PHH CORPORATION
AMENDED AND RESTATED
DEFERRED COMPENSATION TRUST AGREEMENT
PHH CORPORATION
AMENDED AND RESTATED
DEFERRED COMPENSATION TRUST AGREEMENT
Table of Contents
Page
ARTICLE I
GENERAL
1.1 Establishment of Trust 2
1.2 General Provisions 3
1.3 Contributions to Trust 4
1.4 Change in Control/Potential Change in Control 4
ARTICLE II
TRUSTEE ACCEPTANCE
2.1 Trustee Acceptance 7
ARTICLE III
THE PLANS
3.1 Delivery of Plans 7
3.2 Plans to Control 7
3.3 Amendment or Termination of Plans 7
ARTICLE IV
TRUST FUND
4.1 Grantor Trust; Unfunded Plans 8
4.2 Company Insolvency 8
ARTICLE V
DUTIES AND POWERS OF THE TRUSTEE
WITH RESPECT TO INVESTMENTS
5.1 In General 11
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ARTICLE VI
ADDITIONAL POWERS AND AUTHORITY OF THE TRUSTEE
6.1 Additional Powers and Authority 14
ARTICLE VII
PAYMENTS BY THE TRUSTEE
7.1 Effect of Article 17
7.2 Delivery of Actuarial Statements 17
7.3 Payments from Trust Fund 17
7.4 Tax Withholding 18
7.5 Return of Excess Assets 18
7.6 Letter of Credit 19
7.7 Accelerated Payments 20
ARTICLE VIII
TAXES, EXPENSES AND COMPENSATION
8.1 Payment of Taxes 21
8.2 Litigation Expenses 22
8.3 General Expenses 22
8.4 Trustee Compensation 22
ARTICLE IX
ADMINISTRATION AND RECORDS
9.1 Accounts 23
9.2 Written Accountings 23
9.3 Access to Records 24
9.4 Judicial Settlements 24
9.5 Successor Trustees 25
9.6 Returns and Reports 25
ARTICLE X
REMOVAL OR RESIGNATION OF THE TRUSTEE
AND DESIGNATION OF SUCCESSOR TRUSTEE
10.1 Removal of Trustee 25
10.2 Trustee Resignation 25
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10.3 Procedure on Removal or Resignation 25
10.4 Successor Trustee Provisions 26
ARTICLE XI
ENFORCEMENT OF TRUST AGREEMENT
11.1 Enforcement 27
ARTICLE XII
AMENDMENTS
12.1 Amendments Before Change in Control 28
12.2 Amendments After Change in Control 28
ARTICLE XIII
TERMINATION OF TRUST
13.1 Termination of Trust 29
13.2 Procedure on Termination 29
ARTICLE XIV
NON-ALIENATION
14.1 Non-Alienation 30
ARTICLE XV
COMMUNICATIONS
15.1 To the Company 30
15.2 To the Trustee 30
15.3 Receipt Required 31
15.4 Company Actions and Trustee Reliance 31
15.5 Company Designees 31
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 Governing Law; Successors 32
16.2 Headings 32
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16.3 Merger Provision 32
16.4 Trustee Successors 32
16.5 Severability 33
16.6 Participant and Beneficiary Status 33
16.7 Gender and Plural 33
16.8 Counterparts 33
SCHEDULE A
Assumptions for Valuation of Plan Benefits
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PHH CORPORATION
AMENDED AND RESTATED
DEFERRED COMPENSATION TRUST AGREEMENT
THIS AMENDED AND RESTATED TRUST AGREEMENT is made and
entered into this day of 19 , by and between PHH
Corporation, a Maryland corporation ("Company"), and, ("Trustee").
W I T N E S S E T H:
WHEREAS, the Company maintains two non-tax-qualified
supplemental retirement plans known as the PHH Corporation
Supplemental Executive Retirement Plan and the PHH Corporation
Excess Benefit Plan (each such plan is referred to individually
as a "Plan" and they are referred to collectively as the
"Plans") to provide retirement benefits for certain of its key
executives; and
WHEREAS, the Plans provide for the Company to pay all
benefits from its general revenues and assets; and
WHEREAS, by Trust Agreement dated July 31, 1990 by and
between the Company and the Security Trust Company, N.A. (the
"Prior Trust Agreement"), the Company has heretofore established
a trust fund with respect to the PHH Corporation Supplemental
Executive Retirement Plan (the "SERP"); and
WHEREAS, is corporate successor
to Security Trust, N.A. and as such serves as Trustee under the
Prior Trust Agreement pursuant to Section 16.4 thereof; and
WHEREAS, the Company wishes to amend and restate the
Prior Trust Agreement as hereinafter set forth so that the trust
fund will extend to both Plans; and
WHEREAS, the trust fund shall be subject to the claims
of the Company's creditors in the event of the Company's
bankruptcy or insolvency, and may not necessarily hold
sufficient assets to satisfy all of the benefits to be provided
under the Plans; and
WHEREAS, contributions (if any) to the trust fund shall
be held by the Trustee and invested, reinvested and distributed
in accordance with the provisions of this Trust Agreement; and
WHEREAS, the trust established by this Trust Agreement
is intended to be a "grantor trust" with the result that the
corpus and income of the trust are treated as assets and income
of the Company pursuant to sections 671 through 679 of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the Company and the Trustee,
intending to be legally bound, declare and agree as follows.
