Document:

exv10w3

Exhibit 10.3

ESCROW AGREEMENT

(Escrow No. 210028477)

THIS ESCROW AGREEMENT (this “Escrow Agreement”) is made and entered into as of this 30th day
of July, 2010, by and among BANK OF AMERICA, N.A., national association (“Bank”), PURE CYCLE
CORPORATION, a Colorado corporation (“Buyer”), and CHICAGO TITLE AND TRUST COMPANY (the “Escrow
Agent”).

RECITALS

A. The Bank and Buyer have entered into a Loan Sale and Assignment Agreement dated as of July
30, 2010 (the “Loan Sale Agreement”) relating to the proposed sale and purchase of the loan of Sky
Ranch, LLC, a Colorado limited liability company, which indebtedness is currently owed to the Bank
(the “Loan Sale”), subject to the terms and conditions set forth therein.

B. The parties desire to enter into this Escrow Agreement to provide for the holding and
disposition of the Earnest Money under the Loan Sale Agreement.

C. Capitalized terms used but not defined herein shall have the meanings set forth in the
Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1. Escrow Funds. Pursuant to the Loan Sale Agreement, Purchaser has delivered to
Escrow Agent by wire transfer funds in the amount of Seven Hundred Thousand Dollars ($700,000.00)
(the “Earnest Money”).

2. Refund Process; Objection to Refund. Buyer may deliver to Escrow Agent a notice
requesting a return of the Earnest Money (a “Refund Notice”) if Buyer terminates the Loan Sale
Agreement prior to 5:00 p.m. (Eastern time) on or before September 30, 2010 in accordance with the
terms and conditions of the Loan Sale Agreement which allows Buyer to do so. In the event that
Buyer shall deliver to Escrow Agent a Refund Notice, Escrow Agent shall, within one (1) Business
Day after receipt of such Refund Notice, give written notice to the Bank together with a copy of
the Refund Notice, in accordance with the notice provisions set forth in Section 15 hereof.
If within a period of five (5) business days following Escrow Agent’s delivery of a copy of the
Refund Notice to the Bank (the “Notice Period”), Escrow Agent does not receive a notice from the
Bank objecting to the refund of the Earnest Money to Buyer (an “Objection Notice”), then, on the
first business day following the Notice Period, Escrow Agent shall deliver to Buyer the Earnest
Money, less the Escrow Agent’s customary escrow fee, and this Escrow Agreement shall terminate. If
the Bank delivers an Objection Notice to Escrow Agent, the Bank shall simultaneously deliver to
Buyer a copy of such Objection Notice, which shall set forth in reasonable detail the grounds for
the objection. If Escrow Agent receives a timely Objection Notice from the Bank, Escrow Agent
shall not deliver the Earnest Money to Buyer, but shall continue to hold the Earnest Money pursuant
to the terms of this Escrow Agreement until such time as Escrow Agent receives either joint written
instructions from Buyer and the Bank or a court order issued by a court of competent jurisdiction
directing the disposition

 

 

 

of the Earnest Money. Following the delivery of an Objection Notice to Escrow Agent, Escrow Agent
is hereby authorized and directed to ignore any unilateral demands, notices or requests for
disposition of the Earnest Money. Failure of the Bank to respond to a Refund Notice on or before
the end of the Notice Period shall be deemed to mean that the Bank does not object to the delivery
to Buyer of the Earnest Money and all interest earned thereon.

3. Payment to Bank. The Bank may deliver to Escrow Agent a notice demanding that the
Earnest Money or applicable portion thereof be paid to the Bank if (A) Buyer fails to close under
the terms of the Loan Sale Agreement, or (B) the Bank is entitled under the terms of the Loan Sale
Agreement to withhold the refund to Buyer of all or any portion of the Earnest Money, in such
event, the notice and objection periods provided in Section 2 shall apply.

