Exhibit 10.1


    Exhibit
      10.1

    


    


    AMENDED
      AND RESTATED

    


    


    TAX
      SHARING AGREEMENT

    


    


    by
      and
      among

    


    


    CENDANT
      CORPORATION

    


    and

    


    PHH
      CORPORATION

     

     

     

     

     

     

     

    

      ______________

      [***]
        INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
        HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
        AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
        ACT
        OF 1934, AS AMENDED.

    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    



    AMENDED
      AND RESTATED TAX SHARING AGREEMENT

    


    This
      Amended and Restated Tax Sharing Agreement (this “Agreement”) is amended and
      restated as of December 21, 2005, by and among Cendant Corporation, a Delaware
      corporation (“Cendant”), PHH Corporation, a Maryland corporation (“PHH”), and
      each PHH Affiliate that executes this Agreement. Capitalized terms used herein
      and not otherwise defined shall have the meanings ascribed to such terms in
      Article VII hereof.

    


    RECITALS

    


    WHEREAS,
      Cendant and its direct and indirect domestic subsidiaries are members of an
      Affiliated Group, of which Cendant is the common parent
      corporation;

    


    WHEREAS,
      Cendant's Board of Directors determined that it was appropriate and desirable
      for Cendant to distribute all of its shares of PHH common stock to Cendant
      shareholders;

    


    WHEREAS,
      Cendant and PHH agreed to undertake a series of transactions including (i)
      as
      more fully set forth in the Steps Memo, the contribution by PHH to Cendant
      Mobility Services Corporation, a Delaware corporation ("Mobility"), of certain
      assets, and, in connection therewith, the distribution by Mobility to PHH of
      $100 million to be distributed by PHH to its creditors, followed by the
      distribution by PHH to Cendant of all of the stock of Mobility (collectively,
      the "Internal Distribution"), (ii) the distribution by Cendant to its common
      shareholders pro rata of all of the stock of PHH (the "Distribution"), and
      (iii)
      each of the other transactions set forth in the Steps Memo and each other
      transaction effected on or before the Distribution Date that is related to
      the
      transactions set forth in the Steps Memo (collectively, the "Internal
      Reorganization"); and

    


    WHEREAS,
      the Internal Distribution is intended to qualify as a reorganization and
      distribution that are tax-free to PHH, Mobility, and Cendant under sections
      368(a)(1)(D), 361(c), and 355 of the Code; the Distribution is intended to
      qualify as a distribution that is tax-free to Cendant and its shareholders
      under
      section 355 of the Code; and the steps comprising the Internal Reorganization
      are intended to be tax-free to Cendant and PHH and their respective
      affiliates.

    


    WHEREAS,
      in contemplation of the Distribution pursuant to which PHH and its direct and
      indirect domestic subsidiaries ceased to be members of the Affiliated Group
      of
      which Cendant is the common parent, Cendant and PHH desire to set forth their
      agreement on the rights and obligations of Cendant and PHH and their respective
      groups with respect to handling and allocating Taxes for periods beginning
      before and after the Distribution Date, Taxes, if any, resulting from
      transactions effectuated in connection with the Internal Distribution, the
      Distribution, the Internal Reorganization, and various other Tax
      matters.


    
      
        
        

      

      
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    WHEREAS,
      Cendant and PHH executed the Tax Sharing Agreement, dated as of January 31,
      2005, by and among Cendant, PHH and each PHH Affiliate that executed such
      agreement (the "Tax Sharing Agreement").

    


    WHEREAS,
      Cendant and PHH desire to amend and restate the Tax Sharing
      Agreement.

    


    NOW,
      THEREFORE, in consideration of the foregoing and the terms, conditions,
      covenants and provisions of this Agreement, Cendant and PHH mutually covenant
      and agree as follows:

    


    ARTICLE
      I  


     

    PREPARATION
      AND FILING OF TAX RETURNS; PAYMENT OF TAXES

     

    


    Section
      1.1   Cendant’s
      Responsibility.
      (a)
      Cendant shall have sole and exclusive responsibility for the preparation and
      timely filing of:

     

    (i)
        all
      Cendant Separate Income Tax Returns;

     

    (ii)
        all
      Cendant Consolidated and Combined Income Tax Returns; and 

     

    (iii)
        all
      Tax
      Returns required to be filed by Cendant or any Cendant Affiliate with respect
      to
      Other Taxes as determined pursuant to Section 1.3 hereof. 

     

    (b)
        Subject
      to Section 1.2(c), and Sections 2.1(b), (c), and (d), Cendant shall be liable
      for and shall timely pay, or cause to be paid, to the applicable Taxing
      Authority all Taxes required to be reported on Tax Returns for which it has
      responsibility under this Section 1.1 and shall be entitled to receive and
      retain any refunds of Taxes paid with respect thereto. 

     

    Section
      1.2   PHH’s
      Responsibility.
      (a) PHH
      shall have sole and exclusive responsibility for the preparation and timely
      filing of:

     

    (i)
        all
      PHH
      Separate Income Tax Returns;

     

    (ii)
        all
      PHH
      Consolidated and Combined Income Tax Returns; and 

     


    
      
        
        

      

      
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    (iii)
        all
      Tax
      Returns required to be filed by PHH or any PHH Affiliate with respect to Other
      Taxes as determined pursuant to Section 1.3 hereof. 

     

    (b)
        Subject
      to Section 2.1(a), (c), and (d), PHH shall be liable for and shall timely pay,
      or cause to be paid, to the applicable Taxing Authority all Taxes required
      to be
      reported on Tax Returns for which it has responsibility under this Section
      1.2
      and subject to Section 1.6, shall be entitled to receive and retain any refunds
      of Taxes paid with respect thereto. 

     

    (c)
        Notwithstanding
      Section 1.1 or any other provision of this Agreement to the contrary, PHH shall
      be liable for any Taxes attributable to transactions or actions taken by PHH
      or
      any PHH Affiliate on the Distribution Date, except for (i) any transactions
      or
      actions undertaken in the ordinary course of business consistent with past
      practices or (ii) the Distribution, to the extent PHH would not otherwise be
      liable for any such Taxes under Section 2.1(b), (c), or (d). To the extent
      required or permissible, any extraordinary item, within the meaning of Treasury
      Regulation Section 1.1502-76(b)(2)(ii)(C), of PHH or any PHH Affiliate that
      occurs or results from a transaction that takes place on the Distribution Date
      shall be treated as occurring at the beginning of the day following the
      Distribution Date. 

     

    Section
      1.3   Liability
      for Other Taxes.
      PHH
      shall and shall cause each PHH Affiliate to prepare and timely file all Tax
      Returns for Other Taxes in respect of which the legal incidence of the Other
      Tax
      is imposed on PHH or any PHH Affiliate, as the case may be, and PHH shall be
      liable for and timely pay (or cause to be paid) all such Other Taxes. Cendant
      shall and shall cause each Cendant Affiliate to prepare and timely file all
      Tax
      Returns for Other Taxes in respect of which the legal incidence of the Other
      Tax
      is imposed on Cendant or any Cendant Affiliate, as the case may be, and Cendant
      shall be liable for and timely pay (or cause to be paid) all such Other Taxes.
      Responsibility for filing any Tax Return and liability for paying any Other
      Tax
      that is legally imposed on more than one legal entity (e.g., joint and several
      liability) shall be allocated in accordance with past practices as reasonably
      determined by Cendant, or in the absence of such practices, in accordance with
      any reasonable allocation method determined by Cendant.

     

    Section
      1.4   Agent.
      PHH
      hereby irrevocably designates, and agrees to cause each PHH Affiliate to so
      designate, Cendant as its sole and exclusive agent and attorney-in-fact and
      agrees to take such action and to cause the PHH Affiliates to take such action
      (including execution of powers of attorney and other documents) as Cendant
      may
      reasonably request in connection with any matter relating to Taxes, provided,
      that
      except as otherwise provided in Section 1.6(g) and Section 5.4, this Section
      1.4
      shall not apply to Taxes described in Section 1.2(b). 

     

    Section
      1.5   Manner
      of Tax Return Preparation.
      

     


    
      
        
        

      

      
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    (a)
        Unless
      otherwise required by a Taxing Authority, the parties hereto shall prepare
      and
      file all Tax Returns and take all other actions in a manner consistent with
      this
      Agreement. All Tax Returns shall be filed on a timely basis (taking into account
      applicable extensions) by the party responsible for filing such Tax Returns
      under this Agreement.

     

    (b)
        Subject
      to Section 1.5(a), Cendant shall have the exclusive right in its reasonable
      discretion with respect to any Tax Return described in Section 1.1 to determine
      all relevant matters, including without limitation (1) the manner in which
      such
      Tax Return shall be prepared and filed, including the elections, methods of
      accounting, positions, conventions and principles of taxation to be used and
      the
      manner in which any Tax Asset or Tax related matter regarding such Tax Return
      shall be reported, provided
      that
      Cendant shall elect out of bonus depreciation under section 168(k) of the Code
      for PHH and each PHH Affiliate for the taxable year ended December 31, 2004,
      (2)
      whether any extensions may be requested, (3) the elections that will be made
      by
      Cendant, any Cendant Affiliate, PHH, or any PHH Affiliate on such Tax Return,
      (4) whether any amended Tax Return(s) shall be filed, (5) whether any claim(s)
      for refund shall be made, (6) whether any refund shall be paid by way of refund
      or credited against any liability for the related Tax, and (7) whether to retain
      outside firms to prepare or review such Tax Returns.

     

    Section
      1.6   Certain
      Tax Benefits.
      

     

    (a)
        PHH
      shall
      pay to Cendant the amount of any Tax Benefit Realized by PHH or any PHH
      Affiliate in each taxable year that is attributable to the transactions
      undertaken pursuant to the Avis Merger Agreement being characterized in a manner
      other than as reported by Cendant or any Cendant Affiliate on its originally
      filed applicable income Tax Returns. Within sixty (60) days of any Final
      Determination that may give rise to an obligation of PHH under this Section
      1.6(a) (an "Avis Final Determination"), Cendant shall notify PHH in writing
      of
      such Avis Final Determination and shall provide PHH with such information
      reasonably required by PHH for PHH and each relevant PHH Affiliate to account
      for any Tax Asset (or any increase in any Tax Asset) and to determine the Tax
      Benefit potentially available attributable to the Avis Final Determination.
      Notwithstanding the foregoing, the failure of Cendant to provide notice to
      PHH
      within the time required by the preceding sentence shall not relieve PHH of
      any
      liability and/or obligation which it may have under this Section 1.6.


     

    (b)
        Within
      sixty (60) days after PHH receives notice of any Avis Final Determination,
      PHH
      shall provide to Cendant a schedule showing, in reasonable detail, the effect
      of
      the Avis Final Determination (the "Tax Benefit Schedule") on any Tax Asset
      or
      Tax liability of PHH and the PHH Affiliates for each taxable period ending
      on or
      before the date of the notice for which PHH filed the applicable Tax Return.
      Within thirty (30) days of the finalization of the Tax Benefit Schedule, as
      described in subsection (d) below, PHH shall take or cause to be taken all
      steps
      necessary or appropriate to Realize any Tax Benefit attributable to past taxable
      periods, including the prompt filing of amended Tax Returns and/or claims for
      refund. 

     


    
      
        
        

      

      
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    (c)
        PHH
      shall
      file and shall cause each PHH Affiliate to file all current and future Tax
      Returns consistent with the Avis Final Determination and so as to Realize as
      quickly as possible any Tax Benefit potentially available to PHH and each PHH
      Affiliate, and shall provide to Cendant a Tax Benefit Schedule and a calculation
      of the Tax Benefit Realized annually, no later than 120 days prior to the due
      date, including applicable extensions, of PHH's federal Income Tax Return until
      such time as the parties in good faith agree that PHH has no remaining
      obligation for any Tax Benefit. 

     

    (d)
        Each
      time
      PHH delivers the Tax Benefit Schedule to Cendant, PHH shall also (i) deliver
      to
      Cendant schedules and work papers providing reasonable detail regarding the
      preparation of the Tax Benefit Schedule and the Tax Benefit Realized and an
      Advisory Firm Letter supporting such Tax Benefit Schedule and Tax Benefit
      Realized and (ii) allow Cendant reasonable access to the appropriate
      representatives at PHH and each PHH Affiliate and the Advisory Firm in
      connection with its review of such schedule. The Tax Benefit Schedule shall
      become final and binding on the parties unless Cendant, within thirty (30)
      calendar days after receiving such schedule, provides PHH with notice of a
      good
      faith objection to such Tax Benefit Schedule. If a Dispute arises between PHH
      and Cendant with respect to the Tax Benefit Schedule, Tax Benefit or the Tax
      Benefit Realized, such Dispute shall be resolved in accordance with the
      principles and procedures set forth in Section 6.3.

     

    (e)
        PHH
      shall
      pay Cendant the amount of Tax Benefit Realized by PHH and each PHH Affiliate
      within thirty (30) days of the date on which such Tax Benefit is Realized by
      PHH
      or such PHH Affiliate, as the case may be.

     

    (f)
        There
      shall be an adjustment to any Tax Benefit calculated under Section 1.6 hereof
      in
      the event of an Audit which results in a Final Determination that increases
      or
      decreases the amount of such Tax Benefit to PHH or any PHH Affiliate reported
      on
      any relevant Tax Return of PHH or any PHH Affiliate. PHH shall promptly inform
      Cendant of any such Audit, shall use its reasonable best efforts to sustain
      the
      Tax Benefit at issue in the Audit, and shall, at Cendant's request, allow
      Cendant to participate in the Audit. Upon receiving written notice of a Final
      Determination affecting any Tax Benefit, PHH shall redetermine the relevant
      Tax
      Benefit, taking into account the Final Determination (the “Restated Tax
      Benefit”). If the Restated Tax Benefit is greater than the relevant Tax Benefit,
      PHH shall promptly pay Cendant the difference between such amounts. If the
      Restated Tax Benefit is less than the relevant Tax Benefit, Cendant shall pay
      to
      PHH the difference between such amounts promptly after receipt of written notice
      setting forth the amount due and the computation thereof.

     

    (g)
        New
      Jersey Business Incentive Program.

     

    (i)
        Notwithstanding
      anything to the contrary set forth in this Agreement, Cendant shall have the
      exclusive right and sole discretion to control, contest and represent the
      interests of PHH and each PHH Affiliate in any filing, claim and/or proceeding
      relating or attributable to the New Jersey Business

     


    
      
        
        

      

      
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    Employment
      Incentive Program (the "BEIP") for all periods ending on or prior to the
      Distribution Date. In connection with this Section 1.6(g), PHH shall designate,
      and shall cause each PHH Affiliate to designate, Cendant (and Cendant employees
      and representatives of Cendant) as its attorney-in-fact and agrees to take
      such
      action and cause each PHH Affiliate to take such action (including execution
      of
      appropriate powers of attorney and other documents) as Cendant may reasonably
      request for all periods ending on or prior to the Distribution Date. With
      respect to a filing, claim and/or proceeding relating or attributable to the
      BEIP for a Straddle Period (as defined below), PHH shall have the right and
      discretion to control, contest and represent the interests of PHH and each
      PHH
      Affiliate, provided
      that (x)
      Cendant shall have the right to participate in any such contest or other matter
      relating to the BEIP for such Straddle Period, and PHH and each PHH Affiliate
      shall keep Cendant fully informed of all matters relating to such contest or
      other matter and (y) PHH shall use reasonable best efforts to obtain any BEIP
      Payments (as defined below) that are attributable to such Straddle Period and
      are otherwise legally obtainable by PHH and/or one or more PHH
      Affiliates.

     

    (ii)
        Notwithstanding
      anything to the contrary set forth in this Agreement, PHH shall pay to Cendant,
      no later than five calendar days after receipt by PHH and each PHH Affiliate,
      as
      the case may be, of each BEIP Payment (as defined below), an amount equal to
      (x)
      with respect to all periods ending on or before the Distribution Date, the
      Net
      BEIP Payment (as defined below) attributable to each BEIP Payment and (y) with
      respect to any period that begins on or before and ends after the Distribution
      Date (a "Straddle Period"), the Net BEIP Payment for such Straddle Period
      multiplied by a fraction the numerator of which is the number of calendar days
      in the Straddle Period ending on (and including) the Distribution Date and
      the
      denominator of which is the number of calendar days in such entire Straddle
      Period. For purposes of the Agreement, (i) "BEIP Payment" means each payment
      received by PHH and each PHH Affiliate from the State of New Jersey attributable
      to the BEIP, (ii) "Net BEIP Payment" means the excess of (x) one hundred percent
      (100%) of each BEIP Payment received by PHH and each PHH Affiliate over (y)
      the
      PHH BEIP Deductible Amount, and (iii) "PHH BEIP Deductible Amount" means, with
      respect to each BEIP Payment, the lesser of (x) 10 percent of such BEIP Payment
      and (y) [***]. PHH shall provide to Cendant promptly upon request any contract
      (and any modification or amendments thereto) between PHH and the PHH Consultant.
      

     

    Section
      1.7   Net
      Operating Losses.
      Notwithstanding any other provision of this Agreement, PHH shall elect (under
      section 172(b)(3) of the Code and, to the extent feasible, any similar provision
      of any state, local or foreign Tax law) to relinquish any right to carry back
      net operating losses to any Cendant Consolidated and Combined Income Tax
      Return.

     

    ______________

    [***]
      INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
      HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
      AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
      ACT
      OF 1934, AS AMENDED.


    
      
        
        

      

      
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    ARTICLE
      II  

     

    DISTRIBUTION
      TAXES AND INTERNAL REORGANIZATION TAXES

     

    Section
      2.1   Distribution
      Taxes and Internal Reorganization Taxes.

     

    (a)
      Cendant’s
      Liability for Distribution Taxes and Internal Reorganization
      Taxes.
      Notwithstanding any other provision of this Agreement to the contrary other
      than
      Section 2.1(c), Cendant shall be liable for one hundred percent (100%) of any
      Distribution Taxes and/or Internal Reorganization Taxes that are attributable
      to, or result from, one or more of the following:

    


    (i)
        any
      action, or failure or omission to act, by Cendant or any Cendant Affiliate
      that
      is inconsistent with any material, information, fact, or statement, or that
      constitutes a breach of any covenant or representation, pertaining to Cendant
      or
      any Cendant Affiliate in the Cendant Representation Letters;

     

    (ii)
        any
      action, or failure or omission to act, by Cendant or any Cendant Affiliate
      after
      the Distribution, including, without limitation, a cessation, transfer to
      affiliates, or disposition of its active trades or businesses or other
      businesses, or an issuance of stock, stock buyback, or payment of an
      extraordinary dividend by Cendant or any Cendant Affiliate following the
      Distribution;

     

    (iii)
        any
      acquisition of stock or other equity or assets of Cendant or any Cendant
      Affiliate by one or more other Persons occurring prior to or following the
      Distribution; or

     

    (iv)
        any
      issuance of stock by Cendant or any Cendant Affiliate, or change in ownership
      of
      stock in Cendant or any Cendant Affiliate, that causes section 355(d) or section
      355(e) of the Code to apply to the Distribution.

     

    (b)
        PHH’s
      Liability for Distribution Taxes and Internal Reorganization
      Taxes.
      Notwithstanding any other provision of this Agreement to the contrary other
      than
      Section 2.1(c), PHH shall be liable for one hundred percent (100%) of any
      Distribution Taxes and/or Internal Reorganization Taxes that are attributable
      to, or result from, one or more of the following:

     

    (i)
        any
      action, or failure or omission to act, by PHH or any PHH Affiliate that is
      inconsistent with any material, information, fact, or 

     


    
      
        
        

      

      
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    statement,
      or that constitutes a breach of any covenant or representation, pertaining
      to
      PHH in the PHH Representation Letter;

     

    (ii)
        any
      action, or failure or omission to act, by PHH or any PHH Affiliate after the
      Distribution, including without limitation, a cessation, transfer to affiliates
      or disposition of its active trades or businesses or other businesses, or an
      issuance of stock, stock buyback, or payment of an extraordinary dividend by
      PHH
      or any PHH Affiliate following the Distribution;

     

    (iii)
        any
      acquisition of stock or other equity or assets of PHH or any PHH Affiliate
      by
      one or more other Persons following the Distribution; or

     

    (iv)
        any
      issuance of stock by PHH or any PHH Affiliate, or change in ownership of stock
      in PHH or any PHH Affiliate, that causes section 355(d) or section 355(e) of
      the
      Code to apply to the Distribution.

     

    (c)
        First
      Party Responsible.
      The
      first party to act or fail to act in a manner that results in the imposition
      of
      Distribution Taxes and/or Internal Reorganization Taxes shall be liable for
      one
      hundred percent (100%) of such Distribution Taxes and/or Internal Reorganization
      Taxes pursuant to Section 2.1(a) or 2.1(b), as applicable; provided,
      that if
      such first party is subsequently able to act, and does act, in a manner that
      results in Distribution Taxes and/or Internal Reorganization Taxes not being
      imposed, then such first party shall not be liable for any Distribution Taxes
      and/or Internal Reorganization Taxes imposed as a result of any act, or failure
      or omission to act, by the other party subsequent to the first party’s action,
      or failure or omission to act.

     

    (d)
        "No
      Fault" Allocation.
      In the
      event of the imposition of Distribution Taxes or Internal Reorganization Taxes
      for which neither party is liable pursuant to Sections 2.1(a) or 2.1(b), such
      Taxes shall be borne 86.3 percent by Cendant and 13.7 percent by PHH.


     

    Section
      2.2   Continuing
      Covenants.
      

     

    (a)
        PHH
      shall
      not and shall cause the PHH Affiliates not to take any action, or fail or omit
      to take any action that would cause any of the facts, representations or
      statements set forth in the PHH Representation Letter to be untrue. Moreover,
      (x) during the two-year period following the Distribution Date, PHH will not
      cease to be engaged in the active trade or business relied upon for purposes
      of
      satisfying the requirements of Section 355(b) of the Code with respect to the
      Internal Distribution and/or the Distribution, and (y) during the applicable
      period provided in Section 355(e)(2)(B) of the Code with respect to the
      Distribution, PHH will not enter into any transaction or make or permit any
      change in equity structure (including, without limitation, stock issuances,
      pursuant to the exercise of options, option grants or otherwise, capital
      contributions, or mergers or acquisitions, but not including the Distribution)
      that could cause the Distribution or the Internal Distribution to be treated
      as
      part of a plan pursuant to which one or more Persons acquire directly or
      indirectly PHH stock representing a "50-percent or greater interest" within
      the
      meaning of Section 355(e) of the Code.

     


    
      
        
        

      

      
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    (b)
        Notwithstanding
      Section 2.2(a), PHH shall be permitted to take and shall permit the PHH
      Affiliates to take actions inconsistent with the covenants contained in such
      section if: (i) PHH obtains a ruling from the IRS in form and substance
      acceptable to Cendant to the effect that such actions will not result in the
      Distribution, the Internal Distribution or the Internal Reorganization, as
      the
      case may be, being taxable transactions, in whole or in part, or (ii) PHH
      obtains an opinion in form and substance acceptable to Cendant of nationally
      recognized tax counsel acceptable to Cendant to the effect that such actions
      will not result in the Distribution, the Internal Distribution or the Internal
      Reorganization being taxable transactions, in whole or in part. Notwithstanding
      the receipt of an IRS ruling or a tax opinion described in this Section 2.2(b),
      PHH and the PHH Affiliates shall not be relieved of any indemnification
      obligations under this Agreement. 

     

    


    ARTICLE
      III

     

    INDEMNIFICATION

     

    Section
      3.1   Generally.

     

    (a)
        Cendant
      shall indemnify PHH, each PHH Affiliate, and their respective directors,
      officers and employees, and hold them harmless from and against all Taxes and
      associated Losses, without duplication, (i) for which Cendant is liable under
      this Agreement, (ii) imposed on PHH or any PHH Affiliate under Treasury
      Regulation Section 1.1502-6 (or any corresponding provision of state, local,
      or
      foreign Tax law) as a result of PHH or any PHH Affiliate being a member of
      the
      Affiliated Group (or similar group under state, local, or foreign Tax law)
      of
      which Cendant or any Cendant Affiliate is the common parent, except to the
      extent that PHH otherwise would be liable for such Taxes under Article II of
      this Agreement, or (iii) attributable to a breach of any covenant or obligation
      of Cendant under this Agreement. 

     

    (b)
        PHH
      shall
      indemnify Cendant, each Cendant Affiliate, and their respective directors,
      officers, and employees, and hold them harmless from and against all Taxes
      and
      associated Losses, without duplication, (i) for which PHH is liable under this
      Agreement, (ii) imposed on any Cendant Affiliate under Treasury Regulation
      Section 1.1502-6 (or any corresponding provision of state, local, or foreign
      Tax
      law) as a result of any Cendant Affiliate being a member of the Affiliated
      Group
      (or similar group under state, local, or foreign Tax law) of which PHH or any
      PHH Affiliate is the common parent, except to the extent that Cendant otherwise
      would be liable for such Taxes under Article II of this Agreement, or (iii)
      attributable to a breach of any covenant or obligation of PHH under this
      Agreement.

     

    Section
      3.2   No
      Indemnification for Tax Attributes.
      Notwithstanding anything to the contrary contained in this Agreement, Cendant
      shall not indemnify PHH or any PHH Affiliate from and against, and none of
      PHH
      or any PHH Affiliate shall be entitled to indemnification pursuant to this
      Agreement, for any Taxes or Losses resulting from PHH or any 

     


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    PHH
      Affiliates not having, or having a reduced amount, of Tax attributes (including
      basis of assets, net operating loss carryovers and credit
      carryovers).

     

    


    ARTICLE
      IV

     

    PAYMENTS

     

    Section
      4.1   Payments
      Under This Agreement.
      Any
      payment required to be made pursuant to this Agreement by one party to the
      other
      shall be made according to this Section 4.1. 

     

    (a)
        In
      General.
      All
      payments shall be made within the time prescribed for payment in this Agreement,
      or if no period is prescribed, within twenty (20) days after delivery of written
      notice of payment owing together with a computation of the amounts
      due.

     

    (b)
        Treatment
      of Payments.
      Unless
      otherwise required by any Final Determination, payments made by one party to
      another party (other than payments of interest pursuant to Section 4.1(e) and
      payments of After Tax Amounts pursuant to Section 4.1(d)) pursuant to this
      Agreement shall be treated for all Tax and financial accounting purposes as
      nontaxable payments (dividend distributions or capital contributions, as the
      case may be) made immediately prior to the Distribution and, accordingly, as
      not
      includible in the taxable income of the recipient. 

     

    (c)
        Prompt
      Performance.
      All
      actions required to be taken by any party under this Agreement shall be
      performed within the time prescribed for performance in this Agreement, or
      if no
      period is prescribed, such actions shall be performed promptly.

     

    (d)
        After
      Tax Amounts.
      If,
      pursuant to a Final Determination, it is determined that the receipt or accrual
      of any payment made under this Agreement (other than payments pursuant to
      Section 1.6 or of interest pursuant to Section 4.1(e)), including any payment
      made pursuant to this Section 4.1(d), is includible in income by the receiving
      party, the party making such payment shall pay to the receiving party an
      additional amount equal to (a) the After Tax Amount with respect to such payment
      and (b) interest at the rate described in Section 4.1(e) on the amount of any
      Tax attributable to such inclusion in income from the date such Tax accrues
      through the date of payment of such After Tax Amount. A party making a demand
      for a payment pursuant to this Agreement and for a payment of an After Tax
      Amount with respect to such payment shall separately specify and compute such
      After Tax Amount. However, a party may choose not to specify an After Tax Amount
      in a demand for payment pursuant to this Agreement without thereby being deemed
      to have waived its right subsequently to demand an After Tax Amount with respect
      to such payment. 

     

    (e)
        Interest.
      Payments pursuant to this Agreement that are not made within the period
      prescribed in this Agreement (the “Payment Period”) shall bear interest for the
      period from and including the date immediately following the last date of the
      Payment Period 

     


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    through
      and including the date of payment at a
      per
      annum rate equal to the prime rate as published in The
      Wall Street Journal
      on the
      last day of such Payment Period, plus two percent (2%). Such interest shall
      be
      payable at the same time as the payment to which it relates and shall be
      calculated on
      the
      basis of a year of 365 days and the actual number of days for which
      due.

     

    


    ARTICLE
      V

     

    TAX
      PROCEEDINGS

     

    Section
      5.1   Audits.
      Subject
      to Section 5.4, the party responsible for preparing and filing a Tax Return
      pursuant to Article I (the “Filing Party”) shall have the exclusive right to
      control, contest, and represent the interests of Cendant, any Cendant Affiliate,
      PHH, and any PHH Affiliate, as applicable, in any Audit relating to such Tax
      Return and, in its reasonable discretion, to resolve, settle or agree to any
      deficiency, claim or adjustment proposed, asserted or assessed in connection
      with or as a result of any such Audit. The Filing Party’s rights shall extend to
      any matter pertaining to the management and control of an Audit, including
      execution of waivers, choice of forum, scheduling of conferences and the
      resolution of any Tax related matter regarding such Tax Return. In connection
      with this Section 5.1 with respect to any Audits relating to any Tax Returns
      with respect to Income Taxes for the jurisdictions and years set forth on
      Appendix B attached hereto, PHH shall designate and shall cause the PHH
      Affiliates to designate, Cendant (and Cendant employees and representatives
      of
      Cendant) as its attorney-in-fact and agrees to take such action and to cause
      the
      PHH Affiliates to take such action (including execution of appropriate powers
      of
      attorney and other documents) as Cendant may reasonably request. 

     

    Section
      5.2   Notice.
      Within
      ten (10) days after a party receives a written notice or other information
      from
      a Taxing Authority of the existence of a Tax issue that may require the
      indemnifying party to indemnify the receiving party under this Agreement, such
      party shall notify the indemnifying party of such issue, and thereafter shall
      promptly forward to the other party copies of notices and material
      communications with any Taxing Authority relating to such issue. The failure
      of
      one party to notify the other party of any matter relating to a particular
      Tax
      for a taxable period or to take any action specified in this Agreement shall
      not
      relieve such other party of any liability and/or obligation which it may have
      under this Agreement with respect to such Tax for such taxable period, except
      to
      the extent that such other party’s rights under this Agreement are materially
      prejudiced by such failure.

     

    Section
      5.3   Remedies.
      PHH
      shall make no claim against Cendant and shall not raise or assert any defense
      to
      PHH’s liabilities and/or obligations to Cendant under this Agreement based upon
      the resolution by Cendant of any deficiency, claim or adjustment relating to
      any
      Tax related matter pertaining to Cendant or any Cendant Affiliate.

     

    Section
      5.4   Control
      of Distribution Tax and Internal Reorganization Tax Proceedings.
      Notwithstanding any other provision of this Agreement to the contrary, Cendant
      

     


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    shall
      have the exclusive right and sole discretion to control, contest, and represent
      the interests of Cendant, any Cendant Affiliate, PHH, and any PHH Affiliate
      in
      any Audits (including, without limitation, audits of PHH Separate Income Tax
      Returns) relating to Distribution Taxes and/or Internal Reorganization Taxes
      and
      to resolve, settle or agree to any deficiency, claim or adjustment proposed,
      asserted or assessed in connection with or as a result of any such Audit,
provided
      that to
      the extent that Cendant reasonably believes that PHH may potentially have
      liability for such Distribution Taxes and/or Internal Reorganization Taxes
      pursuant to this Agreement, Cendant shall permit PHH to participate in the
      relevant Audit. Cendant’s rights shall extend to any matter pertaining to the
      management and control of such Audit, including execution of waivers, choice
      of
      forum, scheduling of conferences and the resolution of any Tax related matter
      regarding such Tax Return. In connection with this Section 5.4, PHH shall
      designate and shall cause the PHH Affiliates to designate, Cendant (and Cendant
      employees and representatives of Cendant) as its attorney-in-fact and agrees
      to
      take such action and to cause the PHH Affiliates to take such action (including
      execution of appropriate powers of attorney and other documents) as Cendant
      may
      reasonably request.

     

     

    ARTICLE
      VI

     

    MISCELLANEOUS
      PROVISIONS

     

    Section
      6.1   Effectiveness.
      This
      Agreement shall become effective on the Distribution Date.

     

    Section
      6.2   Cooperation
      and Exchange of Information.
      

     

    (a)
        Cooperation.
      PHH and
      Cendant shall each cooperate fully (and each shall cause its respective
      affiliates to cooperate fully) with all reasonable requests from the other
      party
      hereto, or from an agent, representative or advisor to such party, in connection
      with the preparation and filing of Tax Returns, claims for refund, Audits,
      and
      other matters related to Taxes covered by this Agreement. Such cooperation
      shall
      include, without limitation, at each party's own cost:

     

    (i)
        the
      retention until the expiration of the applicable statute of limitations, and
      the
      provision upon request, of Tax Returns, books, records (including information
      regarding ownership and Tax basis of property), documentation and other
      information relating to the Tax Returns, including accompanying schedules,
      related work papers, and documents relating to rulings or other determinations
      by Taxing Authorities;

     

    (ii)
        the
      execution of any document that may be necessary or reasonably helpful in
      connection with any Audit, or the filing of a Tax Return or refund claim by
      Cendant or any Cendant Affiliate or PHH or any PHH Affiliate, 

     


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    including
      certification, to the best of a party’s knowledge, of the accuracy and
      completeness of the information it has supplied; and

     

    (iii)
        the
      use
      of the party’s reasonable best efforts to obtain any documentation that may be
      necessary or reasonably helpful in connection with any of the foregoing.


     

    Each
      party shall make its employees and facilities available on a reasonable and
      mutually convenient basis in connection with the foregoing matters.
      Notwithstanding anything to the contrary contained in this Agreement or
      otherwise, neither PHH nor any PHH Affiliate shall have the right to receive
      or
      obtain any information relating to Taxes of Cendant, any Cendant Affiliate
      or
      its predecessors, in each case, other than information relating solely to PHH
      or
      a PHH Affiliate.

    


    (b)
        Retention
      of Records.
      Subject
      to Section 6.2(a), a party intending to dispose of documentation relating to
      the
      Taxes of Cendant or any Cendant Affiliate or PHH or any PHH Affiliate, including
      without limitation, Tax Returns, books, records, documentation and other
      information relating to the Tax Returns, including accompanying schedules,
      related work papers, and documents relating to rulings or other determinations
      by Taxing Authorities (after the expiration of the applicable statute of
      limitations) as permitted by this Agreement, shall provide written notice to
      the
      other party describing the documentation to be destroyed or disposed of sixty
      (60) business days prior to taking such action. The other party may arrange
      to
      take delivery of the documentation described in the notice at its expense during
      the succeeding sixty (60) day period.

     

    Section
      6.3   Dispute
      Resolution.
      Any
      dispute, controversy or claim arising out of or relating to this Agreement
      or
      the breach, termination or validity hereof (“Dispute”) shall first be negotiated
      between the appropriate senior executives of Cendant and PHH who have the
      authority to resolve the matter. Such executives shall meet to attempt in good
      faith to negotiate a resolution of the Dispute prior to pursuing other available
      remedies, within ten (10) days of receipt by Cendant or PHH, as applicable,
      of
      notice of a Dispute, which date of receipt shall be referred to herein as the
      “Dispute Resolution Commencement Date.” If the senior executives are unable to
      resolve the Dispute within thirty (30) days from the Dispute Resolution
      Commencement Date, then Cendant and PHH shall jointly retain an Independent
      Firm
      to resolve the Dispute. If Cendant and PHH cannot mutually agree upon an
      Independent Firm, then any Dispute which Cendant and PHH cannot resolve within
      thirty (30) days from the Dispute Resolution Commencement Date shall be resolved
      by a nationally recognized accounting firm selected by the American Arbitration
      Association; provided,
      that
      the American Arbitration Association shall not select any accounting firm that
      is then providing auditing services to Cendant, any Cendant Affiliate, PHH
      or
      any PHH Affiliate. The accounting firm selected by Cendant and PHH or the
      American Arbitration Association, as the case may be, shall act as an arbitrator
      to resolve all points of disagreement, and its decision shall be final and
      binding upon all parties involved. Following the decision of such firm, Cendant
      and PHH shall each take or cause to be taken any action necessary to implement
      the decision of such firm. Cendant and 

     


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    PHH
      shall
      share equally the administrative costs of the arbitration and such firm’s fees
      and expenses, and shall each bear their respective other costs and expenses
      related to the arbitration.

     

     

    Section
      6.4   Notices.
      Notices, offers, requests or other communications required or permitted to
      be
      given by any party pursuant to the terms of this Agreement shall be given in
      writing to Cendant or PHH, as applicable, to the following addresses or
      facsimile numbers: 

     

    If
      to
      Cendant, at:

    


    Cendant
      Corporation

    9
      West
      57th
      Street

    37th
      Floor

    New
      York,
      NY 10019

    Attention:
      Erick Bock

    EVP,
      Legal Corporate Secretary

    Fax
      Number: (212) 413-1922

    


    with
      a
      copy to:

    Cendant
      Corporation

    1
      Campus
      Drive

    Parsippany,
      NJ 07054

    Attention:
      Joseph Huber

    Group
      Vice President and Global Tax Director

    Fax
      Number: (973) 496-7390

    


    If
      to
      PHH, at:

    


    PHH
      Mortgage Corporation

    3000
      Leadenhall Road

    Mailstop
      LGL

    Mount
      Laurel, NJ 08054

    Attention:
      William F. Brown

    Senior
      Vice President & General Counsel

    Fax
      Number: (856) 917-0950

    


    with
      a
      copy to:

    PHH
      Corporation

    940
      Ridgebrook Road

    Sparks,
      MD 21152-9390

    Attention:
      Michael Morrison

    VP
      Corporate Tax

    Fax
      Number: (410) 771-3362


    
      
        
        

      

      
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    or
      to
      such other address or facsimile number as the party to whom notice is given
      may
      have previously furnished to the other in writing as provided herein. Any notice
      involving non-performance, termination, or renewal shall be sent by hand
      delivery, recognized overnight courier or, within the United States, may also
      be
      sent via certified mail, return receipt requested. All other notices may also
      be
      sent by facsimile, confirmed by first class mail. All notices shall be deemed
      to
      have been given when received, if hand-delivered; when receipt confirmed, if
      transmitted by facsimile or similar electronic transmission method; one (1)
      working day after it is sent, if sent by recognized overnight courier; and
      three
      (3) days after it is postmarked, if mailed by first class mail or certified
      mail, return receipt requested, with postage prepaid.

    


    Section
      6.5   Changes
      in Law.

     

    (a)
        Any
      reference to a provision of the Code, Treasury Regulations, or a law of another
      jurisdiction shall include a reference to any applicable successor provision
      or
      law.

     

    (b)
        If,
      due
      to any change in applicable law or regulations or their interpretation by any
      court of law or other governing body having jurisdiction subsequent to the
      date
      hereof, performance of any provision of this Agree-ment or any transaction
      contemplated hereby shall become impracticable or impossible, the parties hereto
      shall use their commercially reasonable efforts to find and employ an
      alternative means to achieve the same or substantially the same result as that
      contemplated by such provision.

     

    Section
      6.6   Confidentiality.
      Each of
      the parties hereto shall hold and cause its directors, officers, employees,
      advisors, and consultants to hold in strict confidence, unless compelled to
      disclose by judicial or administrative process or, in the opinion of its
      counsel, by other requirements of law, all information (other than any such
      information relating solely to the business or affairs of such party) concerning
      the other parties hereto furnished it by such other party or its representatives
      pursuant to this Agreement (except to the extent that such information can
      be
      shown to have been (1) in the public domain through no fault of such party
      or
      (2) later lawfully acquired from other sources not under a duty of
      confidentiality by the party to which it was furnished), and no party shall
      release or disclose such information to any other Person, except its directors,
      officers, employees, auditors, attorneys, financial advisors, bankers or other
      consultants who shall be advised of and agree to be bound by the provisions
      of
      this Section 6.6. Each of the parties hereto shall be deemed to have satisfied
      its obligation to hold confidential information concerning or supplied by the
      other parties if it exercises the same care as it takes to preserve
      confidentiality for its own similar information.

     

    Section
      6.7   Assignment.
      This
      Agreement shall inure to the benefit of and be binding upon the parties hereto
      and their respective legal representatives and successors, and nothing in this
      Agreement, express or implied, is intended to confer upon any other Person
      any
      rights or remedies of any nature whatsoever under or by reason of this
      Agreement. No party may assign this Agreement or any rights or obligations
      hereunder, without the prior written consent of the other parties hereto, and
      any such assignment shall be void; provided,
      that
      each of Cendant 

     


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    and
      PHH
      may assign this Agreement to a successor entity in conjunction with such party’s
      reincorporation without obtaining the consent of the other. 

     

    Section
      6.8   Affiliates.
      Cendant
      shall cause to be performed, and hereby guarantees the performance of, all
      actions, agreements and obligations set forth herein to be performed by any
      Cendant Affiliate, and PHH shall cause to be performed, and hereby guarantees
      the performance of, all actions, agreements and obligations set forth herein
      to
      be performed by any PHH Affiliate. PHH shall, upon the written request of
      Cendant, cause any PHH Affiliate formally to execute this Agreement; upon
      execution, each such PHH Affiliate shall become a party to this Agreement and
      shall be jointly and severally liable the obligations of PHH
      hereunder.

     

    Section
      6.9   Authority.
      Each of
      the parties hereto represents to the other that (a) it has the corporate power
      and authority to execute, deliver and perform this Agreement, (b) the execution,
      delivery and performance of this Agreement by it have been duly authorized
      by
      all necessary corporate or other action, (c) it has duly and validly executed
      and delivered this Agreement and (d) this Agreement is a legal, valid and
      binding obligation, enforceable against it in accordance with its terms subject
      to applicable bankruptcy, insolvency, reorganization, moratorium or other
      similar laws affecting creditors’ rights generally and general equity
      principles.

     

    Section
      6.10   Entire
      Agreement.
      This
      Agreement and Appendices A and B attached hereto, constitute the entire
      agreement between the parties with respect to the subject matter hereof and
      shall supersede all prior written and oral and all contemporaneous oral
      agreements and understandings with respect to the subject matter hereof. To
      the
      extent that this Agreement is inconsistent with any of such other agreements
      with respect to the matters discussed herein, this Agreement shall control.
      Except as set forth in Article III of the Transition Services Agreement, (i)
      this Agreement shall exclusively control matters relating to Taxes and (ii)
      neither the Transition Services Agreement nor the Separation Agreement shall
      have any application to any matter that is governed by this
      Agreement.

     

    Section
      6.11   Governing
      Law and Jurisdiction.
      This
      Agreement shall be construed in accordance with, and all Disputes hereunder
      shall be governed by, the laws of the State of New York, excluding its conflict
      of law rules.

     

    Section
      6.12   Counterparts.
      This
      Agreement, including Appendices A and B hereto, may be executed in counterparts,
      each of which shall be deemed to be an original but all of which shall
      constitute one and the same agreement. 

     

    Section
      6.13   Severability.
      If any
      term or other provision of this Agreement is determined by a non-appealable
      decision by a court, administrative agency or arbitrator to be invalid, illegal
      or incapable of being enforced by any rule of law or public policy, all other
      conditions and provisions of this Agreement shall nevertheless remain in full
      force and effect so long as the economic or legal substance of the transactions
      contemplated hereby is not affected in any manner materially adverse to any
      party. Upon such determination that any term or other 

     


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    provision
      is invalid, illegal or incapable of being enforced, the parties hereto shall
      negotiate in good faith to modify this Agreement so as to effect the original
      intent of the parties as closely as possible in an acceptable manner to the
      end
      that transactions contemplated hereby are fulfilled to the fullest extent
      possible. 

     

    Section
      6.14   Parties
      in Interest.
      This
      Agreement, including Appendices A and B hereto, shall be binding upon Cendant
      and PHH, and any PHH Affiliate that executes this Agreement, and inure solely
      to
      the benefit of PHH, any PHH Affiliate that executes this Agreement, and Cendant
      and their respective permitted assigns, and nothing in this Agreement, express
      or implied, is intended to confer upon any other Person any rights or remedies
      of any nature whatsoever under or by reason of this Agreement. 

     

    Section
      6.15   Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of any party hereto in the exercise of any right
      hereunder shall impair such right or be construed to be a waiver of, or
      acquiescence in, any breach of any representation, warranty or agreement herein,
      nor shall any failure to exercise, or any single or partial exercise, of any
      such right preclude other or further exercise thereof or of any other right.
      

     

    Section
      6.16   Amendments.
      No
      change or amendment will be made to this Agreement except by an instrument
      in
      writing signed on behalf of each of the parties to this Agreement. 

     

    Section
      6.17   Interpretation.
      When a
      reference is made in this Agreement to an Article or a Section, or to an
      Appendix, such reference shall be to an Article or Section of, or an Appendix
      to, this Agreement unless otherwise indicated. The headings contained in this
      Agreement, in any Appendix, and in the table of contents to this Agreement
      are
      for reference purposes only and shall not affect in any way the meaning or
      interpretation of this Agreement. The use of the term "including" in the
      Agreement shall always mean "including, without limitation".

     

    Section
      6.18   Tax
      Sharing Agreements.
      As of
      the Closing Date, all tax sharing agreements (including the Cendant Tax Sharing
      Agreement) between PHH and/or any PHH Affiliate, on the one hand, and Cendant
      and/or any Cendant Affiliate, on the other hand, shall be terminated as of
      the
      Distribution Date and, after the Distribution Date, none of the parties to
      any
      such tax sharing agreement shall have any further rights or obligations under
      any such agreement. Notwithstanding anything to the contrary contained in this
      Agreement, this Section 6.18 shall not operate to terminate any tax sharing
      agreement (including the Cendant Tax Sharing Agreement) between or as it relates
      to Cendant, on the one hand, and any Cendant Affiliate, on the other
      hand.

    


    ARTICLE
      VII

     

    DEFINITIONS

     

    Section
      7.1   Defined
      Terms.
      The
      following terms shall have the meanings given them in this Section
      7.1:

     

    "Advisory
      Firm"
      means a
      nationally recognized accounting or law firm that is reasonably acceptable
      to
      Cendant.

     

    "Advisory
      Firm Letter"
      means a
      letter from an Advisory Firm stating that any Tax Benefit Schedule or other
      information to be provided by PHH to Cendant pursuant to Section 1.6(d) and
      all
      supporting schedules and work papers were prepared in a manner consistent with
      the terms of this Agreement and, to the extent not expressly provided in this
      Agreement, on a reasonable basis in light of the facts and law in existence
      on
      the date of such Tax Benefit Schedule or other information delivered to Cendant.
      

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    "Affiliated
      Group"
      means
      an affiliated group of corporations within the meaning of section 1504(a)(1)
      of
      the Code that files a United States federal consolidated Income Tax
      Return.

     

    "After
      Tax Amount"
      means
      any additional amount necessary to eliminate (through a gross-up mechanism)
      the
      Tax consequences of the receipt or accrual of any payment required to be made
      under this Agreement (including payment of any additional amount required to
      gross up such additional amounts), taking into account the effect of the
      deductions available for interest paid or accrued and for Taxes such as state
      and local Income Taxes), and determined by assuming that the recipient of the
      payment pays Tax at the highest applicable marginal corporate Tax rate (or
      rates, in the case of an item that affects more than one Tax) for the relevant
      taxable period (or portion thereof).

     

    "Audit"
      includes any audit, assessment of Taxes, other examination by any Taxing
      Authority, proceeding, or appeal of such a proceeding relating to Taxes, whether
      administrative or judicial, including proceedings relating to competent
      authority determinations.

     

    "Avis
      Final Determination"
      has the
      meaning set forth in Section 1.6(a).

     

    "Avis
      Merger Agreement"
      means
      the Agreement and Plan of Merger and Reorganization by and among PHH
      Corporation, PHH Holdings Corporation, Avis Rent A Car, Inc. and Avis Fleet
      Leasing and Management Corporation, dated as of May 22, 1999. 

     

    "Cendant
      Affiliate"
      means
      any corporation or other entity directly or indirectly Controlled by Cendant
      immediately after the Distribution. For the avoidance of doubt, "Cendant
      Affiliate"
      shall
      exclude PHH and each PHH Affiliate. 

     

    "Cendant
      Consolidated and Combined Income Tax Returns"
      means
      each Tax Return required to be filed for Income Taxes of the federal Affiliated
      Group filing a consolidated Income Tax Return and each state, local, or foreign
      affiliated, consolidated, combined, unitary, or similar group, in each case,
      of
      which Cendant or any Cendant Affiliate is the common parent.

     


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    


     

    "Cendant
      Representation Letters"
      means
      the Tax Certificate from Cendant to Skadden dated January 31, 2005, and the
      Business Purpose Letter from Cendant to Skadden dated January 31, 2005, in
      which
      certain representations, warranties and covenants are made on behalf of Cendant
      in connection with the issuance of the Tax Opinion.

     

    "Cendant
      Separate Income Tax Return"
      means
      (i) each Tax Return with respect to Income Taxes required to be filed by Cendant
      or any Cendant Affiliate that is not a Cendant Consolidated or Combined Return
      and (ii) each Tax Return with respect to Income Taxes for the jurisdictions
      and
      years set forth on Appendix B attached hereto.

     

    "Cendant
      Tax Sharing Agreement"
      means
      the Tax sharing agreement effective as of the first day of the consolidated
      return year beginning January 1, 2003 by and between Cendant and its
      subsidiaries.

     

    "Code"
      means
      the Internal Revenue Code of 1986, as amended, and any successor
      thereto.

     

    "Control"
      means
      the ownership of stock, directly or indirectly, possessing at least 50 percent
      of the total combined voting power of all classes of stock entitled to vote.
      

     

    "Dispute"
      has the
      meaning set forth in Section 6.3.

     

    "Dispute
      Resolution Commencement Date"
      has the
      meaning set forth in Section 6.3.

     

    "Distribution"
      has the
      meaning set forth in the recitals to this Agreement.

     

    "Distribution
      Date"
      has the
      meaning set forth in the Separation Agreement between Cendant and PHH dated
      as
      of January 31, 2005.

     

    "Distribution
      Taxes"
      means
      the product of (x) the aggregate amount of any gain or income recognized by
      Cendant, each Cendant Affiliate, PHH and each PHH Affiliate resulting from
      or
      arising in connection with the failure of the Internal Distribution to be wholly
      tax-free under sections 355, 361(c), and/or 368(a)(1)(D) of the Code (or any
      other applicable section of the Code), or the Distribution to be wholly tax-free
      under section 355 of the Code (or any other applicable sections of the Code),
      including, without limitation, any gain or income resulting from the application
      of section 355(d) or section 355(e) of the Code to the Distribution or the
      Internal Distribution, or corresponding provisions of the laws of any other
      jurisdiction and (y) the highest applicable marginal aggregate corporate Income
      Tax rate (for federal, state, local and foreign purposes) for the relevant
      taxable period (or portion thereof). Notwithstanding the forgoing, Distribution
      Taxes shall not include income or gain attributable to (i) intercompany items
      with respect to (A) the December 31, 2002 transfer of Speedy Title and Appraisal
      Review Services Corporation ("STARS") by PHH Holdings to Cendant Settlement
      Services Group, Inc. ("CSSG") or (B) the transfer of certain domain names from
      Cendant Mortgage Corporation to one or more Cendant Affiliates and/or (ii)
      any
      excess loss account with respect to the stock of PHH Corner 

     


    
      
        
        

      

      
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    Leasing,
      Inc., PHH Market Leasing, Inc., PHH Milford Leasing, Inc., and PHH St. Paul
      Leasing, Inc. For purposes of this definition, "intercompany items" and "excess
      loss accounts" shall be, in each case, taken into account pursuant to the
      Treasury Regulations promulgated pursuant to section 1502 of the Code.


     

    "Filing
      Party"
      has the
      meaning set forth in Section 5.1.

     

    "Final
      Determination"
      means
      the final resolution of liability for any Tax for any taxable period, by or
      as a
      result of: (i) a final and unappealable decision, judgment, decree or other
      order by any court of competent jurisdiction; (ii) a final settlement with
      the
      IRS, a closing agreement or accepted offer in compromise under Code sections
      7121 or 7122, or a comparable agreement under the laws of other jurisdictions,
      which resolves the entire Tax liability for any taxable period; (iii) any
      allowance of a refund or credit in respect of an overpayment of Tax, but only
      after the expiration of all periods during which such refund may be recovered
      by
      the jurisdiction imposing the Tax; or (iv) any other final disposition,
      including by reason of the expiration of the applicable statute of
      limitations.

     

    "Income
      Tax"
      means
      (i) any Tax determined by reference to income, net worth, gross receipts or
      capital, or any such Taxes imposed in lieu of such Tax and (ii) any franchise
      Tax. 

     

    "Independent
      Firm"
      means a
      nationally recognized accounting firm acceptable to Cendant and PHH.


     

    "Internal
      Distribution"
      has the
      meaning set forth in the recitals to the Agreement.

     

    "Internal
      Reorganization"
      has the
      meaning set forth in the recitals to the Agreement. 

     

    "Internal
      Reorganization Taxes"
      means
      the product of (x) the aggregate amount of any gain or income recognized by
      Cendant, each Cendant Affiliate, PHH and each PHH Affiliate resulting from
      or
      arising in connection with the failure of any of the transactions set forth
      in
      the Steps Memo, or any transactions related thereto, to be wholly tax-free
      and
      (y) the highest applicable marginal aggregate corporate Income Tax rate (for
      federal, state, local and foreign purposes) for the relevant taxable period
      (or
      portion thereof). Notwithstanding the forgoing, Internal Reorganization Taxes
      shall not include (i) Distribution Taxes, (ii) income or gain attributable
      to
      the sale, pursuant to the Steps Memo, of PHH stock by Cendant and/or the Cendant
      Rabbi Trust (as defined in the Steps Memo), and (iii) income or gain
      attributable to (A) intercompany items with respect to (x) the December 31,
      2002
      transfer of STARS by PHH Holdings to CSSG and (y) the transfer of certain domain
      names from Cendant Mortgage Corporation to one or more Cendant Affiliates and/or
      (B) any excess loss account with respect to the stock of PHH Corner Leasing,
      Inc., PHH Market Leasing, Inc., PHH Milford Leasing, Inc., and PHH St. Paul
      Leasing, Inc. For purposes of this definition, "intercompany items" and "excess
      loss accounts" shall be, in each case, taken into account pursuant to the
      Treasury Regulations promulgated pursuant to section 1502 of the Code.


     


    
      
        
        

      

      
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    "IRS"
      means
      the United States Internal Revenue Service or any successor thereto, including,
      but not limited to its agents, representatives, and attorneys.

     

    "Losses"
      means
      any loss, cost, damage or expense, including reasonable attorneys’ fees and
      costs attributable to the foregoing. 

     

    "Mobility"
      has the
      meaning set forth in the recitals.

     

    "Other
      Taxes"
      means
      any Taxes other than Income Taxes.

     

    "Payment
      Period"
      has the
      meaning set forth in Section 4.1(e).

     

    "Person"
      means
      an individual, a partnership, a corporation, a limited liability company, an
      association, a joint stock company, a trust, a joint venture, an unincorporated
      organization or a governmental entity or any department, agency or political
      subdivision thereof.

     

    "PHH
      Affiliate"
      means
      any corporation or other entity directly or indirectly Controlled by PHH
      immediately after the Distribution; provided,
      however,
      that
      PHH Affiliate shall not include PHH Home Loans LLC and provided,
      further
      that PHH
      Affiliate shall also include AFL, PHH Holdings, AFL Management, VMS Holdings,
      Inc. PHH Financial Services, Inc., PHH Continental Leasing, Inc., PHH Auto
      Finance Corporation, Speedy Title & Appraisal Review Services Corporation,
      and the successor of each of the foregoing.

     

    "PHH
      Consolidated and Combined Income Tax Returns"
      means
      each Tax Return required to be filed for Income Taxes of any federal Affiliated
      Group filing a consolidated Income Tax Return and each state, local, or foreign
      affiliated, consolidated, combined, unitary, or similar group, in each case,
      of
      which PHH or any PHH Affiliate is the common parent.

     

    "PHH
      Representation Letter"
      means
      the Tax Certificate from PHH to Skadden dated January 31, 2005, in which certain
      representations, warranties and covenants are made on behalf of PHH in
      connection with the issuance of the Tax Opinion.

     

    "PHH
      Separate Income Tax Return"
      means
      each Tax Return with respect to Income Taxes required to be filed by PHH or
      any
      PHH Affiliate that is not a PHH Consolidated or Combined Return, provided
      that a
      PHH Separate Income Tax Return shall not include any Tax Returns with respect
      to
      Income Taxes for the jurisdictions and years set forth on Appendix B attached
      hereto. 

     

    "Realized"
      A Tax
      Benefit or other benefit shall be deemed to have been Realized from a Tax Asset
      in a taxable period only if and to the extent that the Tax liability of the
      taxpayer (or of the Affiliated Group or any other state, local, foreign or
      similar group of which it is a member) for such period, after taking into
      account the effect of the Tax Asset on the Tax liability of such taxpayer in
      the
      current period and all prior periods, is less than it would have been if such
      Tax liability were determined without regard to such Tax Asset. For purposes
      of
      this definition and 

     


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    Section
      1.6, any carryback of a net operating loss or other tax attribute by PHH or
      any
      PHH Affiliate to a taxable period shall be disregarded. For purposes of this
      Agreement, a Tax Benefit shall be deemed to have been "Realized"
      (i) at
      the time of the filing of a Tax Return (including any amended Tax Return or
      any
      Tax Return relating to estimated Taxes) on which a loss, deduction or credit
      or
      increase in basis is applied to reduce the amount of Taxes which would otherwise
      be payable and (ii) at the time of the filing of a claim or form for the refund
      of a Tax.

     

    "Restated
      Tax Benefit"
      has the
      meaning set forth in Section 1.6(f).

     

    "Separation
      Agreement"
      means
      the Separation Agreement between Cendant and PHH dated as of January 31,
      2005.

     

    "Skadden"
      means
      Skadden, Arps, Slate, Meagher & Flom LLP.

     

    "Steps
      Memo"
      means
      the memorandum attached hereto as Appendix A. Fleet Newco LLC, as defined in
      Step 19 of the Steps Memo, shall mean PHH Vehicle Management Services Group
      LLC,
      a Delaware limited liability company.

     

    "Tax
      and Taxes"
      include
      all taxes, charges, fees, duties, levies, imposts, rates or other assessments
      imposed by any federal, state, local or foreign Taxing Authority, including,
      but
      not limited to, income, gross receipts, excise, property, sales, use, license,
      capital stock, transfer, franchise, payroll, withholding, social security,
      value
      added and other taxes, and any interest, penalties or additions attributable
      thereto.

     

    "Tax
      Asset"
      means
      any loss, deduction (including any deduction attributable to depreciation or
      amortization), credit, Tax basis, or other Tax attribute. 

     

    "Tax
      Benefit"
      means
      any reduction in the Tax liability of a taxpayer (or of the Affiliated Group
      or
      any other state, local, foreign or similar group of which it is a member) for
      any taxable period. For purposes of this Agreement, Tax Benefit shall include,
      without limitation, the reduction of any Tax liability of a taxpayer resulting
      from any deductions from the amortization or depreciation of property, or
      reduction in income or gain from the sale of property or increase in any loss
      from the sale of property to the extent such loss reduces the Tax liability
      of
      the taxpayer in such taxable year. 

     

    "Tax
      Benefit Schedule"
      has the
      meaning set forth in Section 1.6(b).

     

    "Tax
      Opinion"
      means
      the opinions issued to Cendant by Skadden in connection with the Internal
      Distribution, the Distribution and the Internal Reorganization.

     

    "Tax
      Return"
      means
      any return, report, certificate, form or similar statement or document
      (including any related or supporting information or schedule attached thereto
      and any information return, amended tax return, claim for refund or declaration
      of estimated tax) required to be supplied to, or filed with, a Taxing Authority
      in connection with the determination, 

     


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    assessment
      or collection of any Tax or the administration of any laws, regulations or
      administrative requirements relating to any Tax.

     

    "Taxing
      Authority"
      means
      any governmental authority or any subdivision, agency, commission or authority
      thereof or any quasi-governmental or private body having jurisdiction over
      the
      assessment, determination, collection or imposition of any Tax (including the
      IRS).

     

    "Transition
      Services Agreement"
      means
      the Transition Services Agreement between Cendant and PHH dated as of January
      31, 2005.

     

    "Treasury
      Regulations"
      means
      the final and temporary (but not proposed) income tax regulations promulgated
      under the Code, as such regulations may be amended from time to time (including
      corresponding provisions of succeeding regulations).

     

    


    


    


    


    [SIGNATURE
      PAGE FOLLOWS]


    
      
        
        

      

      
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    WHEREFORE,
      the parties have signed this Agreement effective as of the date first set forth
      above.

    


    


    CENDANT
      CORPORATION

    


    


    /s/
      Joseph J. Huber   

    Name: Joseph
      J.
      Huber 

      
      Title:  Group
      Vice President and Global Tax Director

    


    


    PHH
      CORPORATION

    


    


    /s/
      Terence W. Edwards  

    Name: Terence
      W. Edwards

    Title: President
      & Chief Executive Officer

     

     

     

    24