Document:

Exhibit
10.22

 

APAC
CUSTOMER SERVICES, INC.

SIXTH
AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

 

This Sixth Amendment to
Amended and Restated Credit Agreement (herein, the “Amendment”) is entered into
as of January 10, 2002, between APAC Customer Services, Inc., an Illinois
corporation formerly known as APAC TeleServices, Inc., the Banks party hereto,
and Harris Trust and Savings Bank, as Agent for the Banks.

 

PRELIMINARY
STATEMENTS

 

A.            The Borrower, the Banks, and the Agent are parties to
that certain Amended and Restated Credit Agreement dated as of
September 8, 1998, as heretofore amended (as amended, the “Credit Agreement”).  All capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.

 

B.            The Borrower and the Required Banks have agreed to amend
certain financial covenants and related definitions, modify the application
otherwise required for the Borrower’s voluntarily prepayment of $5,000,000 of
the Term Loans, and make certain other amendments to the Credit Agreement under
the terms and conditions set forth in this Amendment.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.           AMENDMENTS

 

Subject to satisfaction
of the conditions precedent in Section 2 below, the Credit Agreement shall be
and hereby is amended as follows:

 

1.1.          The definition of “EBITDA” appearing
in Section 5.1 of the Credit Agreement shall be amended and restated in
its entirety to read as follows:

 

“EBITDA”
means, with reference to any period, Net Income for such period plus the sum
(without duplication) of all amounts deducted in arriving at such Net Income
amount in respect of (v) Interest Expense for such period, (w) federal,
state and local income taxes for such period, (x) depreciation of fixed
assets and amortization of intangible assets (including, without limitation,
goodwill, deferred expenses and organization costs) for such period, (y) up to
$12,000,000 of non-recurring, non-cash charges incurred prior to
December 31, 2001, attributable to the discontinuance of certain business
operations and (z) up to 

 

 

$2,000,000 of
non-recurring, non-cash charges incurred on or after January 1, 2002, but
prior to December 31, 2002, attributable to the discontinuance of certain
business operations.

 

1.2.          Section 8.22 of the Credit
Agreement (Total Debt Ratio) shall be amended and restated in its entirety to
read as follows:

 

Section 8.22.  Total Debt Ratio.  The Borrower shall not at any time during
any fiscal quarter of the Borrower permit the Total Debt Ratio to be greater
than or equal to the amount set forth for such quarter below:

 

	
  FROM AND INCLUDING

  	
   

  	
  TO AND INCLUDING

  	
   

  	
  TOTAL DEBT RATIO

  SHALL NOT BE

  GREATER THAN OR

  EQUAL TO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Start of fourth
  fiscal

  quarter 2001

  	
   

  	
  Close of fourth
  fiscal

  quarter 2001

  	
   

  	
  2.50 to 1.0

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Start of first
  fiscal

  quarter 2002

  	
   

  	
  Close of first
  fiscal

  quarter 2002

  	
   

  	
  2.25 to 1.0

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Start of second
  fiscal

  quarter 2002

  	
   

  	
  At all times

  thereafter

  	
   

  	
  2.00 to 1.0

  

 

1.3.          Section 8.24 of the Credit Agreement
shall be amended and restated in its entirety to read as follows:

 

Section
8.24.  Interest Coverage Ratio.  As of the last day of each
fiscal quarter of the Borrower, the Borrower shall not permit the ratio of
EBITDA for the four fiscal quarters of the Borrower then ended to Interest
Expense for the same four fiscal quarters then ended to be less than 3.00 to
1.00.

 

1.4.          Section 8.25 of the Credit
Agreement (Minimum EBITDA) shall be amended and restated in its entirety to
read as follows:

 

Section 8.25.  Minimum EBITDA. 
(a) Cumulative EBITDA.  As of the last day of each fiscal quarter of
the Borrower occurring during the periods set forth below, the Borrower shall
maintain EBITDA for the period then ended at not less than the amount set forth
below:

 

2

 

	
  DURING
  PERIOD CONSISTING OF

  	
   

  	
  EBITDA SHALL

  NOT BE LESS THAN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fourth
  fiscal quarter 2001

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  Fourth
  fiscal quarter 2001 and first fiscal quarter 2002

  	
   

  	
  $

  	
  18,000,000

  	
   

  
	