ARTICLE I
GENERAL
1.1 ESTABLISHMENT OF TRUST. The Company hereby
establishes with the Trustee a grantor trust ("Trust") on behalf
of the participants in the Plans (the "Participants")
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and the beneficiaries of such Participants (the "Beneficiaries"). The
Trust so established shall be governed by the terms of this
Trust Agreement. The Company shall not be obligated to fund the
Trust except as expressly provided herein.
1.2 GENERAL PROVISIONS. The Trust shall consist of
such sums of money and other property acceptable to the Trustee
as from time to time shall be paid or delivered to the Trustee.
The Trust shall be revocable unless and until a Change in
Control or Potential Change in Control as described in Section
1.4 occurs, at which time the Trust shall become irrevocable,
subject, however, to the obligation of the Trustee to return
assets to the Company upon a resolution of the Company's Board
of Directors as described in Section 1.4. Until such time, if
ever, as the Trust becomes irrevocable, the Company shall have
the right, upon written notice to the Trustee, to revoke the
Trust and to receive a distribution of the Trust assets. In the
event the Trust becomes irrevocable, the Company shall have no
right to direct the Trustee to return or divert any Trust assets
before the payment of all Plan benefits to Participants and
Beneficiaries except in accordance with the provisions of
Section 7.5 below.
All money and other property of the Trust, all
investments and reinvestments made therewith or proceeds thereof
and all earnings and profits thereon, less all payments and
charges as authorized herein, are hereinafter referred to
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as the "Trust Fund." The Trust Fund shall be held by the Trustee and
shall be dealt with in accordance with the provisions of this
Trust Agreement. The Trust Fund shall at all times be subject
to the claims of the general creditors of the Company as set
forth in Section 4.2. The insufficiency of assets in the Trust
shall not relieve the Company of its obligation or liability to
make benefit payments otherwise due under the terms of the
Plans.
1.3 CONTRIBUTIONS TO TRUST. Except as required in
Section 1.4 below, the Company in its discretion may contribute
to the Trust from time to time such amounts as it deems
advisable.
1.4 CHANGE IN CONTROL/POTENTIAL CHANGE IN CONTROL.
Upon the occurrence of a Change in Control or a Potential Change
in Control as hereinafter defined, the Company shall pay to the
Trustee sufficient amounts to fund all Accrued Benefits, as
hereafter defined, under the Plans as of the date such Change in
Control or Potential Change in Control occurs. Accrued Benefits
shall be valued by an independent actuarial firm (the
"Actuaries") selected by the Company using the assumptions set
forth in Schedule A to this Trust Agreement. The Company shall
furnish a copy of the Actuaries' valuation report to the Trustee
within thirty (30) days after such date, and the Trustee shall
be entitled to rely on such report. If a Change in Control does
not occur within ninety (90) days after
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the occurrence of a Potential Change in Control, and the Board
of Directors of the Company adopts a resolution to the effect
that, for purposes of this Trust Agreement, a Change in
Control is not imminent, any amounts contributed to the Trust
because of the Potential Change in Control, together with any
earnings thereon, shall be paid by the Trustee to the Company.
For purposes of this Agreement (a) "Accrued Benefits" shall
mean benefits calculated under the Plans based on (i) service
as of the date of the Change in Control or Potential Change in
Control and (ii) compensation projected to the benefit commencement
date assumed on Schedule A to the Trust Agreement, using for that
projection the Compensation Scale set forth on Schedule A, and
(b) a "Change in Control" shall be deemed to have taken place if:
(i) a third person, including a "group" as defined in section
13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial
owner of shares of the Company having twenty percent (20%) or
more of the total number of votes that may be cast for the
election of directors of the Company; or (ii) as a result of, or
in connection with, any cash tender or exchange offer, merger or
other business combination, sale of assets or contested election, or
any combination of the foregoing transactions (a "Transaction"),
the persons who were directors of the Company before the Transaction
shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company. A
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"Potential Change in Control" shall be deemed to
have taken place if (i) any third person commences a tender or
exchange offer (other than a tender or exchange offer which, if
consummated, would not result in a change of control) for twenty
percent (20%) or more of the then outstanding shares of common
stock or combined voting power of the Company's then outstanding
voting securities; (ii) the Company enters into an agreement,
the consummation of which would result in the occurrence of a
Change in Control; (iii) any person (including the Company)
publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in
Control; or (iv) the Board of Directors of the Company adopts a
resolution to the effect that, for purposes of this Trust
Agreement, a Change in Control is imminent. The Company shall
have a duty to inform the Trustee whenever a Change in Control
or Potential Change in Control has occurred. If any two
Participants or Beneficiaries notify the Trustee in writing that
a Change in Control has occurred then, unless, in the written
opinion of counsel to the Company (which opinion may be based on
representations of fact as long as counsel does not know that
such representations are untrue) such a Change in Control has
not occurred, a Change in Control will be deemed to have
occurred for purposes of this Trust Agreement.
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ARTICLE II
TRUSTEE ACCEPTANCE
2.1 TRUSTEE ACCEPTANCE. The Trustee accepts the
Trust established under this Trust Agreement on the terms and
subject to the provisions set forth herein, and it agrees to
discharge and perform fully and faithfully all of the duties and
obligations imposed upon it under this Trust Agreement.