4. Other Demand for Payment. Except as expressly provided in Paragraphs 2 or 3 above,
in the event that either party makes a written demand upon the Title Company for payment of the
Earnest Money, Escrow Agent shall, within one (1) Business Day after receipt of such demand, give
written notice to the other party together with a copy of such demand, pursuant to the notice
provisions set forth in Section 15 hereof. If Escrow Agent does not receive a written
objection within five (5) business days after the giving of such notice, Escrow Agent is hereby
authorized to make such payment. If Escrow Agent does receive such written objection within such
five (5) business day period, Escrow Agent shall continue to hold the Earnest Money until otherwise
directed by joint written instructions from the Bank and Buyer or a court order from a court of
competent jurisdiction directing the disposition of the Earnest Money.

5. Limitation Of Duties Of Escrow Agent. Escrow Agent shall have no duties or
responsibilities other than those expressly set forth herein. Escrow Agent shall have no duty to
enforce any obligation of any person to make any delivery or to enforce any obligation of any
person to perform any other act. Escrow Agent shall be under no liability to the other parties
hereto or to anyone else by reason of any failure on the part of any party hereto or any maker,
guarantor, endorser or other signatory of any document or any other person to perform such person’s
obligations under any such document. Except for amendments to these Instructions hereinafter
referred to and except for joint instructions given to Escrow Agent by the parties hereto, Escrow
Agent shall not be obligated to recognize any agreement between any or all of the persons referred
to herein. It is understood and agreed that the duties of Escrow Agent are purely ministerial in
nature. Escrow Agent shall not be liable to the other parties hereto or to anyone else for any
action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith
and in the exercise of reasonable judgment, except for acts of willful misconduct or gross
negligence. Escrow Agent may rely conclusively and shall be protected in acting upon any order,
notice, demand, certificate, opinion or advice of counsel (including counsel chosen by Escrow
Agent), statement, instrument, report or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained) which is reasonably believed by Escrow Agent to be genuine and
to be signed or presented by the proper person or persons. Except as specifically set forth herein,
Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination
or rescission of this Escrow Agreement or any of the terms hereof, unless evidenced by a final
judgment or decree of a court of competent jurisdiction in the State of Illinois or a Federal court
in such State, or a writing delivered to Escrow Agent signed
by the proper party or parties and, if the duties or rights of Escrow Agent are affected, unless it
shall give its prior written consent thereto.

 

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6. Disclaimer Re: Validity of Documentation. In its capacity as Escrow Agent, Escrow
Agent shall not be responsible for the genuineness or validity of any security, instrument,
document or item deposited with it and shall have no responsibility other than to faithfully follow
the instructions contained herein, and shall not be responsible for the validity or enforceability
of any security interest of any party and it is fully protected in acting in accordance with any
written instrument given to it hereunder by any of the parties hereto and reasonably believed by
Escrow Agent to have been signed by the proper person. Escrow Agent may assume that any person
purporting to give any notice hereunder has been duly authorized to do so.

7. Resignation of Escrow Agent. Escrow Agent may resign as Escrow Agent hereunder
upon giving thirty (30) days’ prior written notice to that effect to each of the parties to these
Instructions. In such event, the successor Escrow Agent shall be selected and approved by the
parties hereto, which approval will not be unreasonably withheld or unduly delayed. Such party that
will no longer be serving as Escrow Agent shall deliver, against receipt, to such successor Escrow
Agent, the Earnest Money, if any, held by such party, to be held by such successor Escrow Agent
pursuant to the terms and provisions of this Escrow Agreement. If no such successor has been
designated on or before the effective date of such party’s resignation, the current Escrow Agent
shall continue until such successor is appointed; provided, however, its sole obligation thereafter
shall be to safely keep all documents and instruments then held by it and to deliver the same to
the person, firm or corporation designated as its successor or until directed by a final order or
judgment of a court of competent jurisdiction in the State of Illinois or a Federal court in such
State, whereupon Escrow Agent shall make disposition thereof in accordance with such order or
judgment. If no successor Escrow Agent is designated and qualified within thirty (30) days after
Escrow Agent’s resignation is effective, such party that will no longer be serving as Escrow Agent
may apply to any court of competent jurisdiction for the appointment of a successor Escrow Agent.