  Fourth
  fiscal quarter 2001 and first and second fiscal quarters 2002

  	
   

  	
  $

  	
  27,000,000

  	
   

  

 

(b) Rolling 4 Quarters EBITDA.  As of the last day of each fiscal quarter of
the Borrower ending during the periods set forth below, the Borrower shall
maintain EBITDA for the four fiscal quarters then ended at not less than the
amount set forth below:

 

	
  DURING PERIOD OF 4
  FISCAL 

  QUARTERS ENDING ON THE LAST 

  DAY OF

  	
   

  	
  EBITDA SHALL

  NOT BE LESS THAN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Third
  fiscal quarter 2002

  	
   

  	
  $

  	
  36,000,000

  	
   

  
	
  Fourth
  fiscal quarter 2002

  	
   

  	
  $

  	
  38,000,000

  	
   

  
	
  First
  fiscal quarter 2003, and each fiscal quarter ending thereafter

  	
   

  	
  $

  	
  41,000,000

  	
   

  

 

1.5.          Section 8.28 of the Credit
Agreement shall be amended and restated in its entirety to read as follows:

 

Section 8.28.  Capital Expenditures.  The Borrower shall not permit Capital
Expenditures for the Borrower and its Subsidiaries (taken together) to exceed
(a) $12,000,000 during the fiscal year of the Borrower ending
December 31, 2002 and (b) $6,000,000 during the 6 month period ending
June 30, 2003.

 

SECTION 2.           CONDITIONS PRECEDENT.

 

This Amendment shall not
become effective unless and until all of the following conditions have been
satisfied:

 

2.1.          The Borrower, the Agent, and the
Required Banks shall have executed and delivered this Amendment, and the
Guarantors shall have executed their acknowledgment and consent to this
Amendment in the space provided for that purpose below.

 

2.2.          The Borrower shall have paid to the
Agent for the benefit of the Lenders executing this Amendment on or prior to
the close of business on January    
, 2002, an amendment fee of 0.25% multiplied by the sum of such Lenders
outstanding Term Loans

 

3

 

(after giving
effect to the voluntary prepayment called for by Section 3 below) and Revolving
Credit Commitments.

 

2.3.          The Borrower shall have paid to the
Agent for its own use and benefit an agent’s fee as mutually agreed upon by
them.

 

2.4.          All legal matters incident to the
execution and delivery hereby and of the other instruments and documents
contemplated hereby shall be satisfactory to the Required Banks, the Agent and
their respective counsel.

 

SECTION 3.           CONDITIONS SUBSEQUENT.

 

In consideration of this
Amendment, the Borrower hereby agrees to prepay the principal balance of the
Term Loans by not less than $5,000,000 on or after the date hereof but on or
before February 1, 2002, such payment to be (i) accompanied by any amount due
the Banks under Section 1.13 of the Credit Agreement, (ii) applied to the
final installment due on the Term Loans and (iii) allocated among the Term
Loans of the Banks in accordance with their respective Term Loan
Percentages.  It shall constitute in
Event of Default under the Credit Agreement if the Borrower fails to make such
payment as provided for herein.

 

SECTION 4.           REPRESENTATIONS.

 

In order to induce the
Required Banks to execute and deliver this Amendment, the Borrower hereby
represents to each Bank that as of the date hereof the representations and
warranties set forth in Section 6 of the Credit Agreement are and shall be
and remain true and correct (except that the representations contained in
Section 6.5 shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Agent pursuant to Section 8.5 of
the Credit Agreement) and, after giving effect to this Amendment, (i) the
Borrower is in full compliance with all of the terms and conditions of the
Credit Agreement and (ii) no Default or Event of Default has occurred and is
continuing under the Credit Agreement.

 

SECTION 5.           MISCELLANEOUS.

 

5.1.          The Borrower and the Guarantors have
heretofore executed and delivered to the Agent and the Banks certain Collateral
Documents.  The Borrower and, by signing
the acknowledgment and consent set forth below, each Guarantor hereby
acknowledge and agree that, notwithstanding the execution and delivery of this
Amendment, the Collateral Documents remain in full force and effect, and the
rights and remedies of the Agent and the Banks thereunder, the obligations of
the Borrower and the Guarantors thereunder, and the liens and security
interests created and provided for thereunder remain in full force and effect
and shall not be affected, impaired or discharged hereby.  Nothing herein contained shall in any manner
affect or impair the priority of the liens and security interests created and
provided for by the Collateral Documents as to the indebtedness which would be
secured thereby prior to giving effect to this Amendment.