ARTICLE III
THE PLANS
3.1 DELIVERY OF PLANS. A copy of each Plan has been
delivered to the Trustee. All terms defined in the Plans shall
have the same meanings when used herein unless expressly
provided to the contrary herein. The Company will deliver
promptly to the Trustee copies of all amendments to the Plans.
3.2 PLANS TO CONTROL. The terms of each Plan shall
govern the amount, form and timing of benefit payments under
that Plan to which a Participant or Beneficiary is entitled.
3.3 AMENDMENT OR TERMINATION OF PLANS. The Company
retains sole discretion to modify or amend any of the provisions
of the Plans or to terminate one or both of them as provided
therein.
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ARTICLE IV
TRUST FUND
4.1 GRANTOR TRUST; UNFUNDED PLANS. It is intended
that the Trust constitute a grantor trust under Code sections
671 through 679, with the assets of the Trust Fund being treated
as assets of the Company for purposes of Federal, state and
local income tax laws. The creation of this Trust is not
intended to cause the Plans to be treated as a funded plan for
purposes of Title I of the Employee Retirement Income Security
Act of 1974, as amended from time to time.
4.2. COMPANY INSOLVENCY.
(a) The assets of the Trust Fund shall at all
times be subject to the rights of the bankruptcy or insolvency
creditors of the Company under this Section. At any time the
Trustee has actual knowledge or has determined that the Company
is Insolvent (as defined below), the Trustee shall deliver any
undistributed principal and income in the Trust Fund to satisfy
such claims of the general creditors of the Company as a court
of competent jurisdiction may direct. The Board of Directors
and the Chief Executive Officer of the Company shall have the
duty to inform the Trustee of the Company's Insolvency. If the
Company or a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become
Insolvent, the Trustee shall independently determine, within
thirty (30) days after receipt of such notice, whether the
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Company is Insolvent and, pending such determination, the
Trustee shall discontinue payments under the Plans, shall hold
the Trust Fund assets for the benefit of the Company's general
creditors, and shall resume payments under the Plans only after
the Trustee has determined that the Company is not Insolvent (or
is no longer Insolvent, if the Trustee initially determined the
Company to be Insolvent). For purposes of such determination,
the Trustee may employ legal counsel, accountants and other
advisors and shall be entitled to rely on their advice. Unless
the Trustee has actual knowledge of the Company's Insolvency,
the Trustee shall have no duty to inquire whether the Company is
Insolvent. The Trustee may in all events rely on such evidence
concerning the Company's solvency as may be furnished to the
Trustee which will give the Trustee a reasonable basis for
making a determination concerning the Company's solvency. For
purposes of this Trust Agreement, the Trustee shall be
considered to possess any knowledge and information concerning
the Company in the possession of the Trustee's Banking
Department or other departments that can reasonably be imputed
to the Trustee under normal bank procedures. Nothing in this
Trust Agreement shall in any way diminish any rights of the
Participants and Beneficiaries to pursue their rights as general
creditors of the Company with respect to payments under the
Plans. The Company shall be considered "Insolvent" for purposes
of this Trust Agreement in
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the event of (a) the Company's inability to pay its debts as
they mature, within the meaning of Section 15-202 of the
Maryland Uniform Fraudulent Conveyance Act; (b) a general
assignment for the benefit of the Company's creditors; (c)
the voluntary commencement by the Company of any proceeding
under Title 11 of the United States Code or any other
law of any jurisdiction for the relief, liquidation or
rehabilitation of debtors (all of which proceedings are
hereinafter collectively referred to as "Insolvency
Proceedings"); (d) the making of an admission by the Company of
any of the material allegations of or consenting to or
acquiescing in a petition, application, motion or complaint
commencing an Insolvency Proceeding or the seeking by the
Company of the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar official of
or for a substantial part of its assets; (e) the involuntary
commencement of an Insolvency Proceeding against the Company
which is not fully stayed, timely controverted or dismissed
within one hundred twenty (120) days after the filing thereof;
or (f) the appointment of or taking of possession by a receiver,
custodian, trustee, liquidator or similar official of or for the
Company or of or for a substantial part of its assets.
(b) If the Trustee discontinues payments from
the Trust Fund pursuant to Section 4.2(a) and subsequently
resumes such payments, the first payment following such
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discontinuance shall include the aggregate amount of all
payments which would have been made (together with interest on
the amount delayed at a rate equal to the "prime rate" charged
by the Trustee's commercial lending department) in accordance
with each Plan during the period of such discontinuance, less
the aggregate amount of payments made under that Plan by the
Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
(c) It is intended that the rights of the
general creditors of the Company to enforce the provisions of
this Article in the event of the Company's Insolvency be
enforceable with respect to the Trust Fund at the time of
Insolvency under both Federal and state law.