8. Investment. Deposits made pursuant to this Escrow Agreement may be invested on
behalf of any party or parties hereto in a federally insured account: provided, that any direction
to Escrow Agent for such investment shall be expressed in writing and contain the consent of all
other parties to this escrow, and also provided that Escrow Agent is in receipt of the taxpayer’s
identification number and investment forms as required. Escrow Agent will, upon request, furnish
information concerning its procedures and fee schedules for investment. In the event the Escrow
Agent is requested to invest deposits hereunder, Chicago Title and Trust Company shall not to be
held responsible for any loss of principal or interest which may be incurred as a result of making
the investment or redeeming said investment for the purposes of this Escrow Agreement.

9. Direction Not to Invest/Right to Commingle. Except as to deposits of funds for
which Escrow Agent has received express written direction concerning investment or other handling,
the parties hereto direct the Escrow Agent not to invest any funds deposited by the parties under
the terms of this escrow and waive any rights which they may have under Section 2-8 of the
Corporate Fiduciary Act (205 ILCS 620/2-8) to receive interest on funds deposited

 

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hereunder. In the absence of an authorized direction to invest funds, the parties hereto agree
that Escrow Agent shall be under no duty to invest or reinvest any such funds at any time held by
it hereunder; and further, that Escrow Agent may commingle such deposits with other deposits or
with its own funds in the manner provided for the administration of funds under Section 2-8 of the
Corporate Fiduciary Act (205 ILCS 620/2-8) and may use any part or all such funds for its own
benefit without obligation to any party for interest or earnings derived thereby, if any. Provided,
however, nothing herein shall diminish Escrow Agent’s obligation to apply the full amount of the
deposits in accordance with the terms of this Escrow Agreement.

10. Business Day. Whenever under the terms and provisions of this Escrow Agreement
the time for performance of a condition falls upon a Saturday, Sunday, or holiday, such time for
performance shall be extended to the next business day.

11. Agreements. The parties have heretofore entered into the Loan Sale Agreement (as
defined above) pertaining to the Loan Sale transaction. This Escrow Agreement shall not supersede
the terms and provisions contained in the Loan Sale Agreement and in the event of a conflict, the
terms and provisions contained in the Loan Sale Agreement shall govern and prevail. It is agreed
by the parties hereto that Escrow Agent is not to be considered a party to said Loan Sale
Agreement; the Loan Sale Agreement is not to be construed as a part of these Instructions. It is
agreed, however, by the parties hereto that the Escrow Agent shall be governed solely by the terms
and provisions contained in these Instructions.

12. Governing Law. This Escrow Agreement are governed by and are to be construed
under the laws of the State of Illinois.

13. Reimbursement of Expenses. The Escrow Agent shall be reimbursed by Buyer for any
reasonable expenses incurred by it hereunder, including the reasonable fees of any attorneys that
it may wish to consult in connection with the performance of its duties hereunder. Such
compensation and expenses shall be paid and reimbursed to the Escrow Agent solely by the Buyer.
The Bank shall not be obligated to pay, reimburse or contribute to any portion of the Escrow
Agent’s fees, compensation or expenses.

14. Disputes. In the event of a dispute between any of the parties hereto as to their
respective rights and interests hereunder, the Escrow Agent shall be entitled to hold any and all
cash then in its possession or under its control hereunder until such dispute shall have been
resolved by the parties in dispute and the Escrow Agent shall have been notified by instrument
jointly signed by all of the parties in dispute, or until such dispute shall have been finally
adjudicated by a court of competent jurisdiction.

15. Notices. Any notice, demand, request or other communication or delivery which
either party hereto may be required or may desire to give under this Escrow Agreement shall be in
writing and shall be deemed to have been properly given only if (a) hand delivered (effective upon
delivery), (b) sent by a nationally recognized overnight delivery service (effective one (1)
business day after delivery to such courier for overnight service), (c) sent by facsimile between
9:00 a.m. and 5:00 p.m. Eastern time on a business day (effective upon confirmation of transmission
provided the same is followed up by an overnight courier delivery), in each case,
prepaid and addressed as follows, or to such other or additional addresses as either party might
designate by written notice to the other party in accordance with the notice provisions hereof:

 

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	If to Escrow Agent:
	 	Chicago Title Insurance Company
	 
