exv10w7









Exhibit 10.7




CHESAPEAKE FUNDING LLC




$1.0 billion

Series 2009-1 Floating Rate Asset Backed Notes



PURCHASE AGREEMENT



June 2, 2009




J.P. Morgan Securities Inc.

Banc of America Securities LLC




Citigroup Global Markets Inc.

As Representatives of the several Initial Purchasers named in Schedule 1,



c/o J.P. Morgan Securities Inc.

270 Park Avenue

New York, New York 10017



Ladies and Gentlemen:




          CHESAPEAKE FUNDING LLC, a Delaware special purpose limited liability company (the
“Issuer”), proposes to issue and sell U.S. $1,000,000,000 principal amount of its Series
2009-1 Floating Rate Asset Backed Notes (the “Securities”). The Securities will be issued
pursuant to the Series 2009-1 Indenture Supplement, to be dated as of June 9, 2009 (the
“Indenture Supplement”), between the Issuer and The Bank of New York Mellon, as Indenture
Trustee (the “Indenture Trustee”), to the Amended and Restated Base Indenture, dated as of
December 17, 2008 (as amended or modified from time to time, the “Base Indenture” and,
together with the Indenture Supplement, the “Indenture”), between the Issuer and the
Indenture Trustee. The Issuer is a wholly-owned subsidiary of PHH Sub 2 Inc. (“PHH Sub 2”)
and an indirect wholly-owned subsidiary of PHH Corporation (“PHH”). The Issuer makes loans
to Chesapeake Finance Holdings LLC (“Holdings”) pursuant to a Loan Agreement among the
Issuer, Holdings and D.L. Peterson Trust (the “Origination Trust”), which are secured by,
among other things, beneficial interests in certain assets of the Origination Trust. PHH Vehicle
Management Services, LLC (“VMS”) acts as administrator of the Issuer and Holdings and acts
as the servicer of the assets of the Origination Trust. VMS is an indirect wholly-owned subsidiary
of PHH. Holdings is an entity whose sole common member is VMS and whose sole preferred member is
PHH Sub 1 Inc. (“PHH Sub 1”), a wholly-owned subsidiary of PHH. VMS, PHH and the Issuer
hereby confirm their agreement with the several initial purchasers named in Schedule 1 hereto (the
“Initial Purchasers”) concerning the purchase of the Securities from the Issuer by the
Initial Purchasers.




          Certain of the Initial Purchasers are financial institutions appearing on the Federal Reserve
Bank of New York’s list of Primary Government Securities Dealers Reporting to the Government
Securities Dealers Statistics Unit of the Federal Reserve Bank of New York (each in such capacity,
a “Primary Dealer”), and may be party to that certain Master Loan and Security Agreement
among the Federal Reserve Bank of New York (the “FRBNY”), as Lender, various












 



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Primary Dealers party thereto, The Bank of New York Mellon, as Administrator, and The Bank of
New York Mellon, as Custodian (the “MLSA”), in the form most recently posted by the FRBNY
at http://www.newyorkfed.org/markets/talf_docs.html, in connection with the Term Asset-Backed
Securities Loan Facility (“TALF”). To the extent expressly provided in this Agreement, and
subject to the limitations set forth in Section 23 hereof, certain of the rights, benefits and
remedies of the Initial Purchasers under this Agreement will be for the benefit of, and will be
enforceable by, each Initial Purchaser who is a Primary Dealer (each a “PD Initial
Purchaser”) not only in its capacity as an Initial Purchaser but also in its capacity as a
Primary Dealer and as a signatory to a letter agreement making such Primary Dealer a party to the
MLSA.




          The Securities will be offered and sold to the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an
exemption therefrom. PHH, VMS and the Issuer have prepared a preliminary offering circular dated
May 22, 2009 (the “First Preliminary Offering Circular”) and a second preliminary offering
circular dated May 29, 2009 (the “Second Preliminary Offering Circular” and, together with
the First Preliminary Offering Circular, the “Preliminary Offering Circular”), and have or
will prepare and deliver to the Initial Purchasers, on or promptly after the date hereof, copies of
a final offering circular (the “Final Offering Circular”), dated the date hereof, to be
used by the Initial Purchasers in connection with their solicitation of purchases of, or offering
of, the Securities. Any references herein to the Preliminary Offering Circular and the Final
Offering Circular shall be deemed to include all amendments and supplements thereto and all
documents incorporated by reference thereto, unless otherwise noted. PHH, VMS and the Issuer
hereby confirm that they have authorized the use of the Preliminary Offering Circular, the other
Time of Sale Information (as defined below) and the Final Offering Circular in connection with the
offering and resale of the Securities by the Initial Purchasers in accordance with Section 2.




          Capitalized terms used but not defined herein shall have the meanings given to such terms in
the Indenture.




          At or prior to the time when sales of the Securities were first made (the “Time of
Sale”), the following information shall have been prepared (collectively, the “Time of Sale
Information”): the Preliminary Offering Circular, as supplemented and amended by a pricing term
sheet substantially in the form of Annex B hereto setting forth the terms of the Securities omitted
from the Preliminary Offering Circular, and the other written communications listed on Annex A
hereto.




          1. Representations, Warranties and Agreements of the Issuer and PHH. (a) The
Issuer and PHH jointly and severally represent and warrant to, and agree with, (i) the several
Initial Purchasers and (ii) with respect to subsections (a)(i), (ii), (xxi), (xxii), (xxiii) and
(xxiv) of this Section 1, the PD Initial Purchasers in their capacities as Primary Dealers with
respect to the TALF loans secured by the Securities, on and as of the date hereof and the Closing
Date (as defined in Section 3) that:





     (i) The Preliminary Offering Circular, as of its date, did not, the Time of Sale
Information, at the Time of Sale did not and on the Closing Date will not, and the Final
Offering Circular, as of its date and on the Closing Date, will not, contain any untrue









 



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statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, that the Issuer and PHH make
no representation or warranty as to information contained in or omitted from the Time of
Sale Information or the Final Offering Circular in reliance upon and in conformity with
written information relating to the Initial Purchasers furnished to the Issuer through the
Representatives by or on behalf of any Initial Purchaser specifically for use therein (the
“Initial Purchasers’ Information”);




     (ii) Each of the Preliminary Offering Circular and the Final Offering Circular, as of
its respective date, contains all of the information that, if requested by a prospective
purchaser of the Securities on the date hereof and on the Closing Date, would be required to
be provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the Securities
Act;




     (iii) Assuming the accuracy of the representations and warranties of the Initial
Purchasers contained in Section 2 and their compliance with the agreements set forth
therein, it is not necessary, in connection with the issuance and sale of the Securities to
the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial
Purchasers in the manner contemplated by this Agreement, the Preliminary Offering Circular
and the Final Offering Circular, to register the Securities under the Securities Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”);




     (iv) The Issuer has been duly formed as a limited liability company and is validly
existing and in good standing under the laws of the State of Delaware, is qualified to do
business and is in good standing as a foreign limited liability company in each jurisdiction
in which the ownership or lease of property or the conduct of its business requires such
qualification, and has the requisite power and authority to own or hold its properties and
to conduct the business in which it is engaged as described in the Time of Sale Information
and the Final Offering Circular;




     (v) The Issuer has the requisite power and authority to execute and deliver this
Agreement, the Securities, the Indenture and any other Transaction Document to which it is a
party and perform its obligations hereunder and thereunder;




     (vi) Each of the Transaction Documents to which the Issuer is a party has been duly
authorized, executed and delivered by the Issuer and constitutes the legal, valid and
binding obligation of the Issuer enforceable against the Issuer in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws relating to or affecting generally the enforcement of creditors’ rights or by
general equitable principles;




     (vii) The Issuer is not in violation of the LLC Agreement or in default in the
performance or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement or lease to which it is a party or by
which it or its properties may be bound. The execution and delivery of this Agreement









 



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and the Transaction Documents to which the Issuer is a party and the incurrence of the
obligations and consummation of the transactions herein and therein contemplated will not
conflict with, or constitute a breach of or default under, the LLC Agreement or any
contract, indenture, mortgage, loan agreement or lease, to which the Issuer is a party or by
which it or its properties may be bound, or any law, administrative regulation or court
decree;




     (viii) This Agreement has been duly authorized, executed and delivered by the Issuer;




     (ix) The Securities have been duly authorized for issuance, offer and sale as
contemplated by this Agreement and, when authenticated by the Indenture Trustee and issued
and delivered against payment of the purchase price therefor, will constitute legal, valid
and binding obligations of the Issuer enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, or other similar laws relating
to or affecting generally the enforcement of creditors’ rights or by general equitable
principles;




     (x) No consent, approval, authorization, order, registration or qualification of or
with any court or any regulatory authority or other governmental agency or body is required
for the issuance, offer or sale of the Securities by the Issuer in accordance with the terms
of this Agreement or for the consummation of the transactions contemplated by this Agreement
and the Transaction Documents except to the extent provided for in the Transaction
Documents;




     (xi) There are no legal or governmental proceedings pending to which the Issuer is a
party or of which any property of the Issuer is the subject (other than any such proceedings
involving the Issuer’s property which would not have a Material Adverse Effect) and, to the
best of its knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;




     (xii) The Issuer is not an “investment company” within the meaning of the Investment
Company Act of 1940, as amended;




     (xiii) As of the Closing Date, the representations and warranties of the Issuer
contained in the Transaction Documents to which the Issuer is a party will be true and
correct and are repeated herein as though fully set forth herein;




     (xiv) On and immediately after the Closing Date, the Issuer (after giving effect to
the issuance of the Securities and to the other transactions related thereto as described in
the Time of Sale Information and the Final Offering Circular) will be Solvent. As used in
this paragraph, the term “Solvent” means, with respect to a particular date, that on
such date (A) the present fair market value (or present fair saleable value) of the assets
of the Issuer is not less than the total amount required to pay the probable liabilities of
the Issuer on its total existing debts and liabilities (including contingent liabilities) as
they become absolute and matured, (B) the Issuer is able to realize upon its assets and pay
its debts and
other liabilities, contingent obligations and commitments as they mature and become due









 



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in the normal course of business, (C) assuming the sale of the Securities as contemplated by
this Agreement, the Time of Sale Information and the Final Offering Circular, the Issuer is
not incurring debts or liabilities beyond its ability to pay as such debts and liabilities
mature and (D) the Issuer is not engaged in any business or transaction, and is not about to
engage in any business or transaction, for which its property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the industry in
which the Issuer is engaged. In computing the amount of such contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount that, in the light
of all the facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability;




     (xv) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the
Securities Act;




     (xvi) None of the Issuer, any of its affiliates or any person acting on its or their
behalf has engaged or will engage, in connection with the offering of the Securities, in any
directed selling efforts (as such term is defined in Regulation S under the Securities Act
(“Regulation S”)), and all such persons have complied and will comply with the
offering restrictions requirements of Regulation S to the extent applicable;




     (xvii) Neither the Issuer nor any of its affiliates has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect
of, any security (as such term is defined in the Securities Act), which is or will be
integrated with the sale of the Securities in a manner that would require registration of
the Securities under the Securities Act;




     (xviii) None of the Issuer, any of its affiliates or any other person acting on its
or their behalf has engaged, in connection with the offering of the Securities, in any form
of general solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act;




     (xix) There are no securities of the Issuer registered under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or listed on a national securities
exchange or quoted in a U.S. automated inter-dealer quotation system;




     (xx) The Issuer has not taken and will not take, directly or indirectly, any action
prohibited by Regulation M under the Exchange Act in connection with the offering of the
Securities;




     (xxi) Assuming the Securities receive the ratings described in the Preliminary
Offering Circular, the Securities satisfy all requirements to be “eligible collateral”
(“Eligible Collateral”) as such term is defined under the MLSA with reference to the
Term Asset-Backed Securities Loan Facility: Terms and Conditions, effective May 19, 2009 or
as in effect on the date of the Preliminary Offering Circular or the date of the Final
Offering Circular, posted by the FRBNY at
http://www.newyorkfed.org/markets/talf_terms.html and the Term Asset-Backed









 



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Securities
Loan Facility Frequently Asked Questions, effective May 19, 2009 or as in effect on the date
of the Preliminary Offering Circular or the date of the Final Offering Circular, posted by
the FRBNY at http://www.newyorkfed.org/markets/talf_faq.html under TALF;




     (xxii) The Securities and the Unit Leases and the Fleet Receivables underlying the
Securities satisfy all applicable criteria for securities relating to “auto loans” under
TALF, including that the Securities are being issued to refinance existing Series of
Variable Funding Investor Notes with commitment termination dates in 2009 and that the
initial aggregate principal amount of the Securities does not exceed the maximum aggregate
Invested Amount of such Series; and




     (xxiii) The Preliminary Offering Circular contains, and the Final Offering Circular
will contain, all information required to be included therein under TALF in order for the
Securities to be Eligible Collateral.




     (xxiv) As of the date hereof and the Closing Date, the representations and warranties
of the Issuer and PHH contained in the Certification as to TALF Eligibility to be attached
as Annex A to the Final Offering Circular (the “TALF Certification”) are and will be
true and correct and are repeated herein as though fully set forth herein.