ARTICLE V
DUTIES AND POWERS OF THE TRUSTEE
WITH RESPECT TO INVESTMENTS
5.1 IN GENERAL.
(a) The Trustee shall invest and reinvest the
principal and income of the Trust Fund as directed by the
Company or, in the absence of direction, as it shall determine
in its sole discretion; provided, however, that the Trustee
shall follow the Company's direction as to investments only if
the Trustee, in its own judgment, determines that the Company's
directions are reasonable in light of the current and
anticipated obligations of the Plans. The Trustee shall keep
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the Trust Fund invested, without distinction between principal
and income, in any property, whether real, personal or mixed,
and wherever situated and whether or not productive of income,
including without limitation, capital, common and preferred
stocks and personal, corporate and governmental or other
obligations, whether secured or unsecured, and including any
collective part interest therein; mortgages, leaseholds, fees
and other interests in realty; oil, gas or mineral properties
and rights, royalties, payments or other interests in such
properties; contracts, choses in action, trust and participation
certificates or other evidences of ownership, part ownership or
part interest; all without being limited or restricted to
investments of a character authorized for trustees or other
fiduciaries under any present or future laws and, except as
otherwise required by Federal law, without regard to the
proportion any such property may bear to the entire amount of
the Trust Fund.
(b) Specifically, but not by way of limitation,
the Trustee is authorized and empowered to invest all or any
part of the Trust Fund in any common or collective trust fund or
pooled investment fund presently or hereafter maintained by the
Trustee as the same may be amended from time to time; and the
declaration of trust establishing such common or collective fund
is hereby made a part hereof as if set forth at length herein,
the assets of the fund invested in said common or
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collective trusts shall be held and administered by the Trustee
strictly in accordance with the terms of the instrument, and the
combining of assets of the Trust Fund with assets of other trusts
in such common or collective trust fund is specifically authorized
hereby.
(c) The Trustee in its discretion may keep such
portion of the Trust Fund in cash or cash balances or hold all
or any portion of the Trust Fund in savings accounts,
certificates of deposit and other types of time or demand
deposits with any financial institution or quasi-financial
institution, either domestic or foreign (including any such
institution operated or maintained by the Trustee in its
corporate capacity) as the Trustee may from time to time
determine to be in the best interests of the Trust Fund.
(d) Notwithstanding any powers granted to
Trustee pursuant to this Trust Agreement or to applicable law,
Trustee shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to
the Internal Revenue Code.
(e) In no event may Trustee invest in
securities (including stock or rights to acquire stock) or
obligations issued by the Company, other than a de minimis amount
held in common investment vehicles in which Trustee invests. All
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rights associated with assets of the Trust shall
be exercised by Trustee or the person designated by Trustee, and
shall in no event be exercisable by or rest with Plan
Participants.
ARTICLE VI
ADDITIONAL POWERS AND AUTHORITY OF THE TRUSTEE
6.1 ADDITIONAL POWERS AND AUTHORITY. The Trustee
shall have the following additional powers and authority with
respect to the Trust or any property constituting part of the
Trust Fund:
(a) To sell, exchange or transfer any such
property at public or private sale for cash or on credit and
grant options for the purchase or exchange thereof.
(b) To participate in any plan of
reorganization, consolidation, merger, combination, liquidation
or other similar plan relating to any such property, and to
consent to or oppose any such plan or any action thereunder, or
any contract, lease, mortgage, purchase, sale or other action by
any corporation or other entity.
(c) To deposit any such property with any
protective, reorganization or similar committee; to delegate
discretionary power to any such committee; and to pay part of
the expenses and compensation of any such committee and any
assessments levied with respect to any property so deposited.
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(d) To exercise any conversion privilege or
subscription right available in connection with any such
property; to oppose or to consent to the reorganization,
consolidation, merger or readjustment of the finances of any
corporation, company or association, or to the sale, mortgage,
pledge or lease of the property of any corporation, company or
association any of the securities of which may at any time be
held in the Trust Fund and to do any act with reference thereto,
including the exercise of options, the making of agreements or
subscriptions and the payment of expenses, assessments or
subscriptions, which may be deemed necessary or advisable in
connection therewith, and to hold and retain any securities or
other property which it may so acquire.
(e) To commence or defend suits or legal
proceedings and to represent the Trust in all suits or legal
proceedings; to settle, compromise or submit to arbitration any
claims, debts or damages due or owing to or from the Trust.
(f) To exercise, personally or by general or
limited power of attorney, any right, including the right to
vote, appurtenant to any securities or other such property.
(g) To borrow money from any lender in such
amounts and upon such terms and conditions as shall be deemed
advisable or proper to carry out the purposes of the Trust and
to pledge any securities or other property for the repayment of
any such loan.
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(h) To engage any legal counsel, including
counsel to the Company, or any other suitable agents, to consult
with such counsel or agents with respect to the construction of
this Trust Agreement, the duties of the Trustee hereunder, the
transactions contemplated by this Trust Agreement or any act
which the Trustee proposes to take or omit, to rely upon the
advice of such counsel or agents, and to charge against and pay
from the Trust Fund the reasonable fees and expenses of such
counsel or agents, which fees and expenses shall be paid or
reimbursed by the Company.
(i) To register any securities held by it in
its own name or in the name of any custodian of such property or
of its nominee, including the nominee of any system for the
central handling of securities, with or without the addition of
words indicating that such securities are held in a fiduciary
capacity, to deposit or arrange for the deposit of any such
securities with such a system and to hold any securities in
bearer form.
(j) To take, execute and deliver, as Trustee,
any and all deeds, leases, notes, bonds, guarantees, mortgages,
conveyances, contracts, waivers, releases or other instruments
in writing necessary or proper for the accomplishment of any of
the foregoing powers.