 

4

 

5.2.          Except as specifically amended herein
or waived hereby, the Credit Agreement shall continue in full force and effect
in accordance with its original terms. 
Reference to this specific Amendment need not be made in the Credit
Agreement, the Notes, or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any
of such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.

 

5.3.          The Borrower agrees to pay on demand
all reasonable costs and expenses of or incurred by the Agent in connection
with the negotiation, preparation, execution and delivery of this Amendment,
including fees and expenses of counsel to the Agent.

 

5.4.          This Amendment may be executed in any
number of counterparts, and by the different parties on different counterpart
signature pages, all of which taken together shall constitute one and the same
agreement.  Any of the parties hereto
may execute this Amendment by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original.  This Amendment shall be governed by the
internal laws of the State of Illinois.

 

[SIGNATURE PAGES
TO FOLLOW]

 

5

 

This Sixth Amendment to
Amended and Restated Credit Agreement is entered into as of the date and year
first above written.

 

	
   

  	
  APAC CUSTOMER SERVICES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Accepted and agreed to as
of the date and year first above written.

 

	
   

  	
  HARRIS TRUST AND
  SAVINGS BANK, in its
    individual capacity as a Bank and
  as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

6

 

	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

	
   

  	
  LASALLE BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

	
   

  	
  THE NORTHERN TRUST
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

	
   

  	
  FIRSTAR BANK MILWAUKEE,
  N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

	
   

  	
  NATIONAL CITY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

	
   

  	
  THE FUJI BANK, LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

7

 

GUARANTORS’
CONSENT

 

The undersigned have
heretofore executed and delivered to the Agent and the Banks a Guaranty
Agreement dated May 20, 1998 (the
“Guaranty”), and certain Collateral Documents relating thereto.  The undersigned hereby consent to the Sixth
Amendment to Amended and Restated Credit Agreement as set forth above and
confirms that the Guaranty and Collateral Documents executed and delivered by
them and all of the obligations of the undersigned thereunder remain in full
force and effect.  The undersigned
further agree that the consent of the undersigned to any further amendments to
the Credit Agreement shall not be required as a result of this consent having
been obtained.  The undersigned acknowledge
that the Agent and the Banks are relying on the assurances set forth herein in
entering into the Sixth Amendment to Amended and Restated Credit Agreement as
set forth above.

 

	
  .

  	
  APAC CUSTOMER SERVICES
  OF TEXAS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  APAC CUSTOMER SERVICES,

  
	
   

  	
   

  	
  INC., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
								

 

	
   

  	
  APAC CUSTOMER SERVICES
  GENERAL

  PARTNER, INC.

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
						

 

	
   

  	
  ITI HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
						

 

8

 

	
  .

  	
  APAC CUSTOMER SERVICES,
  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  APAC CUSTOMER SERVICES,
  INC., its 

  
	
   

  	
   

  	
  Manager

  
	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title

  	
   

  
									

 

9<Page>

                                                                     Exhibit 4.4

REGISTERED
No. FXR-
CUSIP NO.

                                 PHH CORPORATION
                                MEDIUM-TERM NOTE
                                  (FIXED RATE)

      If this Debt Security is registered in the name of The Depository Trust
Company (the "Depositary") (55 Water Street, New York, New York) or its nominee,
this Debt Security may not be transferred except as a whole by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee to
a successor Depositary or a nominee of such successor Depositary unless and
until this Debt Security is exchanged in whole or in part for Debt Securities
in definitive form. Unless this certificate is presented by an authorized
representative of the Depositary to the Issuer or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as requested by an authorized
representative of the Depositary and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.