	 	171 North Clark Street
	 
	 	Chicago, Illinois 60601
	 
	 	Attn: Donna Adelmann
	 
	 	Telephone:  (312) 223-2731
	 
	 	 
	If to the Bank:
	 	Traci Craig
	 
	 	Bank of America NA
	 
	 	101 E. Kennedy Blvd. 10th Floor
	 
	 	Tampa, Florida 33602
	 
	 	MC: FL1-400-10-07
	 
	 	Telephone: 813-225-8478
	 
	 	Fascimile:   813-225-8327
	 
	 	 
	 
	 	With a copy to:
	 
	 	 
	 
	 	Duane Morris LLP
	 
	 	190 South LaSalle Street
	 
	 	Suite 3700
	 
	 	Chicago, Illinois 60603
	 
	 	Attn: David B. Yelin, Esq.
	 
	 	 
	If to Buyer:
	 	Pure Cycle Corporation
	 
	 	Attention:  Mark Harding,
	 
	 	President and Chief Executive Officer
	 
	 	500 East 8th Avenue, Suite No. 201
	 
	 	Denver, Colorado 80203
	 
	 	Phone:  (303) 292-3456
	 
	 	Fax:                       (303) 292-3475
	 
	 	 
	 
	 	With a copy to:
	 
	 	 
	 
	 	Senn Visciano Rosenstein P.C.
	 
	 	1801 California Street, Suite 4300
	 
	 	Denver, Colorado  80202-2604
	 
	 	Attention Mark A. Senn, Esq.
	 
	 	Phone: (303) 298-1122
	 
	 	Fax:                       (303) 296-9101

16. Escrow Agent Acceptance. The Escrow Agent hereby consents and agrees to all of
the provisions hereof, and agrees to accept, as Escrow Agent hereunder, all cash and documents
deposited hereunder, and agrees to hold and dispose of said cash and documents deposited hereunder
in accordance with the terms and provisions hereof.

 

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17. Successors and Assigns. This Escrow Agreement and all of the provisions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
legal representatives, successors and assigns.

18. Counterpart Execution. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall constitute one and
the same instrument.

19. Facsimile or Photocopy Signatures. A facsimile or photocopy signature on this
Escrow Agreement, any amendment hereto or any notice delivered hereunder shall have the same legal
effect as an original signature.

[Signatures on Following Page.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be duly executed
the day and year first above written.

	 	 	 	 	 
	 	BANK:

BANK OF AMERICA, N.A.,

a national banking association

 	 
	 	By:  	/s/ Traci Craig
 	 
	 	 	Traci Craig, Vice President 	 
	 	 	 	 
	 
	 	BUYER:

PURE CYCLE CORPORATION,

a Colorado corporation

 	 
	 	By:  	/s/ Mark Harding
 	 
	 	 	Mark Harding 	 
	 	 	President and Chief Executive Officer 
500 East
8th Avenue

Suite 201

Denver, Colorado 80203

Phone: (303) 292-3456

Fax:                 (303) 292-3475 	 
	 

	 	 	 	 	 
	ESCROW AGENT:

CHICAGO TITLE AND TRUST COMPANY

 	 	 
	By:  	 	 	 
	 	Its:  Authorized Agent 	 	 
	 	 	 	 
	 

 

7exv10w1

Exhibit 10.1

Execution Copy

SEPARATION AGREEMENT

     THIS SEPARATION AGREEMENT (“Agreement”) is executed as of August 4, 2010, by and between Mark
R. Danahy (“Danahy”) and PHH Corporation (the “Company”).

     WHEREAS, Danahy and the Company agreed that it would be in their mutual best interests for
Danahy’s employment with the Company to cease and he no longer serve as Executive Vice President,
Mortgage of the Company or President and Chief Executive Officer of PHH Mortgage Corporation,
effective as of May 14, 2010 (the “Termination Date”);

     WHEREAS, during Danahy’s employment with the Company he was given access to the Company’s
confidential, proprietary and trade secret information and the Company’s employees, customers and
contacts; and

     WHEREAS, the parties desire to provide for certain payments and benefits as consideration for
Danahy’s agreement to certain restrictive covenants and his execution of a general release of
claims.