          (b) PHH and VMS jointly and severally represent and warrant to, and agree with, the several
Initial Purchasers on and as of the date hereof and the Closing Date that:





     (i) VMS (A) has been duly formed and is validly existing as a limited liability
company and is in good standing under the laws of the State of Delaware, (B) is qualified to
do business and is in good standing as a foreign limited liability company in each
jurisdiction in which the ownership or lease of property or the conduct of its business
requires such qualification, except where such lack of qualification or good standing would
not have a material adverse effect on its condition (financial or other), business or
results of operations or its ability to perform its obligations hereunder or under the
Transaction Documents to which it is a party (a “VMS Material Adverse Effect”) and
(C) has the requisite power and authority to own or hold its properties and to conduct the
business in which it is engaged as described in the Time of Sale Information and the Final
Offering Circular;




     (ii) VMS has the requisite power and authority to execute and deliver this Agreement
and any Transaction Document to which it is a party and perform its obligations hereunder
and thereunder;




     (iii) This Agreement and each of the Transaction Documents to which VMS is a party
have been duly authorized, executed and delivered by it and constitute its legal, valid and
binding obligations enforceable against it in accordance with their respective terms, except
as enforcement thereof may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting generally the enforcement of creditors’ rights or by general
equitable principles;









 



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     (iv) VMS is not in violation of its organizational documents or in default in the
performance or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement or lease to which it is a party or by
which it or its properties may be bound which would have a VMS Material Adverse Effect. The
execution and delivery of this Agreement and the Transaction Documents to which VMS is a
party and the incurrence of the obligations and consummation of the transactions herein and
therein contemplated will not conflict with, or constitute a breach of or default under any
contract, indenture, mortgage, loan agreement or lease, to which VMS is a party or by which
it or its properties may be bound, or any law, administrative regulation or court decree,
with only such exceptions as would not have a VMS Material Adverse Effect, nor will such
action result in any violation of its organizational documents;




     (v) VMS possesses adequate certificates, licenses, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business now operated
by it, with only such exceptions as would not have a VMS Material Adverse Effect, and has
not received any notice of proceedings relating to the revocation or modification of any
such certificate, license, authority or permit;




     (vi) There are no legal or governmental proceedings pending to which VMS, Holdings or
the Origination Trust is a party or of which any of its property is the subject that, if
determined adversely to it, individually or in the aggregate, could reasonably be expected
to have a VMS Material Adverse Effect; and to the best of VMS’s knowledge, no such
proceedings are threatened or contemplated by governmental authorities or threatened by
others;




     (vii) As of the Closing Date, VMS’s representations and warranties contained in the
Transaction Documents to which it is a party will be true and correct and are repeated
herein as though fully set forth herein;




     (viii) As of the Closing Date, the representations and warranties of each of Holdings
and the Origination Trust contained in the Transaction Documents to which it is a party will
be true and correct and are repeated herein as though fully set forth herein;




     (ix) No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the Preliminary Offering
Circular or the Final Offering Circular has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith;




     (x) Since the date as of which information is given in the Time of Sale Information,
there has been no material adverse change or any development involving a prospective
material adverse change in its, Holdings’ or the Origination Trust’s, condition, financial
or otherwise, or in their respective earnings, business affairs, management or business
prospects, whether or not arising in the ordinary course of business;









 



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     (xi) The Origination Trust has good and marketable title to the Origination Trust
Assets allocated to the Lease SUBI Portfolio and the 1999-1B Sold SUBI Portfolio, free and
clear of Liens (except as permitted or contemplated by the Transaction Documents), and has
not assigned to any person any of its right, title or interest in any such Origination Trust
Assets, or obtained the release of any such prior assignment other than as described in the
Time of Sale Information and the Final Offering Circular;




     (xii) Holdings, as Initial Beneficiary, has made the appropriate allocation of assets
within the estate of the Origination Trust to the appropriate SUBI Portfolios, as required
by the Origination Trust Documents; and




     (xiii) VMS is the sole common member of Holdings and owns its membership interests
therein free and clear of Liens.



          (c) PHH represents and warrants to, and agrees with, the several Initial Purchasers on and
as of the date hereof and the Closing Date that:





     (i) PHH (A) has been duly formed and is validly existing as a corporation and is in
good standing under the laws of the State of Maryland, (B) is qualified to do business and
is in good standing as a foreign corporation in each jurisdiction in which the ownership or
lease of property or the conduct of its business requires such qualification, except where
such lack of qualification or good standing would not have a material adverse effect on its
condition (financial or other), business or results of operations or its ability to perform
its obligations hereunder or under the performance guaranty of the indemnity and repurchase
obligations of VMS under the Servicing Agreement by it, dated October 25, 2001 (the “PHH
Guarantee”) (a “PHH Material Adverse Effect”) and (C) has the requisite power
and authority to own or hold its properties and to conduct the business in which it is
engaged;




     (ii) PHH has the requisite power and authority to execute and deliver this Agreement
and the PHH Guarantee and to perform its obligations hereunder and thereunder;




     (iii) This Agreement has been duly authorized, executed and delivered by PHH and
constitutes its legal, valid and binding obligation enforceable against PHH in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws relating to or affecting generally the enforcement of creditors’ rights
or by general equitable principles;




     (iv) The PHH Guarantee has been duly authorized, executed and delivered by PHH and
the PHH Guarantee constitutes its legal, valid and binding obligation enforceable against it
in accordance with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws relating to or affecting generally the enforcement of
creditors’ rights or by general equitable principles;




     (v) PHH is not in violation of its certificate of incorporation or by-laws or in
default in the performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement or lease to









 



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which it is a party or by which it or its properties may be bound which would have a
PHH Material Adverse Effect. The execution and delivery of this Agreement and the PHH
Guarantee and the incurrence of the obligations and consummation of the transactions herein
and therein contemplated will not conflict with, or constitute a breach of or default under
any contract, indenture, mortgage, loan agreement or lease, to which PHH is a party or by
which it or its properties may be bound, or any law, administrative regulation or court
decree, with only such exceptions as would not have a PHH Material Adverse Effect, nor will
such action result in any violation of its certificate of incorporation or by-laws;




     (vi) PHH possesses adequate certificates, licenses, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business now operated
by it, with only such exceptions as would not have a PHH Material Adverse Effect, and has
not received any notice of proceedings relating to the revocation or modification of any
such certificate, license, authority or permit;




     (vii) There are no legal or governmental proceedings pending to which PHH is a party
or of which any of its property is the subject that, if determined adversely to it,
individually or in the aggregate, could reasonably be expected to have a PHH Material
Adverse Effect; and to the best of PHH’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;




     (viii) PHH is the sole common stockholder of each of PHH Mortgage Corporation and PHH
Sub 2 and owns its stock therein free and clear of Liens;




     (ix) PHH Mortgage Corporation is the sole common stockholder of PHH Sub 1;




     (x) PHH Sub 2 is the sole member of the Issuer and owns its membership interests
therein free and clear of Liens; and




     (xi) PHH Sub 1 is the sole preferred member of Holdings and owns its preferred
membership interests therein free and clear of Liens.



          2. Purchase and Resale of the Securities. (a) On the basis of the representations,
warranties and agreements contained herein, and subject to the terms and conditions set forth
herein, the Issuer agrees to issue and sell to each of the Initial Purchasers, severally and not
jointly, and each of the Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuer, the principal amount of Securities set forth opposite the name of such Initial Purchaser on
Schedule 1 hereto at a purchase price equal to 99.30% of the principal amount thereof. Interest on
the Securities will accrue during each Series 2009-1 Interest Period at the rate of 2.00% per annum
above One-Month LIBOR, as determined in accordance with the Indenture. The Issuer shall not be
obligated to deliver any of the Securities except upon payment for all of the Securities to be
purchased as provided herein.




          (b) The Initial Purchasers have advised the Issuer that they propose to offer the Securities
for resale upon the terms and subject to the conditions set forth herein and in the Time of Sale
Information. Each Initial Purchaser, severally and not jointly, represents and warrants to,
and agrees with, the Issuer and VMS that (i) it is purchasing the Securities pursuant to a
private













 



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sale exempt from registration under the Securities Act, (ii) it has not solicited offers
for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D under the Securities Act (“Regulation D”) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act, (iii) it has solicited and will
solicit offers for the Securities only from, and has offered or sold and will offer, sell or
deliver the Securities, as part of its initial offering, only to (A) persons whom it reasonably
believes to be qualified institutional buyers (“Qualified Institutional Buyers”) as defined
in Rule 144A under the Securities Act (“Rule 144A”), or if any such person is buying for
one or more institutional accounts for which such person is acting as fiduciary or agent, only when
such person has represented to it that each such account is a Qualified Institutional Buyer to whom
notice has been given that such sale or delivery is being made in reliance on Rule 144A and in each
case, in transactions in accordance with Rule 144A and (B) in the case of offers outside the United
States, to persons other than U.S. Persons (as defined in Regulation S in the Securities Act) in
accordance with Rule 903 of Regulation S, (iv) it has not offered or sold and, prior to the date
six months after the date of issuance of the Securities will not offer or sell, any Securities to
persons in the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995 or the Financial Services and Markets Act 2000 (the “FSMA”), (v) it has
only communicated or caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity (within the meaning of
section 21 of the FSMA) received by it in connection with the issue or sale of any Securities in
circumstances in which section 21(1) of the FSMA does not apply to the Issuer and (vi) it has
complied and will comply with all applicable provisions of the FSMA with respect to anything done
by it in relation to such Securities in, from or otherwise involving the United Kingdom. Each
Initial Purchaser, severally and not jointly, agrees that, prior to or simultaneously with the
confirmation of sale by such Initial Purchaser to any purchaser of any of the Securities purchased
by such Initial Purchaser from the Issuer pursuant hereto, such Initial Purchaser shall furnish to
that purchaser a copy of the Time of Sale Information (and any amendment or supplement thereto that
the Issuer shall have furnished to such Initial Purchaser prior to the date of such confirmation of
sale). In addition to the foregoing, each Initial Purchaser acknowledges and agrees that the
Issuer and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Sections 6(h) and (p), counsel for the Issuer and for the Initial Purchasers, respectively, may
rely upon the accuracy of the representations and warranties of the Initial Purchasers and their
compliance with their agreements contained in this Section 2, and each Initial Purchaser hereby
consents to such reliance.




     (c) The Issuer acknowledges and agrees that the Initial Purchasers may sell Securities to any
affiliate of an Initial Purchaser and that any such affiliate may sell Securities purchased by it
to an Initial Purchaser.



          3. Delivery of and Payment for the Securities. (a) Delivery of and payment for the Securities shall be made at the offices of Simpson
Thacher & Bartlett LLP, New York, New York, or at such other place as shall be agreed upon by you
as the representatives (collectively, the “Representatives”) of the Initial Purchasers and
the Issuer, at 10:00 A.M., New York City










 



11



time, on June 9, 2009 (such date and time of payment and
delivery being referred to herein as the “Closing Date”).




          (b) On the Closing Date, payment of the purchase price for the Securities shall be made to
the Issuer by wire or book-entry transfer of same-day funds to such account or accounts as the
Issuer shall specify prior to the Closing Date or by such other means as the parties hereto shall
agree prior to the Closing Date against delivery to the Representatives, for the account of each of
the Initial Purchasers of the certificates evidencing the Securities. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery, the Securities
shall be in global form, registered in such names and in such denominations as the Representatives
shall have requested in writing not less than two full business days prior to the Closing Date.
The Issuer agrees to make one or more global certificates evidencing the Securities available for
inspection by the Representatives in New York, New York at least 24 hours prior to the Closing
Date.




          4. Further Agreements of the Issuer, PHH and VMS. Each of the Issuer, PHH and VMS,
jointly and severally, agrees with each of the several Initial Purchasers and, in the case of
subsections (s), (t), (u) and (v) of this Section 4, the PD Initial Purchasers in their capacities
as Primary Dealers with respect to the TALF loans secured by the Securities, that:




          (a) the Issuer will advise the Representatives promptly and, if requested, confirm such
advice in writing, of the happening of any event at any time prior to the completion of the initial
offering of the Securities as a result of which any Time of Sale Information or the Final Offering
Circular as then amended or supplemented would include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances existing when such Time of Sale Information or the Final Offering Circular is
delivered to a purchaser, not misleading; the Issuer shall advise the Representatives promptly of
any order preventing or suspending the use of the Time of Sale Information or the Final Offering
Circular, of any suspension of the qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding for any such purpose; and the
Issuer, PHH and VMS shall use their respective best efforts to prevent the issuance of any such
order preventing or suspending the use of the Time of Sale Information or the Final Offering
Circular or suspending any such qualification and, if any such suspension is issued, to obtain the
lifting thereof at the earliest possible time;




          (b) the Issuer, PHH and VMS shall prepare the Final Offering Circular in a form reasonably
acceptable to the Representatives and the Issuer shall furnish promptly to each of the
Representatives and counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Circular, any other Time of Sale Information and the Final Offering Circular
(and any amendments or supplements thereto) as may be reasonably requested;




          (c) prior to making any amendment or supplement to any of the Time of Sale Information or
the Final Offering Circular, the Issuer shall furnish a copy thereof to each of the Representatives
and counsel for the Initial Purchasers and the Issuer shall not effect any such amendment or
supplement to which the Representatives shall reasonably object by notice to the Issuer after a
reasonable period to review;











 



12




          (d) if, at any time prior to the Closing Date, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Time of Sale Information in order that
the Time of Sale Information will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary at any such time to
amend or supplement the Time of Sale Information to comply with applicable law, the Issuer shall
promptly prepare such amendment or supplement as may be necessary to correct such untrue statement
or omission or so that the Time of Sale Information, as so amended or supplemented, will comply
with applicable law;




          (e) if, at any time prior to completion of the resale of the Securities by the Initial
Purchasers but in no event in excess of 180 days from the date hereof, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the Final Offering
Circular in order that the Final Offering Circular will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary at any such time to amend or supplement the Final Offering
Circular to comply with applicable law, the Issuer shall promptly prepare such amendment or
supplement as may be necessary to correct such untrue statement or omission or so that the Final
Offering Circular, as so amended or supplemented, will comply with applicable law;




          (f) for so long as the Securities are outstanding and are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, the Issuer, PHH and VMS shall furnish to
holders of the Securities and prospective purchasers of the Securities designated by such holders,
upon request of such holders or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless the Issuer is then subject
to and in compliance with Section 13 or 15(d) of the Exchange Act (the foregoing agreement being
for the benefit of the holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);




          (g) the Issuer shall supply to each Initial Purchaser, on a continuing basis, three (3)
copies of all correspondence with, and information that the Issuer and its affiliates make
available to, the Indenture Trustee in connection with this Agreement and the Transaction Documents
and the transactions contemplated hereby and thereby;




          (h) the Issuer shall promptly take from time to time such actions as the Representatives may
reasonably request to qualify the Securities for offering and sale under the securities or Blue Sky
laws of such jurisdictions as the Representatives may designate and to continue such qualifications
in effect for so long as required for the resale of the Securities; and to arrange for the
determination of the eligibility for investment of the Securities under the laws of such
jurisdictions as the Representatives may reasonably request; provided that the Issuer
shall not be obligated to qualify as a foreign corporation or limited liability company in any
jurisdiction in which it is not so qualified or to file a general consent to service of process in
any jurisdiction;











 



13




          (i) the Issuer, PHH and VMS shall assist the Representatives in arranging for the Securities
to be eligible for clearance and settlement through The Depository Trust Company (“DTC”);




          (j) the Issuer, PHH and VMS shall not, and shall cause their affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any security (as such term
is defined in the Securities Act) which could be integrated with the sale of the Securities in a
manner which would require registration of the Securities under the Securities Act;




          (k) the Issuer, PHH and VMS shall not, and shall cause their affiliates not to, authorize or
knowingly permit any person acting on their behalf to, solicit any offer to buy or offer to sell
the Securities by means of any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; and the Issuer, PHH and VMS shall not offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under circumstances where such offer,
sale, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities
Act to cease to be applicable to the offering and sale of the Securities as contemplated by this
Agreement, the Time of Sale Information and the Final Offering Circular;




          (l) for a period of 60 days from the date of the Final Offering Circular, the Issuer, PHH
and VMS shall not, and shall cause their affiliates not to, offer for sale, sell, contract to sell
or otherwise dispose of, directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt securities issued by the
Issuer or any asset-backed securities backed by equipment leases originated by VMS or the
Origination Trust (other than the Securities), without the prior written consent of the
Representatives;




          (m) the Issuer, PHH and VMS shall not, and shall cause each of their affiliated purchasers
(as defined in Regulation M under the Exchange Act) not to, make bids or purchase for the purpose
of creating actual, or apparent, active trading in or of raising the price of the Securities;




          (n) each of the Issuer, PHH and VMS shall do and perform all things required to be done and
performed by it under this Agreement that are within its control prior to or after the Closing
Date, and each of the Issuer, PHH and VMS shall use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;




