to the extent, that such records have actually
been
received by PHF. Such records shall, to the extent so received by PHF, include,
but shall not be limited to, information concerning the date of each transfer
of
Relinquished Property(ies) to a Buyer and the date of each receipt of
Replacement Property(ies) from a Seller. Such records shall be maintained in
a
reasonable manner such that they may be audited and/or available for inspection
by Exchangor, or its designated representatives, upon Exchangor’s request, at
reasonable, mutually agreeable times, while this Agreement remains in force.
After expiration, termination or cancellation of this Agreement, at Holdings’
expense (which expenses shall be reasonable and approved by Holdings), PHF
shall
continue to maintain such records, and to allow Holdings to audit or inspect
the
records, until the end of PHF’s internally established retention period for
Exchange documentation but in no event for less than four years. PHF shall
cooperate with Exchangor, or its designated representatives, in the conduct
of
any such inspection. Notwithstanding the responsibilities of PHF under this
Section 2.8, Exchangor, and not PHF, shall be solely responsible for all
matching of Relinquished Property(ies) with Replacement Property(ies) as
required to create each separate and distinct Exchange hereunder as provided
in
Section 2.1.
6
2.9 Non-Matched
Properties.
The
parties hereto acknowledge and agree that, consistent with the safe harbor
of
Section 6.01 of Revenue Procedure 2003-39, Exchangor may (a) assign to PHF
Rights under a Relinquished Property Agreement with respect to one or more
Relinquished Properties that are not ultimately matched with one or more
Replacement Properties under the LKE Program and (b) assign to PHF rights under
a Replacement Property Agreement with respect to one or more Replacement
Properties that are not ultimately matched with one or more Relinquished
Properties under the LKE Program. The parties hereto further acknowledge and
agree that, consistent with the safe harbor of Section 6.01 of Revenue Procedure
2003-39, PHF may (a) receive proceeds with respect to the transfer of one or
more Relinquished Properties that ultimately are not matched with one or more
Replacement Properties under the LKE Program and (b) disburse funds for the
acquisition of one or more Replacement Properties that ultimately are not
matched with Relinquished Properties under the LKE Program. Nevertheless,
pending Exchangor’s completion of the matching procedures under Section 2.1, all
property transferred pursuant to a Relinquished Property Agreement, or acquired
pursuant to a Replacement Property Agreement, shall be transferred or acquired,
as the case may be, pursuant to the terms of this Agreement.
2.10 Matching
of Relinquished and Replacement Property.
The
Exchangor shall match Replacement Property to be used in its trade or business
with Relinquished Property used in its trade or business for each Exchange
on
its books and records in accordance with Section 1.1031(a)-2 of the Treasury
Regulations and the Safe Harbor set forth in Sections 4.01 and 4.02 of Revenue
Procedure 2003-39.
ARTICLE
III
IDENTIFICATION
OF REPLACEMENT PROPERTIES
3.1 Manner
of Deemed Identification.
To meet
the identification requirement described in Section 1031(a)(3)(A) of the Code
and Section 1.1031(k)-1(b)(1)(i) of the Treasury Regulations, Exchangor intends,
with respect to each Exchange, to utilize the Deemed Deferred Exchange
Identification Procedures pursuant to which Replacement Property acquired within
the Deferred Exchange Identification Period for an Exchange, and matched with
one or more Relinquished Properties for such Exchange, is deemed to have been
identified for such Exchange.
3.2 Manner
of Written Identification.
Notwithstanding the foregoing Section 3.1, Exchangor may, with respect to an
Exchange, at any time during the Deferred Exchange Identification Period for
such Exchange, (i) provide written identification of potential Replacement
Property(ies) to PHF pursuant to the Written Deferred Exchange Identification
Procedures and (ii) thereafter match one or more such Replacement Property(ies)
that are like-kind (as defined in Section 1.1031(a)-(b), and 1.1031(a)-2 of
the
Treasury Regulations) with one or more Relinquished Properties for such
Exchange. Any such written identification may be revoked pursuant to Section
1.1031(k)-1(c)(6) of the Treasury Regulations by a written revocation from
Exchangor to PHF prior to the end of the Deferred Exchange Identification
Period.
3.3 Content
of Written Identification.
In any
written identification of potential Replacement Properties for an Exchange,
Exchangor shall identify only properties that are of like kind to the
Relinquished Property(ies) for such Exchange. For each Exchange in which a
written identification is transmitted, Exchangor shall identify either (a)
no
more than three potential Replacement Properties in the aggregate, or (b) any
number of potential Replacement Properties provided
that the
aggregate fair market value of Identified Replacement Properties does not exceed
200% of the aggregate fair market value of the Relinquished Property(ies) for
such Exchange.
ARTICLE
IV
RECEIPT
AND DISBURSEMENT OF FUNDS
4.1 Accounts.
(a) The
Exchangor and PHF shall enter into the Master Trust Agreement with Wachovia
Bank, National Association, pursuant to which the Exchangor and PHF shall
maintain one or more Joint Disbursement Accounts and a Reservoir Account. One
or
more Joint Collection Accounts have been established and will be maintained
by
the Chesapeake Trustee in accordance with Section
5.1
of the
Base Indenture, in the name of “JPMorgan Chase Bank, National Association, as
Trustee, and PHH Funding, LLC, as Qualified Intermediary for Chesapeake Finance
Holdings LLC” and shall be operated in accordance with the terms of this
Agreement and the Indenture. Initially, the Joint Collection Accounts will
be
maintained at JPMorgan Chase Bank, National Association and Bank of America,
N.A.
The
Joint Disbursement Accounts and the Joint Collection Accounts are intended
to
qualify within the definition of “Joint Accounts” described in Section 5.02 of
Revenue Procedure 2003-39. The Reservoir Account will be opened by WBNA as
a
“qualified trust” (within the meaning of Section 1.1031(k)-1(g)(3)(iii) of the
Treasury Regulations) under the Master Trust Agreement, for the benefit of
PHF
and Exchangor.
7
(b) The
Joint
Collection Accounts are intended to facilitate the orderly and efficient
collection of proceeds from the disposition of the Relinquished Property,
including the collection of all Relinquished Property Proceeds, and to allow
for
the identification and separation of funds that are Relinquished Property
Proceeds from funds that are Non-Qualified Funds. All payments made by Buyers
to
or on behalf of PHF or the Exchangor in respect of sales of Relinquished
Property shall be made directly to a Joint Collection Account.
(c) The
Joint
Disbursement Accounts are intended to facilitate the orderly and efficient
disbursement of funds to Sellers, including the disbursement of all funds
relating to the acquisition of Replacement Property under the LKE
Program.
(d) The
Reservoir Account is intended (i) to receive all Relinquished Property
Proceeds that are not used for other qualified purposes including, but not
limited to, the payment of Liabilities Due on Transfer and (ii) to provide
Relinquished Property Proceeds to the Joint Disbursement Accounts (to the extent
of the funds deposited in the Reservoir Account and any income earned on the
investment thereof pursuant to the Master Trust Agreement). Relinquished
Property Proceeds on deposit in the Joint Collection Accounts shall be deposited
into the Reservoir Account to the extent, and only to the extent, that any
portion of such proceeds remain in such Joint Collection Accounts after all
Liabilities Due on Transfer, including the outstanding Loans and all other
amounts payable under the Loan Agreement, have been paid in full.
(e) Pursuant
to the Master Trust Agreement, Relinquished Property Proceeds held in the
Reservoir Account shall be invested until such funds are distributed to a Joint
Disbursement Account in order to purchase Replacement Property.
(f) All
Relinquished Property Proceeds (and any earnings thereon), whether in a Joint
Collection Account, a Joint Disbursement Account or the Reservoir Account,
shall
be held subject to Sections 1.1031(k)-1(g)(4)(ii) and 1.1031(k)-1(g)(6) of
the
Treasury Regulations, including the restrictions on the Exchangor’s right to
receive, pledge, borrow, or otherwise obtain the benefits of Relinquished
Property Proceeds and earnings thereon held by PHF. Notwithstanding that, prior
to the occurrence of a Distribution Event with respect to the related
Relinquished Property, the Exchangor shall have no right to receive, pledge,
borrow, or otherwise obtain the benefits of Relinquished Property Proceeds
or
the earnings thereon held by either PHF or the bank maintaining the account
where such Relinquished Property Proceeds are on deposit, Relinquished Property
Proceeds received with respect to Relinquished Property Subject to Liabilities
shall be applied to the payment of the related Liabilities Due on Transfer,
including the outstanding Loans and all other amounts payable under the Loan
Agreement, as provided in Sections 2.2(b) and 4.2(b). Upon any Distribution
Event with respect to Relinquished Property, PHF shall, at such time and in
satisfaction of PHF’s remaining obligations under this Agreement as to the
related Exchange, have the bank maintaining the Account where the related
Relinquished Property Proceeds are on deposit pay any remaining amount of such
Relinquished Property Proceeds, including without limitation accumulated
interest thereon, to, or as directed by, the Exchangor.
8
4.2 Separation
and Application of Funds in Joint Collection Accounts; Proceeds from Transfer
of
Relinquished Property by PHF.
(a) Reports.
On each
Business Day, Exchangor shall make available to PHF a report with respect to
each Joint Collection Account setting forth for such Business Day (1) the
aggregate Relinquished Property Proceeds deposited in, or expected to settle
in,
such Joint Collection Account, and (2) the amount of Non-Qualified Funds, if
any, deposited in, or expected to settle in, such Joint Collection
Account.