ORIGINAL ISSUE DATE:                          PRINCIPAL AMOUNT AND CUR-
                                              RENCY OR CURRENCY UNIT:

                                              OPTION TO RECEIVE PAYMENTS
                                              IN SPECIFIED CURRENCY:
                                              YES: ___  NO: ___

INTEREST RATE:                                MATURITY DATE:

REDEMPTION PROVISIONS, IF ANY:                REPAYMENT PROVISIONS, IF
                                              ANY:

         REDEEMABLE ON OR AFTER:              OPTIONAL REPAYMENT DATE:
         INITIAL REDEMPTION PERCENTAGE:       OPTIONAL REPAYMENT PRICE:
         ANNUAL REDEMPTION PERCENTAGE
         REDUCTION:

OTHER PROVISIONS:                             EXCHANGE RATE AGENT:

      If this Debt Security is issued with original issue discount, the
following information is supplied for purposes of Sections 1273 or 1275 of
the Internal Revenue Code: Issue Price (for each $1,000 principal amount): $   ;
Original Issue Discount Under Section 1272 of the Internal Revenue Code (for
each $1,000 principal amount): $     ; Yield To Maturity:      ; Method Used to
Determine Yield To Maturity For Short Accrual Period of    to   :   ; and
Original Issue Discount for Short Accrual Period of   to     :

<Page>

      PHH CORPORATION, a corporation duly organized and existing under the laws
of the State of Maryland (herein called the "Corporation"), for value received,
hereby promises to pay to Cede & Co. or registered assigns the principal sum set
forth above in the currency set forth above (any currency or currency unit other
than U.S. dollars being hereinafter referred to as a "Specified Currency"), on
the Stated Maturity shown above (the "Maturity Date"), in such coin or currency
specified above as at the time of payment shall be legal tender for the payment
of public and private debts, and to pay interest thereon from the Original Issue
Date shown above or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on February 15 and August 15
in each year (the "Interest Payment Dates"), unless otherwise provided above,
commencing with the Interest Payment Date immediately following the Original
Issue Date shown above, and on the Maturity Date, at the interest rate per annum
shown above until the principal hereof is paid or made available for payment;
provided, however, that if the Original Issue Date shown above is after a
Regular Record Date and on or before the immediately following Interest Payment
Date, interest payments will commence on the Interest Payment Date following the
next succeeding Regular Record Date to the person in whose name this Note is
registered in the security register (the "Security Register") of the Corporation
(the "Holder") on such next succeeding Regular Record Date and provided,
further, that, unless the Holder hereof is entitled to make, and has made, a
Specified Currency Payment Election (as hereinafter defined) with respect to one
or more such payments, the Corporation will make all such payments in U.S.
dollars in amounts determined as set forth below. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture dated as of November 6, 2000 (hereinafter called the
"Indenture"), between the Corporation and Bank One Trust Company, N.A., as
trustee (hereinafter called the "Trustee", which term includes any successor
trustee under the Indenture), be paid to the Person in whose name this Note (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be the January 31 or July
31 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date; provided, however, that interest payable at the Maturity
Date will be paid to the Person to whom said principal sum is payable. Any
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.

      Payment of the principal of (and premium, if any) and any interest on this
Note due to the Holder hereof at the Maturity Date will be made in immediately
available funds, upon surrender of this Note at the offices of the Trustee, 14
Wall Street, Eighth Floor, New York, New York 10005, provided that the Note is
presented to the Trustee or its agent in time for the Trustee to make such
payments in such funds in accordance with its normal procedures. Payment of
interest on this Note due on any Interest Payment Date (other than interest on
this Note due to the Holder hereof at Maturity) will be made by check mailed to
the address of the person entitled thereto at the Holder's last address as it
appears on the Security Register. Payments of principal, premium if any, and
interest on Global Notes will be made to the Depositary by wire transfer, either
in same day funds or in next day funds. Notwithstanding the foregoing, a Holder
of $10,000,000 or more in aggregate principal amount of Notes of like tenor and
term shall, upon written request, be entitled to receive payments of interest
(other than interest on said Notes due to the Holder at Maturity) by wire
transfer to an account maintained by such Holder with a bank located in the
United States of America.

<Page>

      Any such designation for wire transfer purposes shall be made by filing
the appropriate information with the Trustee at its office, 14 Wall Street,
Eighth Floor, New York, New York 10005, on or prior to the Regular Record Dates
relating to the applicable Interest Payment Dates and any such designation made
with respect to any Note by a registered Holder shall remain in effect with
respect to any further payments with respect to this Note payable to such
Holder unless revoked or changed by written instructions received by the Trustee
from such Holder, provided that any such written revocation or change which is
received by the Trustee after a Regular Record Date and before the related
Interest Payment Date shall not be effective with respect to such Interest
Payment Date.