          (o) none of the Issuer, PHH or VMS shall take any action prior to the Closing Date which
would require the Time of Sale Information or the Final Offering Circular to be amended or
supplemented pursuant to Section 4(d) or Section 4(e) of this Agreement;




          (p) the Issuer shall apply the net proceeds from the sale of the Securities as set forth in
the Time of Sale Information and the Final Offering Circular under the heading “Use of Proceeds”;




          (q) to the extent that the ratings to be provided with respect to the Securities by S&P and
Moody’s is conditional upon the furnishing of documents or the taking of any other actions by the
Issuer or any of its affiliates, the Issuer, PHH and VMS shall furnish such documents and take any
such other action that is reasonably requested by S&P or Moody’s;











 



14




          (r) the Issuer shall furnish to the Representatives copies of each report and certificate
and any financial information delivered to the Indenture Trustee pursuant to the Indenture;




          (s) each of the Issuer, PHH and VMS shall take all actions necessary to ensure that, on the
Closing Date, the Securities qualify as Eligible Collateral;




          (t) each of the Issuer and PHH shall fully and timely perform all actions required of it
pursuant to the TALF Certification, unless any such required action is waived by the FRBNY, or its
designated agents;




          (u) upon determining that any statement set forth in paragraph (2) of the TALF Certification
was not correct when made or ceased to be correct, the Issuer shall (i) promptly notify each PD
Initial Purchaser of such determination, (ii) notify the FRBNY and all registered holders of the
Securities in writing of such determination no later than 9:00 A.M., New York City time, on the
fourth Business Day following such determination, (iii) issue a press release regarding such
determination no later than 9:00 A.M., New York City time, on the fourth Business Day following
such determination, and (iv) promptly provide each PD Initial Purchaser a copy of each such
notification; and




          (v) upon the occurrence of any Amortization Event, the Issuer shall (i) promptly notify each
PD Initial Purchaser of such Amortization Event, (ii) promptly notify the FRBNY and all registered
holders of the Securities in writing of such occurrence, which notice shall be delivered to the
FRBNY’s custodian at talf@bnymellon.com and to FRBNY at talfreports@ny.frb.org at the same time
notice of the Amortization Event is given to the Trustee, (iii) promptly provide each PD Initial
Purchaser a copy of each such notification and (iv) include the material details of such
Amortization Event in the Monthly Settlement Statement delivered to the Series 2009-1 Investor
Noteholders immediately following the occurrence of such Amortization Event.




          5. Written Communications . Each of the Issuer, PHH and VMS hereby represents
and agrees that it (including its agents and representatives, other than the Initial Purchasers in
their capacity as such) has not prepared, made, used, authorized, approved or referred to and will
not prepare, make, use, authorize, approve or refer to any written communication that constitutes
an offer to sell or solicitation of an offer to buy the Securities other than (i) the Preliminary
Offering Circular, (ii) the Final Offering Circular and (iii) the documents listed on Annex A,
including the pricing term sheet substantially in the form of Annex B, which constitute part of the
Time of Sale Information.




          (b) Each Initial Purchaser hereby represents and agrees that it has not and will not use,
authorize use of, refer to, or participate in the planning for use of, any written
communication that constitutes an offer to sell or the solicitation of an offer to buy the
Securities other than (i) the Preliminary Offering Circular, (ii) the Final Offering Circular,
(iii) any written communication listed on Annex A, (iv) any written communication prepared by such
Initial Purchaser and approved by the Issuer in advance in writing or (v) any written communication
relating to or that contains the terms of the Securities and/or other information that was included
in the Preliminary Offering Circular or the Final Offering Circular.











 



15




          6. Conditions of Initial Purchasers’ Obligations. The respective obligations of the
several Initial Purchasers hereunder are subject to the accuracy, on and as of the date hereof and
the Closing Date, of the representations and warranties of the Issuer, PHH and VMS contained
herein, to the accuracy of the statements of the Issuer, PHH, Holdings and VMS and their respective
officers made in any certificates delivered pursuant hereto, to the performance by the Issuer, PHH
and VMS of their obligations hereunder, and to each of the following additional terms and
conditions:




          (a) The Final Offering Circular (and any amendments or supplements thereto) shall have been
printed and copies distributed to the Initial Purchasers by 5:00 P.M., New York City time, on the
fourth Business Day prior to the Closing Date; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding for that purpose shall have
been commenced or shall be pending or threatened.




          (b) None of the Initial Purchasers shall have discovered and disclosed to the Issuer, PHH or
VMS on or prior to the Closing Date that (i) the Time of Sale Information, as of the Time of Sale,
contained an untrue statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omitted to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or (ii) the Time of Sale
Information or the Final Offering Memorandum, or any amendment or supplement thereto, contains an
untrue statement of fact which, in the opinion of counsel for the Initial Purchasers, is material
or omits to state any act which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.




          (c) All corporate proceedings and other legal matters incident to the authorization, form
and validity of each of the Transaction Documents and the Final Offering Circular, and all other
legal matters relating to the Transaction Documents and the transactions contemplated thereby,
shall be satisfactory in all material respects to the Representatives; and the Issuer, PHH, PHH Sub
1, PHH Sub 2, Holdings, VMS and the Origination Trust shall have furnished to the Representatives
all documents and information that they or their counsel may reasonably request to enable them to
pass upon such matters.




          (d) The Issuer shall have furnished to the Representatives (x) a letter from Deloitte and
Touche, LLP, addressed to the Initial Purchasers and dated as of May 29, 2009, in form and
substance satisfactory to the Representatives, concerning certain agreed-upon procedures performed
in respect of the Origination Trust Assets allocated to the Lease SUBI Portfolio and concerning the
accounting, financial and statistical information set forth or
incorporated by reference in the Time of Sale Information and (y) a letter from Deloitte and
Touche, LLP, addressed to the Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Representatives, concerning certain agreed-upon procedures performed in respect
of the Origination Trust Assets allocated to the Lease SUBI Portfolio and concerning the
accounting, financial and statistical information set forth or incorporated by reference in the
Final Offering Circular.











 



16




          (e) The Indenture Supplement shall have been duly executed and delivered by the Issuer and
the Indenture Trustee, and the Securities shall have been duly executed and delivered by the Issuer
and duly authenticated by the Indenture Trustee.




          (f) The Representatives shall have received a letter from S&P stating that the Securities
have received a rating of “AAA” and a letter from Moody’s stating that the Securities have received
a rating of “Aaa.”




          (g) Subsequent to the execution and delivery of this Agreement, there shall not have
occurred any of the following: (i) any change, or any development involving a prospective change,
in or affecting particularly the business or properties of PHH or VMS which, in the judgment of the
Representatives, materially impairs the investment quality of the Securities or makes it
impractical or inadvisable to proceed with completion of the sale of and payment for the
Securities; (ii) any suspension or limitation of trading in securities generally on the New York
Stock Exchange or any setting of minimum prices for trading on such exchange; (iii) any moratorium
on commercial banking activities shall have been declared by federal or New York state authorities;
(iv) an outbreak or escalation of hostilities or a declaration by the United States of a national
emergency or war; (v) any material disruption in commercial banking, securities settlement or
clearance services in the United States; or (vi) any other substantial national or international
calamity or emergency the effect of which, in the case of this clause (vi), is, in the judgment of
the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed
with the completion of the sale of and payment for the Securities on the terms and in the manner
contemplated by this Agreement and in the Time of Sale Information and the Final Offering Circular
(exclusive of any amendment or supplement thereto).




          (h) The Representatives shall have received an opinion of White & Case LLP, special counsel
to the Issuer, PHH, Holdings, the Origination Trust and the other Persons named therein, dated the
Closing Date and addressed to the Initial Purchasers in the form of Exhibit A attached
hereto. The opinion shall specify that the PD Initial Purchasers in their capacities as Primary
Dealers with respect to the TALF loans secured by the Securities shall be entitled to rely on (i)
the opinion set forth therein that the Securities are Eligible Collateral and (ii) the negative
assurances set forth therein with respect to the Time of Sale Information and the Final Offering
Circular.




          (i) The Representatives shall have received an opinion of White & Case LLP, special counsel
to the Issuer, dated the Closing Date and addressed to the Initial Purchasers in the form of
Exhibit B attached hereto.




          (j) The Representatives shall have received an opinion of Joseph W. Weikel, Senior Vice
President and General Counsel of VMS, dated the Closing Date and addressed to the Initial
Purchasers in the form of Exhibit C attached hereto.




          (k) The Representatives shall have received an opinion of the General Counsel of PHH, dated
the Closing Date and addressed to the Initial Purchasers in the form of Exhibit D attached
hereto.











 



17




          (l) The Representatives shall have received an opinion of Sonnenschein Nath & Rosenthal LLP,
counsel for the Indenture Trustee, dated the Closing Date and addressed to the Initial Purchasers
and in form and substance satisfactory to the Representatives and to counsel for the Initial
Purchasers.




          (m) The Representatives shall have received an opinion of Richards, Layton & Finger, counsel
for the Wilmington Trust Company, as Origination Trustee, and special Delaware counsel for the
Issuer, VMS, Holdings, the Origination Trust and Raven Funding LLC (“SPV”), dated the
Closing Date and addressed to the Initial Purchasers, in the form of Exhibit E attached
hereto.




          (n) The Representatives shall have received an opinion of DLA Piper LLP, Maryland local
counsel to the Issuer and VMS, dated the Closing Date and addressed to the Initial Purchasers, in
form and substance satisfactory to the Representatives and to counsel for the Initial Purchasers
and to the effect that none of the Origination Trust, Holdings nor the Issuer will be treated as an
association taxable as a corporation for Maryland state income or franchise tax purposes.




          (o) The Representatives shall have received an opinion of Drinker Biddle & Reath LLP,
special counsel to PHH Funding, LLC (the “Intermediary”), dated the Closing Date and
addressed to the Initial Purchasers, in form and substance satisfactory to the Representatives and
to counsel for the Initial Purchasers.




          (p) The Representatives shall have received an opinion of Simpson Thacher & Bartlett LLP,
dated the Closing Date and addressed to the Initial Purchasers, with respect to the validity of the
Securities and such other matters as the Representatives may reasonably request.




          (q) The Representatives shall have received an opinion of the Managing Counsel of Wells
Fargo Bank, National Association, dated the Closing Date and addressed to the Initial Purchasers,
in form and substance satisfactory to the Representatives and to counsel for the Initial
Purchasers.




          (r) The Representatives shall have received a certificate or certificates signed by two
managers or officers of the Issuer, dated the Closing Date, stating that to the best of their
respective knowledge (i) the representations and warranties of the Issuer in this Agreement and any
Transaction Documents to which the Issuer is a party are true and correct on and as of the Closing
Date or, in the case of the representations and warranties in the Transaction Documents, on and as
of the dates specified in such agreements; (ii) that the Issuer has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied hereunder or under the
Transaction Documents at or prior to the Closing Date; (iii) subsequent to the date as of
which information is given in the Time of Sale Information, there has not been any material
adverse change in the general affairs, business, properties, key personnel, capitalization,
condition (financial or otherwise) or results of operation of the Issuer except as set forth or
contemplated in the Time of Sale Information; and (iv) nothing has come to such managers’ or
officers’ attention that would lead such managers or officers to believe that the Preliminary
Offering Circular as of its date did not, the Time of Sale Information as of the Time of Sale did
not, the Final Offering Circular as of its date did not, and the Time of Sale Information and the










 



18



Final Offering Circular as of the Closing Date do not, include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.




          (s) The Representatives shall have received a certificate signed by any two of the managers,
President, any Vice President and the Treasurer of VMS, dated the Closing Date, in which such
officers shall state that, to the best of their respective knowledge (i) the representations and
warranties of VMS in this Agreement and any Transaction Documents to which VMS is a party are true
and correct on and as of the Closing Date or, in the case of the representations and warranties in
the Transaction Documents, on and as of the dates specified in such agreements; (ii) VMS has
complied with all agreements and satisfied all conditions on its part to be performed or satisfied
hereunder or under the Transaction Documents at or prior to the Closing Date; (iii) subsequent to
the date as of which information is given in the Time of Sale Information, there has not been any
material adverse change in the general affairs, business, properties, key personnel,
capitalization, condition (financial or otherwise) or results of operation of VMS except as set
forth or contemplated in the Time of Sale Information; and (iv) nothing has come to such managers’
or officers’ attention that would lead such managers or officers to believe that the Time of Sale
Information as of the Time of Sale did not, the Final Offering Circular as of its date did not, and
the Time of Sale Information and the Final Offering Circular as of the Closing Date do not, include
any untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.




          (t) The Representatives shall have received a certificate signed by two managers or officers
of Holdings, dated the Closing Date, in which such managers shall state that, to the best of their
respective knowledge (i) the representations and warranties of Holdings in the Transaction
Documents to which Holdings is a party are true and correct on and as of the dates specified in
such Transaction Documents; (ii) Holdings has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder or under the Transaction Documents at
or prior to the Closing Date; and (iii) subsequent to the date as of which information is given in
the Time of Sale Information, there has not been any material adverse change in the general
affairs, business, properties, key personnel, capitalization, condition (financial or otherwise) or
results of operation of Holdings except as set forth or contemplated in the Time of Sale
Information.




          (u) The Representatives shall have received a certificate signed by two officers of VMS, in
its capacity as Servicer of the Origination Trust, dated the Closing Date, in which the Servicer
shall state that, to the best of its knowledge (i) the representations and warranties regarding the
Origination Trust in the Transaction Documents are true and correct on and as of the dates
specified in such Transaction Documents; (ii) the Origination Trust has complied with
all agreements and satisfied all conditions on its part to be performed or satisfied hereunder
or under the Transaction Documents at or prior to the Closing Date; and (iii) subsequent to the
date as of which information is given in the Time of Sale Information, there has not been any
material adverse change in the general affairs, business, properties, key personnel,
capitalization, condition (financial or otherwise) or results of operation of the Origination Trust
except as set forth or contemplated in the Time of Sale Information.











 



19




          (v) The Representatives shall have received a certificate signed by two officers of PHH,
dated the Closing Date, in which such officers shall state that, to the best of their knowledge (i)
the representations and warranties of PHH in this Agreement are true and correct on and as of the
dates specified herein; (ii) PHH has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the Closing Date; (iii) subsequent
to the date as of which information is given in the Time of Sale Information, there has not been
any material adverse change in the general affairs, business, properties, key personnel,
capitalization, condition (financial or otherwise) or results of operation of PHH; and (iv) nothing
has come to such officers’ attention that would lead such officers to believe that the Preliminary
Offering Circular as of its date did not, the Time of Sale Information as of the Time of Sale did
not, the Final Offering Circular as of its date did not, and the Time of Sale Information and the
Final Offering Circular as of the Closing Date do not, include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.




          (w) The Issuer shall have one or more interest rate caps that satisfy the requirements of
Section 5A.11 of the Indenture Supplement.




          (x) The Representatives shall have received a copy of the duly executed supplement to the
Base Indenture amending the definition of “Eligible Floating Rate Index”, and such supplement shall
be in full force and effect.