     NOW THEREFORE, intending to be legally bound hereby, the Company and Danahy agree as follows:

Last Day of Employment

     Danahy’s employment with the Company and any of its subsidiaries and affiliates is hereby
terminated on the Termination Date.

Release and Covenant Not to Sue.

     In consideration for the benefits and payments specified in this Agreement, Danahy hereby
fully and forever releases and discharges the Company and each of its subsidiaries and affiliates,
and all of their predecessors and successors, assigns, officers, directors, trustees, employees,
agents and attorneys, past and present (“Releasees”) of and from any and all claims, demands,
liens, agreements, contracts, covenants, actions, suits, causes of action, obligations,
controversies, debts, costs, expenses, damages, judgments, orders and liabilities, of whatever kind
or nature, direct or indirect, in law, equity or otherwise, whether known or unknown, arising
through the date of this Agreement, out of Danahy’s employment with the Company or any Releasee,
including the termination thereof. By this paragraph Danahy waives any claims which Danahy has or
may have against Releasees, or any of them. This includes all rights and obligations under any
federal, state or local laws or ordinances pertaining to employment, including but not limited to
any claims for relief or causes of action under the Age Discrimination in Employment Act, 29 U.S.C.
§621 et seq., or any other federal, state or local statute, ordinance or regulation regarding
discrimination in employment, all claims for wrongful discharge, all claims that Releasees, or any
of them, dealt unfairly with Danahy, in bad faith or in

 

 

violation of any contract or agreement, expressed or implied, that may have existed between
Releasees, or any of them, and Danahy, and all claims against Releasees, or any of them, for
assault, battery, personal injury, emotional distress, pain and suffering.

     Danahy expressly represents that he has not filed a lawsuit or initiated any other
administrative proceeding against Releasees, or any of them, and that he has not assigned any claim
against the Releasees, or any of them, Danahy further promises not to initiate a lawsuit or to
bring any other claim against Releasees, or any of them, arising out of or in any way related to
Danahy’s employment by the Company or any Releasee, including the termination of that employment.
This Agreement will not prevent Danahy from filing a charge with the Equal Employment Opportunity
Commission (or similar state agency) or participating in any investigation conducted by the Equal
Employment Opportunity Commission (or similar state agency); provided, however, that any claims by
Danahy for personal relief in connection with such a charge or investigation (such as reinstatement
or monetary damages) would be barred by this Agreement.

     The foregoing will not be deemed to release the Company from any of the following claims,
entitlements or rights of Danahy for or to:

	 	1.	 	Claims or actions brought, in good faith, solely to enforce or clarify the
promises, rights, entitlements, obligations, and benefits provided in this Agreement;
	 
	 	2.	 	Vested benefits under retirement plans sponsored by the Company in which Danahy
is a participant, based on services performed prior to the Termination Date;
	 
	 	3.	 	Rights to convert coverage under an existing life insurance policy provided by
the Company, subject to the conversion rights of such policy;
	 
	 	4.	 	Coverage, if any, under any policy of liability or directors and officers
liability insurance for matters subject to said policies for activities arising out of
or in any way related to Danahy’s employment prior to the Termination Date;
	 
	 	5.	 	Any right to indemnification or cost of defense from or by the Company pursuant
to the Company’s by-laws or charter, or duly adopted resolution of the Company’s Board
of Directors for activities and actions by Danahy as an agent, officer, or employee of
the Company, prior to the Termination Date;
	 
	 	6.	 	Earned wages and compensation, accrued vacation and accrued fringe benefits, or
reimbursement for authorized expenses acquired or incurred before the Termination Date;
and
	 
	 	7.	 	Any counterclaims in connection with a lawsuit or administrative proceeding in
which the Company, its successors, assigns or subrogees seek legal or equitable relief
from Danahy provided such counterclaim (i) arises out of the transaction or occurrence
that is the subject matter of the claim raised by the Company in such lawsuit or
proceeding, (ii) does not require for adjudication the joinder or presence of third
parties, and (iii) does not relate to or arise out of the termination

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	 	 	 	of Danahy’s employment or involve any claim for compensation or benefits for
services rendered to the Company.

Rescission Right.