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ARTICLE VII
PAYMENTS BY THE TRUSTEE
7.1 EFFECT OF ARTICLE. This Article shall only apply
after funds have been transferred to the Trust. Until that
time, this Article shall have no force or effect and shall
impose no duties or obligations on the parties.
7.2 DELIVERY OF ACTUARIAL STATEMENTS. The Company
shall deliver to the Trustee a copy of each statement which the
Company receives from the Company's actuaries concerning the
Accrued Benefits of Participants (and, if applicable,
Beneficiary) under the Plans upon receipt of such statement by
the Company.
7.3 PAYMENTS FROM TRUST FUND. Unless the Company has
provided written evidence to the Trustee that the Company has
made payments to Participants (and, if applicable,
Beneficiaries) pursuant to the terms of the Plans, the Trustee
shall make such payments from the Trust Fund provided that the
Company is not Insolvent at the time of such payments. If a
Participant or Beneficiary does not receive a payment that he or
she believes he or she has become entitled to under a Plan, he
or she shall notify the Trustee of such entitlement. The
Trustee shall within ten (10) days after its receipt of such
notice forward a copy of such notice to the Company. If the
Company fails to notify the Trustee within ten (10) days after
its receipt of such notice that it denies the claim of the
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Participant or Beneficiary to payment by the Trustee, the
Trustee shall make payment from the Trust Fund to the
Participant or Beneficiary under the terms of the Plan as soon
as practicable and, in any event, within thirty (30) days after
the expiration of said ten (10) day notice period. The Trustee
shall provide the Company with written confirmation of the fact
and amount of such payment after it is made. If the Company
shall notify the Trustee within said ten (10) day notice period
that it denies the claim of the Participant or Beneficiary to
payment by the Trustee, then, within thirty (30) days after
receipt by the Trustee of such notice from the Company, the
Company shall commence an action or proceeding in court and
shall join the Trustee so that the dispute may be resolved. Such
action or proceeding shall be commenced in the Federal or state
court at the situs of the Trust Fund, subject to removal by any
party in accordance with the rules of practice applicable
thereto.
7.4 TAX WITHHOLDING. The Trustee shall deduct from
each payment hereunder any Federal, state or local withholding
or other taxes or charges which the Trustee is required to
deduct under applicable laws.
7.5 RETURN OF EXCESS ASSETS. As of each April 30
(the "Determination Date") during the term of this Agreement,
the Trustee shall determine the fair market value of such assets
as may have been contributed to the Trust, and report
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that value in writing to the Company. If the total assets of the
Trust exceed 110% of the present value of the Accrued Benefits under
the Plans as of that date (valued by the Actuaries in the same
way that benefits were valued for purposes of Section 1.4
above), the Trustee shall pay to the Company the amount of any
such excess or agree to a reduction in the face amount of any
letter of credit used to fund the Trust equal to the amount of
such excess. The determination of the above items and the
amount, if any, to be paid to the Company, shall be made not
later than the September 1 next following each Determination
Date, and payment to the Company if any, shall be made within
thirty (30) days after the determination is completed. The
payment of excess assets to the Company under this Section 7.5
shall only be made to the extent that assets are available to
make such payment, and the Trustee shall not be required to
surrender or borrow from any insurance policy to fund such
payment nor shall the Trustee be required to sell any stock or
liquidate any other asset should the Trustee in its sole
discretion deem it not prudent to do so.
7.6 LETTER OF CREDIT. The Company may provide to the
Trustee as an asset of the Trust Fund one or more irrevocable
and unconditional letters of credit. The Trustee shall accept a
letter of credit as part of the Trust Fund only if (i) it is
irrevocable and grants the Trustee the unconditional right to
draw upon it in whole or in part at any time, (ii) it is issued
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by a bank having total assets at the time the letter of credit
is issued of at least $1 billion, and (iii) the Trustee has
received an opinion of Piper & Marbury, or of other outside
legal counsel selected by the Company, addressed to the Trustee,
to the effect that the acceptance by the Trustee of a letter of
credit as part of the Trust Fund should not adversely affect the
status of the trust as a "grantor trust" for purposes of the
Code. The Trustee shall be entitled to rely on such opinion.
The Trustee agrees that it shall draw upon a letter of credit
only upon the following circumstances: (i) the letter of credit
will expire within fifteen (15) days and either the letter of
credit has not been renewed or the Trustee has not received from
the Company assets having a market value equal to the face
amount of the letter of credit, or (ii) the Trustee is obligated
to make payments to a Participant or Beneficiary or to commence
an action or proceeding in court in the nature of interpleader
as provided in Section 7.3 and the Trustee, in its sole and
absolute discretion, determines that it does not have sufficient
liquid assets to make the payments which it is obligated to make
or which are under dispute pursuant to Section 7.3.
7.7 ACCELERATED PAYMENTS. Notwithstanding any
provision of the Trust Agreement or the Plans to the contrary,
the Trustee shall make payments of Plan benefits hereunder
before such payments are otherwise due if it determines, based
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on an opinion of counsel to the Trustee (who may, but need not,
be counsel to the Company), that a Participant or Beneficiary
has recognized or will recognize income for federal income tax
purposes with respect to amounts that are or will be payable to
him or her under a Plan before they otherwise would be paid to
him or her. The amount to be paid under this Section 7.7 shall
be the amount of the benefit which the Participant or
Beneficiary recognizes as income. Payments under this Section
7.7 shall be made during the year in which the Participant or
Beneficiary recognizes income, or as soon as practicable
thereafter. Payments under this Section 7.7 shall reduce
benefits otherwise payable to a Participant or Beneficiary under
the terms of the Plan with respect to which payments are made.
