Exhibit 10.4

 

PHH CORPORATION

 

2012 NON-QUALIFIED STOCK OPTION

AWARD NOTICE

 

We are pleased to notify you that PHH Corporation (the “Company”) has awarded
you Non-Qualified Stock Options (each an “Option” or collectively, the
“Options”).  The Options entitle you to purchase shares of the Company’s Stock. 
The number of shares you may purchase and the exercise price at which you may
purchase them are specified below.  This Non-Qualified Stock Option Award Notice
(the “Award Notice”) constitutes part of and is subject to the terms and
provisions of the attached Non-Qualified Stock Option Award Agreement (the
“Agreement”) and the PHH Corporation Amended and Restated 2005 Equity and
Incentive Plan, as amended (the “Plan”).  Capitalized terms used but not defined
in this Award Notice shall have the meanings set forth in the Agreement or the
Plan.

 

Optionee:

[Name]

 

 

Participant #:

[ID]

 

 

Grant Date:

                  , 2012

 

 

Number of Shares:

[# of shares]

 

 

Exercise Price:

$[FMV on the grant date]

 

 

Expiration Date:

The Options shall expire at 5:00 p.m. Eastern Time on the 10th anniversary of
the Grant Date, unless fully exercised or terminated earlier.

 

 

Vesting Schedule:

Subject to the provisions of the Agreement and the Plan, and provided that you
remain continuously employed with the Company through September 27, 2015, the
Options shall become 100% vested.

 

We congratulate you on the recognition of your importance to our organization
and its future.

 

PHH CORPORATION

 

AGREED TO AND ACCEPTED:

 

 

 

 

By:

 

 

 

 

Name: Glen A. Messina

 

Name: [include name]

Title: President & CEO, PHH Corporation

 

Date:                          , 2012

Date:                         , 2012

 

 

 

 

RETAIN THIS NOTIFICATION AND YOUR AWARD AGREEMENT WITH

 

YOUR IMPORTANT DOCUMENTS AS A RECORD OF THIS AWARD.

 

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PHH CORPORATION

 

NON-QUALIFIED STOCK OPTION

AWARD AGREEMENT

 

PHH Corporation, a Maryland corporation (the “Company”) has granted to the
Optionee named in the Award Notice to which this Non-Qualified Stock Option
Award Agreement (the “Agreement”) is attached, an award consisting of
non-qualified stock options (each an “Option,” and collectively, the “Options”),
subject to the terms and conditions set forth in the Award Notice and this
Agreement.  The Options have been granted pursuant to the PHH Corporation
Amended and Restated 2005 Equity and Incentive Plan, as amended (the “Plan”).

 

WHEREAS, the Human Capital and Compensation Committee of the Board of Directors
of the Company (the “Committee”) has the authority under and pursuant to the
Plan to grant and establish the terms of awards to eligible employees of the
Company and its Subsidiaries; and

 

WHEREAS, the Committee desires to grant non-qualified stock options to the
Optionee, subject to the terms of the Plan, the Award Notice, and this
Agreement.

 

In consideration of the provisions contained in this Agreement, the Company and
the Optionee agree as follows:

 

1.                                       The Plan.  The Options granted to the
Optionee hereunder are granted pursuant to the Plan.  A copy of the prospectus
for the Plan is attached hereto and the terms of such Plan are hereby
incorporated in this Agreement.  Terms used in this Agreement which are not
defined in this Agreement shall have the meanings used or defined in the Plan.

 

2.                                       Number of Shares and Purchase Price. 
The Optionee is hereby granted Options to purchase the number of shares of Stock
specified on the attached Award Notice (the “Option Shares”) at the Exercise
Price per Share specified on the Award Notice, pursuant to the terms of this
Agreement and the provisions of the Plan.

 

3.                                       Term of Option and Conditions of
Exercise.

 

(a)                                  The Options have been granted as of the
Grant Date and shall terminate on the Expiration Date specified on the Award
Notice, subject to earlier termination as provided herein and in the Plan.  Upon
the termination or expiration of the Options, all rights of the Optionee in
respect of such Options hereunder shall cease.

 

(b)                                 Subject to the provisions of the Plan and
this Agreement, except as may otherwise be provided by the Committee, the
Options shall vest in accordance with the Vesting Schedule set forth on the
Award Notice, so long as the Optionee continues to be employed by or provide
service to the Company or a Subsidiary; provided, however, that

 

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(i)                                     the Options shall become fully vested
and exercisable upon the death of the Optionee or the termination of the
Optionee’s employment or service due to a disability (as defined in the
Company’s long-term disability plan) of the Optionee; and

 

(ii)                                  if the Optionee has not signed a
restrictive covenant agreement in a form acceptable to the Company by no later
than thirty (30) days after the Grant Date, the Options shall be forfeited.

 

(c)                                  Upon the effective date of a Change in
Control that occurs before September 27, 2015 and while the Optionee is employed
with the Company or its Subsidiaries, the Optionee will become vested as to a
pro rata portion of the Options determined as follows: the total number of
Options multiplied by a fraction where the numerator is the number of calendar
days from and including the Grant Date through and including the effective date
of the Change in Control and the denominator is the total number of calendar
days from and including the Grant Date through and including September 27,
2015.  Notwithstanding the foregoing, if the surviving company following the
Change in Control either (A) continues the Options in effect (subject to
Section 5 of the Plan) or (B) replaces the Options with an option to receive the
surviving company stock in a manner that complies with Code Section 409A and the
regulations thereunder and, in either case, does not extend the maximum period
for vesting under the Vesting Schedule provided under the Award Notice and this
Agreement, then no accelerated vesting shall occur. Options that do not vest
according to this Subsection (c) will continue to be subject to the Vesting
Schedule in the Award Notice.

 

4.                                       Termination of Employment.

 

(a)                                  Except as may otherwise be provided by the
Committee, if the Optionee’s employment with or service to the Company or a
Subsidiary is terminated, the Options that are then unexercisable will terminate
immediately upon such termination of employment or service.

 

(b)                                 Notwithstanding subsection (a):

 

(i)                                     if the Optionee’s employment is
terminated by the Company and its Subsidiaries without Cause (as defined in
subsection (c)), the Options shall become vested in accordance with the
following schedule:

 

Date of Termination of
Employment Without Cause

 

Percent Vested

 

Before January 1, 2013

 

0

%

On or after January 1, 2013, but before January 1, 2014

 

25

%

On or after January 1, 2014, but before September 27, 2015

 

50

%

September 27, 2015

 

100

%

 

(ii)                                  if the Optionee’s employment is terminated
due to Optionee’s voluntary resignation from the Company and its Subsidiaries on
or after attaining age

 

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sixty-five (65) (a “Retirement”), the Optionee will become vested as to a pro
rata portion of the Options determined as follows: the total number of Options
multiplied by a fraction where the numerator is the number of calendar days from
and including the Grant Date through and including the date of Retirement and
the denominator is the total number of calendar days from and including the
Grant Date through and including September 27, 2015.

 

Notwithstanding the foregoing, in the event the Optionee violates any
non-competition, non-solicitation, non-disclosure, or other restrictive covenant
agreement with the Company or its Subsidiaries prior to the date an Option is
exercised, then the Optionee shall not be vested and all the Options will be
forfeited.

 

(c)                                  Except as may otherwise be provided by the
Committee, if the Optionee’s employment with or service to the Company or a
Subsidiary is terminated, the Options that are then exercisable will terminate
as follows:

 

(i)                                     If the Optionee’s employment terminates
by reason of such Optionee’s death or disability (as defined in the Company’s
long-term disability plan), the Options may be exercised, to the extent vested
on the date of termination, by the Optionee, the Optionee’s legal representative
or legatee for a period of two years from the date of death or disability or
until the Expiration Date, if earlier.

 

(ii)                                  If the Optionee’s employment is terminated
by the Company for Cause, the Options that are then exercisable will terminate
immediately as of the effective date of such termination.  For purposes of this
Agreement, “Cause” means any one of the following: (1) a material failure of the
Optionee to substantially perform the Optionee’s duties with the Company or its
Subsidiaries (other than failure resulting from incapacity due to physical or
mental illness); (2) any act of fraud, misappropriation, dishonesty,
embezzlement or similar conduct against, or relating to the assets of, the
Company or its Subsidiaries; (3) conviction (or plea of nolo contendere) of a
felony or any crime involving moral turpitude; (4) repeated instances of
negligence in the performance of the Optionee’s job or any instance of gross
negligence in the performance of the Optionee’s duties as an employee of the
Company or one of its Subsidiaries; (5) any breach by the Optionee of any
fiduciary obligation owed to the Company or any Subsidiary or any material
element of the Company’s Code of Business Ethics and Conduct or other applicable
workplace policies; or (6) failure by the Optionee to perform Optionee’s job
duties for the Company or any Subsidiary to the best of Optionee’s ability and
in accordance with reasonable instructions and directions from the Board or its
designee, and the reasonable workplace policies and procedures established by
the Company or any Subsidiary, as applicable, from time to time.

 

(iii)                               If the Optionee’s employment terminates for
any reason other than by the Company for Cause or due to death or disability,
the Options may be exercised, to the extent vested on the date of termination,
for a period of one year from the date of termination or until the Expiration
Date, if earlier.

 

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5.                                       Exercise of Options.

 

The Options may only be exercised in accordance with the terms of the Plan and
the administrative procedures established by the Committee from time to time. 
The Optionee may pay the Exercise Price by:

 

(a)                                  delivery of cash, certified or cashier’s
check, money order or other cash equivalent acceptable to the Committee in its
discretion;

 

(b)                                 a broker-assisted cashless exercise
procedure satisfactory to the Company;

 

(c)                                  tender (via actual delivery or attestation)
to the Company of other shares of Stock which have a Fair Market Value on the
date of tender equal to the Exercise Price, provided that such shares have been
owned by the Optionee for a period of at least six months free of any
substantial risk of forfeiture or were purchased on the open market without
assistance, direct or indirect, from the Company; or

 

(d)                                 any combination of the foregoing.

 

6.                                       Adjustment upon Changes in
Capitalization.  The Options are subject to adjustment in the event of certain
changes in the capitalization of the Company, to the extent set forth in
Section 5 of the Plan.

 

7.                                       Restrictions on Grant of the Award and
Issuance of Shares.  The grant of the Options and issuance of shares of Stock
upon exercise of the Options shall be subject to and in compliance with all
applicable requirements of federal, state or foreign law with respect to such
securities.  No shares of Stock may be issued hereunder if the issuance of such
shares would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed.  The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance of any shares subject to the Award Notice shall relieve the
Company of any liability in respect of the failure to issue such shares as to
which such requisite authority shall not have been obtained.  As a condition to
the settlement of the Award Notice, the Company may require the Optionee to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

 

8.                                       No Rights as a Stockholder.  The
Optionee shall not have any of the rights of a stockholder with respect to the
Option Shares until such Option Shares have been issued to the Optionee upon
exercise of the Options (as evidenced by a stock certificate or an appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company).  No adjustment will be made for dividends or distributions or other
rights for which the record date is prior to the date on which such Option
Shares are issued.

 

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9.                                       No Rights to Continued Employment; Loss
of Office.  Neither this Agreement nor the Award Notice shall be construed as
giving the Optionee any right to continue in the employ of the Company or any of
its Subsidiaries, or shall interfere in any way with the right of the Company to
terminate such employment.  Notwithstanding any other provision of the Plan, the
Award Notice, this Agreement or any other agreement (written or oral) to the
contrary, for purposes of the Plan and the Award Notice, a termination of
employment shall be deemed to have occurred on the date upon which the Optionee
ceases to perform active employment duties for the Company following the
provision of any notification of termination or resignation from employment, and
without regard to any period of notice of termination of employment (whether
expressed or implied) or any period of severance or salary continuation. 
Notwithstanding any other provision of the Plan, the Award Notice, this
Agreement or any other agreement (written or oral) to the contrary, the Optionee
shall not be entitled (and by accepting an Award Notice, thereby irrevocably
waives any such entitlement), by way of compensation for loss of office or
otherwise, to any sum or other benefit to compensate the Optionee for the loss
of any rights under the Plan as a result of the termination or expiration of an
Award Notice in connection with any termination of employment.  No amounts
earned pursuant to the Plan or any Award Notice shall be deemed to be eligible
compensation in respect of any other plan of the Company or any of its
Subsidiaries.

 

10.                                 Clawback.  The Award Notice, and any stock
issued or cash paid pursuant to the Award Notice, is expressly subject to any
“clawback policy” adopted by the Board or its designee, as may be amended from
time to time, or any recoupment permitted or required by law.

 

In addition, until such time subsequent to the Grant Date that the Company
adopts a “clawback policy” that is applicable to the Optionee that expressly
supersedes this paragraph, the Options shall be forfeited, and the Optionee
shall be obligated to return to the Company any shares previously issued
pursuant to the exercise of the Options or a cash payment equal to the value of
the shares at the time such shares were sold or transferred, if the Committee
determines in good faith (a) that the Optionee has violated the terms of any
non-competition, non-solicitation, non-disclosure, or other restrictive covenant
agreement with the Company and/or one or more of its Subsidiaries or (b) that,
within three (3) years after the date the Optionee exercises an Option, the
Optionee (i) experiences a termination of employment for Cause, or the Committee
determines after employment termination that the Optionee’s employment could
have been terminated for Cause, (ii) engaged in conduct that causes material
financial or reputational harm to the Company or Subsidiaries, (iii) provided
materially inaccurate information related to publicly reported financial
statements of the Company and its Subsidiaries, (iv) improperly, or with gross
negligence, failed to identify, assess or report risks material to the Company
or its Subsidiaries that were within the scope of the Optionee’s responsibility
and of which the Optionee was aware or should have been aware based on facts
reasonably available to the Optionee, or (v) violated the Company’s Code of
Business Ethics and Conduct, is under investigation for a regulatory matter due
to gross negligence or willful misconduct in the performance of the Optionee’s
duties for the Company and its Subsidiaries, or otherwise engaged in gross
misconduct with respect to the Company and its Subsidiaries.

 

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11.                                 Compliance with Stock Ownership Guidelines. 
Except as provided in the PHH Corporation Stock Ownership and Retention
Guidelines adopted November 14, 2011, as amended (the “Guidelines”), the
Optionee may not divest shares received through the exercise of the Options
until the ownership requirements of the Guidelines have been met.

 

12.                                 Nontransferability of Options.  These
Options are nontransferable otherwise than by will or the laws of descent and
distribution and during the Optionee’s lifetime, the Options may be exercised
only by the Optionee or, during the period in which the Optionee is under a
legal disability, by the Optionee’s guardian or legal representative.  Except as
provided above, the Options may not be assigned, transferred, pledged,
hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.

 

13.                                 Withholding of Taxes.  At the time the
Options are exercised, in whole or in part, or at any time thereafter as
requested by the Company, the Optionee hereby authorizes withholding from
payroll or any other payment of any kind due to the Optionee and otherwise
agrees to make adequate provision for foreign, federal, state and local taxes
required by law to be withheld, if any, which arise in connection with the
Options.  The Company may require the Optionee to make a cash payment to cover
any withholding tax obligation as a condition of exercise of the Options or
issuance of share certificates representing Option Shares.

 

The Committee may, in its sole discretion, permit the Optionee to satisfy, in
whole or in part, any withholding tax obligation which may arise in connection
with the Options either by electing to have the Company withhold from the shares
of Stock to be issued upon exercise that number of Option Shares, or by electing
to deliver to the Company already-owned shares of Stock, in either case having a
Fair Market Value equal to the amount necessary to satisfy the applicable
statutory minimum withholding amount due as determined by the Company.

 

14.                                 Amendment.  This Agreement may be amended
from time to time by the Committee in its discretion; provided, however, that
this Agreement may not be modified in a manner that would have a materially
adverse effect on the Options or Option Shares as determined in the discretion
of the Committee, except as provided in the Plan or in a written agreement
signed by the Optionee and the Company.

 

15.                                 Captions.  The captions and section numbers
appearing in this Agreement are inserted only as a matter of convenience.  They
do not define, limit, construe or describe the scope or intent of the provisions
of this Agreement.

 

16.                                 Notices.  Any notice or communication having
to do with this Agreement must be given by personal delivery or by certified
mail, return receipt requested, (or applicable non-U.S. equivalent for notices
mailed from outside the United States) addressed, if to the Company or the
Committee, to the attention of the General Counsel of the Company at the
principal office of the Company and, if to the Optionee, to the Optionee’s last
known address contained in the personnel records of the Company.

 

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17.                                 Binding Effect.  Each and all of the
provisions of this Agreement are binding upon and inure to the benefit of the
Company and the Optionee and their respective estate, successors and assigns,
subject to any limitations on transferability under applicable law or as set
forth in the Plan.

 

18.                                 Blackout Periods.  The Optionee acknowledges
that, from time to time as determined by the Company in its sole discretion, the
Company may establish “blackout periods” during which the Options may not be
exercised.  The Company may establish a blackout period for any reason or for no
reason.

 

19.                                 Integrated Agreement.  The Award Notice,
this Agreement and the Plan constitute the entire understanding and agreement of
the Optionee and the Company with respect to the subject matter contained herein
or therein and supersedes any prior agreements, understandings, restrictions,
representations, or warranties among the Optionee and the Company with respect
to such subject matter other than those as set forth or provided for herein or
therein.  To the extent contemplated herein or therein, the provisions of the
Award Notice and the Agreement shall survive any settlement of the award and
shall remain in full force and effect.  The Optionee’s participation in the Plan
is voluntary and has not been induced by a promise of employment or continued
employment with the Company or a Subsidiary or affiliate of the Company.

 

20.                                 Governing Law.  This Agreement and the legal
relations between the parties shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without effect to the conflicts
of laws principles thereof.

 

21.                                 Authority.  The Committee shall have full
authority to interpret and construe the terms of the Plan, the Award Notice, and
this Agreement.  The determination of the Committee as to any such matter of
interpretation or construction shall be final, binding and conclusive on all
parties.

 

*         *         *         *         *         

 

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