(b) Identification
of Funds.
On each
Business Day, Exchangor shall: (i) identify any funds in the Joint
Collection Accounts as of such Business Day which constitute Non-Qualified
Funds
and direct PHF to immediately transfer such funds to the Collection Account;
(ii) initiate on such Business Day proposed Electronic Funds Transfers from
the
Joint Collection Accounts in order to apply any funds in the Joint Collection
Accounts as of such Business Day which constitute Relinquished Property Proceeds
in the following order: first, transfer to the Collection Account an amount
of
such funds sufficient to repay in full the Liabilities Due on Transfer,
including the outstanding Loans and all other amounts payable under the Loan
Agreement, and second, transfer to the Reservoir Account any remaining amount
of
such funds; and (3) notify PHF and the Chesapeake Trustee of such proposed
transfers.
(c) Approval
of Certain Transfers.
If upon
notification to PHF of the proposed Electronic Funds Transfers of Relinquished
Property Proceeds pursuant to clause (2) of Section 4.2(b), PHF approves of
such proposed Electronic Funds Transfers, PHF agrees to take, within one hour
of
the receipt of such notification of transfers, all appropriate actions needed
to
approve and transmit such transfers. If PHF does not approve of any of such
proposed Electronic Funds Transfers of Relinquished Property Proceeds, PHF
shall
immediately notify the Exchangor, the Chesapeake Trustee and the banking
institution maintaining the applicable Joint Collection Account via telephone
or
fax (any such notice given by telephone to be confirmed in writing), of the
disapproval and the reasons for such disapproval; provided,
that no
such disapproval shall relieve PHF from its obligation under Section 2.2(b)
to apply Relinquished Property Proceeds to the repayment of the Liabilities
Due
on Transfer, including the outstanding Loans and all other amounts payable
under
the Loan Agreement pursuant to Section 2.2(b), on the Business Day on which
such
Relinquished Property Proceeds are received in a Joint Collection Account.
In
the event that PHF disapproves of any such proposed Electronic Funds Transfer
of
Relinquished Property Proceeds to the Collection Account that is required to
be
applied to repay Liabilities Due on Transfer, including the outstanding Loans
and all other amounts payable under the Loan Agreement, and the Chesapeake
Trustee or the Servicer certifies to PHF as to the amount of such Liabilities
Due on Transfer on such Business Day, PHF shall then be obligated to approve
such transfer up to the amount so certified to be due and owing. PHF shall
cause
the bank maintaining the Joint Collection Accounts to accept each Electronic
Funds Transfer described in Section 4.2(b) that is subsequently approved by
PHF
pursuant to this Section 4.2(c).
9
(d) Ownership
of Funds; Restricted Transfers.
The
Exchangor and PHF hereby acknowledge and agree that it is the intent of the
parties hereto that funds deposited into the Reservoir Account shall be used
solely to enable PHF to perform its obligations hereunder to acquire Replacement
Property and shall not be considered part of PHF’s general assets nor subject to
claims by PHF’s creditors.
(e) Non-Qualified
Funds. PHF
shall
apply any Non-Qualified Funds, or shall cooperate with Exchangor for purposes
of
executing any authorization to cause any Non-Qualified Funds to be applied,
as
directed by the Exchangor pursuant to clause (1) of Section 4.2(b).
(f) Effectuation
of Transfer.
On each
Business Day, PHF shall cause the bank maintaining each Joint Collection Account
to cause the amount set forth in the instructions described in Section 4.2(b)
as
being required to pay Liabilities Due on Transfer, including the outstanding
Loans and all other amounts payable under the Loan Agreement, to be transferred
from such Joint Collection Account to the Collection Account, and, if no such
Liabilities Due on Transfer remain outstanding, shall cause the remaining
amount, if any, held in such Joint Collection Account to be transferred to
the
Reservoir Account. PHF hereby agrees that it shall not approve any transfer
of
Relinquished Property Proceeds from the Joint Collection Accounts to any account
other than the Collection Account or, if all Liabilities Due on Transfer,
including the outstanding Loans and all other amounts payable under the Loan
Agreement, have been paid in full, the Reservoir Account. The Exchangor shall
provide notice to the Chesapeake Trustee of any transfer from a Joint Collection
Account to the Reservoir Account.
4.3 Payment
for Replacement Property.
(a) Reports.
On each
Business Day, the Exchangor shall provide PHF and WBNA with a report with
respect to each Joint Disbursement Account setting forth for such Business
Day (1) the aggregate Replacement Property Acquisition Costs expected to be
disbursed from such Joint Disbursement Account, (2) the aggregate amount to
be
transferred to such Joint Disbursement Account from the Reservoir Account,
if
any, to fund such aggregate Replacement Property Acquisition Costs, (3) the
amount (if any) of Additional Subsidies to be transferred to such Joint
Disbursement Account from any other source, including the proceeds of Loans
to
be made to Holdings, to fund such aggregate Replacement Property Acquisition
Costs, (4) the aggregate amount (if any) of Additional Subsidies to be
transferred to such Joint Disbursement Account from any other account, to fund
Non-LKE Disbursements, and (5) adjustments, if any, to amounts previously funded
from the Reservoir Account.
(b) Funding
by PHF.
On each
Business Day, Exchangor shall direct WBNA to initiate a series of proposed
Electronic Funds Transfers in order to withdraw from the Reservoir Account
and
transfer to one or more Joint Disbursement Accounts on such Business Day amounts
to fund the aggregate Replacement Property Acquisition Costs on such Business
Day in accordance with the report delivered pursuant to Section 4.3(a) and
shall
notify PHF of such proposed Electronic Funds Transfers. If upon such
notification of the proposed Electronic Funds Transfers PHF approves of the
proposed Electronic Funds Transfers, PHF agrees to take, within one hour of
the
receipt of such notification, all appropriate actions needed to approve and
transmit such transfers. If PHF does not approve of any of such proposed
Electronic Funds Transfers, PHF shall immediately notify Exchangor, via
telephone or fax (any such notice given by telephone to be confirmed in
writing), of the disapproval and the reasons for such disapproval. PHF shall
cause the bank maintaining each Joint Disbursement Account to accept each
Electronic Funds Transfer described above that is subsequently approved by
PHF.
10
(c) Shortfalls
in Funding.
If, for
any reason, the sum of the amounts proposed to be transferred from the Reservoir
Account to the Joint Disbursement Accounts for the purchase of Replacement
Property on any Business Day exceeds the total amount of collected funds in
the
Reservoir Account available for such purpose on such Business Day, including
any
funds earned from the investment of funds held in the Reservoir Account pursuant
to the Master Trust Agreement on such day and actually credited to the Reservoir
Account, the amounts to be transferred to the Joint Disbursement Accounts from
the Reservoir Account on such Business Day to fund the aggregate Replacement
Property Acquisition Costs shall be reduced by the amount of such
shortfall.
(d) Effectuation
of Transfers.
On each
Business Day, PHF shall cause the amounts, if any, set forth in the instructions
described in Section 4.3(b), reduced, if necessary, as described in Section
4.3(c), to be transferred from the Reservoir Account to the applicable Joint
Disbursement Account.
(e) Funding
by Exchangor.
In the
event that the aggregate funds transferred from the Reservoir Account to a
Joint
Disbursement Account on any Business Day are insufficient to fund all
Replacement Property Acquisition Costs and Non-LKE Disbursements to be made
from
such Joint Disbursement Account on such Business Day, Holdings may transfer
Additional Subsidies (including funds received pursuant to Loans made to
Holdings under the Loan Agreement) to such Joint Disbursement Account in an
amount sufficient for PHF to acquire the related Replacement Property. PHF
shall
not be required to pay related Replacement Property Acquisition Costs or make
Non-LKE Disbursements for which sufficient funds are not available.
4.4 Investment
of Funds in the Reservoir Account.
(a) Investment
of Funds.
On each
Business Day, all funds in the Reservoir Account shall be invested in accordance
with the terms of the Master Trust Agreement. Exchangor shall provide WBNA
instructions from time to time in accordance with the Master Trust Agreement
setting forth the manner in which such funds shall be invested; provided
that
Exchanger shall not provide any instructions to invest such funds in a manner
that is not in accordance with the requirements of Section 1.1031(k)-1(g)(6)
of
the Treasury Regulations.
(b) Interest
Reporting.
Exchangor and PHF acknowledge and agree that the income earned on funds invested
pursuant to the Master Trust Agreement will be attributed to Holdings for income
tax purposes. Holdings hereby represents and warrants to PHF that (i) Holdings’
federal tax identification number is ▇▇-▇▇▇▇▇▇▇ and (ii) Holdings is not subject
to backup withholding under Section 3406 of the Code
11
4.5 Disbursements
from Account.
All
Relinquished Property Proceeds shall be held subject to the terms of this
Agreement (including, without limitation, the terms of Section 4.1(f)) and,
following any transfer of such Relinquished Property Proceeds to the Reservoir
Account and/or a Joint Disbursement Account in accordance with the terms hereof
and of the Master Trust Agreement.
4.6 Security
Procedures.
PHF is
authorized to receive funds transfer instructions via: fax; mail; overnight
delivery; and/or electronic transmission signed or otherwise furnished by any
one of the persons listed on the attached Schedule
1
and/or
their representative. PHF may rely in good faith on the instructions executed
by
any one of the persons listed on Schedule 1
without
further inquiry. PHF may
rely
solely upon any account numbers or similar identifying numbers provided by
Exchangor and/or its representative to identify (i) the beneficiary, (ii) the
beneficiary’s bank, or (iii) an intermediary bank. PHF may rely on the
instructions furnished by the persons listed on Schedule
1
for any
payment order using any such identifying number, even when its use may result
in
a person other than the beneficiary being paid, or the transfer of funds to
a
bank other than the beneficiary’s bank or an intermediary bank designated.
