PHH CORPORATION
AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN
FOR CORPORATE DIRECTORS
1. DEFINITIONS
Where used herein, the following capitalized terms shall have the
following meanings:
a) "Corporation" means PHH Corporation.
b) "Director" means any person duly elected and serving as a
member of the Board of Directors of the Corporation.
c) "Election" means a notice, substantially in the form attached,
of election to participate in the Plan, completed, signed,
and submitted to the Secretary by a Director.
d) "Fees" mean any compensation or portion thereof payable to a
Participant in his capacity as a Director, whether payable as
a director's fee or as a fee for service on a committee of the
Board of Directors of the Corporation, excluding traveling
expenses incident to attendance at meetings and excluding
amounts deferred under the PHH Corporation Directors Deferred
Stock Retirement Program.
e) "Fund" means such mutual fund or funds as may from time to
time be designated by the Compensation Committee of the Board
of Directors of the Corporation.
f) "Participant" means a Director who has in effect an Election.
g) "Plan" means this deferred compensation plan, as it may be
hereafter amended by the Board of Directors of the Corporation
from time to time.
h) "Secretary" means the person holding the office of secretary
of the Corporation.
2. PARTICIPATION
a) Commencement. Any Director may become a Participant by
submitting an Election, which shall be effective upon (1) the
effective date of the Plan, if the Election is received prior
to such effective date, (2) at the beginning of the calendar
year following receipt of the Election, if such receipt is
after the effective date of the Plan, or (3) as to any person
elected to fill a vacancy on the Board of Directors who was
not a Director on the preceding December 31st, receipt of this
Election.
b) Termination. Deferral of Fees under the Plan shall continue as
to any Participant until (1) he terminates such deferral by
notifying the Secretary in writing, in which event such
deferral shall terminate effective at the end of the calendar
year in which such notification is received, or (2) he ceases
to be a Director. Such termination shall create no right to
distribution unless otherwise provided under Section 4(b) or
another provision of the Plan.
c) Re-Election. A director who has terminated his deferral of
Fees under the Plan may again elect such deferral by following
the procedure set forth in Section 2(a).
3. ACCOUNTS
a) Election. An Election may specify that all or any part of
Fees to be earned after its effective date are to be deferred.
The Election shall specify the Funds to which such Fees to be
deferred are to be credited.
b) Maintenance. The Corporation shall, during any year in which
a Participant has an Election in effect, withhold and defer
the payment of all or any specified part of the Participant's
Fees in accordance with such Election, and maintain a separate
memorandum account with respect thereto.
c) Investment of Accounts.
1) Share allocation. Amounts credited to a Participant's
account under the Plan shall be invested in the Fund
by the Corporation in the name of the Corporation on
the date on which such amounts would have been paid
to such Participant but for deferral, or as soon as
practicable thereafter. If the Compensation Committee
has designated more than one Fund, then the
Participant shall elect the portion of the
Participant's account to be invested by the
Corporation in each Fund. There shall be allocated to
such Participant's account the number of shares of
each Fund obtainable by dividing the amount so
credited to such Fund by the net asset value per
share of that Fund on the date of such investment.
2) Reinvestment of Income. Distribution of dividends,
interest, and capital gains on the Corporation's
shares in each Fund shall be reinvested in the Fund
by the Corporation upon such distribution. On the
date of such reinvestment, there shall be allocated
to the account of each Participant with amounts
otherwise credited thereto that portion of the number
of additional shares of such Fund purchased by the
Corporation as a result of such reinvestment which is
equal to the product of dividing the total number of
shares of such Fund owned by the Corporation
immediately preceding such reinvestment by the number
of shares of the fund allocated to such Participant's
account.
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3) Valuation. The value of a Participant's account at
any given date shall thus be measured by the net
asset value of the number of shares of each Fund
standing to the credit of such account on such date.
4) Redemption. The Corporation shall from time to time
pay to Participants or their beneficiaries the cash
proceeds of such portions of the Corporation's shares
in a Fund as may be necessary to effect distributions
in accordance with the provisions of Section 4 and
the applicable Elections.
d) Transfer. A Participant may, at any time while a Director,
transfer the amount in any Fund within the Participant's
account to another Fund, provided that transfers between funds
shall be subject to such administrative rules as to frequency,
amount, and other matters, as the Committee may establish for
ease of administration.