ARTICLE VIII
TAXES, EXPENSES AND COMPENSATION
8.1 PAYMENT OF TAXES. The Company shall from time to
time pay taxes of any and all kinds which are lawfully levied or
assessed upon or become payable in respect of the Trust Fund,
the income or any property forming a part thereof, or any
security transaction pertaining thereto. To the extent that any
taxes lawfully levied or assessed upon the Trust Fund are not
paid by the Company, the Trustee shall pay such taxes out of the
Trust Fund. The Trustee shall, at Company expense,
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contest the validity of such taxes in any manner deemed appropriate
by the Company or its counsel or the Company may itself contest the
validity of any such taxes.
8.2 LITIGATION EXPENSES. In the event the Trustee
deems it necessary to litigate any issue regarding this Trust or
the payment of benefits hereunder, all reasonable attorney's
fees and expenses incurred by the Trustee shall be charged
against and paid from the Trust Fund and shall be reimbursed by
the Company, unless, with respect to any such issue, the Trustee
is found to have acted with gross negligence or in breach of its
fiduciary duty.
8.3 GENERAL EXPENSES. Any other reasonable expenses
incurred by the Trustee in the performance of its duties under
this Trust Agreement, including brokerage commissions, shall be
charged against and paid from the Trust Fund to the extent that
the Company does not pay such expenses. The Company shall
reimburse the Trust Fund for any such expenses paid from the
Trust Fund.
8.4 TRUSTEE COMPENSATION. The Company will pay the
Trustee such reasonable compensation for its services as may be
agreed upon in writing from time to time by the Company and the
Trustee. Such compensation shall be charged against and paid
from the Trust Fund to the extent the Company does not pay such
compensation.
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ARTICLE IX
ADMINISTRATION AND RECORDS
9.1 ACCOUNTS. The Trustee shall keep or cause to be
kept accurate and detailed accounts of any investments,
receipts, disbursements and other transactions hereunder, and
all accounts, books and records relating thereto shall be open
to inspection and audit at all reasonable times by any person
designated by the Company. All such accounts, books and records
shall be preserved (in original form, or on microfilm, magnetic
tape or any other similar process) for such period as the
Trustee may determine, but the Trustee may only destroy such
accounts, books and records after first notifying the Company in
writing of its intention to do so and transferring to the
Company any of such accounts, books and records requested.
9.2 WRITTEN ACCOUNTINGS. Within sixty (60) days
after each April 30, and within sixty (60) days after the
removal or resignation of the Trustee or of the termination of
the Trust, the Trustee shall file with the Company a written
accounting setting forth all investments, receipts,
disbursements and other transactions effected by it from the
preceding May 1 to April 30 or to the date of such removal,
resignation or termination, including a description of all
investments and securities purchased and sold with the cost or
net proceeds of such purchases or sales and showing all cash,
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securities and other property held as of April 30 or at the end
of such other period. Upon the expiration of one hundred eighty
(180) days from the date of filing such annual or other
accounting, the Trustee shall be released and discharged from
all liability and accountability with respect to the propriety
of its acts and transactions shown in such accounting, except
with respect to any such acts or transactions as to which the
Company shall within such one hundred eighty (180) day period
file with the Trustee written objections and except for matters
which the Company, would not reasonably have been expected to
have discovered by a proper review of such accounting.
9.3 ACCESS TO RECORDS. The Trustee shall from time
to time permit the Company's employees and agents to have
reasonable access during ordinary business hours to such records
as may be necessary to audit the Trustee's accounts. Upon
reasonable prior notice, the Trustee shall also make its records
of the Trust available for inspection during ordinary business
hours by any Participant or Beneficiary and shall furnish to
each Participant or Beneficiary who so requests in writing a
copy of any or all reports with respect to the Trust which are
furnished to the Company.
9.4 JUDICIAL SETTLEMENTS. Nothing contained in this
Trust Agreement shall be construed as depriving the Trustee or
the Company of the right to have a judicial settlement of the
Trustee's accounts, and upon any proceeding for a judicial
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settlement of the Trustee's accounts or for instructions the
only necessary party thereto in addition to the Trustee shall be
the Company.
9.5 SUCCESSOR TRUSTEES. In the event of the removal
or resignation of the Trustee, the Trustee shall deliver to the
successor trustee all records which shall be required by the
successor trustee to enable it to carry out the provisions of
this Trust Agreement.
9.6 RETURNS AND REPORTS. In addition to any returns
required of the Trustee by law, the Trustee shall prepare and
file such tax reports and other returns as the Company and the
Trustee may from time to time agree.
ARTICLE X
REMOVAL OR RESIGNATION OF THE TRUSTEE
AND DESIGNATION OF SUCCESSOR TRUSTEE
10.1 REMOVAL OF TRUSTEE. The Company may remove the
Trustee, with or without cause, upon at least thirty (30) days'
notice in writing to the Trustee.
10.2 TRUSTEE RESIGNATION. The Trustee may resign at
any time upon at least thirty (30) days' notice in writing to
the Company.
