PHH CORPORATION [AMENDED AND RESTATED] EXECUTIVE SEVERANCE AGREEMENT
Exhibit
10.1
Form
of PHH Corporation Severance Agreements for Certain Executive Officers as
approved by the PHH Corporation Compensation Committee on January 10,
2008.
PHH
CORPORATION
[AMENDED
AND RESTATED] EXECUTIVE SEVERANCE AGREEMENT
This
AGREEMENT (“Agreement”) is made
and entered into effective as of ____________, 2008, by and between
________________ (“Executive”) and PHH Corporation, a Maryland corporation (the
“Company”). [This Agreement amends and restates the Agreement between
Executive and the Company dated as of _____________, 2007 (the “Prior
Agreement”), and supersedes the Prior Agreement in its entirety. By
executing this Agreement, Executive and the Company consent to the amendment
and
restatement of the Prior Agreement as set forth herein.]
WHEREAS,
Executive is employed by the
Company or one of its subsidiaries and the Company desires to provide Executive
with certain severance benefits as consideration for 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 Executive incurs a separation from
service (within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”)), on or before the first anniversary of the
effective time of a Change in Control (as defined below) 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 Executive as a result of any (I) change in the required location
of Executive’s employment as of the date of this Agreement in excess of 50
miles, (II) material diminution in Executive’s duties or responsibilities as of
the date of this Agreement, provided that the mere occurrence of the Change
in
Control (including the failure of Executive to (x) retain responsibilities
and
duties in respect of either the mortgage business or fleet business or (y)
hold
a position in a public company) shall not constitute diminution in duties or
responsibilities, or (III) reduction of Executive’s base salary or material
reduction in compensation opportunity as of the date of this Agreement, the
Company shall pay Executive a single lump sum payment equal to $________
(“Severance Benefits”); provided, that
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 Executive to
substantially perform Executive’s duties with the Company or 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 Executive’s job or any instance of gross negligence in the
performance of Executive’s duties as an employee of the Company or one of its
subsidiaries; (e) any breach by 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 Executive to perform his or her job duties for the Company to
the
best of Executive’s ability and in accordance with reasonable instructions and
directions from 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 Executive to benefits under the
Company’s long-term disability plan covering Executive, as in effect at the time
of any termination of employment.
For
purposes of this Agreement, “Change in Control” means the occurrence of any of
the following events on or before December 31, 2009:
(a) any
"person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act
(other than (A) the Company, (B) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, and (C) any
corporation owned, directly or indirectly, by the stockholders of the Company
in
substantially the same proportions as their ownership of Stock), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing
30% or more of the combined voting power of the Company's then outstanding
voting securities (excluding any person who becomes such a beneficial owner
in
connection with a transaction immediately following which the individuals who
comprise the Board of Directors of the Company (the “Board”) immediately prior
thereto constitute at least a majority of the Board, the entity surviving such
transaction or, if the Company or the entity surviving the transaction is then
a
subsidiary, the ultimate parent thereof);
(b) the
following individuals cease for any reason to constitute a majority of the
number of directors of the Board then serving: individuals who, on
the effective date of a Change in Control (the “Effective Date”), constitute the
Board and any new director (other than a director whose initial assumption
of
office is in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of directors
of the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved or
recommended;
(c) there
is
consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other than a merger or
consolidation immediately following which the individuals who comprise the
Board
immediately prior thereto constitute at least a majority of the Board of the
entity surviving such merger or consolidation or, if the Company or the entity
surviving such merger is then a subsidiary, the ultimate parent thereof;
or
(d) the
stockholders of the Company approve a plan of complete liquidation of the
Company or there is consummated an agreement for the sale or disposition by
the
Company of all or substantially all of the assets of the Company, PHH Mortgage
Corporation or PHH Vehicle Management Services LLC (or any transaction having
a
similar effect), other than a sale or disposition by the Company of all or
substantially all of its assets to an entity, immediately following which the
individuals who comprise the Board immediately prior thereto constitute at
least
a majority of the board of directors of the entity to which such assets are
sold
or disposed of or, if such entity is a subsidiary, the ultimate parent
thereof.