          (y) The Representatives shall have received a copy of the duly executed Back-up Servicing
Agreement as described under “The Back-up Servicing Agreement” in the Time of Sale Information and
the Final Offering Circular.




          (z) The Issuer, PHH and VMS shall have taken all action required by the FRBNY for the
Securities to be Eligible Collateral and the Securities shall be Eligible Collateral.




          (aa) The Issuer, PHH and VMS shall have satisfied all applicable requirements under TALF,
including, without limitation, the execution and delivery of the following documents:





     (i) on or prior to 12:00 Noon, New York City time, on the date that is four Business
Days prior to the Closing Date (or such later time as may be specified by FRBNY) (the
“TALF Delivery Date”), a nationally recognized independent accounting firm that is
registered with the Public Company Accounting Oversight Board shall have furnished to the
FRBNY an attestation, substantially in the form required under TALF,
electronically and by mail, postmarked on or prior to such date, to the FRBNY, with a
notification to the Representatives that such attestation has been sent to the FRBNY;




     (ii) on or prior to 5:00 P.M., New York City time, on the TALF Delivery Date, the
Issuer and PHH, as sponsor, shall have executed the TALF Certification, and delivered the
TALF Certification to the FRBNY, with a copy to the Representatives, and included the
executed TALF Certification in the Final Offering Circular;









 



20



     (iii) on or prior to 12:00 Noon, New York City time, on the TALF Delivery Date, PHH,
as sponsor, shall have executed the Indemnity Undertaking relating to the Securities,
substantially in the form required under TALF, and delivered such Indemnity Undertaking
electronically and by mail, postmarked on or prior to such date to the FRBNY, with a copy to
the Representatives;




     (iv) on or prior to 10:00 A.M., New York City time, on the Closing Date, the Issuer
shall have delivered the rating agency letters described in paragraph (f) above to the
FRBNY; and




     (v) on or prior to the Closing Date, the Issuer and PHH, as sponsor, shall have
executed and delivered the Term Asset-Backed Securities Loan Facility Undertaking relating
to the Securities (the “TALF Undertaking”), substantially in the form attached
hereto as Exhibit F hereto, and delivered a copy to the Representatives.



          All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers.




          7. Termination. The obligations of the Initial Purchasers hereunder may be
terminated by the Representatives, in their absolute discretion, by notice given to and received by
the Issuer prior to delivery of and payment for the Securities if, prior to that time, any of the
events described in Sections 6(g), 6(r)(iii), 6(s)(iii), 6(t)(iii), 6(u)(iii) or 6(v)(iii) shall
have occurred and be continuing.




          8. Reimbursement of Initial Purchasers’ Expenses. If (a) this Agreement shall have
been terminated pursuant to Section 7, (b) the Issuer shall fail to tender the Securities for
delivery to the Initial Purchasers for any reason permitted under this Agreement or (c) the Initial
Purchasers shall decline to purchase the Securities for any reason permitted under this Agreement,
VMS shall reimburse the Initial Purchasers for such out-of-pocket expenses (including reasonable
fees and disbursements of counsel) as shall have been reasonably incurred by the Initial Purchasers
in connection with this Agreement and the proposed purchase and resale of the Securities.




          9. Indemnification. (a) Each of the Issuer, PHH and VMS shall, jointly and severally, indemnify and hold
harmless each Initial Purchaser (including, in the case of a PD Initial Purchaser, in its capacity
as a Primary Dealer), its affiliates, their respective officers, directors, shareholders, partners,
trustees, employees, representatives and agents, and each person, if any, who controls any Initial
Purchaser (including, in the case of a PD Initial Purchaser, in its capacity as a Primary Dealer)
within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes
of this Section 9(a) and Section 10 as an Initial Purchaser), from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases and sales of the
Securities), to which that Initial Purchaser may become subject, whether commenced or threatened,
under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation,
at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of,
or is based upon:











 



21





     (i)(A) any untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in the Preliminary Offering Circular, any other Time of Sale
Information or the Final Offering Circular or in any amendment or supplement thereto or in
any written communication described in Section 5(b)(iv) hereof or Section
5(b)(v) hereof or (B) the omission or alleged omission to state in the Preliminary
Offering Circular, any other Time of Sale Information or the Final Offering Circular or in
any amendment or supplement thereto or in any written communication described in Section
5(b)(iv) hereof or Section 5(b)(v) hereof a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Issuer, PHH and VMS shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Initial Purchasers’ Information,




     (ii) the breach of any representation, warranty or covenant made by the Issuer or PHH
in the TALF Certification or in any other document provided by the Issuer, VMS or PHH to the
FRBNY in connection with the Securities; or




     (iii) the breach of any obligation set forth in Section 4(s), (t) or (u) hereof,


and shall reimburse each Initial Purchaser promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.




          (b) Each Initial Purchaser, severally and not jointly, shall indemnify and hold harmless the
Issuer, PHH, VMS and their respective affiliates, officers, directors, employees, representatives
and agents, and each person, if any, who controls the Issuer, PHH or VMS within the meaning of the
Securities Act or the Exchange Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Issuer, PHH or VMS may become subject,
whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the Preliminary Offering
Circular, any other Time of Sale Information or the Final Offering Circular or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state in the Preliminary Offering
Circular, any other Time of Sale Information or the Final Offering Circular or in any amendment or
supplement thereto a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading,
but in each case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with any Initial
Purchasers’ Information furnished by such Initial Purchaser, and shall reimburse the Issuer, PHH
and VMS, as the case may be, promptly upon demand for any legal or other expenses reasonably
incurred by the Issuer, PHH or VMS in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred.











 



22




          (c) Promptly after receipt by an indemnified party under this Section 9 of notice of any
claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof
is to be made against the indemnifying party pursuant to Section 9(a) or 9(b), notify the
indemnifying party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and,
provided, further, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to the indemnified
party under this Section 9 for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable costs of investigation;
provided, however, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1) the employment of
counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the
indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a conflict or potential
conflict exists (based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the
defense of such action within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other charges of counsel will
be at the expense of the indemnifying party or parties. It is understood that the indemnifying
party or parties shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action or claim effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written consent or if there be
a final judgment for the plaintiff in any such action or claim, the indemnifying
 party agrees to
indemnify and hold harmless any indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior written consent of
the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified party from










 



23



all liability on
claims that are the subject matter of such proceeding and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.




          The obligations of the Issuer, PHH, VMS and the Initial Purchasers in this Section 9 and in
Section 10 are in addition to any other liability that the Issuer, PHH, VMS or the Initial
Purchasers, as the case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.




          10. Contribution. If the indemnification provided for in Section 9 is unavailable
or insufficient to hold harmless an indemnified party under Section 9(a) or 9(b), then each
indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Issuer, PHH and VMS on the one hand and the Initial Purchasers on the
other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of the Issuer, PHH
and VMS on the one hand and the Initial Purchasers on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations. The relative benefits received by the Issuer,
PHH and VMS on the one hand and the Initial Purchasers on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received by or on behalf of
the Issuer on the one hand, and the total discounts and commissions received by the Initial
Purchasers with respect to the Securities purchased under this Agreement, on the other, bear to the
total gross proceeds from the sale of the Securities under this Agreement. The relative fault
shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates
to the Issuer, PHH or VMS or information supplied by the Issuer, PHH or VMS on the one hand or to
any Initial Purchasers’ Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such untrue statement
or omission. The Issuer, VMS, PHH and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by pro rata allocation
(even if the Initial Purchasers were treated as one entity for such purpose) or by any other method
of allocation that does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability,
or action in respect thereof, referred to above in this Section 10 shall be deemed to include, for
purposes of this Section 10, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending or preparing to defend any such action or
claim. Notwithstanding the provisions of this Section 10, no Initial Purchaser shall be required
to contribute any amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchaser with respect to the Securities purchased by it under this
Agreement exceeds the amount of any damages which such Initial Purchaser has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from










 



24



any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute as provided in
this Section 10 are several in proportion to their respective purchase obligations and not joint.




          11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchasers, the Issuer, VMS, PHH and their respective
successors. This Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except as provided in Sections 9 and 10 with respect to affiliates, officers,
directors, employees, representatives, agents and controlling persons of the Issuer, PHH, VMS and
the Initial Purchasers and in Section 4(e) with respect to holders and prospective purchasers of
the Securities. Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 11, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.




          12. Expenses. The Issuer agrees with the Initial Purchasers to pay (a) all costs,
expenses, fees and taxes incident to and in connection with the authorization, issuance, sale,
preparation and delivery of the Securities; (b) the costs incident to the preparation, printing and
distribution of the Preliminary Offering Circular, the Final Offering Circular and any amendments
or supplements thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of the certificates
evidencing the Securities, including stamp duties and transfer taxes, if any, payable upon issuance
of the Securities; (e) the reasonable fees and expenses of counsel to the Issuer, PHH, PHH Sub 1,
PHH Sub 2, Holdings, the Origination Trust, VMS and independent accountants; (f) the reasonable
fees and expenses of counsel to the Initial Purchasers; (g) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel for the Initial
Purchasers); (h) any fees charged by rating agencies for rating the Securities; (i) the fees and
expenses of the Indenture Trustee and any paying agent (including reasonable related fees and
expenses of any counsel to such parties); (j) all expenses and application fees incurred in
connection with the approval of the Securities for book-entry transfer by DTC; (k) the fees and
expenses incurred by the Issuer, VMS and PHH in connection with any “roadshow” presentations to
investors; and (l) all other costs and expenses incident to the performance of the obligations of
the Issuer, PHH and VMS under this Agreement which are not otherwise specifically provided for in
this Section 12; provided, however, that except as provided in this Section 12 and
Section 8, the Initial Purchasers shall pay their own costs and expenses.




          13. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Issuer, VMS, PHH and the Initial Purchasers contained in this
Agreement or made by or on behalf of the Issuer, Holdings, VMS, PHH or the Initial Purchasers
pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery
of and payment for the Securities and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on behalf of any of
them or any of their respective affiliates, officers, directors, employees, representatives, agents
or controlling persons.




          14. Notices, etc. All statements, requests, notices and agreements hereunder shall
be in writing, and:











 



25





     (a) if to the Representatives or the Initial Purchasers, shall be delivered or sent
by mail or facsimile to J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York
10017, Attention: Asset-Backed Securities (facsimile no.: (212) 834-6562);




     (b) if to the Issuer, shall be delivered or sent by mail or facsimile to 940
Ridgebrook Road, Sparks, Maryland 21152, Attention: Joseph Weikel (facsimile no.: (410)
771-2530); or




     (c) if to VMS or PHH, shall be delivered or sent by mail or facsimile to 3000
Leadenhall Road, Mount Laurel, New Jersey 07040, Attention: Mark Johnson, (facsimile no.:
(856) 917-4278);


provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall also be
delivered or sent by mail to such Initial Purchaser at its address set forth on the signature page
hereof. Any such statements, requests, notices or agreements shall take effect at the time of
receipt thereof. The Issuer, VMS and PHH shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial Purchasers by the
Representatives.




          15. Definition of Terms. For purposes of this Agreement, (a) the term “business
day” means any day on which the New York Stock Exchange, Inc. is open for trading, (b) except where
otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the
Securities Act and (c) the term “written communication” has the meaning set forth in Rule 405
under the Securities Act.




          16. Initial Purchasers’ Information. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the Initial Purchasers’ Information consists solely of the
following information in the Preliminary Offering Circular and the Final Offering Circular: the
last sentence on the cover page, the second sentence of the 10th paragraph (regarding
the intention to make a market for the Securities) under “Plan of distribution” and the
11th paragraph (regarding over-allotment and stabilizing transactions) under “Plan of
distribution”.




          17. No Fiduciary Duty. Each of the Issuer, PHH and VMS acknowledge and agree that,
in connection with the offering of the Securities contemplated hereunder or any other services the
Initial Purchasers may be deemed to be providing hereunder, notwithstanding any preexisting
relationship, advisory or otherwise, between the parties or any oral representations or assurances
previously or subsequently made by the Initial Purchasers: (i) no fiduciary or agency relationship
between the Issuer, PHH, VMS and any other person, on the one hand, and the Initial Purchasers, on
the other hand, exists; (ii) the Initial Purchasers are not acting as advisor, expert or otherwise,
to the Issuer, PHH or VMS, and such relationship between the Issuer, PHH and VMS, on the one hand,
and the Initial Purchasers, on the other hand, is entirely and solely commercial, based on
arms-length negotiations; (iii) any duties and obligations that the Initial Purchasers may have to
the Issuer, PHH or VMS shall be limited to those duties and obligations specifically stated herein;
and (iv) the Initial Purchasers and their respective affiliates may have interests that differ from
those of the Issuer, PHH and VMS. The Issuer, PHH and VMS hereby waive any claims that the Issuer,
PHH or VMS may have against the Initial Purchasers with respect to any breach of fiduciary duty in
connection with the offering of the Securities.











 



26




          18. No Petition. Each Initial Purchaser hereby agrees that, prior to the date that
is one year and one day after payment in full of all obligations under the Indenture, it will not
institute against, or join with any other Person in instituting against, the Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other similar proceeding,
under any federal or state bankruptcy or similar law.




          19. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.




          20. Counterparts. This Agreement may be executed in one or more counterparts (which
may include counterparts delivered by facsimile) and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.




          21. Amendments. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.




          22. Headings. The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.




          23. Limitation on Representations and Covenants of the Issuer, PHH and VMS




          The representations, covenants and agreements made by the Issuer, PHH and VMS in this
Agreement to any Primary Dealer shall only extend to a Primary Dealer in connection with the
performance by such Primary Dealer of its obligations under TALF, and do not extend to and may not
be relied upon by any direct or indirect purchaser or owner of the Securities, or any other Person
claiming by or through any such purchaser or owner or any third party beneficiary, for any purpose
or in any circumstance, whether on the theory that a Primary Dealer has acted or acts as their
agent or otherwise. For the avoidance of doubt, the limitations contained in this Section 23 shall
apply only to Primary Dealers in their capacity as such and shall not be construed to limit the
representations, covenants and agreements made herein by the Issuer, PHH or VMS to any Initial
Purchaser in its capacity as an Initial Purchaser.














 



 




          If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to us a counterpart hereof, whereupon this instrument will become a binding agreement among
the Issuer, VMS, PHH and the several Initial Purchasers in accordance with its terms.




	 	 	 	 	 
	 	Very truly yours,



CHESAPEAKE FUNDING LLC

 	 
	 	By:  	/s/ Mark E. Johnson
 	 
	 	 	Name:  	Mark E. Johnson 	 
	 	 	Title:  	Senior Vice President & Treasurer 	 
	 
	 	PHH VEHICLE MANAGEMENT SERVICES, LLC

 	 
	 	By:  	/s/        Mark E. Johnson
 	 
	 	 	Name:  	Mark E. Johnson 	 
	 	 	Title:  	Senior Vice President & Treasurer 	 
	 
	 	PHH CORPORATION

 	 
	 	By:  	/s/        Terence W. Edwards
 	 
	 	 	Name:  	Terence W. Edwards 	 
	 	 	Title:  	President & CEO 	 
	 


[Purchase Agreement]












 



 



	 	 	 	 	 
	Accepted:




J.P. MORGAN SECURITIES INC.