      If this Note is denominated in a Specified Currency, payment of the
principal of (and premium, if any) and any interest due on this Note will be
made in Specified Currency provided that the Holder hereof is entitled to make,
and has made, a Specified Currency Payment Election with respect to such
payments, the Exchange Rate Agent is able to convert such payments as provided
below, the Specified Currency is not unavailable due to the imposition of
exchange controls or other circumstances beyond the control of the Corporation
and the Specified Currency is used by the government of the country issuing such
currency or for the settlement of transactions by public institutions of or
within the international banking community. Unless otherwise specified, if
this Note is denominated in a Specified Currency, the Holder hereof may elect to
receive payments of principal of (and premium, if any) and interest in such
Specified Currency (a "Specified Currency Payment Election" ) by delivery of a
written request for such payment to the principal office of the Trustee, 14 Wall
Street, Eighth Floor, New York, New York 10005, on or prior to the Regular
Record Date or at least fifteen days prior to the Maturity Date, as the case may
be. Such request may be in writing (mailed or hand delivered) or by cable, telex
or other form of facsimile transmission. A Holder of a Foreign Currency Note may
elect to receive payment in the Specified Currency for all principal, premium,
if any, and interest payments and need not file a separate election for each
payment. Such election will remain in effect until revoked by written notice to
the Trustee, 14 Wall Street, Eighth Floor, New York, New York 10005, but
written notice of any such revocation must be received by the Trustee on or
prior to the Regular Record Date or at least fifteen days prior to the Maturity
Date, as the case may be.

      In the event of an official redenomination of a foreign currency or
currency unit, the obligations of the Corporation with respect to payments
hereunder denominated or payable in such foreign currency or currency unit
shall, in all cases, be deemed immediately following such redenomination to
provide for payment of that amount of redenominated currency representing the
amount of such obligations immediately before such redenomination. In no event,
however, shall any adjustment be made to any amount payable hereunder as a
result of any change in the value of such foreign currency or currency unit
relative to any other currency due solely to fluctuations in exchange rates.

      If any Interest Payment Date or the Maturity Date (or date of redemption
or repayment) of this Note would fall on any day which is not a Business Day (as
defined below), the payment of interest and principal (and premium, if any) need
not be made on such day, but may be made on the next succeeding Business Day
with the same force and effect as if made on the due date and no interest shall
accrue for the period from and after such date.

      This Note is one of a duly authorized issue of securities of the
Corporation (hereinafter called the "Securities"), issued and to be issued in
one or more series under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
respective rights, obligations, duties and immunities thereunder of the
Corporation, the Trustee and the holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. As

<Page>

provided in the Indenture, the Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may be
subject to different redemption provisions, if any, may be subject to different
sinking, purchase or analogous funds, if any, may be subject to different
covenants and events of default, and may otherwise vary as in the Indenture
provided or permitted. This Note is one of a series of the Securities, which
series is unlimited in aggregate principal amount and is designated as the
Medium-Term Notes (the "Notes") of the Corporation, of which series the
Corporation initially has designated $3,000,000,000 aggregate principal amount,
or the equivalent thereof in foreign currencies or currency units. The Notes may
be issued from time to time in various principal amounts and currencies or
currency units, mature at different times, bear interest, if any, at different
rates, be redeemable at different times or not at all, and may have other terms
as may be designated with respect to a Note.

      Interest payments for this Note will include interest accrued to but
excluding the Interest Payment Dates. Interest payments for this Note shall be
computed and paid on the basis of a 360-day year of twelve 30-day months, unless
otherwise provided above.