Exchangor acknowledges that these security procedures are commercially
reasonable.
ARTICLE
V
INDEMNITY
BY EXCHANGOR
5.1 Indemnification.
If PHF
or any of its officers, directors, employees, members, successors, and assigns
(collec-tively, the "Indemnitees") becomes involved in any claim, investigation,
proceeding, or suit in connection with this Agreement, or any instrument or
document executed by PHF at Exchangor’s request in connection herewith
(collectively, “Claims”), Holdings agrees to indemnify, defend (with counsel
reasonably acceptable to PHF) and hold each of the Indemnitees harmless from
all
loss, cost, damages, expenses and all reasonable attorneys' fees suffered or
incurred by the Indemnitees as a result thereof, except for Claims arising
out
of or related to the gross negligence, willful misconduct, or breach of this
Agreement by PHF and/or any of the Indemnities.
5.2 Notice
and Defense of Claims.
PHF
shall notify Holdings in writing of any Claim or potential Claim which may
give
rise to a right of indemnification under Section 5.1 within ten (10) days (or
such earlier period as may be required to avoid prejudicing Holdings position)
after PHF is made aware (in writing or orally) of such Claim or potential Claim.
If the Holdings acknowledges in writing (in form and substance satisfactory
to
PHF) that it is indemnifying PHF and any other Indemnitees with respect to
such
Claim, Holdings will be entitled to assume the defense of such Claim at its
sole
expense. PHF agrees to consult and cooperate to the extent deemed necessary
by
Holdings in such defense.
12
5.3 Survival.
The
indemnity set forth in this Article V shall survive the expiration or sooner
termination of this Agreement and shall not merge into any document executed
in
conjunction herewith. It is intended that the provisions of this Article V
take
precedence over the provisions of any other agreements between the parties
entered into pursuant to this Agreement, and the parties agree that the
provisions of this Article V may not be amended or modified except by a written
agreement between the parties making express reference to this Article
V.
5.4 No
Setoff.
PHF
shall not have any right of setoff against any of the funds held by PHF or
held
in any of the accounts contemplated hereunder to satisfy any right PHF may
have
against Exchangor, Holdings or any other Person under this Agreement or any
other agreement.
ARTICLE
VI
REPRESENTATIONS,
WARRANTIES AND COVENANTS
6.1 Representations
and Warranties of PHF.
PHF
hereby represents and warrants to Exchangor as of the date hereof (and on the
dates of the transactions described in Article II and IV) and covenants, where
applicable, with Exchangor as follows:
(a) Organization,
Power, Standing and Qualification. PHF
is a
limited liability company duly organized, validly existing, and in good standing
under the laws of the State of Delaware, has the requisite organizational power
and authority to carry on its business as it has been conducted in the past,
is
presently being conducted, and is contemplated to be conducted under this
Agreement, and to own and operate the properties and assets presently owned
and
operated by it, and contemplated to be owned and operated by it under this
Agreement. At Exchangor’s request and expense, PHF will qualify to do business
in those states requested by Exchangor. PHF shall at all times operate in a
manner consistent with its certificate of formation and its operating
agreement.
(b) Power
and Authority.
PHF has
the power and authority to execute, deliver and perform this Agreement, to
acquire Rights under assignment(s) of Relinquished Property Agreements, to
acquire Rights under assignment(s) of Replacement Property Agreements and to
otherwise perform its obligations under this Agreement and the transactions
contemplated hereby. The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of PHF. This Agreement is a
valid
and binding obligation of PHF, enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws affecting the enforcement of creditors’ rights
generally.
(c) Validity
of Contemplated Transactions.
(i) No
Violation.
The
execution, delivery, and performance of this Agreement and the consummation
of
the transactions contemplated hereby do not and will not (a) contravene any
provisions of the articles of organization or operating agreement of PHF; (b)
violate, conflict with, constitute a default under, cause the acceleration
of
any payments pursuant to, or otherwise impair the good standing, validity,
or
effectiveness of any agreement, contract, indenture, lease, or mortgage to
which
PHF is a party, or subject any of the assets of PHF to any indenture mortgage,
contract, commitment, lien (including without limitations any tax lien) or
agreement to which PHF is a party or by which PHF is bound; or (c) violate
any
provision of any law, rule, regulation, order, permit or license to which PHF
is
subject.
13
(ii) Required
Filings; Consents.
The
execution, delivery, and performance of this Agreement and the consummation
of
the transactions contemplated hereby will not require PHF to file or register
with, or obtain any permit, authorization, consent or approval of, any
governmental or regulatory authority or any other third party, except as
otherwise disclosed herein.
(d) Indebtedness
and Liens.
Neither
PHF, nor any person acting on behalf of or as an agent for PHF, has incurred
or
will incur any Indebtedness or will pledge, assign, transfer, or otherwise
encumber (or permit any of the foregoing encumbrances with respect to) any
of
PHF’s rights in the Relinquished Property(ies) or the Replacement Property(ies)
hereunder.
(e) Litigation
and Compliance.
There is
no suit, action, claim, arbitration, administrative, legal, or other proceeding
or governmental investigation pending or, to the best knowledge of PHF after
due
inquiry threatened against PHF or its members nor has there been any failure
by
PHF or its members to comply with nor has there been any violation of, or
default with respect to any order, writ, injunction, judgment or decree of
any
court or federal, state, or local department, official, commission, authority,
board, bureau, agency, or other instrumentality issued or pending against PHF
or
its members.
(f) Agency.
Other
than in connection with the type of transactions contemplated by this Agreement
and the Master Trust Agreement, PHF is not, nor has it been during the last
two
years, an attorney, attorney-in-fact, broker, agent (within the meaning of
Section 1.1031(k)-1(k)(2) of the Treasury Regulations), partner, or trustee
of
Exchangor or any of its affiliates.
(g) Tax
Advice.
PHF
represents that at no time has it or its members, employees or agents made
any
representation or rendered any advice with respect to the tax aspects of the
transactions contemplated herein except as may be consistent with its role
as a
Qualified Intermediary.
(h) Solvency.
Before
and after giving effect to the transactions contemplated by this
Agreement, PHF is solvent within the meaning of the Bankruptcy Code and PHF
is
not the subject of any voluntary or involuntary
case or
proceeding seeking liquidation, reorganization or other relief with respect
to
itself or its debt under any bankruptcy or insolvency law and no Insolvency
Event has occurred with respect to PHF.
(i) Ownership.
All of
the issued and outstanding membership interests of PHF are owned by Wachovia
Exchange Services, LLC, a Delaware limited liability company (“Parent”), and
have been validly issued, are fully paid and non-assessable. PHF has no
subsidiaries and owns no capital stock or any interest in any other
Person.
14
(j) No
Other Agreements.
Other
than as contemplated by this Agreement and the Master Trust Agreement, (i)
PHF
is not a party to any contract or any agreement of any kind or nature and (ii)
PHF is not subject to any obligations or liabilities of any kind or nature
in
favor of any third party.
(k) Not
a Disqualified Person.
PHF
hereby represents and warrants to Exchangor
that at
all
times during the period commencing two years prior to the date hereof through
the date hereof, PHF has not been and PHF
is
not
a
disqualified person
within
the meaning of such term as set forth in Section 1.1031(k)-1(k) of the Treasury
Regulations (a “Disqualified
Person”),
taking into account all exceptions and exclusions therefrom.
PHF
shall not knowingly cause PHF to become a Disqualified Person during the period
commencing on the execution date hereof through the Termination
Date.
6.2 Representations
and Warranties of Holdings.
Holdings
hereby represents and warrants to PHF as of the date hereof and on the date
of
the transactions described in Articles II, III, IV and covenants, where
applicable, with PHF as follows:
(a) Organization,
Power, Standing and Qualification.
Holdings
is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to carry on its business as it has been conducted in the
past and is presently being conducted. Holdings is duly qualified to transact
business and is in good standing as a foreign corporation in each and every
jurisdiction where the failure to qualify or to be in good standing would have
a
material adverse effect upon its ability to perform its obligations under this
Agreement or the transactions contemplated hereby.
(b) Corporate
Power and Authority.
Holdings
has the power and authority to execute, deliver and perform this Agreement,
to
transfer the Relinquished Property(ies) and to acquire the Replacement
Property(ies). The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Holdings. This Agreement
has
been duly executed and delivered by Holdings and is a valid and binding
obligation of Holdings, enforceable in accordance with its terms, except as
such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium,
or
similar laws affecting the enforcement of creditors’ rights
generally.
(c) Validity
of Contemplated Transactions.
The
execution, delivery, and performance of this Agreement and the consummation
of
the transactions contemplated hereby do not and will not (i) contravene any
provision of the limited liability company agreement of Holdings (ii) violate,
conflict with, constitute a default under, cause the acceleration of any
payments pursuant to, or otherwise impair the good standing, validity, or
effectiveness of the transfer of any Relinquished Property(ies) or the
acquisition of Replacement Property(ies), where applicable, or any indenture,
mortgage, contract, commitment, or agreement to which Holdings is a party or
by
which it is bound, or (iii) violate any provision of any law, rule, regulation,
order, permit or license to which Holdings is subject.
15
(d) Litigation
and Compliance.