 	 	 
	By:  	/s/      Marquis Gilmore
 	 	 
	 	Name:  	Marquis Gilmore 	 	 
	 	Title:  	Managing Director 	 	 
	 




For itself and as Representative of the

several Initial Purchasers




Address:

J.P. Morgan Securities Inc.

270 Park Avenue

New York, New York 10017

Attn: Marquis Gilmore, Managing Director




	 	 	 	 	 
	BANC OF AMERICA SECURITIES LLC

 	 	 
	By:  	/s/          Bill Heskett
 	 	 
	 	Name:  	Bill Heskett 	 	 
	 	Title:  	Managing Director 	 	 
	 



For itself and as Representative of the

several Initial Purchasers




Address:

Bank of America Tower

One Bryant Park

New York, NY 10036

Attn: William C. Heskett, Managing Director




[Purchase Agreement]












 



 



	 	 	 	 	 
	CITIGROUP GLOBAL MARKETS INC.

 	 	 
	By:  	/s/        Steven Vierengel
 	 	 
	 	Name:  	Steven Vierengel 	 	 
	 	Title:  	Managing Director 	 	 
	 




For itself and as Representative of the

several Initial Purchasers




Address:

Citigroup Global Markets Inc.

388 Greenwich Street, 19th Floor

New York, New York 10013




[Purchase Agreement]












 



 




SCHEDULE 1




	 	 	 	 	 
	 	 	Principal Amount of	 
	Initial Purchasers	 	Securities	 
	J.P. Morgan Securities Inc.
	 	$	300,000,000.01	 
	Banc of America Securities LLC
	 	$	300,000,000.00	 
	Citigroup Global Markets Inc.
	 	$	300,000,000.00	 
	Wachovia Capital Markets, LLC
	 	$	33,333,333.33	 
	Scotia Capital (USA) Inc.
	 	$	33,333,333.33	 
	RBS Securities Inc.
	 	$	33,333,333.33	 
	 
	 	 	 
	TOTAL
	 	$	1,000,000,000.00	 












 



 


ANNEX A




Additional Time of Sale Information





	1.	 	Term sheet containing the terms of the securities, substantially in the form of Annex B.
	 
	2.	 	Roadshow presentation dated May 2009.











 



 


ANNEX B




Pricing Term Sheet




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	Jt Leads/Books: JPM, BAS, Citi 

Co Managers: RBS,Scotia, Wachovia	 	100% Pot	 	144A	 	 	 	 	 	 
	CL

	 	SIZE
	 	WAL
	 	M/S
	 	PWIN
	 	Exp Final
	 	LGL
	 	Pxg
	 	 	$	 
	A

	 	1bln
	 	1.92yrs
	 	Aaa/AAA
	 	13-34mths
	 	04/15/12
	 	12/15/20
	 	1ml+200
	 	 	100.00	 






HAIRCUT: 10%

TALF Eligible: Yes

144A: Yes

Expected Pricing: Pxd

Expected Settlement: 6/09/09










 



 


EXHIBIT A




FORM OF OPINIONS OF WHITE & CASE LLP




          The Representatives shall have received the favorable opinion, dated as of the Closing Date,
of White & Case LLP, special counsel to the Issuer, SPV, PHH Sub 2, Holdings, VMS, PHH VMS
Subsidiary Corporation (“VMS Sub”), PHH Financial Services, Inc. (“PHH Financial Services”), PHH
and the Origination Trust, in form and substance, and subject to such qualifications and
assumptions as are, satisfactory to the Representatives and to counsel for the Initial Purchasers,
addressed to the Initial Purchasers and to the effect that:




     (a) The Securities, the Indenture and the other Transaction Documents conform in all material
respects to the descriptions thereof contained in the Preliminary Offering Circular and the Final
Offering Circular.



     (b) The Securities are in the form contemplated by the Base Indenture and the Indenture
Supplement, and when duly executed by the Issuer and authenticated by the Indenture Trustee in the
manner provided in the Base Indenture and the Indenture Supplement and issued and delivered against
payment of the purchase price therefor, will constitute valid and binding obligations of the
Issuer, enforceable against the Issuer in accordance with their terms and will be entitled to the
benefits of the Base Indenture and the Indenture Supplement.



     (c) Each of the Transaction Documents to which the Issuer, VMS, VMS Sub, Holdings, PHH
Financial Services, PHH Sub 2, SPV, PHH or the Origination Trust (each, a “Party”) is a party, and
which by its terms provides it is to be governed by New York law, constitutes the valid and binding
obligation of such Party, enforceable against such Party in accordance with its terms, except (i)
as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors’ rights generally and by general equitable
principles (regardless of whether the issue of enforceability is considered in a proceeding in
equity or at law) and (ii) such counsel need not express an opinion as to the enforceability of any
rights to indemnification which are violative of the public policy underlying any law, rule or
regulation. For purposes of this opinion, the Transaction Documents shall include not only the
“Transaction Documents” as defined in Schedule I to the Base Indenture but also the Indenture
Supplement and the Limited Liability Company Agreement of Holdings dated as of March 7, 2006 by and
among VMS and the other parties named therein.



     (d) The statements in the Preliminary Offering Circular and the Final Offering Circular under
the headings “Risk factors—Holdings’ indirect ownership of the leases, the vehicles and the
receivables could result in reduced payments to investors in the Series 2009-1 Notes”,
—Insolvency or bankruptcy of VMS could result in delayed or reduced payments to investors in the
Series 2009-1 Notes” and “—Insolvency or bankruptcy of PHH Corporation could result in delayed or
reduced payments to investors in the Series 2009-1 Notes”, “Material Legal Aspects of the
Origination Trust”, “Material Legal Aspects of the Leases and the Vehicles”, “Certain employee
benefit plan considerations”, “Summary of terms of the Series 2009-1 Notes—Material federal and
certain state income tax consequences” and “Material federal and certain state income tax
consequences—U.S. federal income tax consequences”, to









 



2

the extent that they constitute summaries of matters of law, documents or proceedings or legal
conclusions relating to U.S. federal law, have been prepared or reviewed by such counsel and are
correct in all material respects.




     (e) None of the Parties is an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.



     (f) The execution, delivery and performance by VMS, PHH and the Issuer of the Purchase
Agreement, the issuance of the Securities to the Initial Purchasers and the offering of the
Securities, and the execution, delivery and performance by each of the Parties of each of the
Transaction Documents to which it is a party and the consummation by each of the Parties of the
applicable transactions provided for therein do not and will not (a) require any authorization,
consent, approval, license or other action by or in respect of, or notice to or filing with, any
federal or New York state governmental, legislative, judicial, administrative or regulatory body,
agency or official, except for the filing of the applicable financing statements; or (b)
contravene, violate or constitute a default under any provision of any federal or New York state
law, rule or regulation or any order, writ, judgment or decree, of which such counsel is aware
after due inquiry, of any New York State or federal court or governmental authority binding upon
any such Party.



     (g) Assuming that the initial offer and sale of the Securities to the Initial Purchasers and
any offer and resale of the Securities by the Initial Purchasers are made in the manner and under
the circumstances contemplated in the Purchase Agreement and in the Preliminary Offering Circular
and the Final Offering Circular, and assuming compliance by each of the Initial Purchasers with its
obligations under the Purchase Agreement, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchasers and to each subsequent purchaser in the
manner contemplated by the Purchase Agreement and by the Preliminary Offering Circular and the
Final Offering Circular to qualify the Indenture under the Trust Indenture Act.



     (h) It is not necessary to qualify the LLC Agreement or the Origination Trust Documents under
the Trust Indenture Act.



     (i) The provisions of the Loan Agreement are effective to create a valid and enforceable
security interest in the Lease SUBI and the Fleet Receivable SUBI and the other Loan Collateral (as
defined in the Loan Agreement) in favor of the Issuer.



     (j) The provisions of the Asset Purchase Agreement are effective to create a valid and
enforceable ownership or security interest, as the case may be, in the Sold Assets (as defined
therein).



     (k) The provisions of the Receivables Purchase Agreement and the Receivables Assignments are
effective to create a valid and enforceable ownership or security interest, as the case may be, in
the Transferred Fleet Receivables (as defined therein) described therein. The provisions of the
Old Contribution Agreement are effective to create a valid and enforceable ownership or security
interest, as the case may be, in the Assigned Assets (as defined in the Old Contribution Agreement)
contributed to the Origination Trust pursuant thereto. The provisions









 



3

of the Contribution Agreement are effective to create a valid and enforceable ownership or
security interest, as the case may be, in the Assigned Assets (as defined in the Contribution
Agreement) contributed to the Origination Trust pursuant thereto.




     (l) The provisions of the Indenture and the Series 2009-1 Indenture Supplement are effective
to create a valid and enforceable security interest in the Collateral and the Series 2009-1
Collateral and the Proceeds thereof in favor of the Indenture Trustee.



     (m) The provisions of the Security Agreement are effective to create a valid and enforceable
security interest in the Collateral (as defined in the Security Agreement) and the Proceeds (as
defined in the Security Agreement) thereof in favor of the Issuer.



     (n) The provisions of the Assignment and Assumption Agreement are effective to convey to
Holdings all of SPV’s right, title and interest in the Assigned Documents (as defined in the
Assignment and Assumption Agreement).



     (o) Section 9-301 of the New York UCC provides that the local law of the jurisdiction in which
a debtor is located governs perfection of a security interest in the collateral described in each
of the financing statements naming VMS, SPV, PHH Financial Services, VMS Sub, Holdings or the
Issuer as debtor (the “Financing Statements”) and that the local law of the jurisdiction in which a
debtor is located governs the effect of perfection or nonperfection and the priority of a
non-possessory security interest in such collateral except to the extent that such collateral
consists of negotiable documents, goods, instruments, money or tangible chattel paper. Section
9-301 of the New York UCC also provides that the local law of the jurisdiction in which the
collateral is located governs the effect of the perfection or nonperfection and the priority of a
nonpossessory security interest in negotiable documents, goods, instruments, money and tangible
chattel paper.



     (p) VMS, SPV, PHH Financial Services, VMS Sub, Holdings and the Issuer are located in the
State of Delaware under Section 9-307(e) of the New York UCC.



     (q) The Lease SUBI Certificate is either an “instrument”, a “certificated security”, “tangible
chattel paper” or a “general intangible”, as such terms are defined in the New York UCC. The Fleet
Receivable SUBI Certificate is either an “instrument,” a “certificated security,” a “general
intangible” or an “account,” as such terms are defined in the New York UCC.



     (r) Each Lease is either “tangible chattel paper” or a “general intangible,” as such terms are
defined in the New York UCC.



     (s) With respect to the security interest in the SUBI Certificates granted to the Issuer by
Holdings pursuant to the Loan Agreement:




     (I) Assuming that each of the SUBI Certificates is an “instrument” (as defined
in the New York UCC), and has been delivered to, and is continually in the
possession of the Issuer in the State of New York, the Issuer has a perfected
security interest in the SUBI Certificates, as determined in accordance with Article
9 of the New York UCC.









 



4



     (II) Assuming that (i) each of the SUBI Certificates is a “certificated
security” (as defined in the New York UCC), and has been delivered to, and is
continually in the possession of the Issuer in the State of New York and (ii) the
SUBI Certificates are registered in the name of the Issuer, the Issuer has a
perfected security interest in the SUBI Certificates, as determined in accordance
with Article 9 of the New York UCC.



     (t) With respect to the delivery of the Collateral to the Indenture Trustee in accordance with
the Indenture and the Series 2009-1 Indenture Supplement:




          (a) Assuming that the Collateral is comprised of an “instrument” (as defined in
the New York UCC), and has been delivered to, and is continually in the possession
of, the Indenture Trustee in the State of New York, the Indenture Trustee has a
perfected security interest in such Collateral, as determined in accordance with
Article 9 of the New York UCC.




          (b) Assuming that (i) the Collateral is comprised of a “certificated security”
(as defined in the New York UCC), and has been delivered to, and is continually in
the possession of the Indenture Trustee in the State of New York and (ii) such
Collateral is registered in the name of the Indenture Trustee or is endorsed to the
Indenture Trustee or in blank by an effective endorsement, the Indenture Trustee has
a perfected security interest in such Collateral, as determined in accordance with
Article 9 of the New York UCC.




          (c) (i)(A) The security interest in any portion of the Collateral consisting
of a Security Entitlement carried in a Series Account which is a “securities
account” as defined in Section 8-501(a) of the New York UCC (each a “Securities
Account”) maintained by the Indenture Trustee for the benefit of the Series 2009-1
Investor Noteholders pursuant to and in accordance with the Indenture and the Series
2009-1 Indenture Supplement, will attach upon acquisition by the Issuer and the
Indenture Trustee of rights in such Security Entitlement. Upon full compliance with
the procedures set forth in the Indenture in respect of a Permitted Investment, the
Indenture Trustee will acquire a Security Entitlement carried in the Securities
Account in respect of such Permitted Investment and will become the Entitlement
Holder (as defined in the New York UCC) of such Security Entitlement. Such security
interest will be perfected upon execution and delivery of the Series 2009-1
Indenture Supplement by the parties thereto and acquisition by the Indenture Trustee
of such Security Entitlement as described above and will remain perfected so long as
the Base Indenture and the Series 2009-1 Indenture Supplement remain in effect and
the conditions set forth in this clause (A) are satisfied and the Indenture Trustee
remains the Entitlement Holder of such Security Entitlement as described above;




          (B) such security interest in that portion of the Collateral consisting of a
Securities Account, if any, will be perfected if and will remain perfected so long
as the security interest of the Indenture Trustee for the benefit of the Series
2009-1 Investor Noteholders, in all Security Entitlements carried in such Securities









 



5


Account is perfected by the means indicated in clause (A) above.



     (ii) With respect to the security interest in any Collateral perfected as
described in subparagraph (i) above, if such Collateral consists of a Securities
Account or a Security Entitlement credited to a Securities Account and so long as
such security interest therein is perfected in the manner specified in clauses (A)
and (B) of subparagraph (i) above, as applicable, and if such security interest was
created for value and without notice (within the meaning of Section 8-105 of the New
York UCC) to the Indenture Trustee or the Series 2009-1 Investor Noteholders of any
adverse claim (as defined in Section 8-102(a)(1) of the New York UCC) (an “Adverse
Claim”) to such Securities Account or Security Entitlement in such Securities
Account, such perfected security interest has priority over all other security
interests theretofore or thereafter created under the New York UCC in such
Securities Account or Security Entitlement (provided that (x) if the
Indenture Trustee and another secured party both have control over such Securities
Account and Security Entitlements, their interests will rank equally, except that
any security interest granted to the Securities Intermediary in such Securities
Account or Security Entitlement would have priority over the security interest
therein of the Indenture Trustee unless otherwise agreed by the Securities
Intermediary, and (y) such priority will be subject to Section 8-511 of the New York
UCC, to the Bankruptcy Code and to liens or claims of the U.S. or otherwise given
priority by operation of law, including New York or federal law).