4. DISTRIBUTION
a) Duration and Installments. Fees deferred and credited to a
Participant's accounts under the Plan shall be distributed to
a Participant in cash. Such distribution shall be in one
payment, or in annual or quarterly installments over a period
not to exceed ten years, as specified in such Participant's
last election submitted while a Director, provided that, once
an election of a form of payment has been made, no change in
that Election will be effective unless it is made at least 12
months before distribution begins.
b) Order and Value of Installments. If distribution is to be made
in installments and a Participant's account consists of more
than one Fund at the time distribution is to begin,
distribution from such Participant's account shall be made pro
rata from each such Fund. The value of each installment, other
than the final one, shall be equal to the product of dividing
the aggregate value of amounts standing to the credit of both
accounts of such Participant on the date of commencement of
distribution by the total number of installments, regardless
of increase or decrease in the value of such amounts during
the course of distribution.
c) Commencement. Such distribution period shall begin, as
specified in such Participant's last Election submitted while
a Director, either with the first day of the calendar year
following the year in which the Participant shall cease to be
a Director for any reason other than death, or with the first
day of the calendar year following the year in which the
Participant shall cease to be a Director and shall have
attained age 65. Once an Election has been made under this
paragraph (c), no change in that Election will be effective
unless it is made at least twelve months before the
distribution period would have begun in the absence of the
change.
d) Death Before Distribution. In the event that a Participant
shall die prior to any distribution to him the total amounts
deferred and credited to his account shall be paid to such
beneficiary(ies) as the Participant may have last designated
at any time in writing to the Secretary, in such installments
and over such period as have been specified in such
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Participant's last Election submitted while a Director,
beginning with the first day of the calendar year immediately
following the Participant's death.
e) Death During Distribution. In the event that a Participant
shall die after commencement, but before completion, of
distributions to him, any undistributed amounts shall be paid
to the aforesaid designated beneficiary(ies) in the same
installments and for the same duration as would have applied
but for such Participant's death.
f) No Beneficiary. In the event that a Participant shall not file
a written designation of beneficiary or no designated
beneficiary is living at the Participant's death, the balance
credited to the Participant's accounts shall be paid in full
to the Participant's estate on the first business day of the
calendar year following death.
(g) Suspension of Distributions. If a Director who had ceased to
be a Director for any reason is reelected as a Director or
appointed to fill a vacancy on the Board of Directors, and the
Director has received or is receiving distributions under the
Plan at the time of his or her reelection or appointment or
becomes eligible to receive distributions under the Plan while
he or she serves as a Director pursuant to such reelection or
appointment, the distributions (if any) to which the Director
would be entitled under the Plan on or after his or her
reelection or appointment shall be suspended during the period
in which he or she serves as a Director. All undistributed
amounts attributable to service as a Director before such
reelection or appointment shall be aggregated with the fees
(if any) deferred after such reelection or appointment and
distributed as indicated in the Election completed by the
Director at the time of his or her reelection or appointment
or in any change in that Election that may be made in
accordance with the provisions of this Section 4.
5. OBLIGATION OF CORPORATION
a) Plan is Unfunded. The Plan shall be unfunded. Investments in
the Funds shall be in the name of the Corporation, and credits
to the account of each Participant shall not be set apart nor
otherwise made available so that they may be drawn upon at any
time, except as provided in this Plan. Neither any Participant
nor any beneficiary shall have any right, title, or interest
in shares of the Fund or in such credits or any claim against
them. Payments may only be made at such times and in the
manner expressly provided in this Plan, and the Corporation is
under a contractual obligation only to make the payments when
due. No note or security for the payment of any Participant's
accounts shall be issued by the Corporation.
b) Trust. Notwithstanding the foregoing, to assist in meeting
its obligations under this Plan, the Corporation may establish
a Trust, substantially in the form attached hereto as Exhibit
A and in accordance with the terms of the model trust
described in Revenue Procedure 92-64.
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6. CLAIMS AGAINST ACCOUNT
No credits to the accounts of any Participant under this Plan shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to do so
shall be void. Nor shall any credit be subject to attachment or legal
process for debts or other obligations. Nothing contained in this Plan
shall give any Participant or beneficiary any interest, lien, or claim
against any specific assets of the Corporation. No Participant or
beneficiary shall have any rights other than as a general creditor of
the Corporation.