(e) Notwithstanding
the foregoing, a Change in Control shall not be deemed to have occurred by
virtue of an offering of the equity securities of the Company that is registered
with the Securities and Exchange Commission or the consummation of any
transaction or series of integrated transactions immediately following which
the
holders of the Stock immediately prior to such transaction or series of
transactions continue to have substantially the
same
proportionate ownership in an entity which owns all or substantially all of
the
assets of the Company immediately following such transaction or series of
transactions.
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 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 the second paragraph of Section 1 unless the Company provides
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 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
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 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 Executive shall exceed the net after-tax benefit that would be
received by 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
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 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 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 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
Executive and the Company an opinion that Executive has substantial authority
not to report any Excise Tax. Executive and the Company shall each
provide the Accounting Firm access to and copies of any books, records, and
documents in the possession of 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.
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 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 Executive substantially prevails in any such dispute, controversy or claim,
all costs and reasonable attorneys’ fees paid or incurred by 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 Executive and the Company.
6.
Employment and
Assumption by a Successor. In the event that a successor
entity to the Company by virtue of a Change in Control (a “Successor”) (i)
offers Executive employment 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 Executive’s
duties or responsibilities as described in Section 1(ii)(II) of the Agreement,
or (III) reduction in 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 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
Executive’s employment is terminated on account of the failure to accept such
employment, and (y) if Executive does accept such employment, on and after
the
effective date of such employment with a Successor, all references in the
Agreement to “Company” shall be deemed to be references to the Successor (except
where the context requires otherwise) and the Successor 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
a Successor 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
Executive and the Company.
7.
No Duty to Mitigate;
Obligations of the Company. 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 Executive may receive
from employment by another employer. Except as otherwise provided by
this Agreement, the obligations of the Company to make payment to 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 Executive
or any third party at any time.
8.
Facility of
Payment. If
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 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 Executive pursuant
to this Agreement in connection with Executive’s termination of employment would
constitute deferred compensation subject to the rules of Section 409A of
the Code, and (ii) Executive is a “specified employee” under
Section 409A of the Code, then only to the extent required to avoid
Executive’s incurrence of any additional tax or interest under
Section 409A, such payment or benefit will be delayed until the earliest
date following Executive’s “separation from service” within the meaning of
Section 409A which will permit Executive to avoid such additional tax or
interest. The Company and 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.
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:
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a.
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If
to the Company,
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PHH
CORPORATION
0000
Xxxxxxxxxx Xxxx
Xx.
Xxxxxx, Xxx Xxxxxx 00000
Attn: General
Counsel
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b.
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If
to Executive, at the home address which Executive most recently
communicated to the Company in
writing.
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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. 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 a
Change in Control.
14.
Governing
Law. This
Agreement shall be construed, administered and enforced in accordance with
the laws of the State of __________ 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 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.
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***
IN
WITNESS WHEREOF, Executive and the
Company have executed this Agreement effective as of the date written
below.
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Executed
this ___ day of ________, 2008
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By:
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[Executive
Name]
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PHH
CORPORATION
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By:
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Its:
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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 or herself, his or her 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 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 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
Executive may be entitled under any benefit plan or special retention bonus
arrangement of the Company or any affiliate in which Executive participates
(the
“Company
Plans”). 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 Executive’s indemnification
as an officer and employee of the Company or any affiliate
thereof. Nothing contained in this Release shall release 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.
(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
Executive’s protected right to file a charge or participate in an investigation
or proceeding conducted by the EEOC. The parties further agree that
Executive knowingly and voluntarily waives all rights or claims (that arose
prior to Executive’s execution of this Release) the Releasers may have against
the Releasees, or any of them, to receive any benefit or remedial relief
(including, but not limited to, reinstatement, back pay, front pay, damages,
attorneys’ fees, experts’ fees) as a consequence of any investigation or
proceeding conducted by the EEOC.
2.
Executive acknowledges that 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. 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,
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. 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 or her right
of
revocation as described above. If Executive fails to sign this
Release or revokes his or her 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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______________________________
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Executive
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