     (d) (i)(A) The security interest in any portion of the Collateral consisting
of a Security Entitlement carried in the Collection Account maintained by the
Indenture Trustee for the benefit of the Investor Noteholders pursuant to and in
accordance with the Base Indenture and the Collection Account Control Agreement,
will attach upon acquisition by the Issuer and the Indenture Trustee of rights in
such Security Entitlement. Upon full compliance with the procedures set forth in
the Base Indenture and the Collection Account Control Agreement in respect of a
Permitted Investment, the Indenture Trustee will acquire a Security Entitlement
carried in the Collection Account in respect of such Permitted Investment and will
become the Entitlement Holder (as defined in the New York UCC) of such Security
Entitlement. Such security interest will be perfected upon acquisition by the
Indenture Trustee of such Security Entitlement as described above and will remain
perfected so long as the Base Indenture and the Collection Account Control Agreement
remain in effect and the conditions set forth in this clause (A) are satisfied and
the Indenture Trustee remains the Entitlement Holder of such Security Entitlement as
described above; and



     (B) such security interest in that portion of the Collateral consisting of the
Collection Account will be perfected if and will remain perfected so long as the
security interest of the Indenture Trustee for the benefit of the Investor
Noteholders, in all Security Entitlements carried in the Collection Account is
perfected by the means indicated in clause (A) above.




     (ii) With respect to the security interest in any Collateral perfected as









 



6



described in subparagraph (i) above, so long as such security interest therein
is perfected in the manner specified in clauses (A) and (B) of subparagraph (i)
above, as applicable, and if such security interest was created for value and
without notice (within the meaning of Section 8-105 of the New York UCC) to the
Indenture Trustee or the Investor Noteholders of any Adverse Claim to the Collection
Account or Security Entitlement in the Collection Account, such perfected security
interest has priority over all other security interests theretofore or thereafter
created under the New York UCC in the Collection Account or Security Entitlement
(provided that such priority will be subject to Section 8-511 of the New
York UCC, to the Bankruptcy Code and to liens or claims of the U.S. or otherwise
given priority by operation of law, including New York or federal law).




     (e) (i)(A) The security interest in any portion of the Collateral consisting
of a Security Entitlement carried in the Gain on Sale Account maintained by the
Indenture Trustee for the benefit of the Investor Noteholders pursuant to and in
accordance with the Base Indenture and the Gain on Sale Account Control Agreement,
will attach upon acquisition by the Issuer and the Indenture Trustee of rights in
such Security Entitlement. Upon full compliance with the procedures set forth in
the Base Indenture and the Gain on Sale Account Control Agreement in respect of a
Permitted Investment, the Indenture Trustee will acquire a Security Entitlement
carried in the Gain on Sale Account in respect of such Permitted Investment and will
become the Entitlement Holder (as defined in the New York UCC) of such Security
Entitlement. Such security interest will be perfected upon acquisition by the
Indenture Trustee of such Security Entitlement as described above and will remain
perfected so long as the Base Indenture and the Gain on Sale Account Control
Agreement remain in effect and the conditions set forth in this clause (A) are
satisfied and the Indenture Trustee remains the Entitlement Holder of such Security
Entitlement as described above; and




     (B) such security interest in that portion of the Collateral consisting of the
Gain on Sale Account will be perfected if, and will remain perfected so long as, the
security interest of the Indenture Trustee for the benefit of the Investor
Noteholders, in all Security Entitlements carried in the Gain on Sale Account is
perfected by the means indicated in clause (A) above.




     (ii) With respect to the security interest in any Collateral perfected as
described in subparagraph (i) above, so long as such security interest therein is
perfected in the manner specified in clauses (A) and (B) of subparagraph (i) above,
as applicable, and if such security interest was created for value and without
notice (within the meaning of Section 8-105 of the New York UCC) to the Indenture
Trustee or the Investor Noteholders of any Adverse Claim to the Gain on Sale Account
or Security Entitlement in the Gain on Sale Account, such perfected security
interest has priority over all other security interests theretofore or thereafter
created under the New York UCC in the Gain on Sale Account or Security Entitlement
(provided that such priority will be subject to Section 8-511









 



7



of the New York UCC, to the Bankruptcy Code and to liens or claims of the U.S.
or otherwise given priority by operation of law, including New York or federal law).



     (u) In the event of the filing of a bankruptcy petition with respect to VMS under the
Bankruptcy Code, the transfer of Transferred Fleet Receivables (as defined in the Receivables
Purchase Agreement) from VMS to SPV would not be recharacterized by a court as a pledge to secure
borrowings but rather properly would be held as a valid sale or contribution, as applicable, of all
of VMS’ right, title and interest in the Transferred Fleet Receivables and, therefore, a court
properly would hold that (i) the Transferred Fleet Receivables and the proceeds thereof are not
part of VMS’ bankruptcy estate under Section 541 of the Bankruptcy Code and (ii) the automatic stay
under section 362 of the Bankruptcy Code would not apply to the Transferred Fleet Receivables or
the proceeds thereof.



     (v) In the event of the filing of a bankruptcy petition with respect to VMS under the
Bankruptcy Code, the transfer of Leases, Vehicles, Existing Interests and other Sold Assets (as
defined in the Asset Purchase Agreement) from VMS to SPV (the “VMS Transferred Assets”) would not
be recharacterized by a court as a pledge to secure borrowings but rather properly would be held as
a valid sale or contribution, as applicable, of all of VMS’ right, title and interest in the VMS
Transferred Assets and, therefore, a court properly would hold that (i) the VMS Transferred Assets
and the proceeds thereof are not part of VMS’ bankruptcy estate under Section 541 of the Bankruptcy
Code and (ii) the automatic stay under section 362 of the Bankruptcy Code would not apply to the
VMS Transferred Assets or the proceeds thereof.



     (w) In a case under the Bankruptcy Code in which PHH or any of its Affiliates (other than the
Issuer, Holdings or SPV) was the debtor, subject to certain facts, assumptions and qualifications
specified therein, it would not be a proper exercise by a court of its equitable discretion to
disregard the separate existence of the Origination Trust so as to order substantive consolidation
under the Bankruptcy Code of the assets and liabilities of the Origination Trust with the
bankruptcy estate of PHH or any of its Affiliates (other than the Issuer, Holdings or SPV).



     (x) In a case under the Bankruptcy Code in which PHH or any of its Affiliates (other than the
Origination Trust or the Issuer) was the debtor, subject to certain facts, assumptions and
qualifications specified therein, it would not be a proper exercise by a court of its equitable
discretion to disregard the separate existence of SPV or the separate existence of Holdings so as
to order substantive consolidation under the Bankruptcy Code of the assets and liabilities of SPV
or Holdings with the bankruptcy estate of PHH or any of its Affiliates (other than the Issuer or
the Origination Trust).



     (y) In a case under the Bankruptcy Code in which PHH or any of its Affiliates (other than the
Origination Trust, Holdings or SPV) was the debtor, subject to certain facts, assumptions and
qualifications specified therein, it would not be a proper exercise by a court of its equitable
discretion to disregard the separate existence of the Issuer so as to order substantive
consolidation under the Bankruptcy Code of the assets and liabilities of the Issuer with the
bankruptcy estate of PHH or any of its Affiliates (other than the Origination Trust, Holdings or
SPV).









 



8


     (z) State law will govern the determination of what persons or entities have the authority to
file a bankruptcy petition on behalf of a Delaware limited liability company.



     (aa) The Securities are Eligible Collateral.



     (bb) The Securities will be treated as debt for United States federal income tax purposes.



     (cc) None of the Issuer, Holdings or the Origination Trust will be classified as an
association or a publicly traded partnership taxable as a corporation for United States federal
income tax purposes.



     (dd) Assuming that the initial offer and sale of the Securities to the Initial Purchasers and
any offer and resale of the Securities by the Initial Purchasers are made in the manner and under
the circumstances contemplated in the Purchase Agreement and in the Preliminary Offering Circular
and the Final Offering Circular, assuming compliance by each of the Initial Purchasers with its
obligations under the Purchase Agreement and assuming the accuracy of the representations and
warranties of the Initial Purchasers in the Purchase Agreement, it is not necessary in connection
with the offer, sale, issuance and delivery of the Securities to register the Securities under the
Securities Act.



     (ee) Although such counsel assumes no responsibility for the accuracy, completeness or
fairness of the Preliminary Offering Circular or the Final Offering Circular (except as provided in
paragraphs (a) and (d) above), nothing has come to the attention of such counsel to cause such
counsel to believe that (i) the Preliminary Offering Circular (except for financial statements and
other financial or statistical data set forth or incorporated by reference in the Preliminary
Offering Circular, as to which such counsel need make no statement), at the Time of Sale, contained
any untrue statement of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not
misleading or (ii) the Final Offering Circular (except for financial statements and other financial
or statistical data set forth or incorporated by reference in the Final Offering Circular, as to
which such counsel need make no statement), as of its date or as of Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading.









 



 


EXHIBIT B




FORM OF OPINIONS OF WHITE & CASE LLP




          The Representatives shall have received the favorable opinion, dated as of the Closing Date,
of White & Case LLP, special counsel to the Issuer, Holdings, VMS, PHH and SPV, in form and
substance, and subject to such qualifications and assumptions as are, satisfactory to the
Representatives and to counsel for the Initial Purchasers, addressed to the Initial Purchasers and
to the effect that:




     (a) Each of the Master Exchange Agreement and the Master Trust Agreement has been duly
executed and delivered by the Intermediary and constitutes the legal, valid and binding obligation
of the Intermediary, enforceable against the Intermediary in accordance with its terms, subject to
bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether applied by a court of law
or equity).



     (b) The execution and delivery by the Intermediary of each of the Master Exchange Agreement
and the Master Trust Agreement and the performance by the Intermediary of its agreements or
obligations under each of the Master Exchange Agreement and the Master Trust Agreement will not
violate any New York statute or any rule or regulation that has been issued pursuant to any New
York statute by any court or governmental agency or body having jurisdiction over the Intermediary
or any of its property.



     (c) The execution and delivery by the Intermediary of each of the Master Exchange Agreement
and the Master Trust Agreement and the performance by the Intermediary of its agreements or
obligations under each of the Master Exchange Agreement and the Master Trust Agreement will not
require any authorization, approval, consent, order, license or other action by, or any notice to
or filing with, any governmental authority or agency under the law of the State of New York.



     (d) In a case under the Bankruptcy Code in which Wachovia Exchange Services, LLC was the
debtor, subject to certain facts, assumptions and qualifications specified therein, it would not be
a proper exercise by a court of its equitable discretion to disregard the separate existence of the
Intermediary so as to order substantive consolidation under the Bankruptcy Code of the assets and
liabilities of the Intermediary with the bankruptcy estate of Wachovia Exchange Services, LLC.









 



 


EXHIBIT C




FORM OF OPINIONS OF COUNSEL TO VMS




     The Representatives shall have received the favorable opinion, dated as of the Closing Date,
of Joseph W. Weikel, Senior Vice President and General Counsel of VMS, in form and substance
satisfactory to the Representatives and counsel for the Initial Purchasers, and addressed to the
Initial Purchasers and to the effect that:




     1. To my best knowledge, there are no pending actions or suits or judicial, arbitral,
rule-making, administrative or other proceedings to which any Party is a party or of which
any property or assets of any Party is the subject which singularly or in the aggregate, if
determined adversely to a Party, could reasonably be expected to have a Material Adverse
Effect or a material adverse effect on any Party’s condition (financial or other), business
or results of operations or such Party’s ability to perform its obligations under the
Indenture Supplement or the Transaction Documents to which it is a party and to my best
knowledge, no such proceedings are threatened or contemplated by governmental authorities or
threatened by others.




     2. To my best knowledge, no Party is (A) in violation of its respective limited
liability company agreement or certificate of incorporation and by-laws, (B) in default in
any material respect, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any term, covenant
or condition contained in any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party or by which it is bound or to
which any of its property or assets are subject or (C) in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject.




     3. None of the execution and delivery by each of the Parties of the Purchase Agreement,
the Indenture Supplement and each Transaction Document to which it is a party, as the case
may be, the consummation by the Parties of the transactions contemplated thereby or
compliance by the Parties with any of the provisions thereof, including the issuance of the
Securities to the Initial Purchasers and the offering of the Securities, (i) conflicts with
or results in any breach of any provision of the respective organizational documents of the
Parties, (ii) results in a default (or gives rise to any right of termination, cancellation
or acceleration) or results in the creation or imposition of any mortgage, lien, security
interest, charge or encumbrance upon any of the property or assets of the Parties, under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation known to me after due inquiry to which
any of the Parties is a party or by which its respective assets may be bound or (iii)
contravenes any provision of any Federal law or the law of the State of Maryland, statute,
rule or regulation or any order, writ, injunction or decree of which such counsel is aware
or any Federal or Maryland State court or governmental entity to which the Parties are
subject.









 



2



     4. VMS has the power and authority to execute and deliver each Transaction Document to
which it is a party and to perform its obligations thereunder, and all corporate action
required to be taken for the due and proper authorization, execution and delivery of each
Transaction Document to which it is a party and the transactions contemplated thereby have
been duly and validly taken.




     5. Each Transaction Document to which VMS is a party has been duly executed and
delivered by VMS.




     6. Each Fleet Receivable (as defined in the Base Indenture) is either a “general
intangible” or an “account” as such terms are defined in the Uniform Commercial Code as in
effect in the State of Maryland.









 






EXHIBIT D




FORM OF OPINIONS OF GENERAL COUNSEL TO PHH




          The Representatives shall have received the favorable opinion, dated as of the Closing Date,
of the General Counsel to PHH, in form and substance satisfactory to the Representatives and
counsel for the Initial Purchasers, and addressed to the Initial Purchasers and to the effect that:





     1. PHH Corporation (“PHH”), a Maryland corporation, has been duly organized and is
validly existing as a corporation in good standing under the laws of the State of Maryland.




     2. To such counsel’s best knowledge, there are no pending actions or suits or judicial,
arbitral, rule-making administrative or other proceedings to which PHH is a party or of
which any property or assets of PHH is the subject which singularly or in the aggregate, if
determined adversely to PHH, could reasonably be expected to have a PHH Material Adverse
Effect and to such counsel’s best knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.




     3. To such counsel’s best knowledge, PHH is not (A) in violation of its certificate of
incorporation or by-laws, (B) in default in any material respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument
known to such counsel after due inquiry to which it is a party or by which it is bound or to
which any of its property or assets are subject or (C) in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree known to such counsel
after due inquiry to which it or its property or assets may be subject.




     4. The execution and delivery by PHH of the Purchase Agreement and the PHH Guarantee
and the consummation by PHH of the transactions contemplated thereby does not (i) conflict
with or result in any breach of any provision of the certificate of incorporation or by-laws
of PHH or (ii) result in a default (or gives rise to any right of termination, cancellation
or acceleration) or result in the creation or imposition of any mortgage, lien, security
interest, charge or encumbrance upon any of the property or assets of PHH, under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation known to such counsel after due inquiry to which PHH
is a party or by which its respective assets may be bound.