There is
no material suit, action, claim, arbitration, administrative or legal or other
proceeding, or governmental investigation pending or, to the knowledge of
Holdings (after due inquiry), threatened against Exchangor that is related
to
this Agreement, nor has there been any failure by Exchangor to comply with,
nor
has there been any violation of, or default with respect to, any order, writ,
injunction, judgment, or decree of any court or federal, state, or local
department, official, commission, authority, board, bureau, agency, or other
instrumentality issued or pending against Exchangor that is related to this
Agreement which has not been disclosed to PHF.
(e) Legal
or Tax Advice.
Holdings
acknowledges that neither PHF nor any employee, officer, director, agent,
principal or affiliate of PHF has given any legal or tax advice nor made
representations regarding the legal or tax consequences of the LKE Program.
Holdings further acknowledges that it has been advised to seek independent
legal
and tax advice regarding the LKE Program, regarding whether any Relinquished
Property and Replacement Property are like-kind under Treasury Regulations
Sections 1.1031(a)-2 and 1.1031(k)-1 and to have this Agreement reviewed and
approved by independent counsel.
(f) Not
a Disqualified Person.
Holdings
hereby represents and warrants to the PHF that, to the best of Holdings’
knowledge, as of the date hereof, PHF is not a Disqualified Person with respect
to Exchangor. Holdings shall not knowingly cause PHF to become a Disqualified
Person with respect to Exchangor during the Term of this Agreement.
6.3 Survival
of Representations and Warranties.
All
representations and warranties made by or on behalf of PHF and Holdings in
this
Agreement and all obligations, agreements and covenants undertaken by or on
behalf of PHF and Holdings in this Agreement, will survive for five (5) years,
notwithstanding any investigation made by or on behalf of PHF or
Exchangor.
6.4 Covenants
of PHF.
(a) PHF
will
file its tax returns on a timely basis and pay its tax liability, if any, on
a
timely basis.
(b) PHF
shall
make all necessary filings and pay all fees required by the State of Delaware
to
conduct its business and the transactions contemplated hereby, and Exchangor
may
request that PHF make any filings other than those normally required for PHF
to
conduct its business in those states in which PHF has operations. In each case,
Holdings shall reimburse PHF for such fees.
(c) PHF
agrees that, except as otherwise required by law, it will not disclose
Confidential Information it receives from or about Exchangor except to its:
agents or attorneys-in-fact, by and under power of attorney duly executed by
PHF; employees; or other entities specifically named in this Agreement, in
each
case only to the extent necessary to achieve the purposes contemplated by this
Agreement.
6.5 Treasury
Regulations Disclosure Requirements.
Notwithstanding anything herein to the contrary, any party to this Agreement
(and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the U.S. federal income tax treatment and U.S. federal income tax structure
of
the transactions contemplated by this Agreement.
16
6.6 Maintenance
of Separate Existence.
PHF
covenants and agrees that it shall do all things necessary to continue to be
readily distinguishable from Parent and its affiliates and maintain its limited
liability company existence separate and apart from that of Parent and its
affiliates including, without limitation, (i) practicing and adhering to
organi-zational formalities, such as maintaining appropriate books and records;
(ii) observing all organizational formalities in connection with all dealings
between itself and Parent, and the affiliates or any unaffiliated entity with
respect to Parent; (iii) observing all procedures required by its operating
agreement and the laws of the State of Delaware; (iv) acting solely in its
name
and through its duly authorized officers or agents in the conduct of its
busi-nesses; (v) managing its business and affairs by or under the direction
of
its managers; (vi) ensur-ing that its managers duly authorizes all of its
actions; (vii) maintaining at least one manager who is an independent manager;
(viii) owning or leasing (including through shared arrangements with affiliates)
all office furni-ture and equipment necessary to operate its business; (ix)
not
(A) having or incurring any indebt-▇▇-▇▇▇▇ to Parent or its affiliates; (B)
guaranteeing or otherwise becoming liable for any obligations of Parent or
its
affiliates; (C) having obligations guaranteed by Parent or its affiliates;
(D)
holding itself out as responsible for debts of Parent or its affiliates or
for
decisions or actions with respect to the affairs of Parent or its affiliates;
(E) operating or purport-ing to operate as an integrated, single economic unit
with respect to Parent, its affiliates or any unaffiliated entity thereof;
(F)
seeking to obtain credit or incur any obligation to any third party based upon
the assets of Parent, its affiliates or any unaffiliated entity thereof; (G)
induce any such third party to reasonably rely on the creditworthiness of
Parent, its affiliates or any unaffili-ated entity thereof; and (H) being
directly or indirectly named as a direct or contingent beneficiary or loss
payee
on any insurance policy of Parent, its affiliates or any unaffiliated entity
thereof; (x) maintaining its deposit and other bank accounts and all of its
assets separate from those of any other Person; (xi) maintaining its
financial records separate and apart from those of any other Person; (xii)
not
suggesting in any way, within its financial statements, that its assets are
avail-able to pay the claims of creditors of Parent, its affiliates or any
unaffiliated entity thereof; (xiii) compensating all its employees, officers,
consultants and agents for services provided to it by such Persons out of its
own funds; (xiv) maintaining office space separate and apart from that of Parent
and its affiliates and a telephone number separate and apart from that of Parent
and its affiliates; (xv) conducting all oral and written communications,
includ-ing, without limitation, letters, invoices, purchase orders, contracts,
statements, and applications solely in its own name; (xvi) having separate
stationery from Parent, its affiliates or any unaffili-ated entity thereof;
(xvii) accounting for and managing all of its liabilities separately from
those of Parent and its affiliates; (xviii) allocating, on an arm’s-length
basis, all shared corporate operating services, leases and expenses, including,
without limitation, those associated with the services of shared consul-tants
and agents and shared computer and other office equipment and software; and
otherwise maintaining an arm’s-length relationship with each of Parent, its
affiliates and any unaffil-iated entity thereof; (xix) refraining from filing
or
otherwise initiating or supporting the filing of a motion in any bankruptcy
or
other insolvency proceeding involving Parent to substantively consolidate Parent
with an affiliate or unaffiliated entity thereof; (xx) remaining solvent and
assuring adequate capital-ization for the business in which it is engaged and
(xxi) conducting all of its business (whether written or oral) solely in
its own name so as not to mislead others as to the identity of Parent or its
affiliates.
17
6.7 Mergers.
PHF will
not merge or consolidate with or into any other Person unless PHF complies
with
Section 8.5.
6.8 Organizational
Documents.
PHF will
not amend any of its organizational documents, including its certificate of
formation and limited liability company agreement, unless prior to such
amendment, the Rating Agency Condition will be met.
6.9 No
Other Agreements.
PHF will
not enter into or be a party to any agreement or instrument other than this
Agreement, the Master Trust Agreement and any documents and agreements
incidental thereto or entered into as contemplated herein.
6.10 Other
Business.
PHF will
not engage in any business or enterprise or enter into any transaction other
than the making of Exchanges pursuant to this Agreement, the related exercise
of
its rights as Qualified Intermediary hereunder, the incurrence and payment
of
ordinary course operating expenses and other activities related to or incidental
to either of the foregoing.
ARTICLE
VII
TERM
AND COMPENSATION
7.1 Term.
The
term
of this Agreement shall begin on the date first written above and shall continue
for thirty-six (36) months thereafter. The term shall be automatically renewed
for successive twelve (12) month terms, unless either party notifies the other
in writing at least one hundred twenty (120) days prior to the end of a term
of
its desire to terminate this Agreement. In addition, (i) Exchangor or PHF may
terminate this Agreement, by providing not less than sixty (60) days prior
written notice to the other party hereto, For Cause, including, in the case
of a
termination by Exchangor, Exchangor’s inability to derive further benefit from
the LKE Program and (ii) Holdings may terminate this Agreement, by providing
not
less than ten (10) days prior written notice to PHF in the event a Parent
Downgrade Event shall occur. Upon any such termination, (i) this Agreement
shall
remain in effect with respect to Then-Pending Exchanges, (ii) any indemnities
and obligations owing to PHF under this Agreement as of the Termination Date
shall survive until satisfied or otherwise terminated, (iii) termination of
this
Agreement shall not affect any rights or obligations of the parties hereto
under
any Then-Pending Exchange that has not yet been completed as of the Termination
Date. In the event that any party hereto terminates this Agreement, such party
shall not do so in a manner that causes a Then-Pending Exchange not to qualify
under Code Section 1031 or in a manner that would violate Sections
1.1031(k)-1(g)(4)(ii) or (g)(6) of the Treasury Regulations or Revenue Procedure
2003-39. Subject to the restrictions above and the retention of any funds
related to Then-Pending Exchanges, upon the Termination Date, PHF shall, at
such
time, and in satisfaction of PHF’s remaining obligations under this Agreement,
pay all funds in any Account to Exchangor or Exchangor’s designee. Any funds
held by PHF with respect to a Then-Pending Exchange shall not be disbursed
to
Exchangor until after the occurrence of a Distribution Event for such
Exchange.
18
7.2 Compensation.
Holdings
agrees to timely pay PHF as agreed upon under the terms and conditions of the
fee schedule attached hereto as Exhibit
A
as the
same may be amended from time to time in writing signed by Holdings and PHF.
If
this Agreement is terminated for any reason, PHF will continue to be compensated
until all Then-Pending Exchanges are completed.
ARTICLE
VIII
MISCELLANEOUS
8.1 Pending
Litigation.