     Danahy expressly acknowledges and recites that (a) he has read and understands the terms of
this Agreement in its entirety, (b) he has entered into this Agreement knowingly and voluntarily,
without any duress or coercion; (c) he has been advised orally and is hereby advised in writing to
consult with an attorney with respect to this Agreement before signing it; (d) he was provided
twenty-one (21) calendar days after the receipt of this Agreement to consider its terms before
signing it; and (e) he has seven (7) calendar days from the date of signing to terminate and revoke
this Agreement in which case this Agreement will be unenforceable, null and void. Danahy may
revoke this Agreement during those seven (7) days by providing written notice of revocation to the
Company. The revocation must be delivered to the General Counsel of PHH Corporation, 3000
Leadenhall Road, Mail Stop LGL, Mt. Laurel, NJ 08054.

Consideration.

     In consideration of Danahy’s execution of and failure to revoke this Agreement contained, and
his continued compliance with the terms and conditions of this Agreement, the Company agrees to pay
or provide the following payments and benefits:

     (a) Pay to Danahy, as severance, four hundred twenty-four thousand thirty nine dollars
($424,039) (the “Severance Amount”). The Severance Amount shall be paid in bi-weekly installments
in accordance with the Company’s normal payroll practices, commencing on the Termination Date and
ending on June 30, 2011 (the “Severance Period”), provided that no payment shall be made to Danahy
unless and until Danahy has signed this Agreement and it has become irrevocable. The payments
scheduled to be paid after the Termination Date and before this Agreement becomes irrevocable will
not be paid until the first pay date after the date that the Agreement becomes irrevocable.

     (b) Pay to Danahy the annual cash bonus for calendar year 2010 in an amount equal to the bonus
Danahy would have received, if any, based on actual performance of the Company in accordance with
the 2010 Management Incentive Plan. The bonus will be paid to Danahy at the same time bonuses are
payable to corporate employees, but no later than March 15 after the end of the 2010 performance
year. Determination of Danahy’s bonus payout will be based solely on the actual performance of the
Company in accordance with the 2010 Management Incentive Plan. There will be no reduction in the
bonus payout related to individual MBO targets.

     (c) Allow Danahy to continue to vest in any outstanding options or restricted stock units that
have been awarded to Danahy under the PHH Corporation Amended and Restated 2005 Equity and
Incentive Plan (the “Equity Plan”), subject to the terms and conditions of the Equity Plan and any
applicable award agreement, on the same basis and at the same time as such awards would have vested
had Danahy remained in the employ of the Company through June 30, 2011. Danahy will have the right
to exercise the portion of any option that is vested and unexercised as of the Termination Date in
accordance with the terms of the applicable option

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agreement. Danahy may also exercise any option which vests after the Termination Date
pursuant to this Agreement for a period extending not beyond the period that vested options as of
the Termination Date could have been exercised under the applicable option agreement.

     (d) Reimburse Danahy for COBRA continuation coverage under the Company’s group health plan, if
elected by Danahy and his eligible dependents, for the period commencing upon his Termination Date
and ending on the earlier to occur of the date he becomes covered under another group health plan
or until June 30, 2011.

     (e) On July 1, 2011, the Company will pay to Danahy a lump sum cash payment equal to one
hundred eighty-seven thousand and five hundred dollars ($187,500.00); provided that Danahy has
complied with the terms of this Agreement through that date.

     (f) Provide Danahy reasonable outplacement services for up to thirteen (13) months beginning
on the Termination Date. Such services shall be provided by the Company’s provider, Right
Management.

     (g) Transfer to Danahy, as soon as practicable following the date this Agreement becomes
irrevocable, but in no event later than 90 days from the date hereof, ownership of the car
currently provided to him by the Company.

     (h) Provide Danahy with financial planning and tax services, if elected by Danahy, for up to
six months and an amount not to exceed $5000 beginning on the Termination Date. Such services
shall be provided by the Company’s provider, Ayco.

     None of the foregoing payments or benefits will be made or provided if this Agreement has not
become irrevocable within 90 days after the Termination Date. Payment and provision of the
foregoing benefits are conditioned on Danahy’s continued compliance with this Agreement.