7. COMPETITION BY PARTICIPANT
In the event a Participant ceases to be a Director and become a
proprietor, officer, partner, employee, director, or otherwise becomes
affiliated with any business that is in competition with the
Corporation, or becomes employed by any governmental agency that has
jurisdiction over the activities of the Corporation, the entire balance
credited to the Participant's accounts may, if directed by the Board of
Directors of the Corporation in its sole discretion, be paid
immediately to the Participant in a lump sum.
8. AMENDMENT OR TERMINATION
This Plan may be altered, amended, suspended, or terminated at any time
by the Board, provided, however, that no alternation, amendment,
suspension, or termination shall be made to this Plan which would
result in the distribution or amounts credited to the accounts of
Participants in any manner than is otherwise provided in this Plan.
[Approved by the Board of Directors on June 21-22, 1993 and April 18, 1994.]
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AMENDMENT NO. 1 TO THE
PHH CORPORATION AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN FOR CORPORATE DIRECTORS
THIS AMENDMENT NO. 1 is dated as of February 26, 1996, to the PHH Corporation
Amended and Restated Deferred Compensation Plan for Corporate Directors as
approved by the Board of Directors on June 21-22, 1993 and April 18, 1994 (the
"Plan").
PREAMBLE
The Board of Directors of PHH Corporation (the "Corporation") desires that the
Plan be amended to provide for the termination of Elections in certain events.
Accordingly, the Plan is hereby amended as follows:
1. Section 1. (Definitions) is amended as follows:
a. The following term shall be added prior to the term
"Corporation":
(a) "Change in Control" shall be deemed to have taken place on the date
of the earlier to occur of either of the following events: (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 Corporation having 20% or more of the total number of votes that
may be cast for the election of directors of the Corporation; or (ii)
as the 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 Corporation
before the Transaction shall cease to constitute a majority of the
Board of Directors of the Corporation or any successor to the
Corporation.
b. The following term shall be added after the term "Fees":
(f) "Financial Trigger" shall be deemed to have occurred if the
Corporation's Net Income for any fiscal quarter is less than 50% of the
Corporation's Net Income for the same fiscal quarter for the
immediately preceding year. The term "Net Income" shall mean the
consolidated net income of the Corporation and its consolidated
subsidiaries, determined on the basis of generally accepted accounting
principles, excluding extraordinary gains and gains from discontinued
operations but including extraordinary losses and losses from
discontinued operations. The Corporation's Net Income for the fiscal
quarter in question shall be determined by reference to the
Corporation's quarterly report on Form 10-Q as filed with the
Securities and Exchange Commission for that fiscal quarter and shall be
deemed to have occurred at the time such filing is made.
c. The following term shall be added after the term "Plan":
(j) "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 Corporation
enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control; (iii) any person (including the
Corporation) 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 Corporation adopts a
resolution to the effect that, for purposes of this Plan, a Change in
Control is imminent.
d. The terms listed in Section 1. shall be re-lettered as
appropriate.
2. Section 2. (Participation) is hereby amended as follows:
(a) In subsection (b) (Termination), the word "or" prior to subclause
(2) in the first sentence of that subsection shall be deleted, and the
following inserted prior to the period at the end of that sentence: ";
or (3) immediately upon a Change in Control, Potential Change in
Control or Financial Trigger."
(b) In subsection (c) (Re-Election), the words "who has terminated his
deferral of Fees under the Plan" in the first line of that subsection
shall be deleted and the following inserted in lieu thereof: "whose
deferral of Fees under the Plan has been terminated"
3. Miscellaneous.
3.1 Except as otherwise expressly provided herein, the terms of the
Plan shall remain in full force and effect.
3.2 Capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Plan.
This Amendment No. 1 to the PHH Corporation Amended and Restated Deferred
Compensation Plan for Corporate Directors is hereby executed as of the date
first above written pursuant to the approval of Corporation's Board of Directors
on February 26, 1996.
PHH CORPORATION
By: /s/ Robert D. Kunisch
---------------------------------
Robert D. Kunisch
Chairman, Chief Executive Officer
and President
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