     5. PHH has the power and authority to execute and deliver the Purchase Agreement and
the PHH Guarantee and to perform its obligations thereunder, and all corporate action
required to be taken for the due and proper authorization, execution and delivery of the
Purchase Agreement and the PHH Guarantee and the transactions









 



2 



contemplated thereby have been duly and validly taken.




     6. The Purchase Agreement and the PHH Guarantee have been duly executed and delivered
by PHH.









 



 


EXHIBIT E




FORM OF OPINIONS OF RICHARDS, LAYTON & FINGER




     The Representatives shall have received the favorable opinion, dated as of the Closing Time,
of Richards, Layton & Finger, P.A., counsel to Wilmington Trust Company, as the SUBI Trustee, and
special Delaware counsel to the Issuer, VMS, SPV, Holdings and the Origination Trust, in form and
substance satisfactory to the Representatives and to counsel for the Initial Purchasers and
addressed to the Initial Purchasers, to the effect that:




     1. The Origination Trust has been duly formed and is validly existing in good standing
as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. § 3801,
et seq. (the “Act”), and has the power and authority under the Trust
Agreement and the Act to execute, deliver and perform its obligations under the Transaction
Documents, to issue the SUBI Certificates and to own, lease and operate its properties and
to conduct its business as described in the Trust Agreement.




     2. The Origination Trust Agreement constitutes a legal, valid and binding agreement of
the parties thereto, and is enforceable against such parties, in accordance with its terms.




     3. The Transaction Documents have been duly authorized, executed and delivered by the
Origination Trust.




     4. Each of the SUBI Certificates have been duly authorized, executed and delivered by
the Trust and are validly issued and entitled to the benefits of the Origination Trust
Agreement.




     5. Assuming that (i) separate and distinct records are maintained for each SUBI created
pursuant to the Origination Trust Agreement, (ii) the assets associated with each SUBI are
held in such separate and distinct records (directly or indirectly, including through a
nominee or otherwise) and accounted for in such separate and distinct records separately
from the other assets of the Origination Trust, or any other SUBI, (iii) the notice of the
limitation on liabilities of a series provided in Section 3804(a) of the Act is continuously
set forth in the Certificate of Trust and (iv) the Origination Trust Agreement continuously
provides for those matters described in (i), (ii) and (iii) of this paragraph 5, each SUBI
shall be entitled to the benefits of the limitation on interseries liability set forth in
Section 3804(a) of the Delaware Statutory Trust Act.




     6. The execution, delivery and performance by the Origination Trust of the Transaction
Documents, the issuance and sale by the Origination Trust of the SUBI Certificates and the
consummation by the Origination Trust of the transactions contemplated thereby do not
violate (i) any of the provisions of the Origination Trust Agreement, (ii) any applicable
Delaware law, rule or regulation, or (iii) to our knowledge, without independent
investigation, any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Origination Trust is a party, by









 



2



which it may be bound or to which its assets are subject.




     7. Neither the execution, delivery and performance by the Origination Trust of the
Transaction Documents, the issuance and sale by the Origination Trust of the SUBI
Certificates nor the consummation by the Origination Trust of the transactions contemplated
thereby requires the consent or approval of, the withholding of objection on the part of,
the giving of notice to, the filing, registration or qualification with, or the taking of
any other action in respect of, any governmental authority or agency of the State of
Delaware, other than the filing of the Certificate of Trust and any required financing
statements with the Secretary of State, which Certificate of Trust has been filed.




     8. Assuming that the Origination Trust will not be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal income tax
purposes, the Origination Trust will not be classified as an association or a publicly
traded partnership for income tax purposes under the laws of the State of Delaware.




     9. VMS has been duly formed and is validly existing in good standing as a limited
liability company under the laws of the State of Delaware.




     10. SPV has been duly formed and is validly existing in good standing as a limited
liability company under the laws of the State of Delaware.




     11. The Issuer has been duly formed and is validly existing in good standing as a
limited liability company under the laws of the State of Delaware.




     12. Holdings has been duly formed and is validly existing in good standing as a limited
liability company under the laws of the State of Delaware.




     13. PHH Vehicle Management Services Group LLC (the “VMS Member”) shall not be obligated
personally for any of the debts, obligations or liabilities of VMS, whether arising in
contract, in tort or otherwise, solely by reason of being a member of VMS, except as the VMS
Member may be obligated to make contributions to VMS and to repay any funds wrongfully
distributed to it. The VMS Member may be liable for its own tortious or wrongful conduct
and its obligations set forth in the limited liability company agreement of VMS (the “VMS
Agreement”).




     14. Under the Delaware Limited Liability Company Act (6 Del. C. § 18-101,
et seq.) (the “LLC Act”) and the VMS Limited Liability Company Agreement (“VMS
Agreement”), VMS has all necessary limited liability company power and authority to conduct
its business as described in the Preliminary Offering Circular and the Final Offering
Circular and to execute and deliver, and to perform its obligations under, the Purchase
Agreement and each of the Transaction Documents to which it is a party.




     15. Under the LLC Act and the SPV Limited Liability Company Agreement (“SPV
Agreement”), SPV has all necessary limited liability company power and authority to conduct
its business as described in the Preliminary Offering Circular and the Final Offering
Circular and to execute and deliver, and to perform its obligations under,









 



3



the Transaction Documents to which it is a party.




     16. Under the LLC Act and the Holdings Limited Liability Company Agreement (the
“Holdings Agreement”), Holdings has all necessary limited liability company power and
authority to conduct its business as described in the Preliminary Offering Circular and the
Final Offering Circular and to execute and deliver, and to perform its obligations under,
the Transaction Documents to which it is a party.




     17. Under the LLC Act and the LLC Agreement, the Issuer has all necessary limited
liability company power and authority to conduct its business as described in the
Preliminary Offering Circular and the Final Offering Circular and to execute and deliver,
and to perform its obligations under, the Purchase Agreement, the Indenture Supplement and
the Transaction Documents to which it is a party.




     18. Under the LLC Act and the VMS Agreement, the execution and delivery by VMS of the
Purchase Agreement and the Transaction Documents to which it is a party, and the performance
by VMS of its obligations thereunder, have been duly authorized by all necessary limited
liability company action on the part of VMS.




     19. Under the LLC Act and the SPV Agreement, the execution and delivery by the SPV of
the Transaction Documents to which it is a party, and the performance by the SPV of its
obligations thereunder, have been duly authorized by all necessary limited liability company
action on the part of the SPV.




     20. Under the LLC Act and the Holdings Agreement, the execution and delivery by
Holdings of the Transaction Documents to which it is a party, and the performance by
Holdings of its obligations thereunder, have been duly authorized by all necessary limited
liability company action on the part of Holdings.




     21. Under the LLC Act and the LLC Agreement, the execution and delivery by the Issuer
of the Purchase Agreement, the Indenture Supplement and the Transaction Documents to which
it is a party, and the performance by the Issuer of its obligations thereunder, have been
duly authorized by all necessary limited liability company action on the part of the Issuer.




     22. The execution and delivery by VMS of the Purchase Agreement and the Transaction
Documents to which it is a party, and the performance by VMS of its obligations thereunder,
do not violate (i) any Delaware law, rule or regulation, or (ii) the VMS Agreement.




     23. The execution and delivery by the SPV of the Transaction Documents to which it is a
party, and the performance by the SPV of its obligations thereunder, do not violate (i) any
Delaware law, rule or regulation, or (ii) the SPV Agreement.




     24. The execution and delivery by Holdings of the Transaction Documents to which it is
a party, and the performance by Holdings of its obligations thereunder, do not violate (i)
any Delaware law, rule or regulation, or (ii) the Holdings Agreement.









 



4



     25. The execution and delivery by the Issuer of the Purchase Agreement, the Indenture
Supplement and the Transaction Documents to which it is a party, and the performance by the
Issuer of its obligations thereunder, do not violate (i) any Delaware law, rule or
regulation, or (ii) the LLC Agreement.




     26. No authorization, consent, approval, order, filing or qualification of or with any
Delaware court or any Delaware governmental or administrative body is required solely in
connection with the execution and delivery by VMS of the Purchase Agreement and the
Transaction Documents to which it is a party, and the performance by VMS of its obligations
thereunder (other than the filing of financing statements).




     27. No authorization, consent, approval, order, filing or qualification of or with any
Delaware court or any Delaware governmental or administrative body is required solely in
connection with the execution and delivery by the SPV of the Transaction Documents to which
it is a party, and the performance by the SPV of its obligations thereunder (other than the
filing of financing statements).




     28. No authorization, consent, approval, order, filing or qualification of or with any
Delaware court or any Delaware governmental or administrative body is required solely in
connection with the execution and delivery by Holdings of the Transaction Documents to which
it is a party, and the performance by Holdings of its obligations thereunder (other than the
filing of financing statements).




     29. No authorization, consent, approval, order, filing or qualification of or with any
Delaware court or any Delaware governmental or administrative body is required solely in
connection with the execution and delivery by the Issuer of the Purchase Agreement, the
Indenture Supplement and the Transaction Documents to which it is a party, and the
performance by the Issuer of its obligations thereunder, including the issuance of the
Securities to the Initial Purchasers and the offering of the Securities (other than the
filing of financing statements).




     30. The SPV Agreement constitutes a legal, valid and binding agreement of VMS, as sole
economic member (the “SPV Member”), and is enforceable against the SPV Member, in accordance
with its terms.




     31. The Holdings Agreement constitutes a legal, valid and binding agreement of VMS, as
sole common member (the “Holdings Member”), and is enforceable against the Holdings Member,
in accordance with its terms.




     32. The LLC Agreement constitutes a legal, valid and binding agreement of PHH Sub 2, as
the sole common member (the “Common Member”), and is enforceable against the Common Member,
in accordance with its terms.




     33. If properly presented to a Delaware court, a Delaware court applying Delaware law
would conclude that (i) in order for a Person to file a voluntary bankruptcy petition on
behalf of the SPV, the prior unanimous consent of the Managers (as defined in the SPV
Agreement), including each of the Independent Managers (as defined in the SPV Agreement), as
provided for in Section 4.4(b) of the SPV Agreement, is required and (ii)









 



5



such provision, contained in Section 4.4(b) of the SPV Agreement, that requires the
prior unanimous consent of the Managers (as defined in the SPV Agreement), including each of
the Independent Managers (as defined in the SPV Agreement), in order for a Person to file a
voluntary bankruptcy petition on behalf of the SPV, constitutes a legal, valid and binding
agreement of the SPV Member, and is enforceable against the SPV Member, in accordance with
its terms.




     34. If properly presented to a Delaware court, a Delaware court applying Delaware law
would conclude that (i) in order for a Person to file a voluntary bankruptcy petition on
behalf of the Issuer, the prior unanimous consent of the Managers, including the Independent
Manager, and the affirmative vote of Senior Preferred Members holding Senior Preferred
Membership Interests of at least 66-2/3% of the aggregate stated liquidation preference of
all Senior Preferred Membership Interests then outstanding, voting as a single class, in
person or by proxy at a special meeting called for the purpose, or by unanimous written
consent of the Senior Preferred Members without such meeting, and the affirmative vote of
Junior Preferred Members holding Junior Preferred Membership Interests of at least 66-2/3%
of the aggregate stated liquidation preference of all Junior Preferred Membership Interests
then outstanding, voting as a single class, in person or by proxy at a special meeting
called for the purpose, or by unanimous written consent of the Junior Preferred Members
without such meeting as provided for in Section 3.4(b), Section 9.2(f) and Section 10.2(f)
of the LLC Agreement, is required and (ii) such provisions, contained in Section 3.4(b),
Section 9.2(f) and Section 10.2(f) of the LLC Agreement, that require the prior unanimous
consent of the Managers, including the Independent Manager, and the affirmative vote of
Senior Preferred Members holding Senior Preferred Membership Interests of at least 66-2/3%
of the aggregate stated liquidation preference of all Senior Preferred Membership Interests
then outstanding, voting as a single class, in person or by proxy at a special meeting
called for the purpose, or by unanimous written consent of the Senior Preferred Members
without such meeting and the affirmative vote of Junior Preferred Members holding Junior
Preferred Membership Interests of at least 66-2/3% of the aggregate stated liquidation
preference of all Junior Preferred Membership Interests then outstanding, voting as a single
class, in person or by proxy at a special meeting called for the purpose, or by unanimous
written consent of the Junior Preferred Members without such meeting, in order for a Person
to file a voluntary bankruptcy petition on behalf of the Issuer, constitute legal, valid and
binding agreements of the Common Member, and is enforceable against the Common Member, in
accordance with its terms.




     35. If properly presented to a Delaware court, a Delaware court applying Delaware law
would conclude that (i) in order for a Person to file a voluntary bankruptcy petition on
behalf of Holdings, the prior unanimous consent of the Managers (as defined in the Holdings
Agreement), including the Independent Manager (as defined in the Holdings Agreement), and
the affirmative vote of Senior Preferred Members (as defined in the Holdings Agreement)
holding Senior Preferred Membership Interests (as defined in the Holdings Agreement) of at
least 66-2/3% of the aggregate stated liquidation preference of all Senior Preferred
Membership Interests then outstanding, voting as a single class, in person or by proxy at a
special meeting called for the purpose, or by unanimous written consent of the Senior
Preferred Members without such meeting, and









 



6



the affirmative vote of Junior Preferred Members (as defined in the Holdings Agreement)
holding Junior Preferred Membership Interests (as defined in the Holdings Agreement) of at
least 66-2/3% of the aggregate stated liquidation preference of all Junior Preferred
Membership Interests then outstanding, voting as a single class, in person or by proxy at a
special meeting called for the purpose, or by unanimous written consent of the Junior
Preferred Members without such meeting as provided for in Section 3.4(b), Section 9.2(f) and
Section 10.2(f) of the Holdings Agreement, is required and (ii) such provisions, contained
in Section 3.4(b), Section 9.2(f) and Section 10.2(f) of the Holdings Agreement, that
require the prior unanimous consent of the Managers, including the Independent Manager, and
the affirmative vote of Senior Preferred Members holding Senior Preferred Membership
Interests of at least 66-2/3% of the aggregate stated liquidation preference of all Senior
Preferred Membership Interests then outstanding, voting as a single class, in person or by
proxy at a special meeting called for the purpose, or by unanimous written consent of the
Senior Preferred Members without such meeting and the affirmative vote of Junior Preferred
Members holding Junior Preferred Membership Interests of at least 66-2/3% of the aggregate
stated liquidation preference of all Junior Preferred Membership Interests then outstanding,
voting as a single class, in person or by proxy at a special meeting called for the purpose,
or by unanimous written consent of the Junior Preferred Members without such meeting, in
order for a Person to file a voluntary bankruptcy petition on behalf of Holdings, constitute
legal, valid and binding agreements of the Holdings Member, and is enforceable against the
Holdings Member, in accordance with its terms.