     All amounts paid and property transferred under this Agreement shall be subject to applicable
withholdings for federal, state, and local taxes.

     Danahy acknowledges that: (A) the payments and benefits set forth in this Agreement
constitute full settlement of all his rights arising out of his employment with the Company except
to matters specifically preserved herein, (B) he has no entitlement under any other severance or
similar arrangement maintained by the Company, and (C) except as otherwise provided specifically in
this Agreement, the Company does not and will not have any other liability or obligation to Danahy.
Danahy further acknowledges that, in the absence of his execution of this Agreement, benefits and
payments specified in the “Consideration” section of this Agreement would not otherwise be due to
Danahy.

No Mitigation or Off-Set

     Danahy is under no obligation to seek other employment and unless otherwise set forth in this
Agreement there shall be no offset against amounts or benefits due to Danahy under this Agreement
as a result of any compensation that Danahy may earn in connection with future employment.

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Covenants Not to Compete

     In further consideration for the benefits and payments set forth in this Agreement, Danahy
agrees that, during the Restriction Period (as defined below), Danahy shall not compete with the
Company or any of its subsidiaries or affiliates (the “PHH Group”), as set forth below:

	 	1.	 	Danahy agrees that he will not, directly or indirectly, as an individual on
Danahy’s own account, or as an independent contractor, employee, consultant, agent,
partner, member, joint venturer or otherwise, provide any service or assistance, in any
capacity or function to any business engaged in any of the businesses of or services
provided by the PHH Group as of the Termination Date (other than PHH Vehicle
Management Services Group LLC and its subsidiaries and related affiliates) (the “PHH
Mortgage Group”) and in particular businesses in the mortgage origination and/or
mortgage servicing industries, including without limitation: SunTrust; Wells Fargo;
Wells Fargo Home Mortgage; Bank of America Mortgage; Chase Home Finance; Nexstar
Financial; CitiMortgage, Inc.; GMAC Residential Holdings; SunTrust Mortgage, Inc.;
MetLife Bank; Quicken Loans, Inc.; CTX Mortgage; Branch Banking & Trust Co.; Pulte
Mortgage; AmSouth Mortgage; Fifth Third Mortgage; U.S. Bank Home Mortgage; Citizens
Mortgage Corporation; and any successors that are created by merger, consolidation or
any other similar transaction involving any of the foregoing. Notwithstanding the
foregoing, Danahy may provide services to regulatory bodies, governmental agencies,
mortgage loan guarantors, mortgage backed securities guarantors, entities engaged in
the investment in mortgage loan products or mortgage securities, and mortgage insurance
companies, including but not limited to, Fannie Mae, Freddie Mac, Real Estate
Investment Trusts (REIT) and their advisors, provided, however, that none of these
entities is also engaged in any of the businesses of or services subject to this
covenant not to compete.
	 
	 	2.	 	Danahy acknowledges that the PHH Mortgage Group’s businesses are conducted
nationally and agrees that the restrictions herein shall operate throughout the United
States. Nothing herein shall prohibit Danahy from being a passive owner of not more
than five percent (5%) of the outstanding securities of any publicly traded company
that would be a competing company as described in section 1 above, so long as Danahy
has no active participation in the business of such company.
	 
	 	3.	 	Danahy agrees that he will not, directly or indirectly, on his own behalf or on
behalf of any third party, solicit, induce or encourage, during the Restriction Period
any person who was employed by the PHH Group on the Termination Date, and/or any person
who was employed by the PHH Group at any time during the twelve-month period
immediately preceding the Termination Date, to terminate their employment with the PHH
Group.
	 
	 	4.	 	Danahy agrees that he will not, directly or indirectly, on his own behalf or on
behalf of any third party, during the Restriction Period, call on, or solicit any
person or entity who was a customer or client, of PHH Mortgage Group at any time during
the twelve-month period immediately preceding the Termination Date

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	 	 	 	for any purpose which directly or indirectly competes with the business of the PHH
Mortgage Group.