10.3 PROCEDURE ON REMOVAL OR RESIGNATION. In the
event of such removal or resignation, the Trustee shall duly
file with the Company a written accounting as provided in
Section 9.2 above for the period since the last previous annual
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accounting, listing the investments of the Trust and any
uninvested cash balance thereof, and setting forth all receipts,
disbursements, distributions and other transactions respecting
the Trust not included in any previous accounting, and if
written objections to such accounting are not filed as provided
in Section 9.2, the Trustee shall to the maximum extent
permitted by applicable law be forever released and discharged
from all liability and accountability with respect to the
propriety of its acts and transactions shown in such accounting
except for matters which the Company could not reasonably have
been expected to have discovered by a proper review of such
accounting.
10.4 SUCCESSOR TRUSTEE PROVISIONS. Within thirty (30)
days after any such notice of removal or resignation of the
Trustee, the Company shall designate a successor trustee
qualified to act hereunder. A successor trustee must be a
financial institution having trust assets under management of at
least $1 billion as of the date of appointment as successor
trustee. Each successor trustee, during such period as it shall
act as such, shall have the powers and duties herein conferred
upon the Trustee, and the word "Trustee" wherever used herein,
except where the context otherwise requires, shall be deemed to
include any successor trustee. Upon designation of a successor
trustee and delivery to the resigned or removed Trustee of
written acceptance by the successor trustee of such
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designation, such resigned or removed Trustee shall promptly assign,
transfer, deliver and pay over to such successor trustee, in
conformity with the requirements of applicable law, the funds
and properties in its control or possession then constituting
the Trust Fund.
ARTICLE XI
ENFORCEMENT OF TRUST AGREEMENT
11.1 ENFORCEMENT. The Company shall have the right to
enforce any provisions of this Trust Agreement. After a Change
in Control as described in Section 1.4, each Participant and
Beneficiary shall have the right to enforce the payment of his
or her benefits under the Plans. In any action or proceeding
affecting the Trust, the only necessary parties shall be the
Company and the Trustee and, except as otherwise required by
applicable law, no other person shall be entitled to any notice
or service of process; provided, however, that in any action or
proceeding pertaining to the payment or amount of benefits
payable from the Trust Fund, the Participants (and the
Beneficiaries of deceased Participants) whose benefits are or
will be affected by such action or proceeding shall be entitled
to written notice of such action or proceeding. Any judgment
entered in an action or proceeding described in this Section
11.1 shall be binding and conclusive on all persons having or
claiming to have any interest in the Trust.
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ARTICLE XII
AMENDMENTS
12.1 AMENDMENTS BEFORE CHANGE IN CONTROL. Prior to
the time that a Change in Control described in Section 1.4
occurs, the Company shall have the right, with or without the
consent of the Trustee, the Participants, any Beneficiaries or
any other persons, to amend or modify this Agreement in whole or
in part. The Company's right to amend under the preceding
sentence shall include, without limitation, the right to make
the Trust Agreement irrevocable and the right to extend the time
at which the Trust Agreement becomes irrevocable. Any
amendments made under this Section 12.1 shall be in writing and
executed by the Company, and a copy of any such amendments shall
be delivered to the Trustee.
12.2 AMENDMENTS AFTER CHANGE IN CONTROL. After a
Change in Control described in Section 1.4 occurs, the Company
may from time to time amend or modify, in whole or in part, any
or all of the provisions of this Trust Agreement, except to make
it revocable, with the written consent of the Trustee and the
Participants (and Beneficiaries of deceased Participants),
except that amendments to this Agreement affecting only one Plan
may be made with the written consent of the Trustee and the
Participants (and Beneficiaries of deceased Participants) of
that Plan. The Company and the Trustee shall execute such
supplements to, or amendments of, this Trust Agreement as shall
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be necessary to give effect to any such amendment or
modification.
ARTICLE XIII
TERMINATION OF TRUST
13.1 TERMINATION OF TRUST. Except as provided in
Sections 1.2, 1.4, 4.2 and 7.5, no part of the corpus or income
of the Trust shall be paid to the Company or be used for any
purpose other than for the exclusive purpose of providing
benefits under the Plans prior to the satisfaction of all
liabilities under the Plans; provided, however, that nothing in
this Article shall be deemed to limit or otherwise prevent the
payment from the Trust of expenses, taxes and other charges as
provided in Article VIII or the return of surplus as provided in
Article VII. The Trust may be terminated by the Company at such
time as all amounts due the Participants and Beneficiaries under
the terms of the Plans are paid.
13.2 PROCEDURE ON TERMINATION. Upon the termination
of the Trust, any and all funds remaining in the Trust shall be
paid to the Company and the Trustee shall promptly take such
action as shall be necessary to transfer such assets to the
Company.
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ARTICLE XIV
NON-ALIENATION
14.1 NON-ALIENATION. Except to the extent otherwise
required by law, (i) no amount payable to or in respect of any
Participant or Beneficiary at any time under the Trust shall be
subject in any manner to alienation by anticipation, sale,
transfer, assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind, and any attempt to so alienate, sell,
transfer, assign, pledge, attach, charge or otherwise encumber
any such amount, whether presently or thereafter payable, shall
be void; and (ii) the Trust Fund shall in no manner be liable
for or subject to the debts or liabilities of any Participant or
Beneficiary.