      If this Note is denominated in a Specified Currency, unless the Holder
hereof has elected otherwise, payment in respect of a Foreign Currency Note
shall be made in U.S. dollars based upon the exchange rate as determined by the
Exchange Rate Agent based on the quotation for such non-U.S. dollar currency or
composite currency appearing at approximately 11:00 a.m., New York City time, on
the second Business Day (as defined below) preceding the applicable date of
payment, on the bank composite or multi-contributor pages of the Telerate
Monitor Foreign Exchange Service (or, if such service is not then available to
the Exchange Rate Agent, the Reuters Monitor Foreign Exchange Service or, if
neither is available, on a comparable display or in a comparable manner as the
Corporation and the Exchange Rate Agent shall agree), for the first three banks
(or two, if three are not available), in chronological order, appearing on a
list of banks agreed to by the Corporation and the Exchange Rate Agent prior to
such second Business Day, which are offering quotes. The Exchange Rate Agent
shall then select from among the selected quotations in a manner specified in
the applicable Pricing Supplement. If fewer than two bids are available, then
such conversion will be based on the Market Exchange Rate (as defined below) as
of the second Business Day preceding the applicable payment date. "Business Day"
means any day, other than a Saturday or Sunday, that meets each of the following
applicable requirements: the day is (a) not a legal holiday or a day on which
banking institutions are authorized or required by law or regulation to be
closed in the City of New York and (b) if the Note is denominated or payable in
a Specified Currency other than U.S. dollars, (i) not a day on which banking
institutions are authorized or required by law or regulation to close in the
major financial center of the country issuing the Specified Currency (which in
the case of ECU shall include the financial center of each country that issues a
component currency of the ECU) and (ii) a day on which banking institutions in
such financial center are carrying out transactions in such Specified Currency.
"Market Exchange Rate" means the noon U.S. dollar buying rate in the City of New
York for cable transfers of the relevant currency as certified for customs
purposes by the Federal Reserve Bank of New York. If no Market Exchange Rate as
of the second Business Day preceding the applicable payment date is available,
payments will be made in the Specified Currency, unless such Specified Currency
is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Corporation's control, in which case payment will be
made in U.S. dollars. All currency exchange costs will be borne by the Holders
of such Notes by deductions from such payments.

      Unless otherwise indicated above, this Note may not be redeemed by the
Corporation prior to Maturity. If so indicated above, this Note may be redeemed
on any date on or after the date set forth above, either in whole or in part,
at the option of the Corporation, at a redemption price equal to the

<Page>

product of the principal amount of this Note to be redeemed multiplied by the
Redemption Percentage. The Redemption Percentage shall initially equal the
Initial Redemption Percentage specified above, and shall decline at each
anniversary of the initial date that this Note is redeemable by the amount of
the Annual Redemption Percentage Reduction specified above, until the Redemption
Percentage is equal to 100%.

      If this Note is subject to redemption, notice of redemption shall be
mailed to the registered Holders of the Notes designated for redemption at
their addresses as the same shall appear in the Security Register not less than
30 and not more than 60 days prior to the date of redemption, subject to all
conditions and provisions of the Indenture. In the event of redemption of this
Note in part, a new Note for the amount of the unredeemed portion hereof shall
be issued in the name of the Holder hereof upon the cancellation hereof.

      Unless otherwise indicated above, this Note may not be repaid prior to
Maturity. If so indicated above, this Note may be payable prior to Maturity at
the option of the Holder on the Optional Repayment Dates shown above at a price
equal to 100% of the principal amount to be repaid, together with accrued
interest to the date of repayment. In order for this Note to be repaid, the
Trustee must receive at least 30 but not more than 45 days prior to an Optional
Repayment Date (i) this Note with the form below entitled "Option to Elect
Repayment" duly completed; or (ii) a telegram, telex, facsimile transmission or
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank of trust company in
the United States of America setting forth the name of the Holder of this Note,
the principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of this Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that this Note with
the form below entitled "Option to Elect Repayment" duly completed will be
received by the Trustee not later than five Business Days after the date of such
telegram, telex, facsimile transmission or letter. If the procedure described in
clause (ii) of the preceding sentence is followed, this Note with form duly
completed must be received by the Trustee by such fifth Business Day. Any tender
of this Note for repayment shall be irrevocable. The repayment option may be
exercised by the Holder of this Note for less than the entire principal amount
of the Note provided that the principal amount of this Note remaining
outstanding after repayment is an authorized denomination. Upon such partial
repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Note.

      If an Event of Default with respect to Notes of this series shall occur
and be continuing, the principal of the Notes of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.

      The Indenture permits, with certain exceptions as therein provided, the
amendment or supplementing thereof and the modification of the rights and
obligations of the Corporation and the rights of the holders of the Securities
of each series to be affected under the Indenture at any time by the Corporation
and the Trustee with the consent of the holders of not less than a majority in
principal amount of the Securities at the time outstanding of each series to be
affected. The Indenture also contains a provision permitting the holders of not
less than a majority in aggregate principal amount of the Securities of any
series at the time outstanding, on behalf of the holders of all Securities of
such series, to waive any past defaults under the Indenture with respect to such
series of Securities and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in

<Page>

exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.

      As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Note of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, the Holder of not less
than 25% in principal amount of the Notes of this series at the time outstanding
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in principal amount of the Notes of
this series at the time outstanding a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days, provided,
however, that such limitations do not apply to a suit instituted by the Holder
hereof for the enforcement of payment of the principal of (and premium, if
any) or interest on this Note on or after the respective due date expressed
herein.

      No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, places and rate herein prescribed.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Security Register,
upon surrender of this Note for registration of transfer at the office or agency
of the Corporation in any place where the principal of (and premium, if any) and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes of this series of like tenor and of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. As provided in the Indenture
and subject to certain limitations therein set forth, this Note is exchangeable
for the same aggregate principal amount of Notes of like tenor and of authorized
denominations, as requested by the Holder surrendering the same.

      No service charge shall be made for any such registration of transfer or
exchange, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

      The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple of $1,000 in excess
thereof (or in the case of Securities denominated in a Specified Currency, in
such minimum denomination not less than the equivalent of $1,000 in such
Specified Currency on the basis of the Market Exchange Rate).

      Prior to due presentation of this Note for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note is overdue and neither the Corporation,
the Trustee nor any such agent shall be affected by notice to the contrary.

      The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York.

<Page>

      All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

      This Note shall not be valid or become obligatory for any purpose until
the Certificate of Authentication hereon shall have been signed by an
authorized officer of the Trustee or its duly authorized agent under the
Indenture.

<Page>

      IN WITNESS WHEREOF, PHH CORPORATION has caused this instrument to be
signed by its duly authorized officers, and has caused its corporate seal or a
facsimile thereof to be affixed hereto or imprinted hereon.

Dated:

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

      This is one of the Securities of the series designated herein issued under
the within-mentioned Indenture.

                                                   PHH CORPORATION

                                                   By:__________________________
                                                        Title:

                                                   Attest:

                                                   By:__________________________
                                                        Title:

         [SEAL]

BANK ONE TRUST COMPANY, N.A., as Trustee

 By:____________________________________
         Authorized Signatory

         [SEAL]
<Page>

                                 ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

Please Insert Social Security or           __________________________
Other Identifying Number of Assignee       __________________________

Please Print or Typewrite Name and Address Including Postal Zip Code of Assignee

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

the within Note of PHH CORPORATION and does hereby irrevocably constitute and

appoint_________________________________________________________________________
attorney to transfer the said Note on the books of the Corporation, with full
power of substitution in the premises.

Dated:________________  Your Signature:___________________________________
                                       NOTICE: The signature to this
                                       assignment must correspond with the name
                                       as written upon the within instrument in
                                       every particular, without alteration or
                                       enlargement or any change whatever.
<Page>

                            OPTION TO ELECT REPAYMENT

      The undersigned hereby irrevocably requests and instructs the Corporation
to repay $    principal amount of the within Note, pursuant to its terms, on the
"Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with Interest thereon accrued to the
date of repayment, to the undersigned at

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
           (Please Print or Type Name and Address of the Undersigned)

and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note, if
any.

      For the Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Corporation
within the relevant time period set forth above at the offices of the Trustee,
at 14 Wall Street, Eighth Floor, New York, New York 10005.

Dated:
      ----------------------         -------------------------------------------
                                     NOTICE: The signature to this Option to
                                     Elect Repayment must correspond with the
                                     name as written upon the within Note in
                                     every particular without alteration or
                                     enlargement or any change whatsoever.

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto

Please Insert Social Security or         _________________________

Other Identifying Number of Assignee     _________________________

Please Print or Typewrite Name and Address Including Postal Zip Code of Assignee

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

the within Note of PHH CORPORATION and does hereby irrevocably constitute and

appoint_________________________________________________________________________
attorney to transfer the said Note on the books of the Corporation, with full
power of substitution in the premises.

Dated:         Your Signature:
      --------                -------------------------------------------------
                              NOTICE: The signature to this assignment must
                              correspond with the name as written upon the
                              within instrument in every particular, without
                              alteration or enlargement or any change whatever.

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