If
either party receives any written notice that there is a pending litigation
against either one of the parties in any manner relating to this Agreement,
then
the party receiving said written notice shall immediately notify the other
party
as stated in Section 8.2 below.
8.2 Communication
in Writing.
All
notices, requests, demands, waivers, consents, approvals, or other
communications required or permitted hereunder will be in writing, will be
deemed given when actually received, and will be given by personal delivery,
by
telegram, by facsimile transmission with receipt acknowledged (and with a
confirmation copy sent by registered or certified mail, postage prepaid, return
receipt requested), by same day or overnight courier services, or by registered
or certified mail, postage prepaid, return receipt requested, to the following
addresses:
|
If
to PHF:
|
||
|
▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
Attn:
▇▇▇▇▇ Yorker
|
||
|
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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||
|
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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19
|
If
to Holdings:
|
||
|
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
|
||
|
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
||
|
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
|
||
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If
to ▇.▇. ▇▇▇▇▇▇▇▇:
|
||
|
c/o
Wilmington Trust Company, as trustee
|
||
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11▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
Attention:
Corporate Trust Administration
|
||
|
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Notice
of
any change in any such address will also be given in the manner set forth above.
Whenever the giving of notice is required, the party entitled to receive such
notice may waive the giving of such notice.
8.3 Further
Assurances.
Each
party hereto will take such reasonable actions, as the other party hereto may
from time to time request, to effect this Agreement.
8.4 Amendments.
No
amendment, modification or waiver of, or consent with respect to, any provision
of this Agreement shall in any event be effective unless (i) the same shall
be
in writing and duly executed by all the parties hereto and, if the consent
of
the Holders of a Majority in Interest of each Series of Outstanding Notes for
such amendment and supplement of this Agreement is required pursuant to the
terms of Section 3.2(c) of the Indenture, consented to by the Holders of a
Majority in Interest of each Series of Outstanding Notes and (ii) the Rating
Agency Condition shall have been satisfied.
8.5 Assignment.
This
Agreement shall be binding upon and inure to the benefit of each party and
its
successors in interest and permitted assigns. Except as expressly otherwise
allowed herein, no party may assign or otherwise transfer any of its rights
or
delegate any of its duties or obligations under this Agreement without the
prior
written consent of each other party, which consent shall not be unreasonably
withheld; provided,
however,
that no
assignment by PHF shall be effective without satisfaction of the Rating Agency
Condition; provided
further,
however,
that
(1) Exchangor may pledge all of its right, title and interest in this Agreement
to secure its obligations under the Loan Agreement and (2) any party hereto
may
assign (subject to the Rating Agency Condition in the case of PHF) this
Agreement, without such written consent, to a successor or surviving entity
resulting from a merger or acquisition involving substantially all of a party’s
stock or assets; provided
further
that any
assignment by PHF or any transfer of any interest in this Agreement by PHF,
whether by merger or acquisition or otherwise, shall only be effective if the
successor or surviving entity (x) is a bankruptcy-remote, special purpose entity
organized under the laws of any state of the United States and is not an
affiliate of Exchangor and (y) expressly agrees in writing to abide by the
terms of this Agreement and the Master Trust Agreement. To secure Exchangor’s
obligations under the Loan Agreement, Exchangor has pledged, assigned, conveyed,
delivered, transferred and set over to Chesapeake Funding LLC a security
interest in all of its right, title and interest in, to and under this
Agreement, including any amendments hereto, all monies due and to become due
to
Exchangor hereunder, whether such amounts are payable to Exchangor from a Joint
Collection Account by PHF or payable as damages for breach of this Agreement
or
otherwise, and all other property paid or payable by PHF to Exchangor hereunder
and all rights to compel performance and otherwise exercise remedies hereunder
and PHF hereby consents to such assignment; provided,
however,
that
Exchangor shall have no right, title or interest in and shall not obtain the
benefits of, and no security interest shall attach to, any Qualified Trust
Funds
with respect to an Exchange prior to the occurrence of a Distribution Event
with
respect to such Exchange. To secure Chesapeake Funding LLC’s obligations under
the Indenture and all other Issuer Obligations, Chesapeake Funding LLC has
pledged, assigned, conveyed, delivered, transferred and set over to the
Chesapeake Trustee, for the benefit of the Investor Noteholders, a security
interest in all right, title and interest in, to and under this Agreement
conveyed to Chesapeake Funding LLC by Exchangor and PHF hereby consents to
such
assignment. Except as provided in this paragraph, nothing contained in this
Agreement is intended, or will be construed, to confer upon or give to any
Person, other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies under of by reason of this
Agreement.
20
8.6 Successors
and Assigns; No Third-Party Beneficiaries.
This
Agreement binds, inures to the benefit of, and is enforceable by the successors
and permitted assigns of the parties hereto and does not confer any rights
on
any other persons or entities.
8.7 No
Benefit to Others.
The
representations, warranties, covenants, and agreements contained in this
Agreement are for the sole benefit of the parties hereto and their successors
and permitted assigns, and this Agreement will not be construed as conferring
and is not intended to confer any rights on any other persons or
entities.
8.8 Strict
Performance.
The
failure of any party to insist upon strict performance of any of the terms
or
conditions of this Agreement will not constitute a waiver of any of its rights
hereunder, provided
that any
provision may be waived by the party intended to benefit therefrom by a written
instrument signed by such party.
8.9 Time.
Time is
of the essence in each and every term and provision of this
Agreement.
8.10 Severability.
If any
provision of this Agreement is held illegal, invalid, or unenforceable in a
jurisdiction, this Agreement will, in such circumstances, be deemed modified
in
such jurisdiction to the extent necessary to render enforceable the provisions
hereof, and such illegality, invalidity, or unenforceability will not affect
any
other provision of this Agreement in any other jurisdiction.
8.11 Jury
Trial Waiver.
The
parties to this Agreement hereby unconditionally waive their respective rights
to a jury trial of any claim or cause of action based upon or arising out of,
directly or indirectly, this Agreement, any of the related documents, any
dealings among them relating to the subject matter of the transactions
contemplated hereby or any related transactions, or the relationship that is
being established among them. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court (including,
without limitation, contract claims, tort claims, breach of duty claims, and
all
other common law and statutory claims). This waiver is irrevocable meaning
that
it may not be modified either orally or in writing, and the waiver shall apply
to any subsequent amendments, renewals, supplements or modifications to this
Agreement, and related documents, or to any other documents or agreement, any
related documents, or to any other documents or agreements to this transaction
or any related transaction. In the event of litigation, this Agreement may
be
filed as a written consent to a trial by the court.
21
8.12 Waiver
of Automatic Stay.
In the
event PHF shall have commenced a bankruptcy proceeding, or an involuntary
bankruptcy proceeding shall have been commenced against PHF, PHF shall waive
the
automatic stay to the extent allowable under Section 362 of the Bankruptcy
Code,
and any and all defenses or objections based thereon, subject to the entry
of an
order by the bankruptcy court presiding over PHF’s bankruptcy proceedings so
authorizing, such that Exchangor shall retain the unilateral, absolute and
unconditional right, exercisable at its sole option, to terminate with or
without cause this Agreement and any related agreements (subject to the terms
of
those agreements).
8.13 Counterparts
and Telecopied Signatures.
To
facilitate execution, this Agreement may be executed in any number of
counterparts as may be convenient or necessary, and it shall not be necessary
that the signatures of all parties hereto be contained on any one counterpart
hereof. Additionally, the parties hereto hereby covenant and agree that, for
purposes of facilitating the execution of this Agreement, (a) the signature
pages taken from separate individually executed counterparts of this Agreement
may be combined to form multiple fully executed counterparts and (b) a facsimile
signature shall be deemed to be an original signature. All executed counterparts
of this Agreement shall be deemed to be originals, but all such counterparts
taken together shall constitute one and the same agreement.
8.14 Entire
Agreement.
This
Agreement constitutes the entire understanding and agreement among the parties
with respect to the subject matter contained herein and supersedes any prior
understandings and agreements (whether written or oral) among them respecting
such subject matter.
8.15 Electronic
Signature.
In the
satisfaction of their respective obligations, and exercise of their respective
rights under this Agreement, and any related documents or agreements, to include
bills of sale, each party is, and hereby agrees to be, bound (as though duly
authorized, notarized, and sealed original signatures were affixed to a
document) by any evidence of consent, authorization, or agreement they transmit
or cause to be transmitted by electronic means, including but not limited to:
downloading or transmitting of information via e-mail; facsimile; the internet,
or similar electronic transmission.
8.16 Indebtedness.
PHF
shall not be required to assume any secured loan or other obligation on any
Replacement Property or to execute any promissory note or other evidence of
indebtedness in connection with the acquisition of any Replacement Property,
including any of the foregoing that would impose any personal liability upon
PHF
for repayment of such obligation. PHF shall not execute any agreement nor
participate in any transaction which, in the reasonable opinion of PHF or its
counsel, would require PHF to engage in any unlawful or fraudulent
action.
22
8.17 Dates,
Descriptions,
Values, and Matching.
Exchangor shall be ultimately and solely responsible for the accuracy of any
transfer dates, Relinquished Property and Replacement Property descriptions,
Relinquished Property and Replacement Property values, and/or Relinquished
Property and Replacement Property matching.
8.18 Acknowledgment
of Independent Relationship.