     36. Under the LLC Act and the SPV Agreement, the Bankruptcy (as defined in the SPV
Agreement) or dissolution of the SPV Member will not, by itself, cause the SPV to be
dissolved or its affairs to be wound up.




     37. Under the LLC Act and the Holdings Agreement, an Insolvency Event (as defined in
the Holdings Agreement) with respect to, or dissolution of, the Holdings Member will not, by
itself, cause Holdings to be dissolved or its affairs to be wound up.




     38. Under the LLC Act and the LLC Agreement, the occurrence of an Insolvency Event with
respect to, or dissolution of, the Common Member will not, by itself, cause the Issuer to be
dissolved or its affairs to be wound up.




     39. While under the LLC Act, on application to a court of competent jurisdiction, a
judgment creditor of the SPV Member may be able to charge the SPV Member’s share of any
profits and losses of the SPV and the SPV Member’s right to receive distributions of the
SPV’s assets (the “SPV Member’s Interest”), to the extent so charged, the judgment creditor
has only the right to receive any distribution or distributions to which the SPV Member
would otherwise have been entitled in respect of such SPV Member’s Interest. Under the LLC
Act, no creditor of the SPV Member shall have any right to obtain possession of, or
otherwise exercise legal or equitable remedies with respect to, the property of the SPV.
Thus, under the LLC Act, a judgment creditor of the SPV Member may not satisfy its claims
against the SPV Member by asserting a claim against the assets of the SPV.









 



7



     40. While under the LLC Act, on application to a court of competent jurisdiction, a
judgment creditor of the Holdings Member may be able to charge the Holdings Member’s share
of any profits and losses of Holdings and the Holdings Member’s right to receive
distributions of Holdings’ assets (the “Holdings Member’s Interest”), to the extent so
charged, the judgment creditor has only the right to receive any distribution or
distributions to which the Holdings Member would otherwise have been entitled in respect of
such Holdings Member’s Interest. Under the LLC Act, no creditor of the Holdings Member
shall have any right to obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the property of Holdings. Thus, under the LLC Act, a judgment
creditor of the Holdings Member may not satisfy its claims against the Holdings Member by
asserting a claim against the assets of Holdings.




     41. While under the LLC Act, on application to a court of competent jurisdiction, a
judgment creditor of the Common Member may be able to charge the Common Member’s share of
any profits and losses of the Issuer and the Common Member’s right to receive distributions
of the Issuer’s assets (the “Common Member’s Interest”), to the extent so charged, the
judgment creditor has only the right to receive any distribution or distributions to which
the Common Member would otherwise have been entitled in respect of such Common Member’s
Interest. Under the LLC Act, no creditor of the Common Member shall have any right to
obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the
property of the Issuer. Thus, under the LLC Act, a judgment creditor of the Common Member
may not satisfy its claims against the Common Member by asserting a claim against the assets
of the Issuer.




     42. Under the LLC Act (i) the SPV is a separate legal entity, and (ii) the existence of
the SPV as a separate legal entity shall continue until the cancellation of the SPV
Certificate of Formation.




     43. Under the LLC Act (i) the Issuer is a separate legal entity, and (ii) the existence
of the Issuer as a separate legal entity shall continue until the cancellation of the Issuer
Certificate of Formation.




     44. Under the LLC Act (i) Holdings is a separate legal entity, and (ii) the existence
of Holdings as a separate legal entity shall continue until the cancellation of the Holdings
Certificate of Formation.




     45. Neither Holdings nor the Issuer will be treated as an association taxable as a
corporation for Delaware state income tax purposes.




     46. Each of the financing statements naming VMS, the Origination Trust, Holdings, the
Issuer or SPV and filed in the State of Delaware (the “Financing Statements”) in connection
with the Transaction Documents was at the time it was filed in an appropriate form for
filing in the of State of Delaware and was duly filed in the appropriate filing office in
the State of Delaware and the fees and document taxes, if any, payable in connection
therewith have been paid in full.




     47. Insofar as Article 9 of the Uniform Commercial Code as in effect in the









 



8



State of Delaware (the “UCC”) is applicable (without regard to principles of conflict
of laws), and assuming that the security interest created by the Indenture in favor of the
Trustee in the Collateral and the proceeds thereof has been duly created and has attached,
then, (A) the Trustee has a perfected security interest in the Issuer’s rights in that
portion of the Collateral that may be perfected by the filing of a UCC financing statement
with the Secretary of State of the State of Delaware, and the proceeds thereof, and (B) such
security interest is prior to any other security interest granted by the Issuer that is
perfected solely by the filing of financing statements under the UCC in the State of
Delaware.




     48. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Indenture in favor
of the Indenture Trustee in the Series 2009-1 Collateral and the proceeds thereof has been
duly created and has attached, then, upon the filing of the Financing Statements relating to
the Series 2009-1 Collateral with the Secretary of State of the State of Delaware, (A) the
Indenture Trustee will have a perfected security interest in the Issuer’s rights in that
portion of the Series 2009-1 Collateral that may be perfected by the filing of a UCC
financing statement with the Secretary of State of the State of Delaware, and the proceeds
thereof, and (B) such security interest will be prior to any other security interest granted
by the Issuer that is perfected solely by the filing of financing statements under the UCC
in the State of Delaware.




     49. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Loan Agreement in
favor of the Issuer in the Loan Collateral and the proceeds thereof pursuant to the Loan
Agreement has been duly created and has attached, (A) the Issuer has a perfected security
interest in Holdings’ rights in that portion of the Loan Collateral that may be perfected by
the filing of a UCC financing statement with the Secretary of State of the State of
Delaware, and the proceeds thereof, and (B) such security interest is prior to any other
security interest granted by Holdings that is perfected solely by the filing of financing
statements under the UCC in the State of Delaware.




     50. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Contribution
Agreement in favor of the Origination Trust in the Assigned Assets pursuant to the
Contribution Agreement has been duly created and has attached, (A) the Origination Trust has
a perfected security interest in Holdings’ rights in that portion of the Assigned Assets
that may be perfected by the filing of a UCC financing statement with the Secretary of State
of the State of Delaware, and the proceeds thereof, and (B) such security interest is prior
to any other security interest granted by Holdings that is perfected solely by the filing of
financing statements under the UCC in the State of Delaware.




     51. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Old Contribution
Agreement in favor of the Origination Trust in the Assigned Assets pursuant to the Old
Contribution Agreement has been duly created and has attached, (A) the









 



9



Origination Trust has a perfected security interest in SPV’s rights in that portion of
the Assigned Assets that may be perfected by the filing of a UCC financing statement with
the Secretary of State of the State of Delaware, and the proceeds thereof, and (B) such
security interest is prior to any other security interest granted by SPV that is perfected
solely by the filing of financing statements under the UCC in the State of Delaware.




     52. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Additional
Equipment Assets Contribution Agreement in favor of the Origination Trust in the Assigned
Equipment Assets pursuant to the Additional Equipment Assets Contribution Agreement has been
duly created and has attached, (A) the Origination Trust has a perfected security interest
in SPV’s rights in that portion of the Assigned Equipment Assets that may be perfected by
the filing of a UCC financing statement with the Secretary of State of the State of
Delaware, and the proceeds thereof, and (B) such security interest is prior to any other
security interest granted by SPV that is perfected solely by the filing of financing
statements under the UCC in the State of Delaware.




     53. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Asset Purchase
Agreement and the Additional Equipment Assets Sale Agreement in favor of SPV has been duly
created and has attached, (A) SPV has a perfected security interest in VMS’s rights in that
portion of the Sold Assets and the Additional Equipment Assets that may be perfected by the
filing of a UCC financing statement with the Secretary of State of the State of Delaware,
and the proceeds thereof, and (B) such security interest is prior to any other security
interest granted by VMS that is perfected solely by the filing of financing statements under
the UCC in the State of Delaware.




     54. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Receivables
Purchase Agreement and the Receivables Assignments in favor of Holdings has been duly
created and has attached, (A) Holdings has a perfected security interest in VMS’s rights in
that portion of the Transferred Fleet Receivables that may be perfected by the filing of a
UCC financing statement with the Secretary of State of the State of Delaware, and the
proceeds thereof, and (B) such security interest is prior to any other security interest
granted by VMS that is perfected solely by the filing of financing statements under the UCC
in the State of Delaware.




     55. Insofar as Article 9 of the UCC is applicable (without regard to principles of
conflict of laws), and assuming that the security interest created by the Security Agreement
in favor of the Issuer in the Collateral (as defined in the Security Agreement) and the
proceeds thereof has been duly created and has attached, then, (A) the Issuer has a
perfected security interest in the Origination Trust’s rights in that portion of the
Collateral that may be perfected by the filing of a UCC financing statement with the
Secretary of State of the State of Delaware, and the proceeds thereof, and (B) such security
interest is prior to any other security interest granted by the Origination Trust that is
perfected solely by the filing of financing statements under the UCC in the State of
Delaware.









 



10



     56. Wilmington Trust Company (“Wilmington Trust”) is duly incorporated and is validly
existing in good standing as a banking corporation with trust powers under the laws of the
State of Delaware.




     57. Wilmington Trust has the power and authority to execute, deliver and perform its
obligations under the Origination Trust Agreement.




     58. The Origination Trust Agreement has been duly authorized, executed and delivered by
Wilmington Trust.




     59. The execution, delivery and performance by Wilmington Trust of the Origination
Trust Agreement does not violate the charter or by-laws of Wilmington Trust.




     60. No consent, approval or authorization of, or registration with or notice to, any
governmental authority or agency of the State of Delaware or the United States of America
governing the trust powers of Wilmington Trust is required for the execution, delivery or
performance by Wilmington Trust of the Origination Trust Agreement.









 



 


EXHIBIT F




TERM ASSET-BACKED SECURITIES FACILITY UNDERTAKING




June 9, 2009



          This Term Asset-Backed Securities Loan Facility Undertaking (this “Undertaking”) is
executed as of the date first written above by PHH Corporation (the “Sponsor”) and
Chesapeake Funding LLC (the “Issuer” and, together with the Sponsor, the “Issuer
Parties”). Reference is hereby made to (i) the final offering circular, dated June 2, 2009 (the
“Offering Memorandum”), relating to $1,000,000,000 aggregate principal amount of Floating
Rate Asset Backed Notes (the “Specified Securities”), issued by the Issuer, (ii) each
Master Loan and Security Agreement (the “MLSA”), by and among the Federal Reserve Bank of
New York, as lender (“Lender”), the primary dealers party thereto (the “Primary
Dealers” and each, individually, a “Primary Dealer”) and The Bank of New York Mellon,
as administrator and as custodian, executed in connection with the Term Asset-Backed Securities
Loan Facility (the “TALF Program”), and (iii) the certifications and indemnities given by
the Issuer Parties to Lender in connection with the Specified Securities (the “Issuer
Documents”).




          1. Definitions. Capitalized terms used but not defined herein shall have the meanings
specified in the MLSA. In addition, as used herein, the following terms shall have the following
meanings (such definition to be applicable to both the singular and plural forms of such terms):





          “Dealer Indemnified Party” means a Relevant Dealer and each person, if any, who
controls any Relevant Dealer within the meaning of Section 15 of the Securities Act of 1933,
as amended.




          “Relevant Dealer” means any Primary Dealer that is acting as agent on behalf of
a Borrower with respect to a Relevant Loan.




          “Relevant Loan” means any Loan for which any of the Specified Securities have
been pledged to Lender as Collateral.




          “TALF Provisions” means the portions of the Offering Memorandum that describe,
or are relevant to, the qualification of the Specified Securities as Eligible Collateral,
including without limitation the descriptions of the terms of the Specified Securities and
the assets generating collections or other funds from which the Specified Securities are to
be paid.



          2. Representations and Warranties. The Issuer Parties hereby represent, warrant and
agree, for the benefit of each Relevant Dealer, as follows:





          (a) Each Specified Security constitutes Eligible Collateral;









 



2 



          (b) The certifications contained in the Issuer Documents are true and correct, and the
Issuer Parties will promptly pay and perform their obligations under the Issuer Documents.




          (c) No statement or information contained in the TALF Provisions is untrue as to any
material fact or omits any material fact necessary to make the same not misleading.



          3. Indemnity.




          (a) The Issuer Parties shall, jointly and severally agree, upon demand from a Relevant
Dealer, to reimburse the Dealer Indemnified Parties for, to indemnify and defend the Dealer
Indemnified Parties against, and hold Dealer Indemnified Parties harmless from, any loss, claim,
damage, liability and expense (including reasonable attorneys’ fees, court costs and expenses of
litigation) incurred by a Dealer Indemnified Party in connection with an Issuer Party’s breach of
this Undertaking or the Issuer Documents; provided,
however, that an Issuer Party shall not be
liable to a Dealer Indemnified Party for such Dealer Indemnified Party’s gross negligence, willful
misconduct or fraudulent actions as determined by a court of competent jurisdiction in a final,
nonappealable order.




          (b) Each Dealer Indemnified Party shall give the Sponsor written notice of any claim that
such Dealer Indemnified Party may have under this indemnity. No Issuer Party shall be liable for
any claim that is compromised or settled by a Dealer Indemnified Party without the prior written
consent of the Sponsor, provided that Sponsor responded promptly and in such Dealer
Indemnified Party’s judgment, adequately, to such Dealer Indemnified Party’s notice of such claim.
This indemnity remains an obligation of each Issuer Party notwithstanding termination of the MLSA
or the TALF Program or repayment in full of the Relevant Loans, and is binding upon each Issuer
Party’s successors and assigns. Upon written demand from a Dealer Indemnified Party, each Issuer
Party shall pay promptly amounts owed under this indemnity free and clear of any right of offset,
counterclaim or other deduction.




          (c) Each Dealer Indemnified Party’s right to indemnification hereunder shall be enforceable
against each Issuer Party directly, without any obligation to first proceed against any third party
for whom such Dealer Indemnified Party may act, and irrespective of any rights or recourse that
such Issuer Party may have against any such third party.




          4. Acknowledgement. The Issuer Parties hereby acknowledge (a) the existence of the
MLSA and the terms thereof and (b) that the Relevant Dealers are obtaining the Relevant Loans,
pledging the Specified Securities as collateral therefor and undertaking obligations, in each case
as agents on behalf of the Borrowers with respect thereto in reliance on the representations,
warranties, covenants and indemnities of the Issuer Parties set forth in this Undertaking. This
Undertaking is for the sole benefit of the Dealer Indemnified Parties in connection with the
performance by a Related Dealer of its obligations with respect to the TALF Program and not in its
capacity as an underwriter of the Specified Securities, and may not be relied upon by (i) the
Dealer Indemnified Parties for any other purpose or (ii) any direct or indirect purchaser or owner
of the Specified Securities, or any other Person claiming by or












 



3 



through any such purchaser or owner or any third party beneficiary, for any purpose or in any
circumstance, whether on the theory that the Primary Dealers act as their agents or otherwise.




          IN WITNESS WHEREOF, the Issuer Parties have duly executed this Undertaking as of the day and
year first written above.




	 	 	 	 	 
	 	CHESAPEAKE FUNDING LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PHH CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: