PHH CORPORATION EXECUTIVE SEVERANCE AGREEMENT
Exhibit
10.3
Form
of PHH Corporation Severance Agreement for Certain Executive Officers as
approved by the PHH Corporation Compensation Committee on June 7,
2007.
PHH
CORPORATION
EXECUTIVE
SEVERANCE AGREEMENT
This
AGREEMENT (“Agreement”) is made
and entered into effective as of ____________, 2007, by and between
________________ (“Executive”) and PHH Corporation, a Maryland corporation (the
“Company”).
WHEREAS,
the Executive is employed by
the Company or one of its subsidiaries and the Company desires to provide the
Executive with certain severance benefits as consideration for the Executive’s
continued service with the Company and its subsidiaries.
NOW,
THEREFORE, in consideration of the
aforementioned and of the mutual covenants and conditions contained in this
Agreement, it is agreed as follows:
1. Severance
Benefits. In the event the Executive incurs a separation from
service (within the meaning of Section 409A of the Internal Revenue Code of
1986
(the “Code”)) with the Company and its Subsidiaries (as such term is defined in
the Agreement and Plan of Merger Dated as of March 15, 2007 by and among PHH
Corporation, General Electric Capital Corporation and Jade Merger Sub, Inc.
(the
“Merger Agreement”)) on or before the first anniversary of the Effective Time
(the date on which the merger closes and becomes effective, as more fully
defined in the Merger Agreement) as the result of any (i) involuntary
termination of employment other than for Cause (as defined below) or Disability
(as defined below), or (ii) voluntary termination of employment by the Executive
as a result of any (I) change in the required location of the Executive’s
employment as of the date of this Agreement in excess of 20 miles, (II) material
diminution in the Executive’s duties or responsibilities as of the date of this
Agreement, provided that the mere occurrence of the Merger, the Mortgage
Business Sale (as defined in the Merger Agreement) and other transactions
contemplated by the Merger Agreement or the Mortgage Business Sale Agreement
(including the failure of the Executive to (x) retain responsibilities and
duties in respect of either the Mortgage Business or the Fleet Business (as
defined in the Merger Agreement) or (y) hold a position in a public company)
shall not constitute diminution in duties or responsibilities, or (III)
reduction of the Executive’s base salary or material reduction in compensation
opportunity as of the date of this Agreement, the Company shall pay the
Executive a single lump sum payment equal to $________ (“Severance
Benefits”); provided, that the Executive executes
the General Release substantially in the form attached hereto as Exhibit
A and does not revoke such General Release as set forth
therein. Severance Benefits shall be paid no later than five days
after the expiration of the seven-day period for revocation of the General
Release. For purposes of this Agreement, “Cause” means (a) a material
failure of the Executive to substantially perform the Executive’s duties with
the Company or one of its Subsidiaries (other than failure resulting from
incapacity due to physical or mental illness); (b) any act of fraud,
misappropriation, dishonesty, embezzlement or similar conduct against, or
relating to the assets of, the Company or its Subsidiaries; (c) conviction
(or
plea of nolo contendere) of a felony or any crime involving moral turpitude;
(d)
repeated instances of negligence in the performance of the Executive’s job or
any instance of gross negligence in the performance of the Executive’s duties as
an employee of the Company or one of its Subsidiaries; (e) any breach by the
Executive of any fiduciary obligation owed to the Company or any Subsidiary
or
any material element of the Company’s Code of Ethics, the Company’s Code of
Conduct or other applicable workplace policies; or (f) failure by the Executive
to perform his or her job duties for the Company to the best of the Executive’s
ability and in accordance with reasonable instructions and directions from
the
Executive’s supervisor, and the reasonable workplace policies and procedures
established by the Company, as applicable, from time to time; and “Disability”
means any condition which entitles the Executive to benefits under the Company’s
long-term disability plan covering the Executive, as in effect at the time
of
any termination of employment.
2. Notice
and Opportunity to Cure. Notwithstanding anything in Section 1 to
the contrary, (i) no Severance Benefits shall be paid in connection with any
voluntary termination of employment described in clause (ii) of Section 1 unless
the Executive provides the Company with written notice of the existence of
the
condition described in clause (ii) no later than 90 days after the initial
existence of such condition is known to Executive and the Company fails to
remedy such condition within 30 days of the date of such written notice; and
(ii) no termination shall be deemed to be for Cause as described in clauses
(a),
(d), (e) or (f) of Section 1 unless the Company provides the Executive with
written notice of the existence of the conditions that constitute Cause no
later
than 90 days after the initial existence of such condition is known to the
Company and the Executive fails to remedy such condition within 30
days of the date of such written notice.
3. Parachute
Payments. In the event that any payment or distribution by the
Company for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement, or, including without
limitation, pursuant to the vesting and acceleration provisions under the PHH
2005 Equity and Incentive Plan) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code (such excise tax is hereinafter referred
to
as the “Excise Tax”), then with the consent of the Executive, Severance Benefits
shall be reduced to the extent necessary so that no portion of the Payment
shall
be subject to the Excise Tax but only if, by reason of such reduction, the
net
after-tax benefit received by the Executive shall exceed the net after-tax
benefit that would be received by the Executive if no such reduction was made.
The “net after-tax benefit” shall equal the total of all Payments, less the
Excise Tax. The Company shall retain a nationally recognized
accounting firm (the "Accounting Firm") that is reasonably acceptable to the
Executive (which may be, but will not be required to be, the Company's
independent auditors) to make a determination of whether the Severance Benefits
should be reduced. The Accounting Firm shall submit its determination
and detailed supporting calculations to both the Executive and the Company
no
later than 10 days prior to the date on which the Severance Benefits are to
be
paid. If the Accounting Firm determines that the Severance Benefits
should be reduced and the Executive consents, the Severance Benefits shall
be
reduced but only to the extent necessary so that no portion of the Payments
shall be subject to the Excise Tax, and the Company shall pay such reduced
amount to the Executive at the time prescribed by Section 1 of the
Agreement. If the Accounting Firm determines that none of the
Payments, after taking into account any reduction pursuant to this Section
3,
constitutes a “parachute payment” within the meaning of Section 280G of the
Code, it will, at the same time as it makes such determination, furnish the
Executive and the Company an opinion that the Executive has substantial
authority not to report any Excise Tax. The Executive and the Company
shall each provide the Accounting Firm access to and copies of any books,
records, and documents in the possession of the Executive or the Company, as
the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation and
issuance of the determinations and calculations contemplated by this Section
3. The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by this Section
3 shall be borne by the Company.
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4. Arbitration. Any
dispute, controversy or claim arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by Executive within fifty (50) miles
from the location of the Executive’s employment as of the date hereof, in
accordance with the JAMS Employment Arbitration Rules and Procedures then in
effect. Judgment may be entered on the arbitrator’s award in any
court having jurisdiction. Any dispute or controversy or claim in
connection with this Agreement shall be reviewed based on the de novo
standard of review with respect to any determinations made by the
Company. In the event that the Executive substantially prevails in
any such dispute, controversy or claim, all costs and reasonable attorneys’ fees
paid or incurred by the Executive in connection with such dispute, controversy
or claim shall be paid or reimbursed by the Company.
5. Amendment
and Termination. This Agreement may not be amended or terminated
without written consent by both the Executive and the Company.
6. Employment
and Assumption by Pearl. In the event that Pearl Mortgage
Acquisition 2, L.L.C. (“Pearl”) or any of its Subsidiaries (i) offers Executive
employment in the Mortgage Business (as defined in the Merger Agreement) under
terms and conditions which, if provided by the Company, would not constitute
a
(I) change in required location as described in Section 1(ii)(I) of this
Agreement, (II) material diminution in the Executive’s duties or
responsibilities as described in Section 1(ii)(II) of the Agreement, or (III)
reduction in the Executive’s base salary or material reduction in compensation
opportunities as described in Section 1(ii)(III) of this Agreement, and (ii)
assumes all obligations of the Company under this Agreement, then (x) if the
Executive does not accept such offer of employment, he will not be entitled
to
any Severance Benefits under Section 1 of this Agreement in the event the
Executive’s employment is terminated on account of the failure to accept such
employment, and (y) if the Executive does accept such employment, on and after
the effective date of such employment with Pearl, all references in the
Agreement to “Company” shall be deemed to be references to Pearl (except where
the context requires otherwise) and Pearl shall be liable for the payment of
all
Severance Benefits as provided in Section 1 of this Agreement in connection
with
any termination of employment described in clause (i) or (ii) of Section 1
of
this Agreement which occurs after Executive accepts employment with Pearl or
one
of its Subsidiaries. Except as otherwise provided in this Xxxxxxx 0,
xxxx of the rights or obligations of either of the parties to the Agreement
may
be assigned or assumed without the written agreement of the Executive and the
Company.
7. No
Duty to Mitigate; Obligations of the Company. The Executive shall
not be required to mitigate the amount of any payment or benefit contemplated
by
this Agreement by seeking employment with a new employer or otherwise, nor
shall
any such payment or benefit be reduced by any compensation or benefits that
the
Executive may receive from employment by another employer. Except as
otherwise provided by this Agreement, the obligations of the Company to make
payment to the Executive as described herein are absolute and unconditional
and
may not be reduced by any circumstances, including without limitation any
set-off, counterclaim, recoupment, defense or other right which the Company
may
have against the Executive or any third party at any time.
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8. Facility
of Payment.If the Executive is under legal disability or, in the
Company’s reasonable opinion, is in any way incapacitated so as to be unable to
manage his or her affairs, the Company may cause payments or benefits that
would
otherwise be provided to such person to be provided to the Executive’s legal
representative for his or her benefit or to be applied for the benefit of such
person in any other manner that the Company may determine. Such
provision shall completely discharge the liability of the Company for payments
and benefits hereunder.
9. Application
of Section 409A. Notwithstanding any inconsistent provision of this
Agreement, to the extent the Company determines in good faith that
(i) payments or benefits received or to be received by the Executive
pursuant to this Agreement in connection with the Executive’s termination of
employment would constitute deferred compensation subject to the rules of
Section 409A of the Code, and (ii) the Executive is a “specified
employee” under Section 409A of the Code, then only to the extent required
to avoid the Executive’s incurrence of any additional tax or interest under
Section 409A, such payment or benefit will be delayed until the earliest
date following the Executive’s “separation from service” within the meaning of
Section 409A which will permit the Executive to avoid such additional tax
or interest. The Company and the Executive agree to negotiate in good
faith to reform any provisions of this Agreement to maintain to the maximum
extent practicable the original intent of the applicable provisions without
violating the provisions of Section 409A, if the Company deems such
reformation necessary or advisable pursuant to guidance under Section 409A
to avoid the incurrence of any such interest and penalties. Such
reformation shall not result in a reduction of the aggregate amount of payments
or benefits under this Agreement.
10. Confidential
Information and Return of Company Property. Executive recognizes
and acknowledges that all information pertaining to the affairs, business,
results of operations, accounting methods, practices and procedures, members,
acquisition candidates, financial condition, clients, customers or other
relationships of the Company (“Information”) is confidential and is a unique and
valuable asset of the Company. Executive shall not, at any time,
including following Executive’s separation from service with the Company, give
to any person, firm, associate, corporation, or governmental agency any
Information, except as may be required by law. Executive will not
make use of the Information for Executive’s own purposes or for the benefit of
any person or organization other than the Company. Executive will
also use Executive’s best efforts to prevent the disclosure of Information by
others. All records, memoranda, etc. relating to the business of the
Company are confidential and will remain the property of the
Company. Executive shall return all Company property to the Company
within three days of the effective date of Executive’s separation
from service. If Executive violates the terms of this
Section 10, the Company will be entitled, upon making the requisite showing,
to,
among other things, preliminary and/or permanent injunctive relief in any court
of competent jurisdiction to restrain the breach of or otherwise to specifically
enforce any of the covenants contained in this Section 10 without the necessity
of showing any actual damage or that monetary damages would not provide an
adequate remedy. Such right to an injunction will be in addition to,
and not in limitation of, any other rights or remedies the Company may have
under this Agreement.
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11. Notices. Notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when personally delivered or when mailed
by
United States certified mail, return receipt requested, or by overnight courier,
postage prepaid, as follows:
|
a.
|
if
to the Company,
|
PHH
CORPORATION
0000
Xxxxxxxxxx Xxxx
Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attn: General
Counsel
|
b.
|
if
to the Executive, at the home address which the Executive most recently
communicated to the Company in
writing.
|
Either
party may provide the other with notice of a change of address, which shall
be
effective upon receipt.
12. Gender
and Number. A pronoun or adjective in the masculine gender
includes the feminine gender, the singular includes the plural and the plural
includes the singular, unless the context clearly indicates
otherwise.
13. Waiver
of Certain Severance Benefits. The Executive hereby agrees to waive any
rights to receive severance benefits under the Company’s Severance Pay Plan for
Officers or the Company’s Severance Pay Plan for Non-Officers, as applicable,
during the period commencing on the effective date of this Agreement and ending
after the first anniversary of the Effective Time of the Merger.
14. Governing
Law. This Agreement shall be construed, administered
and enforced in accordance with the laws of the [State of Maryland/New Jersey]
to the extent not superseded by federal law.
15. Integration
with Other Benefit Programs. Except as provided in Section
13, benefits payable under this Agreement will not increase or decrease the
benefits otherwise available to the Executive under any of the Company’s
retirement plans, welfare plans or any other employee benefit plans or programs
unless otherwise expressly provided in any particular plan or
program.
16. No
Employment Rights Created.This Agreement does not constitute a
contract of employment and the Agreement does not give any person the right
to
be retained in the employ or service of the Company.
17. Severability. If
any provision of this Agreement shall be held to be invalid or unenforceable
by
a court of competent jurisdiction, then the remaining provisions of this
Agreement shall remain operative and in full force and effect.
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18. Tax
Withholding. The Company retains the right to withhold from any
amounts due under this Agreement, any income, employment, payroll, excise and
other taxes as the Company may, in its sole discretion, deem
necessary.
19. Successors. This
Agreement shall inure to the benefit of, and be binding upon, each successor
of
the Company, whether by merger, consolidation, transfer of all or substantially
all of its assets or otherwise.
20. Counterparts. For
convenience of the parties and to facilitate execution, this Agreement may
be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same document. Transmission by
facsimile of an executed counterpart signature page hereof by a party hereto
shall constitute due execution and delivery of this Agreement by such
party.
***Signature
on Following Page***
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IN
WITNESS WHEREOF, the Executive and
the Company have executed this Agreement effective as of the date written
below.
Executed
this ___ day of ________, 2007
By:
______________________________
[Executive’s
Name]
PHH
CORPORATION
By:
__________________________
Its:
__________________________
Date:
________________________
ASSUMPTION
BY PEARL MORTGAGE ACQUISITION 2, L.L.C.
Pursuant
to Section 6 of the Agreement, Pearl Mortgage Acquisition 2, L.L.C. hereby
assumes this Agreement effective as of _______________, 200__, and agrees to
be
bound by the terms and conditions hereof as described in Section 6 of the
Agreement.
PEARL
MORTGAGE ACQUISITION 2,
L.L.C.
By:
__________________________
Date:
_________________________
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EXHIBIT
A
GENERAL
RELEASE
THIS
RELEASE (the “Release”) is entered into between
_____________________(“Executive”) and PHH Corporation, a Maryland
corporation (the “Company”), for the benefit of the
Company. The entering into and non-revocation of this Release is a
condition to Executive’s right to receive the payments under the Executive
Severance Agreement. Capitalized terms used and not defined herein
shall have the meaning provided in the Executive Severance
Agreement.
Accordingly,
Executive and the Company agree as follows.
1. In
consideration for the payments and other benefits provided to Executive by
the
Executive Severance Agreement, to which Executive is not otherwise entitled,
and
the sufficiency of which Executive acknowledges, Executive represents and
agrees, as follows:
(a) Executive,
for himself, his heirs, administrators, representatives, executors, successors
and assigns (collectively “Releasers”), hereby irrevocably and
unconditionally releases, acquits and forever discharges and agrees not to
xxx
the Company or any of its subsidiaries, divisions, affiliates and related
entities and their respective current and former directors, officers,
shareholders, trustees, employees, consultants, independent contractors,
representatives, agents, servants, successors and assigns and all persons acting
by, through or under or in concert with any of them (collectively
“Releasees”), from all rights and liabilities up to and including the
date of this Release arising under or relating to the employment of the
Executive and from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes
of
actions, suits, rights, demands, costs, losses, debts and expenses of any nature
whatsoever, known or unknown, suspected or unsuspected and any claims of
wrongful discharge, breach of contract, implied contract, promissory estoppel,
defamation, slander, libel, tortious conduct, employment discrimination or
claims under any federal, state or local employment statute, law, order or
ordinance, including any rights or claims arising under Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act of
1967, as amended, 29 U.S.C. § 621 etseq. (“ADEA”), or any
other federal, state or municipal ordinance relating to discrimination in
employment. Nothing contained herein shall restrict the parties’
rights to enforce the terms of this Release or the Executive Severance
Agreement.
(b) To
the maximum extent permitted by law, Executive agrees that he/she has not filed,
nor will he ever file, a lawsuit asserting any claims which are released by
this
Release, or to accept any benefit from any lawsuit which might be filed by
another person or government entity based in whole or in part on any event,
act,
or omission which is the subject of this Release.
(c) This
Release specifically excludes any claim for vested benefits to which the
Executive may be entitled under any benefit plan or special retention bonus
arrangement of the Company or any affiliate in which the Executive participates
(the “Company Plans”). The Executive’s entitlement to benefits
under the Company Plans shall be determined in accordance with the provisions
of
those Company Plans. This Release specifically excludes the
Executive’s indemnification as an officer and employee of the Company or any
affiliate thereof. Nothing contained in this Release shall release
the Executive from his/her obligations, including any obligations to abide
by
restrictive covenants under the Executive Severance Agreement, that continue
or
are to be performed following termination of employment.
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(d) Executive
represents that he is not aware of any facts or circumstances that would give
rise, based on his/her actions, to any claims or lawsuits against the Company
or
any Release.
(e) The
parties agree that this Release shall not affect the rights and responsibilities
of the US Equal Employment Opportunity Commission (hereinafter “EEOC”) to
enforce ADEA and other laws. In addition, the parties agree that this
Release shall not be used to justify interfering with the Executive’s protected
right to file a charge or participate in an investigation or proceeding
conducted by the EEOC. The parties further agree that the Executive
knowingly and voluntarily waives all rights or claims (that arose prior to
the
Executive’s execution of this Release) the Releasers may have against the
Releasees, or any of them, to receive any benefit or remedial relief (including,
but not limited to, reinstatement, back pay, front pay, damages, attorneys’
fees, experts’ fees) as a consequence of any investigation or proceeding
conducted by the EEOC.
2. The
Executive acknowledges that the Company has specifically advised him/her of
the
right to seek the advice of an attorney concerning the terms and conditions
of
this Release. The Executive further acknowledges receipt of a copy of
this Release, and has been afforded twenty-one (21) days in which to consider
the terms and conditions set forth above prior to this Release. By
executing this Release, the Executive affirmatively acknowledges sufficient
and
reasonable time to review this Release and to consult with an attorney
concerning Executive’s legal rights prior to the final execution of this
Release. Executive has carefully read this Release and fully
understands its terms. The Executive understands that he/she may
revoke this Release within seven (7) days after signing this
Release. Revocation of this Release must be made in writing and must
be received by [__________________________________________] within the time
period set forth above.
3. This
Release will be governed by and construed in accordance with the laws of the
State of [Maryland/New Jersey], without giving effect to any choice of law
or
conflicting provision or rule (whether of the State of [Maryland/New Jersey]
or
any other jurisdiction) that would cause the laws of any jurisdiction other
than
the State of [Maryland/New Jersey] to be applied. In furtherance of
the foregoing, the internal law of the State of [Maryland/New Jersey] will
control the interpretation and construction of this agreement, even if under
such jurisdiction’s choice of law or conflict of law analysis, the substantive
law of some other jurisdiction would ordinarily apply. The provisions of this
Release are severable, and if any part or portion of it is found to be
unenforceable, the other paragraphs shall remain fully valid and
enforceable. This Release shall become effective and enforceable on
the eighth day following its execution by Executive, provided he/she does not
exercise his right of revocation as described above. If Executive
fails to sign this Release or revokes his signature, this Release will be
without force or effect, and Executive shall not be entitled to the payment
under the Executive Severance Agreement.
I,
___________________________, HAVING READ THE FOREGOING RELEASE, UNDERSTANDING
ITS CONTENT AND HAVING HAD AN OPPORTUNITY TO CONSULT WITH COUNSEL OF MY CHOICE,
DO HEREBY KNOWINGLY AND VOLUNTARILY SIGN THIS AGREEMENT, THEREBY WAIVING AND
RELEASING MY CLAIMS, ON _______________________, 200_.
______________________________
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