Exchangor and PHF mutually acknowledge and agree that, pursuant to this
Agreement, PHF will solely acquire Rights under assignments of Relinquished
Property Agreements and the Replacement Property Agreements pursuant to the
provisions of Section 1031 of the Code and the Treasury Regulations thereunder
and that legal title to the Relinquished Property will be directly transferred
to one or more Buyers and legal title to the Replacement Property will be
directly transferred by one or more Sellers to Exchangor. PHF and Exchangor
desire to maintain an independent relationship, therefore, PHF and
Exchangor hereby acknowledge that in engaging in the activities contemplated
by
this Agreement, PHF is acting as a Qualified Intermediary. In no event shall
PHF
or any of PHF’s employees, agents or members be deemed to be acting as an agent
of Exchangor (except as expressly provided in this Agreement and the Treasury
Regulations), nor shall PHF have any fiduciary relationship to
Exchangor.
8.19 Force
Majeure.
No party
to this Agreement is liable to any other party for losses due to, or if it
is
unable to perform its obligations under the terms of this Agreement if such
inability to perform is caused by circumstances reasonably beyond a party’s
control, such as natural disasters, fire, floods, third party strikes, failure
of public utilities or telecommunications infrastructure, or any similar causes
reasonably beyond its control.
8.20 Consequential
Damages.
Notwithstanding anything to the contrary in this Agreement, in no event shall
PHF or any director, officer, employee, member, shareholder or agent of such
party be liable for, and Exchangor releases PHF and each director, officer,
employee, member, shareholder or agent of PHF from, any and all liability for
special, indirect, incidental or consequential damages of any kind whatsoever
(including but not limited to lost profits) even if PHF or any director,
officer, employee, member, shareholder or agent of PHF, is advised of such
loss
or damage and regardless of the form of action.
The
aforesaid is not intended to and shall in no way diminish or bar Exchangor’s
obligation to indemnify PHF.
8.21 Investment
Losses.
In no
event shall PHF be liable for, and Exchangor hereby releases PHF from, any
and
all liability from any damages resulting from, any loss of principal, interest
or other earnings which may be incurred as a result of the investment of any
funds or in redeeming any investment held by PHF in any account.
23
8.22 Governing
Law, Venue and Jury Trial Waiver.
(a) GOVERNING
LAW AND VENUE.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS
OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. VENUE SHALL
BE IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF NEW
YORK.
(b) JURY
TRIAL WAIVER.
EXCHANGOR AND PHF HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE THEIR RIGHT
TO
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING FROM THE SUBJECT MATTER
OF THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM THERETO.
8.23 No
Petitions;
Subordination.
(a) Exchangor
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all of the Investor Notes, it will not
institute against, or join any other Person in institut-ing against, PHF, any
involuntary bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other sim-ilar proceeding under the laws of the United States
or
any state of the United States. In the event that Exchangor takes action in
violation of this Section 8.23(a), PHF agrees, for the benefit of the Investor
Noteholders, that it shall file an answer with the bank-ruptcy court or
otherwise properly contest the filing of such a petition by Exchangor against
PHF or the commencement of such action and raise the defense that Exchangor
has
agreed in writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as its counsel advises that it may
assert.
(b) PHF
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all of the Investor Notes, it will not
institute against, or join any other Person in institut-ing against, Holdings,
Chesapeake or ▇.▇. ▇▇▇▇▇▇▇▇, any involuntary bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other sim-ilar proceeding
under the laws of the United States or any state of the United States. In the
event that PHF takes action in violation of this Section 8.23(b), Holdings
agrees, for the benefit of the Investor Noteholders, that it shall file, or
cause to be filed, an answer with the bank-ruptcy court or otherwise properly
contest the filing of such a petition by PHF against Holdings, Chesapeake or
▇.▇. ▇▇▇▇▇▇▇▇ or the commencement of such action and raise the defense that
PHF
has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as its counsel advises
that
it may assert.
(c) DLPT
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all of the Investor Notes, it will not
institute against, or join any other Person in institut-ing against, Holdings,
any involuntary bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other sim-ilar proceeding under the laws of the
United States or any state of the United States. In the event that DLPT takes
action in violation of this Section 8.23(c), Holdings agrees, for the benefit
of
the Investor Noteholders, that it shall file, or cause to be filed, an answer
with the bank-ruptcy court or otherwise properly contest the filing of such
a
petition by DLPT against Holdings or the commencement of such action and raise
the defense that DLPT has agreed in writing not to take such action and should
be estopped and precluded therefrom and such other defenses, if any, as its
counsel advises that it may assert.
24
(d) PHF
hereby agrees that the obligations of Holdings under this Agreement shall be
subordinate in all respects to Holdings’ obligations under the Loan Agreement
and any and all claims against Holdings arising from the obligations of Holdings
under this Agreement, including, without limitation, all obligations under
Article V and any obligations in respect of fees and expenses, shall be
subordinate in all respects to claims arising from Holdings’ obligations under
the Loan Agreement. The obligations of Holdings hereunder shall be limited
recourse obligations of Holdings that are limited in right of payment to amounts
available therefor, after payment of all amounts then owing under the Loan
Agreement, out of the assets of Holdings and to the extent that the amounts
available out of the assets of Holdings for the payment thereof are
insufficient, any such insufficiency shall not constitute a claim against
Holdings.
(e) The
provisions of this Section 8.23 shall survive the termination of this
Agreement.
8.24 Limitation
of Liability.
It
is
expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as SUBI Trustee of ▇.▇. ▇▇▇▇▇▇▇▇ under
the
Origination Trust Agreement, in the exercise of the powers and authority
conferred and vested in it, (b) nothing herein contained shall be construed
as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (c) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of ▇.▇. ▇▇▇▇▇▇▇▇ or be liable for
the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by any party under the Transaction
Documents.
8.25 SUBIs.
Holdings
represents, warrants and covenants that (a) each of the Lease SUBI and the
Fleet
Receivable SUBI is a separate series of the Origination Trust as provided in
Section 3806(b)(2) of Chapter 38 of Title 12 of the Delaware Code, 12
Del.C. § 3801 et seq., (b)(i) the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to the Lease SUBI,
the Lease SUBI Portfolio or the Fleet Receivable SUBI shall be enforceable
against the Lease SUBI Portfolio or the Fleet Receivable SUBI only, as
applicable, and not against any other SUBI Portfolio (used in this Section
as
defined in the Origination Trust Agreement) or the UTI Portfolio (as defined
in
the Origination Trust Agreement) and (ii) the debts, liabilities, obligations
and expenses incurred, contracted for or otherwise existing with respect to
any
other SUBI (used in this Section as defined in the Origination Trust Agreement),
any other SUBI Portfolio, the UTI or the UTI Portfolio (as defined in the
Origination Trust Agreement) shall be enforceable against such other SUBI
Portfolio or the UTI Portfolio (as defined in the Origination Trust Agreement)
only, as applicable, and not against any other SUBI Assets, (c) except to the
extent required by law, UTI Assets or SUBI Assets with respect to any SUBI
(other than the Lease SUBI and the Fleet Receivable SUBI) shall not be subject
to the claims, debts, liabilities, expenses or obligations arising from or
with
respect to the Lease SUBI or Fleet Receivable SUBI, respectively, in respect
of
such claim, (d)(i) no creditor or holder of a claim relating to the Lease SUBI,
the Fleet Receivable SUBI or the Lease Receivable SUBI Portfolio shall be
entitled to maintain any action against or recover any assets allocated to
the
UTI or the UTI Portfolio (as defined in the Origination Trust Agreement) or
any
other SUBI or the assets allocated thereto, and (ii) no creditor or holder
of a
claim relating to the UTI, the UTI Portfolio (as defined in the Origination
Trust Agreement) or any SUBI other than the Lease SUBI or the Fleet Receivable
SUBI or any SUBI Assets other than the Lease SUBI Portfolio or the Fleet
Receivables shall be entitled to maintain any action against or recover any
assets allocated to the Lease SUBI or the Fleet Receivable SUBI, and (e) any
purchaser, assignee or pledgee of an interest in the Lease SUBI, the Lease
SUBI
Certificate, the Fleet Receivable SUBI, the Lease SUBI Certificate, the Fleet
Receivable SUBI Certificate, any other SUBI, any other SUBI Certificate (used
in
this Section as defined in the Origination Trust Agreement), the UTI or the
UTI
Certificate (as defined in the Origination Trust Agreement) must, prior to
or
contemporaneously with the grant of any such assignment, pledge or security
interest, (i) give to the Origination Trust a non-petition covenant
substantially similar to that set forth in Section 6.9 of the Origination Trust
Agreement, and (ii) execute an agreement for the benefit of each holder,
assignee or pledgee from time to time of the UTI or UTI Certificate (as defined
in the Origination Trust Agreement) and any other SUBI or SUBI Certificate
to
release all claims to the assets of the Origination Trust allocated to the
UTI
and each other SUBI Portfolio and in the event that such release is not given
effect, to fully subordinate all claims it may be deemed to have against the
assets of the Origination Trust allocated to the UTI Portfolio (as defined
in
the Origination Trust Agreement) and each other SUBI Portfolio.
25
8.26 Headings.
The
headings in this Agreement are for convenience of reference only and do not
affect its interpretation.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK.
SIGNATURES
TO APPEAR ON FOLLOWING PAGE.]
26
IN
WITNESS WHEREOF, the
parties have duly executed and delivered this Agreement as of the day and
year
first above written.
PHH
FUNDING, LLC
By:
WACHOVIA EXCHANGE SERVICES, LLC, its sole member
By:
Its
Manager, Wachovia Bank, National Association
By:
/s/:
▇▇▇▇▇ Yorker
Name:
▇▇▇▇▇ Yorker
Title:
Director
27
CHESAPEAKE
FINANCE HOLDINGS LLC
By:
/s/:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Vice President and Treasurer
28
▇.▇.
▇▇▇▇▇▇▇▇ TRUST
By:
WILMINGTON TRUST COMPANY,
not
in
its individual capacity but solely as Delaware Trustee
By:
/s/:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:
Financial Services Officer
|
|
29
APPENDIX
A
A. Interpretation.
In each
Operative Document, unless a clear contrary intention appears:
(i) the
singular number includes the plural number and vice versa;
(ii) reference
to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are permitted by the Operative Documents,
and reference to a Person in a particular capacity excludes such Person in
any
other capacity or individually;
(iii) reference
to any gender includes each other gender;
(iv) reference
to any agreement, document or instrument (including any Operative Document)
means such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof and, if
applicable, the terms of the other Operative Documents, and reference to any
promissory note includes any promissory note which is an extension or renewal
thereof or a substitute or replacement therefor
(v) reference
to any law, act or regulation means such law, act or regulation as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder,
and
reference to any section or other provision of any law, act or regulation means
that provision of such law, act or regulation from time to time in effect and
constituting the substantive amendment, modification, codification, replacement
or reenactment of such section or other provision;
(vi) reference
in any Operative Document to any Article, Section, Appendix, Schedule or Exhibit
means such Article or Section thereof or Appendix, Schedule or Exhibit thereto,
and reference in any Section of any Operative Document to any clause means
such
clause of such Section;
(vii) “hereunder,”
“hereof, “hereto” and words of similar import shall be deemed references to an
Operative Document as a whole and not to any particular Article, Section or
other provision thereof;
(viii) “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term; and
B. Accounting
Terms and Determinations. Unless
otherwise specified herein, all accounting terms used therein shall be
interpreted, all accounting determinations thereunder shall be made, and all
financial statements required to be delivered thereunder shall be prepared
in
accordance with GAAP.
1
C. Conflict
in Operative Documents. If
there
is any conflict between any Operative Documents, such Operative Documents shall
be interpreted and construed, if possible, so as to avoid or minimize such
conflict but, to the extent (and only to the extent) of such conflict, the
Master Exchange Agreement shall prevail and control.
D. Legal
Representation of the Parties. The
Operative Documents were negotiated by the parties with the benefit of legal
representation and any rule of construction or interpretation otherwise
requiring the Operative Documents to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof or
thereof.
E. Defined
Terms. Unless
a
clear contrary intention appears, terms defined herein have the respective
indicated meanings when used in each Operative Document.
“Accounts”
shall
mean the Reservoir Account, any Joint Collection Accounts and/or any Joint
Disbursement Accounts, as the context requires.
“Additional
Subsidies”
mean
funds other than Relinquished Property Proceeds that Holdings deposits into
the
Reservoir Account or a Joint Disbursement Account to pay acquisition of
Replacement Property Acquisition Costs or for Non-LKE
Disbursements.
“Appendix
A” means
this Appendix A to the Master Exchange Agreement and Master Trust Agreement,
as
it may be amended, supplemented, amended and restated or otherwise modified
from
time to time.
“Base
Indenture”
shall
mean the Base Indenture dated as of March 7, 2006 between Chesapeake and ▇▇
▇▇▇▇▇▇ Chase Bank, National Association, as trustee, as amended, modified or
supplemented from time to time.
“Business
Day”
shall
mean any day except a Saturday, Sunday or legal holiday on which the offices
of
the Chesapeake Trustee, or, with respect to any matter involving the Reservoir
Account or any Joint Disbursement Account, WBNA are not open for
business.
“Buyer”
means
any
person or entity that from time to time buys one or more Relinquished Properties
pursuant to a Relinquished Property Agreement.
“Chesapeake”
means
Chesapeake Funding LLC, a Delaware limited liability company.
“Chesapeake
Trustee”
means
JPMorgan Chase Bank, National Association, in its capacity as trustee under
the
Indenture.
“Code”
means
the Internal Revenue Code of 1986, as amended. Section references shall be
deemed to refer to the corresponding section of any successor federal income
tax
law in effect during the Term of this Agreement.
“Confidential
Information” shall
mean any proprietary, confidential or trade secret information of Holdings
or
its Affiliates relating to, among other things: the timing, quantity, type,
or
price of sales; the timing, quantity, type, or price of purchases; or services,
processes, technology, designs, methodologies, specifications, operating
methods, know-how, business or marketing plans, or business relationships of
Holdings or its Affiliates.
2
“Deferred
Exchange Deemed
Identification Procedures”
means
the procedures pursuant to the last sentence of Section 1.1031(k)-1(c)(1) of
the
Treasury Regulations and Section 4.02 of Revenue Procedure 2003-39 by which
one
or more Replacement Properties acquired by an Exchangor during the Deferred
Exchange Identification Period for an Exchange, and matched by Exchangor with
one or more Relinquished Properties for such Exchange are deemed to have
satisfied the requirement of Section 1031(a)(3) of the Code regarding property
identification.
“Deferred
Exchange Identification Period”
means
with respect to each Exchange, the period beginning on the date Exchangor
transfers the first Relinquished Property for such Exchange and ending at
midnight on the 45th calendar day thereafter (irrespective of whether such
day
is a Saturday, Sunday or a holiday).
“Deferred
Exchange Period”
means,
with respect to each Exchange, the period beginning on the date Exchangor
transfers the first Relinquished Property for such Exchange and ending at
midnight on the earlier of (a) the 180th calendar day thereafter (irrespective
of whether such day is a Saturday, Sunday or a holiday), or (b) the due date
for
Exchangor’s U.S. federal income tax return for the year in which the transfer of
the first Relinquished Property for such Exchange takes place, determined with
regard to extensions.
“Disqualified
Person” is
defined in Section
6.1 of the Master Exchange Agreement.
“Distribution
Event”
means,
with respect to Relinquished Property and any related Exchange hereunder, the
occurrence of one of the following: (a) Exchangor has failed to identify any
potential Replacement Property with respect to such Relinquished Property
(including Replacement Property deemed to be identified under the Deferred
Exchange Deemed Identification Procedures), then a Distribution Event shall
occur upon the expiration of the Deferred Exchange Identification Period for
such Exchange, or (b) if Exchangor has identified (or is deemed to have
identified) any potential Replacement Property with respect such Relinquished
Property, then a Distribution Event shall occur upon the earlier of (i)
Exchangor’s receipt of all Identified Replacement Property with respect to such
Exchange or (ii) the expiration of the Deferred Exchange Period for such
Exchange.
“Electronic
Funds Transfer”
shall
mean any funds transfer initiated by an electronic instruction, including,
without limitation, any funds transfer via the Automated Clearing House system,
any wire transfer via the Federal Reserve System and any funds transfer recorded
on the books and records of the banking institution maintaining the relevant
accounts.
“Exchange”
means
each of a series of transactions pursuant to this Agreement, as determined
by
Exchangor, consisting of (i) transfer(s) of one or more Relinquished Properties,
(ii) the subsequent related acquisition(s) of one or more Identified Replacement
Properties for such Exchange, and (iii) the matching of such Relinquished
Properties with such Replacement Properties by the Exchangor in order to create
a separate and distinct exchange as described in the “safe harbor” of Section
4.01 of Revenue Procedure 2003-39.
3
“Exchangor”
means,
collectively, Chesapeake Holdings LLC, a Delaware limited liability company,
and
▇.▇. ▇▇▇▇▇▇▇▇ Trust, a Delaware statutory trust.
“For
Cause”
means,
with respect to a party’s termination of one or more Operative Documents, a
material breach of any representation, covenant or obligation under any
Operative Document by the non-terminating party; provided, however, that (i)
if
the terminating party is Exchangor, then Exchangor’s inability to derive future
benefit from the LKE Program may give rise to a termination “For Cause” and (ii)
an Operative Document shall continue in full force and effect if the
non-terminating party is able to cure such breach prior to the Termination
Date.
“Holdings”
has
the
meaning specified in the preamble to the Master Exchange Agreement.
“Identified
Replacement Property(ies)”
means,
with respect to each Exchange, one or more potential Replacement Properties
as
the Relinquished Property(ies) for such Exchange (i) deemed to be identified
by
the Exchangor during the Deferred Exchange Identification Period pursuant to
the
Deferred Exchange Deemed Identification Procedures or (ii) identified in writing
by the Exchangor during the Deferred Exchange Identification Period pursuant
to
the Written Deferred Exchange Identification Procedures.
“Indebtedness”
means,
with respect to a person, any obligation of such person for borrowed money,
obligations evidenced by bonds, debentures, notes or similar instruments,
conditional sale or other title retention agreements relating to the purchase
of
property or for the deferred price of property or services, obligations under
take or pay or similar arrangements, obligations of third parties that are
guaranteed or secured by property of such person, capital lease obligations,
letters of credit and bankers’ acceptances and any other obligations that would
appear as a liability on the person’s balance sheet.
“Indemnified
Parties,” means,
for purposes of the Master Exchange Agreement, PHF and any of its shareholders,
officers, directors, employees, agents, affiliates, successors and
assigns.
“Indenture”
means
the Base Indenture and all amendments thereof and supplements thereto, including
any Indenture Supplement (as defined in the Base Indenture).
“Joint
Collection Account(s)”
shall
mean the account or accounts maintained by the Chesapeake Trustee, initially
in
the joint name of PHF and the Chesapeake Trustee, pursuant to Section 5.1 of
the
Base Indenture for (1) the deposit of Vehicle disposition proceeds and (2)
the
identification and subsequent separation of the portion of such funds that
are
Relinquished Property Proceeds from the portion of such funds that are
Non-Qualified Funds, which account or accounts are intended to be “joint
accounts” within the meaning of Section 5.02 of Revenue Procedure
2003-39.
4
“Joint
Disbursement Account”
means an
account (1) qualifying within the definition of “Joint Accounts” described in
Section 5.02 of Revenue Procedure 2003-39, and (2) maintained at a bank that
processes funds disbursed on behalf of Exchangor and PHF to
Sellers.
“Joint
Accounts” means
an
account qualifying within the definition of “Joint Accounts” described in
Section 5.02 of Revenue Procedure 2003-39.
“Leasing
Business”
means
Exchangor’s business operations with respect to the leasing of
vehicles.
“Liabilities
Due on Transfer”
means,
with respect to each transfer of Relinquished Property Subject to Liabilities,
(i) any debt secured by such Relinquished Property that must be repaid as a
result of such transfer and (ii) any debt that is required to be repaid with
the
sale proceeds from the disposition of such Relinquished Property.
“LKE
Program”
means a
series of exchanges of one or more Relinquished Properties for one or more
Replacement Properties pursuant to a program described in Revenue Procedure
2003-39 and qualifying under one or more “safe harbors” of Sections 4, 5 and 6
of Revenue Procedure 2003-39.
“Loan
Agreement”
means
the Loan Agreement dated as of March 7, 2006 among Holdings, ▇.▇. ▇▇▇▇▇▇▇▇
and
Chesapeake, as amended, modified or supplemented from time to time.
“Loan
Event of Default”
means
an “event of default” as defined in the Loan Agreement.
“Loans”
means
the loans made by Chesapeake to Holdings pursuant to the Loan
Agreement.
“Master
Exchange Agreement”
means
the Master Exchange Agreement dated as of March 7, 2006 (as the same may be
supplemented, amended, amended and restated or otherwise modified) between
Holdings and ▇.▇. ▇▇▇▇▇▇▇▇, collectively as the Exchangor, and PHF, in its
capacity as Qualified Intermediary, and pursuant to which PHF, Holdings and
▇.▇.
▇▇▇▇▇▇▇▇ are engaging in an LKE Program.
“Master
Trust Agreement”
means
that certain Master Trust Agreement dated March 7, 2006, among PHF, Holdings,
▇.▇. ▇▇▇▇▇▇▇▇ and WBNA, as trustee.
“Non-LKE
Disbursements”
means
disbursements for items relating to the LKE Program other than Replacement
Property Acquisition Costs that are funded with Additional Subsidies deposited
into the Joint Disbursement Account(s) by Holdings.
5
“Non-Qualified
Funds”
means
all amounts that are (1) not Relinquished Property Proceeds and (2) deposited
into a Joint Collection Account.
“Operative
Documents” means
the
following documents:
(a) The
Master Exchange Agreement, and
(b) the
Master Trust Agreement
“Parent
Downgrade Event”
shall
mean, on any date of determination, either (i) WBNA (or any entity that is
a
successor to WBNA as the ultimate parent of PHF) shall have a short-term credit
rating of below “A-1” from S&P or (ii) if at any time WBNA (or any entity
that is a successor to WBNA as the ultimate parent of the PHF) does not have
a
short-term credit rating, WBNA (or any entity that is a successor to WBNA as
the
ultimate parent of PHF) shall have a long-term credit rating of below “A” from
S&P.
“PHF”
means
PHH
Funding, LLC, a Delaware limited liability company.
“Qualified
Intermediary”
means a
“qualified intermediary” as defined in Section 1.1031(k)-1(g)(4) of the Treasury
Regulations.
“Qualified
Trust”
means a
trust which meets the requirements of Section 1.1031(k)-1(g)(3)(iii) of the
Treasury Regulations.
“Qualified
Trust Funds”
means
the funds in the Reservoir Account, including any funds earned from the
investment of funds held in the Reservoir Account.
“Relinquished
Property(ies)”
means
certain Vehicles used in Exchangor's Leasing Business and qualifying as
“relinquished property” (within the meaning of Section 1.1031(k)-1(a) of the
Treasury Regulations) for an Exchange hereunder.
“Relinquished
Property Agreement”
means
each agreement for the sale or other disposition of one or more potential
Relinquished Property(ies) that either (i) relates to a potential Relinquished
Property currently subject to a lease to a customer or (ii) relates to a
potential Relinquished Property which becomes subject to a lease to a customer
during the Term of this Agreement.
“Relinquished
Property Proceeds”
means,
with respect to a Relinquished Property, the amount (excluding Non-Qualified
Funds) received from, or on behalf of, the relevant Buyer with respect to
Buyer's acquisition of such Relinquished Property, or otherwise received in
connection with Exchangor's disposition of such Relinquished
Property.
“Relinquished
Property Subject to Liabilities”
shall
mean any Relinquished Property that is subject to (i) a requirement or
obligation that debt secured by such Relinquished Property must be repaid as
a
result of such Relinquished Property being transferred or (ii) a requirement
that the sale proceeds from the disposition of such Relinquished Property be
applied to satisfy the debt secured by such Relinquished Property.
6
“Replacement
Property(ies)”
means
Vehicles that are like-kind (within the meaning of Section 1031 of the Code
and
Section 1.1031(a)-2 of the Treasury Regulation) to the Relinquished
Property(ies) and to be held for productive use in connection with Exchangor’s
Leasing Business and qualifying as “replacement property” (within the meaning of
Section 1.1031(k)-1(a) of the Treasury Regulations) for an Exchange
hereunder.
“Replacement
Property Acquisition Cost”
means,
with respect to Replacement Property, the amount of consideration (including
funds provided by PHF, to the extent of funds in the Reservoir Account and
the
earnings upon such funds, and such Additional Subsidies provided by Holdings
as
may be necessary) required to be paid to, or for the benefit of, the relevant
Seller to acquire such Replacement Property, and any other amounts (excluding
Non-LKE Disbursements) required to be transferred in connection with the
acquisition of such Replacement Property under the related Replacement Property
Agreement.
“Replacement
Property Agreement” means
each agreement for the acquisition of one or more potential Replacement
Properties that either (i) is currently in effect between Exchangor and a Seller
or (ii) is entered into by Exchangor and a Seller during the Term of this
Agreement.
“Reservoir
Account”
means an
account (1) held in trust by WBNA as Trustee pursuant to the Master Trust
Agreement, (2) used to receive Relinquished Property Proceeds from the Joint
Collection Accounts, and (3) used to provide Relinquished Property Proceeds
to
the Joint Disbursement Account (to the extent of the funds in the Reservoir
Account, including any funds earned from the investment of funds held in the
Reservoir Account).
“Revenue
Procedure 2003-39”
means
the Revenue Procedure promulgated by the Internal Revenue Service as 2003-39
I.R.B. 2003-22, May 7, 2003, as the same may be amended, supplemented, modified
or replaced by (i) future public guidance promulgated by the Internal Revenue
Service with respect to LKE programs generally during the Term of this Agreement
and/or (ii) any private letter rulings obtained by the Exchangor from the
Internal Revenue Service with respect to Exchangor’s LKE Program.
“Rights”
shall
mean (1) with respect to any Relinquished Property, Exchangor’s rights (but not
obligations) in a Relinquished Property Agreement to sell such Relinquished
Property and to receive payment of the purchase price for such Relinquished
Property and (2) with respect to any Replacement Property, Exchangor’s rights
(but not obligations) to acquire such Replacement Property.
“Safe
Harbor”
shall
mean any one or more of the safe harbors described in Section 1.1031(k)-1(g)
of
the Treasury Regulations and any one or more of the safe harbor provisions
of
Revenue Procedure 2003-39.
“Seller”
means
any person or entity from whom the Exchangor from time to time purchases
Replacement Property(ies).
7
“Term
of this Agreement” means,
with respect to each of the Master Exchange, and the Master Trust Agreement,
as
the context requires, the period commencing on March __, 2006 and ending on
the
Termination Date with respect to such Agreement; provided, however, that with
respect to Then-Pending Exchanges only, the “Term of this Agreement” shall be
deemed to continue until the expenditure or distribution of all Relinquished
Property Proceeds with respect to each such Then-Pending Exchange.
“Termination
Date”
means,
with respect to each of the Master Exchange Agreement and the Master Trust
Agreement, the date when the relevant Agreement terminates pursuant to Section
7.1 of the Master Exchange Agreement or Section 11 of the Master Trust
Agreement, as the case may be.
“Then-Pending
Exchange”
means an
Exchange hereunder as to which PHF holds any Relinquished Property Proceeds
on
the Termination Date.
“Treasury
Regulations”
means
all final, proposed and temporary Treasury Department regulations under Title
26
of the Code of Federal Regulations as in effect during the Term of this
Agreement. Section references shall be deemed to refer to the corresponding
section of any amendment, modification or restatement to such
regulations.
“Trustee”
means
WBNA in its capacity as Trustee under the Master Trust Agreement.
“WBNA”
means
Wachovia Bank, National Association.
“Written
Deferred Exchange Identification Procedures”
means,
with respect to each Exchange, the procedures set forth in Section
1.1031(k)-1(c)(2) of the Treasury Regulations and Section 4.02 of Revenue
Procedure 2003-39 for Exchangor’s written identification during the Deferred
Exchange Identification Period of one or more potential Replacement Properties
for such Exchange to be matched by Exchangor with one or more Relinquished
Properties for such Exchange.
8