Document:

Exhibit 10.9

 

PHH CORPORATION

EQUITY COMPENSATION PROGRAM FOR NON-EMPLOYEE DIRECTORS

(Under the PHH Corporation 2014 Equity and Incentive Plan)

 

ARTICLE 1

INTRODUCTION

 

1.1                            Purpose. The purpose of this PHH Corporation Equity Compensation Program for Non-Employee Directors, as amended from time to time (this “Program”), is to provide Non-Employee Directors of PHH Corporation (the “Company”) with the opportunity to receive a portion of their of their fees, stipends and other payments as determined by the Committee or the Board of Directors, in the form of equity of the Company and also to provide an opportunity for Non-Employee Directors to defer payment of the equity portion of such equity compensation.

 

1.2                            Description. This Program is an Award Program under Section 3.4 of the PHH Corporation 2014 Equity and Incentive Plan (the “EIP”) and is subject to the terms of the EIP. The terms of this Program shall be effective for any awards made with respect to Director Fees paid for services performed on or after January 1, 2015 (the “Effective Date”).

 

ARTICLE 2

DEFINITIONS

 

As used in this Program, capitalized terms defined in the EIP shall have the meaning ascribed to them in the EIP, except as otherwise provided herein, and the following terms shall have the following meanings:

 

“Administrator” means the individual or body designated by the Company to provide for the administration of this Program.

 

“Annual Meeting” means the regular annual meeting of the stockholders at which Directors are elected in a given year.

 

“Committee Stipends” means stipends paid to the Non-Employee Director for service on a committee of the Board of Directors, including service as the chair of a committee of the Board of Directors.

 

“Director” means a member of the Board of Directors of the Company.

 

“Director Fees” means the amount of compensation paid by the Company to a Non-Employee Director for his or her services as a Director, including annual retainer fees as well as such other fees, stipends and other payments, but excluding Committee Stipends. “Director Fees” shall also not include any reimbursement by the Company of expenses incurred by a Non-Employee Director incidental to attendance at a Board of Directors’ meeting or a Board of Directors’ committee meeting or of any other expense incurred on behalf of the Company.

 

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“Disability” shall have the meaning provided for in Section 22(e)(3) of the Code or any successor statute thereto. In the event that any benefit under this Program is treated as nonqualified deferred compensation subject to the provisions of Section 409A of the Code, a payment event by reason of a Disability shall, if necessary to comply with Section 409A of the Code, occur with respect to such award only if such Disability also qualifies the Participant as disabled within the meaning of Section 409A(a)(2)(C) of the Code.

 

“EIP” shall have the meaning ascribed to it in Section 1.2.

 

“Equity Compensation Fees” means an amount equal to the portion of Director Fees designated by the Board of Directors by no later than January 1 prior to the Annual Meeting that is expected to be paid over the four (4) full calendar quarters following the Annual Meeting, determined as of the date of the Annual Meeting (or such shorter period provided in Section 5.4 or 6.2(b)). Until later determined by the Board of Directors, the portion of Director Fees twenty-seven forty-fourths (27/44ths) of the Director Fees paid to each Director.

 

“Fee Payment Date” shall have the meaning ascribed to it in Section 5.4.

 

“Non-Employee Director” means any Director of the Company who is not also employed by the Company or any of its Subsidiaries.

 

“Participant” means a “Participant” as defined in the EIP who, as a Non-Employee Director of the Company, receives Equity Compensation Fees.

 

“Program” shall have the meaning ascribed to it in Section 1.1.

 

“Restricted Stock” means Stock granted to a Participant under Section 3.4 of the EIP and Article 5 of this Program that is subject to vesting and forfeiture restrictions upon the date of grant in accordance with the terms of this Program.

 

“Restricted Stock Unit” means a right granted to a Participant under Section 3.4 of the EIP and Article 5 of this Program to receive Stock following the date of grant in accordance with the terms of this Program.

 

“Separation from Service” means for purposes of this Program, termination of a Director’s service as a member of the Board of Directors that constitutes a “separation from service” under Section 409A of the Code and the regulations promulgated thereunder. Unless otherwise provided in Section 409A of the Code and the regulations promulgated thereunder, continued service as an employee of the Company or an Affiliate shall not affect whether a Director has incurred a Separation from Service under this Program.

 

“Stock” shall have the meaning ascribed to it in the EIP.

 

“Vested Stock” means Stock granted to a Participant under Section 3.4 of the EIP and Article 5 of this Program that is fully vested and non-forfeitable upon the date of grant in accordance with the terms of this Program.

 

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ARTICLE 3

ADMINISTRATION

 

The administration and operation of this Program shall be supervised by the Committee with respect to all matters. The Committee shall interpret and construe any and all provisions of this Program and any determination made by the Committee under this Program shall be final and conclusive. Neither the Board of Directors nor the Committee, nor any member of the Board of Directors, nor any employee of the Company or its Affiliates shall be liable for any act, omission, interpretation, construction or determination made in connection with this Program (other than acts of willful misconduct) and the members of the Board of Directors and the Committee and the employees of the Company and its Affiliates shall be entitled to indemnification and reimbursement by the Company to the maximum extent permitted at law in respect of any claim, loss, damage or expense (including counsels’ fees) arising from their acts, omissions and conduct in their official capacity with respect to this Program. If the terms of this Program conflict with the terms of the EIP in a manner that would make compliance with the terms of both this Program and the EIP impossible, the terms of the EIP shall control.

 

ARTICLE 4

PARTICIPATION

 

Vested Stock, Restricted Stock or Restricted Stock Units, as applicable, will be granted to all Non-Employee Directors of the Company in accordance with Article 5. Once a person becomes a Participant under this Program, the Participant shall remain a Participant until all Restricted Stock or Restricted Stock Units, as applicable, are settled pursuant to Article 5 of this Program.

 

ARTICLE 5

AWARDS

 

5.1                            General.

 

(a)                                                                               Unless the Committee or the Board of Directors determines otherwise on a prospective basis, the Company shall issue Restricted Stock or Restricted Stock Units payable in Stock, as applicable, for the purpose of fulfilling the Company’s obligation to compensate each Non-Employee Director, in part, in the form of equity of the Company.

 

(b)                                                                              Restricted Stock or Restricted Stock Units granted under this Article 5 need not be evidenced by an Award Agreement unless the Committee determines that such an Award Agreement is desirable for the furtherance of the purposes of this Program.

 

(c)                                                                               For purposes of Restricted Stock Units granted under this Program, the Company shall keep a separate book account (as subaccounts) in the name of each Non-Employee Director (the “Deferred Fees Account”) as necessary for the proper administration of the Program. Restricted Stock Units awarded pursuant to this Article 5 will have dividend equivalent rights to be credited which shall vest at the same time as the underling Restricted Stock Units to which the dividend equivalent rights relate. Dividend equivalent rights on unvested Restricted Stock Units will be paid when the underlying Restricted Stock Units vest. Dividend equivalent rights on vested Restricted Stock Units will be paid as and when they are paid to

 

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shareholders generally, provided the Director is still on the Board of Directors on the date the dividend is paid. Dividend equivalent rights shall be payable in cash unless the Committee or the Board of Directors determines that they should be paid in the same kind of property or rights as shareholders generally receive.

 

5.2                            Issuance of Stock or Restricted Stock and Crediting of Restricted Stock Units. The number of shares of Restricted Stock to be issued to each Non-Employee Director and the number of Restricted Stock Units to be credited to each Non-Employee Director’s Deferred Fees Account as of the date of the Annual Meeting shall be calculated by dividing: (1) the amount of Equity Compensation Fees payable to such Non-Employee Director; by (2) the Fair Market Value of a share of Stock on the date of the Annual Meeting. In the event the foregoing calculation would result in a grant of a fractional number of shares of Restricted Stock or Restricted Stock Units, as applicable, the number of shares of Restricted Stock or Restricted Stock Units to be granted to the Non-Employee Director shall be rounded down to the nearest whole number of shares of Vested Stock, Restricted Stock or Restricted Stock Units and the fractional amount shall be paid to the Non-Employee Director in cash as part of the Director’s Fees.

 

5.3                            Grant and Vesting of Director Equity Compensation Fees. Subject to the transition rules of Section 5.4, the amount of Equity Compensation Fees payable to each Non-Employee Director shall be paid, at the election of each such Non-Employee Director under Article 6, in either shares of Restricted Stock or Restricted Stock Units. Such shares of Restricted Stock or Restricted Stock Units, as applicable, shall be issued to such Non-Employee Director or credited to such Non-Employee Director’s Deferred Fees Account, as applicable, on the date of the Annual Meeting (the “Grant Date”). Subject to such Non-Employee Director’s continuous service as a member of the Board of Directors (“Continuous Service”), such shares of Restricted Stock or Restricted Stock Units, as applicable, shall vest and become non-forfeitable in one-quarter increments at each of the next four (4) full calendar quarters following the Grant Date; provided however, that the last one quarter increment will become vested on the date immediately prior to the Annual Meeting next following the Grant Date; provided further that Restricted Stock or Restricted Stock Units, will become fully vested and nonforfeitable upon the earlier of (i) the date that such Non-Employee Director’s Continuous Service terminates due to death or Disability; or (ii) the date of the Non-Employee Director’s Separation from Service following a Change in Control (other than due to a removal from the Board of Directors consistent with the Corporation’s Charter, as may be amended from time to time). Any shares of Restricted Stock or Restricted Stock Units that have not vested as of the date that such Non-Employee Director’s Continuous Service terminates shall be forfeited. If payment in the form of Restricted Stock Units is elected, such Restricted Stock Units shall become payable in accordance with the terms of this Program and the Non-Employee Director’s deferral election under Article 6. No acceleration of such payment shall be permitted, except to the extent the Committee determines that such acceleration is permitted under Section 409A of the Code.

 

5.4                            2015 Transition Period. The amount of Equity Compensation Fees payable to each Non-Employee Director for service attributable to the first (1st) and second (2nd) calendar quarters of 2015 shall be paid, at the election of each such Non-Employee Director under Article 6, in either shares of Vested Stock or Restricted Stock Units. Such shares of Vested Stock or Restricted Stock Units, as applicable, shall be issued to such Non-Employee Director or credited to such Non-Employee Director’s Deferred Fees Account, as applicable, on the applicable date the Company otherwise pays fees for a given calendar quarter (each a “Fee Payment Date”) and shall be immediately vested and non-forfeitable as of such date. If payment in the form of Restricted Stock Units is elected, such Restricted Stock Units shall become payable in accordance with the terms of

 

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this Program and the Non-Employee Director’s deferral election under Article 6, provided, however that an irrevocable election to receive such Equity Compensation Fees in the form of Restricted Stock Units must be filed with the Secretary of the Company prior to January 1, 2015. No acceleration of such payment shall be permitted, except to the extent the Committee determines that such acceleration is permitted under Section 409A of the Code.

 

ARTICLE 6

DEFERRAL OF DIRECTOR FEES

 

6.1                            Participation for Deferral of Director Fees.

 

(a)                                                                               Each Non-Employee Director seeking to defer the equity portion of their Director Fees under Section 5.4 or Section 5.5 must do so by electing to receive payment in the form of Restricted Stock Units in accordance with this Article 6. Failure to timely make such an election will result in payment of the applicable Director Fees in the form of shares of Vested Stock or Restricted Stock, as applicable. To defer Director Fees beginning with the calendar quarter following an Annual Meeting, a Non-Employee Director must file a deferral election with the Secretary of the Company prior to January 1 preceding the date of the Annual Meeting

 

(b)                                                                              Notwithstanding subsection (a), a newly elected or appointed Non-Employee Director may make an election to defer Director Fees into Restricted Stock Units by filing an election with the Administrator no later than thirty (30) days following the date of the Non-Employee Director’s election or appointment to the Board of Directors (provided that the Non-Employee Director has not been eligible to participate in this Program or any plan that would be aggregated with this Program under Code Section 409A (other than the accrual of earnings) at any time during the twenty-four (24)-month period ending on the date the new Non-Employee Director becomes eligible to participate in this Program). The deferral election will be effective with respect to the same portion of the Director Fees specified for Non-Employee Directors who are not newly elected or appointed (the new Non-Employee Director’s “Equity Compensation Fees”), but will only apply to Director Fees earned for services beginning with the calendar quarter next following when the election is filed with the Administrator until the end of the calendar quarter in which the next Annual Meeting occurs (the “Fee Deferral Period”). If the new Non-Employee Director does not make an election described in this subsection (b), the Director’s Equity Compensation Fees will instead be paid in Restricted Stock. The number of shares of Restricted Stock granted or Restricted Stock Units to be credited to the newly appointed or elected Non-Employee Director’s Deferred Fees Account as of the first trading day of the first calendar quarter following the date of the Non-Employee Director’s appointment or election (that Non-Employee Directors “Grant Date”), as applicable, shall be calculated by dividing: (1) the amount of Equity Compensation Fees payable to such Non-Employee Director; by (2) the Fair Market Value of a share of Stock on the Grant Date. Subject to accelerated vesting on the events described in Section 5.3(i) or (ii), the Restricted Stock or Restricted Stock Units, as applicable, will vest ratably over the Fee Deferral Period based on the number of calendar quarters in the Fee Deferral Period on the last date of each such calendar quarter, provided however, that the last one

 

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quarter increment will become vested on the date immediately prior to the Annual Meeting next following the Grant Date.

 

6.2                            Deferral Election.

 

A Non-Employee Director who elects to participate in the deferral of Director Fees under this Program shall file a deferral election with the Administrator on a form provided by the Administrator.

 

(a)                                                                             Restricted Stock Units credited to the Non-Employee Director’s Deferred Fees Account (or portion thereof) will be paid in shares of Stock on a dated elected by the Director which may be no earlier than the first anniversary of the Grant Date (or Fee Payment Date, in the case of awards granted pursuant to Section 5.4); provided however, that payments shall be made not later than the earlier of the Director’s Separation from Service or death. If a Non-Employee Director does not make an election, the Non-Employee Director will be deemed to have elected payment on the earlier of the Director’s Separation from Service or death. To the extent that the Committee reasonably determines that earlier payment would result in a violation of federal securities laws, payment shall be made no earlier than six (6) months after the applicable date on which Restricted Stock Units were credited to such Non-Employee Director’s Deferred Fees Account (except in the case of payments made following the Non-Employee Director’s death, Disability or Separation from Service);

 

(b)                                                                            The deferral election will be effective only with respect to Restricted Stock Units to which it relates or will apply with respect to Restricted Stock Units granted for all subsequent Annual Meetings until revoked or modified by the Non-Employee Director, as determined by the Administrator, it being intended that a Non-Employee Director shall have only one election in effect with respect to Restricted Stock Units granted to a the Director at a given Annual Meeting. The Non-Employee Director shall notify the Administrator in writing of any such revocation or modification of a deferral election or permitted new election with respect to the time of payment, which elections shall apply solely to amounts deferred with respect to Grant Dates occurring in the calendar year following the calendar year in which the revocation, modification or new payment election is made.

 

6.3                            Time of Payment for Deferred Fees Account. Payment of a Non-Employee Director’s Deferred Fees Account shall be made in shares of Stock as soon as practical but not later than (30) days after the date payment is due in accordance with Section 6.2, except that, if the applicable payment date occurs within the six (6)-month period beginning on the applicable date on which Restricted Stock Units were credited to such Non-Employee Director’s Deferred Fees Account and to the extent the Committee reasonably determines that earlier payment would result in a violation of federal securities laws, then payment shall be made on the last day of the month in which such six (6)-month period expires. Notwithstanding the previous sentence, payments shall be made following the Non-Employee Director’s death, Disability or the date the Non-Employee Director Separates from Service, without regard to whether such six (6)-month period has expired. A Non-Employee Director shall continue to be credited with dividend equivalents, as applicable, during any such delay in payment.

 

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Notwithstanding any other provision of this Program to the contrary:

 

(a)                                                                             No payment shall be made from this Program that would constitute an impermissible acceleration of payment as defined in Section 409A(a)(3) of the Code and regulations promulgated thereunder; and

 

(b)                                                                            To the extent that Section 409A(a)(2)(B) of the Code, which applies to certain “specified employees,” is applicable to payments to Non-Employee Directors under this Program, no payment shall be made by reason of a Separation from Service before the date which is six (6) months and one day following the Non-Employee Director’s Separation from Service or the Non-Employee Director’s death, if earlier. Any payments which would otherwise have been payable to a Non-Employee Director during the period of delay shall be made in a lump sum following the end of such delay. A Non-Employee Director shall continue to be credited with dividend equivalents, as applicable, during any such delay in payment.

 

6.4                            Effect of Death of Participant. Upon the death of a participating Non-Employee Director, all amounts, if any, remaining in his or her Deferred Fees Account shall be paid in a single payment to the beneficiary designated by the Non-Employee Director or, if no beneficiary is designated, to the Non-Employee Director’s estate, as soon as practicable following the Director’s death. If the designated beneficiary does not survive the Non-Employee Director or dies before receiving payment in full of the Non-Employee Director’s Deferred Fees Account, payment shall be made to the estate of the last to die of the Non-Employee Director or the designated beneficiary, as soon as practicable following the Director’s death. A Non-Employee Director may designate his or her beneficiary, and change his or her designation from time to time, by completing the form designated by the Administrator. No change in a beneficiary designation will be effective until received by the Administrator.

 

ARTICLE 7

GENERAL PROVISIONS

 

7.1                            Amendment and Termination. The Committee may at any time amend, suspend, discontinue or terminate this Program; provided, however, that no such amendment, suspension, discontinuance or termination shall materially and adversely affect the rights of any Participant with respect to a share of Vested Stock or Restricted Stock or a Restricted Stock Unit that has been granted prior to the amendment, suspension, discontinuance or termination and provided further that no amendment or termination shall be made which would violate Section 6.3(a) above. All determinations concerning the interpretation and application of this Section 7.1 shall be made by the Committee.

 

7.2                            Nontransferability. Stock, Restricted Stock or Restricted Stock Units shall not be transferable by a Participant or any permitted transferee except by will or the laws of descent and distribution.

 

7.3                            Miscellaneous.

 

(a)                                                                               No Right of Continued Service. Nothing in this Program shall be construed as conferring upon any Participant any right to continue in the service of the Company or any of its Affiliates.

 

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(b)                                                                              No Limitation on Corporate Actions. Nothing contained in this Program shall be construed to prevent the Company or any Affiliate from taking any corporate action which is deemed by it to be appropriate or in its best interest, whether or not such action would have an adverse effect on this Program or any awards made under this Program. No employee, Participant or other person shall have any claim against the Company or any of its Affiliates as a result of any such action.

 

(c)                                                                               Nonalienation of Benefits. Except as expressly provided herein, neither a Participant nor his or her heirs, executors, or administrators shall have the power or right to transfer, hypothecate, alienate, assign, or otherwise encumber the Participant’s interest under this Program. The Company’s obligations under this Program are not assignable or transferable except to a corporation which acquires all or substantially all of the assets of the Company or any corporation into which the Company may be merged or consolidated.

 

(d)                                                                             Severability. If any provision of this Program is determined by a court of competent jurisdiction to be unenforceable, the remainder of this Program shall continue in full force and effect without regard to such unenforceable provision and shall be applied as though the unenforceable provision were not contained in this Program.

 

(e)                                                                               Governing Law. This Program shall be construed in accordance with and governed by the laws of the State of Maryland, without reference to the principles of conflict of laws.

 

(f)                                                                                Headings. Headings are inserted in this Program for convenience of reference only and are to be ignored in a construction of the provisions of this Program.

 

8Exhibit 10.11

 

RESTRICTED STOCK UNIT AWARD

PURSUANT TO THE PHH CORPORATION

2014 EQUITY AND INCENTIVE PLAN

 

THIS AWARD (including the related Terms and Conditions), as amended effective December 11, 2014, is made as of the Grant Date by PHH CORPORATION (the “Company”) to [NAME] (the “Participant”) subject to acceptance by the Participant.

 

Upon and subject to the provisions of the Plan and the Terms and Conditions attached hereto and incorporated herein by reference as part of this Award, the Company hereby awards as of the Grant Date to the Participant, the Restricted Stock Units.  Underlined and capitalized terms in Paragraphs A through E below shall have the meanings there ascribed to them therein or in the Plan.

 

A.                                 Grant Date:  ______________, 201__.

 

B.                                  Plan Under Which Granted:  PHH Corporation 2014 Equity and Incentive Plan (the “Plan”).

 

C.                                  Restricted Stock Units:  The number of Restricted Stock Units subject to the Award shall be _______________.  Each Restricted Stock Unit represents the Company’s unfunded and unsecured obligation to issue one share of the Company’s common stock (“Stock”) in accordance with this Award, subject to the terms of this Award and the Plan.

 

D.                                 Dividend Equivalents:     Each Restricted Stock Unit shall accrue Dividend Equivalents equal to the dividends per share paid on one share of Stock to a shareholder of record on or after the Grant Date. Dividend Equivalents will vest and be settled as provided in Schedule 1 attached hereto.

 

E.                                   Vesting Schedule:                                The Restricted Stock Units shall vest in accordance with Schedule 1 attached hereto.  Restricted Stock Units that become vested in accordance with Schedule 1 are “Vested Stock Units.”

 

F.                                    Settlement of Vested Stock Units:  Subject to the attached Terms and Conditions, shares of Stock or cash, as applicable, attributable to the applicable Vested Stock Units are to be settled on a date selected by the Company that is no later than sixty (60) days following the date specified in Schedule 1 (each a “Distribution Date”).

 

IN WITNESS WHEREOF, the Company and the Participant have executed this Award as of the Grant Date set forth above.

 

	
PARTICIPANT:
    	
 
    	
PHH CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
Signature of   Participant
    	
 
    	
Title:
    	
 
    
					

 

 

TERMS AND CONDITIONS TO THE

PHH CORPORATION

RESTRICTED STOCK UNIT AWARD

 

1.                                    Settlement and Delivery of Vested Stock Units.

 

(a)                               On the applicable Distribution Date, the Company shall issue and deliver a share certificate, or make or caused to be made an appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, representing the number of shares of Stock attributable to Vested Stock Units to the Participant in settlement of the Participant’s rights under this Award.

 

(b)                              Notwithstanding subsection (a), the Vested Stock Units shall be settled in cash to the extent Vested Stock Units vest due to the Participant’s death, Disability, or Separation from Service, as provided in the Vesting Schedule.  Unless another date is specified by the Committee, the value of the cash payment to be made in settlement of the Vested Stock Units will be determined on the earliest to occur of the date of the Participant’s death, Disability, or Separation from Service, or a Change in Control.

 

(c)                               The Company shall not be required to issue fractional shares (or cash in lieu of fractional shares) upon the settlement of the Award.

 

(d)                              Notwithstanding anything in the Plan, the Award, or any other agreement (written or oral) to the contrary, if Participant is a “specified employee” (within the meaning of Code Section 409A) on the date of Separation from Service, then any payment made or settlement occurring with respect to such Separation from Service under this Award will be delayed to the extent necessary to comply with Section 409A(a)(2)(B)(i) of the Code, and the applicable cash or stock will be paid or settled to Participant during the five-day period commencing on the earlier of: (i) the expiration of the six-month period measured from the date of Participant’s Separation from Service, or (ii) the date of Participant’s death.  Upon the expiration of the applicable six-month period under Section 409A(a)(2)(B)(i) of the Code (or, if earlier, the date of the Participant’s death), all cash or stock deferred pursuant to this paragraph will be paid or delivered to Participant (or Participant’s estate, in the event of Participant’s death) in a lump sum.  Any remaining payments and settlements under the Award will occur as otherwise provided in the Award.

 

2.                                    Tax Withholding. The Participant agrees to have the actual number of shares of Stock to be received in settlement of the Vested Stock Units reduced by the number of whole shares of Stock which, when multiplied by the Fair Market Value of the Stock on the applicable Distribution Date, is sufficient to satisfy the minimum amount of the required tax withholding obligations imposed on the Company on the applicable Distribution Date.  To the extent the Vested Stock Units or Dividend Equivalents are settled in cash, the cash payment will be reduced by any applicable withholding.

 

3.                                    Rights as Shareholder.  Until Stock received in settlement of the Vested Stock Units are issued to the Participant, the Participant shall have no rights as a shareholder with respect to the either Restricted Stock Units or Vested Stock Units.  Except as otherwise provided in Section 7 and Section 5.2 of the Plan, the Company shall make no adjustment for any dividends or distributions or other rights on or with respect to shares of Stock issued in settlement of the Vested Stock Units for which the record date is prior to the issuance of that stock certificate.

 

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4.                                    Special Limitations.  If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities law with respect to shares of Stock otherwise deliverable under this Award, the Participant (a) shall deliver to the Company, prior to the delivery of Stock pursuant to the settlement of the Vested Stock Units, such information, representations and warranties as the Company may reasonably request in order for the Company to be able to satisfy itself that the shares of Stock are being acquired in accordance with the terms of an applicable exemption from the securities registration requirements of applicable federal and state securities laws and (b) shall agree that the shares of Stock so acquired will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities law.

 

5.                                    Restrictions on Transfer.  Except for the transfer by bequest or inheritance, the Participant shall not have the right to make or permit to exist any transfer or hypothecation, whether outright or as security, with or without consideration, voluntary or involuntary, of all or any part of any right, title or interest in or to any Restricted Stock Units (including, without limitation, Vested Stock Units) or Dividend Equivalents.  Any such disposition not made in accordance with this Award shall be deemed null and void.  Any permitted transferee under this Section shall be bound by the terms of this Award.

 

6.                                    Legends on Shares.  The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Stock issued pursuant to this Award.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to this Award in the possession of the Participant to carry out the provisions of this Section.

 

7.                                    Change in Capitalization.

 

(a)                               The number and kind of shares of Stock subject to the Restricted Stock Units (including, without limitation, Vested Stock Units) shall be proportionately adjusted for nonreciprocal transactions between the Company and the holders of capital stock of the Company that cause the per share value of the shares of Stock referenced by the Restricted Stock Units to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend or distribution (each, an “Equity Restructuring”).

 

(b)                              In the event of a merger, consolidation, reorganization, extraordinary dividend, sale of substantially all of the Company’s assets, other change in capital structure of the Company, tender offer for shares of Stock, or a Change in Control of the Company, that in each case does not constitute an Equity Restructuring, the Committee may make such adjustments with respect to the Restricted Stock Units and take such action as it deems necessary or appropriate, including, without limitation, adjusting the number of Restricted Stock Units, making a corresponding adjustment in the number of shares subject to the Restricted Stock Units, substituting a new award to replace the Award, removing restrictions on outstanding Awards, accelerating the termination of the Award or terminating the Award in exchange for the cash value determined in good faith by the Committee of the of Restricted Stock Units, as the Committee may determine. Any determination made by the Committee will be final and binding on the Participant.

 

(c)                               No fractional shares shall be created in making any adjustment pursuant to this Section 7.  Instead, any adjustment pursuant to this Section 7 that would otherwise result in a fractional Restricted Stock Unit or share of Stock becoming subject to the Award shall be further

 

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adjusted to round down the numbers of Restricted Stock Units to the next lowest Restricted Stock Unit or share of Stock, as applicable.

 

(d)                              All determinations and adjustments made by the Committee pursuant to this Section will be final and binding on the Participant. Any action taken by the Committee need not treat all recipients of equity incentives equally.

 

(e)                               The existence of the Plan and the Award shall not affect the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or part of its business or assets, or any other corporate act or proceeding.

 

8.                                    Clawback.  Notwithstanding anything herein to the contrary, this Award and any Stock issued or cash paid pursuant to this Award is expressly subject to any “clawback policy” now or hereafter adopted by the Board of Directors 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 Participant that expressly supersedes this paragraph, this Award shall be forfeited and the Participant shall be obligated to return to the Company any shares or repay any cash previously issued under this Award 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 Participant 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 Affiliates or (b) that, within three (3) years of the date the Award is settled, the Participant (i) experiences a termination of employment for Cause, or the Committee determines after employment termination that the Participant’s employment could have been terminated for Cause, (ii) engaged in conduct that causes material financial or reputational harm to the Company or Affiliates, (iii) provided materially inaccurate information related to publicly reported financial statements of the Company and its Affiliates, (iv) improperly, or with gross negligence, failed to identify, assess or report risks material to the Company or its Affiliates that were within the scope of the Participant’s responsibility and of which the Participant was aware or should have been aware based on facts reasonably available to the Participant, 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 Participant’s duties for the Company and its Affiliates, or otherwise engaged in gross misconduct with respect to the Company and its Affiliates.

 

9.                                    Compliance with Employee Share Ownership and Retention Policy.  Except as provided in the PHH Corporation Employee Share Ownership and Retention Policy amended September 2, 2014, as amended or superseded from time to time (the “Policy”), the Participant may not divest shares of stock received under the Award until the ownership requirements of the Policy have been met.

 

10.                            Section 409A.  This Award is intended to comply with, or otherwise be exempt from, Section 409A of the Code, as applicable.  This Award shall be administered, interpreted, and construed in a manner consistent with such Code section.  Should any provision of this Award be found not to comply with, or otherwise be exempt from, the provisions of Section 409A of the Code, it shall be modified and given effect, in the sole discretion of the Committee and without requiring the Participant’s consent, in such manner as the Committee determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A of the Code.  No acceleration of payment or settlement may be made except as permitted under Code Section 409A.

 

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11.                            Governing Laws.  This Award shall be construed, administered and enforced according to the laws of the State of Maryland; provided, however, no shares of Stock shall be issued except, in the reasonable judgment of the Board of Directors, in compliance with exemptions under applicable state securities laws of the state in which Participant resides, and/or any other applicable securities laws.

 

12.                            Successors.  This Award shall be binding upon and inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of the parties.

 

13.                            Notice.  Except as otherwise specified herein, all notices and other communications required or permitted under this Award shall be in writing and, if mailed by prepaid first-class mail or certified mail, return receipt requested, shall be deemed to have been received on the earlier of the date shown on the receipt or three (3) business days after the postmarked date thereof.  In addition, notices hereunder may be delivered by hand, facsimile transmission or overnight courier, in which event the notice shall be deemed effective when delivered or transmitted.  All notices and other communications under this Award shall be given to the parties hereto at the following addresses:  to the Company (attention of the General Counsel), at the principal office of the Company or at any other address as the Company, by notice to Participant, may designate in writing from time to time; and to Participant, at Participant’s address as shown on the records of the Company, or at any other address as Participant, by notice to the Company, may designate in writing from time to time.

 

14.                            Severability.  In the event that any one or more of the provisions or portion thereof contained in this Award shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award, and this Award shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.

 

15.                            Entire Agreement.  Subject to the terms and conditions of the Plan, this Award expresses the entire understanding and agreement of the parties with respect to the subject matter.  The Committee shall have full and conclusive authority to interpret the Award and to make all other determinations necessary or advisable for the proper administration of the arrangement reflected by this Award.  The Committee’s interpretations and determinations in this regard shall be final and binding on the Participant.

 

16.                            Headings.  Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award.

 

17.                            Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

 

18.                            No Right to Continued Service.  Neither this Award nor the issuance of the Restricted Stock Units hereunder shall be construed as giving Participant the right to continued service with the Company or any Affiliate.

 

19.                            Definitions.  Except as provided below, all capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan.  The following capitalized terms shall have the following meanings:

 

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(a)                               “Cause” means any one of the following: (1) a material failure of the Participant to substantially perform the Participant’s duties with the Company or its Affiliates (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 Affiliates; (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 Participant’s job or any instance of gross negligence in the performance of the Participant’s duties as an employee of the Company or one of its Affiliates; (5) any breach by the Participant of any fiduciary obligation owed to the Company or any Affiliate or any material element of the Company’s Code of Business Ethics and Conduct or other applicable workplace policies; or (6) failure by the Participant to perform Participant’s job duties for the Company or any Affiliate to the best of Participant’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 Affiliate, as applicable, from time to time.

 

(b)                              “Disability” means the Participant is (1) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (2) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company and its Affiliates. The determination of Disability will be made in accordance with the definition of “disability” under Code Section 409A.

 

(c)                               “Dividend Equivalent” means a credit to the Participant’s book of accounts with respect to each Restricted Stock Units outstanding under this Award equal to the amount of each dividend paid on the Stock, other than with respect to a large, nonrecurring cash dividend or distribution subject to the adjustment rules in Section 7 of this Agreement. Dividend Equivalent credits are made on the date of each payment of a dividend. Dividends paid on cash shall be credited as a dollar amounts and no earnings shall accrue or be payable on such Dividend Equivalents prior to settlement of such Dividend Equivalents by payment to the Participant as provided in the Award.

 

(d)                              “Good Reason” means any one of the following (i) a material diminution in Participant’s base compensation (from the amount in effect on the date of the Change in Control); (ii) a material diminution in authority, duties, or responsibilities of Participant; (iii) a material diminution in the budget over which Participant retains authority; (iv) a material change in the geographic location at which Participant is required to perform services; and (v) any other action or inaction that constitutes a material breach of this Award; provided, however, that for the Participant to be able to resign for “Good Reason,” the Participant must give the Company notice of the above conditions within 90 days after the condition first exists, the Company must not have not remedied the condition within 30 days after receiving written notice, and the Participant must resign within 60 days after the Company’s failure to remedy.

 

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SCHEDULE 1

PHH CORPORATION

2014 EQUITY AND INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD

 

Vesting Schedule

 

I.                                      Provided that the Participant remains in continuous service of the Company or any Affiliate through the applicable Vesting Date described in this Part I, the Restricted Stock Units shall become Vested Stock Units in accordance with the following cumulative Vesting Schedule and be settled on the applicable Vesting Date:

 

	
Vesting Dates
    	
 
    	
Percentage of   Restricted Stock Units
    
	
 
    	
 
    	
which are Vested   Stock Units
    
	
 
    	
 
    	
 
    
	
The First Anniversary   of the Grant Date
    	
 
    	
25%
    
	
The Second Anniversary   of the Grant Date
    	
 
    	
60%
    
	
The Third Anniversary   of the Grant Date
    	
 
    	
100%
    

 

II.                                  Notwithstanding Part I, and except as provided in Part II:

 

(A)                           upon the Participant’s Separation from Service due to a termination of employment by the Company and its Affiliates without Cause prior to the final Vesting Date above, the portion of the Restricted Stock Units which are Vested Stock Units will be equal to the total Restricted Stock Units subject to the Award 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 Separation from Service and the denominator is the total number of calendar days from and including the Grant Date through and including the Second Anniversary of the Grant Date, provided that the Award may not become more than 100% vested.

(B)                            upon the resignation by the Participant for any reason on or after the second anniversary of the Grant Date with at least sixty (60) days advance notice, the then unvested Restricted Stock Units will continue to vest in accordance with the schedule set forth in Section I provided that the Participant complies with all applicable restrictive covenants from and after the Participant’s Separation From Service through the applicable Vesting Date.

 

The Short-Term Deferral Rights (as defined in Section VI) that vest in accordance with paragraph (A) will be paid as soon as practicable following the Participant’s Separation from Service.  The Deferred Compensation Rights (as defined in Section VI) that vest in accordance with this paragraph (A) or (B), as applicable, shall be settled on the third anniversary of the Grant Date.

 

III                                 Notwithstanding Parts I and II, all remaining Restricted Stock Units will become Vested Stock Units and, subject to the other terms of this Award, shall be settled upon:

 

(A)                           the Participant’s Separation From Service that occurs within two years following the occurrence of a Change in Control and during the Participant’s service with the Company and its Affiliates due to one of the following:

 

Schedule 1 - Page 1

 

(1)                              a termination of employment by the Company and its Affiliates without Cause; or

 

(2)                              resignation by the Participant from the Company and its Affiliates for Good Reason; or

 

(3)                              resignation by the Participant for any reason on or after the second anniversary of the Grant Date with at least sixty (60) days advance notice.

 

(B)                            upon the Participant’s death or Disability during the Participant’s service with the Company and its Affiliates.

 

IV.         With respect to dividends paid prior to the second anniversary of the Grant Date, the Participant must be employed by the Company or an Affiliate and must not have incurred a Separation from Service on the date an applicable dividend is paid to be entitled to Dividend Equivalents in respect of that dividend. Dividend Equivalents accrued with respect to a Restricted Stock Unit will be paid to the Participant on the Distribution Date for such Restricted Stock Unit.

 

IV.                            Except as otherwise provided in this Vesting Schedule, any portion of the Restricted Stock Units which have not become Vested Stock Units, and all Dividend Equivalents with respect to such Restricted Stock Units, shall be forfeited at the time the Participant’s service with the Company and its Affiliates ceases, regardless of the reason and there shall be no proration for partial service.

 

V.                                 Notwithstanding anything in this Award to the contrary, if the Participant 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 Award shall be forfeited.  Furthermore, if the Company determines that the Participant has violated the restrictive covenant agreement, any portion of the Award which has not been settled or paid will be forfeited.

 

VI.                            For purposes of this Award, the portion of Restricted Stock Units that are scheduled to vest on the first and second anniversaries of the Grant Date as described in Section I, and their associated Dividend Equivalents (collectively the “Short-Term Deferral Rights”), are considered a separate right, for purposes of Code Section 409A, from the portion of the Restricted Stock Units that vest on the third anniversary of the Grant Date, and their associated Dividend Equivalents (collectively, the “Deferred Compensation Rights”), as described in Section I.  The Short-Term Deferral Rights are intended to be exempt from Code Section 409A pursuant to Treas. Reg. § 1.409A-1(b)(4).  The Deferred Compensation Rights are intended to be an account balance plan described in Treas. Reg. § 1.409A-1(c)(i)(B).

 

Schedule 1 - Page 2

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