ARTICLE XV
COMMUNICATIONS
15.1 TO THE COMPANY. Communications to the Company
shall be addressed to the Company at its office at 11333
McCormick Road, Hunt Valley, Maryland 21031, attention Vice
President of Human Resources and Quality; provided, however,
that upon the Company's written request, such communications
shall be sent to such other address and or addressee as the
Company may specify.
15.2 TO THE TRUSTEE. Communications to the Trustee
shall be addressed to it at ;
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provided, however, that upon the Trustee's written request, such
communications shall be sent to such other address as the
Trustee may specify.
15.3 RECEIPT REQUIRED. No communication shall be
binding on the Trustee until it is received by the Trustee, and
no communication shall be binding on the Company until it is
received by the Company.
15.4 COMPANY ACTIONS AND TRUSTEE RELIANCE. Any action
of the Company pursuant to this Trust Agreement, including all
orders, requests, directions, instructions, approvals and
objections of the Company to the Trustee, shall be in writing
signed on behalf of the Company by any duly authorized officer
of the Company. The Trustee may rely on, and will be fully
protected with respect to any such action taken or omitted in
reliance on, any information, order, request, direction,
instruction, approval, objection and list delivered to the
Trustee by the Company or failure to act due to lack of receipt
of direction.
15.5 COMPANY DESIGNEES. The Company may designate
individuals or committees to act on its behalf for purposes of
some or all of the provisions of this Trust Agreement. Such
individuals or committees and their respective authorities and
powers under this Agreement shall be designated by the Company
in writing to the Trustee. Their authority shall continue
until revoked in writing by the Company and received by the
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Trustee. The Trustee shall incur no liability for failure to
act on such individuals' or committees' instructions without
written designation from the Company.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 GOVERNING LAW; SUCCESSORS. This Trust Agreement
shall be governed by and construed in accordance with the laws
of the State of Maryland applicable to contracts made and to be
performed therein. It shall be binding upon and inure to the
benefit of the Company and the Trustee and their respective
successors and assigns.
16.2 HEADINGS. All Article and Section headings
herein have been inserted for convenience of reference only and
shall in no way modify, restrict or affect the meaning or
interpretation of any of the terms or provisions of this Trust
Agreement.
16.3 MERGER PROVISION. This Trust Agreement is
intended as a complete and exclusive statement of the agreement
of the parties hereto, and supersedes all previous agreements or
understandings among them.
16.4 TRUSTEE SUCCESSORS. The term "Trustee" shall
include any successor trustee. If a Trustee is a bank or trust
company, any corporation resulting from any merger,
consolidation or conversion to which such bank or trust company
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may be a party, or any corporation otherwise succeeding
generally to all or substantially all of the assets or business
of such bank or trust company, shall be the successor to it as
Trustee hereunder without the execution of any instrument or any
further action on the part of any party hereto or any
Participant or Beneficiary hereunder.
16.5 SEVERABILITY. If any provision of this Trust
Agreement shall be invalid and unenforceable, the remaining
provisions hereof shall continue to be effective.
16.6 PARTICIPANT AND BENEFICIARY STATUS. Any
reference hereunder to a Participant shall expressly be deemed
to include, where relevant, a Beneficiary of such Participant
duly designated under the terms of a Plan. A Participant shall
cease to have such status once all amounts due him or her under
the Plans have been paid.
16.7 GENDER AND PLURAL. Whenever used herein, and to
the extent appropriate, the masculine, feminine or neuter gender
shall include the other two genders, the singular shall include
the plural and the plural shall include the singular.
16.8 COUNTERPARTS. This Trust Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be the original, and said counterparts shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, this Trust Agreement has been duly
executed by the parties hereto effective as of the day and year
first above written.
ATTEST/WITNESS: PHH CORPORATION
By: (SEAL)
Print Name:
Date:
, Trustee
By: (SEAL)
Print Name:
Date:
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SCHEDULE A
TO
PHH CORPORATION
AMENDED AND RESTATED
DEFERRED COMPENSATION TRUST AGREEMENT
Assumptions for Valuation of Plan Benefits
The assumptions set forth below shall be used for
purposes of determining the Accrued Benefits funding amount
required to be paid to the Trustee under Section 1.4 of the
Trust Agreement upon the occurrence of a Change in Control or
Potential Change in Control (as therein defined):
Item Assumption
Form of Benefit Payments Straight life annuity, except elected
form for benefits in pay
status.
Commencement of Benefits Greater of age 55 or age on
(other than benefits in the second anniversary date
pay status) of the Change in Control or
Potential Change in Control.
Discount Rate (for Adjusted federal long-term
determination of present rate determined under
value of future benefits) Section 382(f)(2) (or any
successor provision) of the
Internal Revenue Code of
1986, as amended, with
respect to ownership changes
occurring in the month of
the Change in Control or the
Potential Change in Control.
Interest Rate (for Same as Discount Rate.
projecting future earnings
on trust assets)
Mortality 1983 Basic Group Annuity
Mortality Table projected
to 1996.
Turnover and Preretirement None.
Deaths
Forfeitures None.
Compensation Scale (for Increasing at the rate of
determination of Final six percent (6%) per year
Average Compensation used to assumed benefit commence-
to compute future amount of ment date, except for accrued
Supplemental Retirement benefits in pay status.
Benefit accrued as of date
of Change in Control or
Potential Change in Control)