     Danahy agrees and acknowledges that the promises and covenants not to compete set forth above
each have a unique, very substantial and immeasurable value to the PHH Group, that the PHH Group is
engaged in a highly competitive industry, and that Danahy is receiving significant consideration in
exchange for these promises and covenants. Danahy acknowledges that the promises and covenants set
forth above are necessary for the reasonable and proper protection of the PHH Group’s legitimate
business interests; and that each and every promise and covenant is reasonable with respect to
activities restricted, geographic scope and length of time.

     The “Restriction Period” for purposes of these “Covenants Not to Compete” shall start on the
Termination Date and end on the last day of the Severance Period.

Confidential Information

     Danahy acknowledges that as part of his employment with the PHH Group, he had access to
information that was not generally disclosed or made available to the public. Danahy recognizes
that in order to guard the legitimate interests of the PHH Group, it is necessary for it to protect
all confidential information. Danahy agrees to keep secret all non-public, confidential and/or
proprietary information, matters and materials of the PHH Group, and personal confidential or
otherwise proprietary information regarding the PHH Group’s employees, executives, directors or
consultants affiliated with the PHH Group, including, but not limited to, documents, materials or
information regarding, concerning or related to the PHH Group’s research and development, its
business relationships, corporate structure, financial information, financial dealings, fees,
charges, personnel, methods, trade secrets, systems, procedures, manuals, confidential reports,
clients or potential clients, financial information, business and strategic plans, proprietary
information regarding its financial or other business arrangements with the executives, sales
representatives, editors and other professionals with which it works, software programs and codes,
access codes, and other similar materials or information, as well as all other information relating
to the business of the PHH Group which is not generally known to the public or within the fleet
management and/or mortgage industries or any other industry or trade in which the PHH Group
competes (collectively, “Confidential Information”), to which Danahy has had or may have access and
shall not use or disclose such Confidential Information to any person except (a) to the extent
required by applicable law, (b) to his personal advisors, to the extent such advisors agree to be
bound by this provision, or (c) to the minimum necessary to enforce this Agreement. This
obligation is understood to be in addition to any agreements Danahy may have signed with the PHH
Group or any of its subsidiaries or affiliates concerning confidentiality and non-disclosure,
non-competition, non-solicitation, and assignment of inventions or other intellectual property
developments, which agreements will remain in full force and effect.

Non-Disparagement.

     Danahy will not disparage or defame, through verbal or written statements or otherwise, the
PHH Group or any of its members, directors, officers, agents or employees or otherwise take any
action which could reasonably be expected to adversely affect the reputation, business

6

 

practices, good will, products and services of the PHH Group or the personal or professional
reputation of any of the PHH Group’s members, directors, officers, agents or employees.

     The Company, in its official capacity, will direct its officers not disparage or defame,
through verbal or written statements or otherwise, Danahy or otherwise take any action which could
reasonably be expected to adversely affect Danahy’s reputation.

Enforcement of Restrictive Covenants.

     Danahy agrees and acknowledges that in the event of a breach or threatened breach by Danahy of
one or more of the covenants and promises described above in “Covenants Not to Compete,”
“Confidential Information,” and “Non Disparagement,” the PHH Group will suffer irreparable harm
that is not compensable solely by damages. In such event, if Danahy were not to immediately cure
the alleged breach upon notice from the Company, the Company shall have the right to suspend making
any further payments to Danahy under the terms of this Agreement pending disposition of the matter
pursuant to the Arbitration provisions of this Agreement. Further, if there is a finding pursuant
to Arbitration under this Agreement that Danahy had in fact breached one or more of the covenants
and promised described above in “Covenants Not to Compete,” “Confidential Information,” and “Non
Disparagement,” under such circumstances, no further payments, rights or benefits provided under
the “Consideration” section of this Agreement would be due to Danahy, and Danahy would be
obligated, within thirty (30) days of such finding, to repay to the Company the amounts described
under “Consideration” paid to him in cash and upon payment or exercise of equity awards that would
have terminated or not become vested without operation of the provisions in “Consideration” above.
The Company and any other member of the PHH Group will, in addition to the remedies provided in
this Agreement, be entitled to avail itself of all such other remedies as may now or hereafter
exist at law or in equity for compensation and for the specific enforcement of the covenants in
this Agreement. Resort to any remedy provided for in this Agreement or provided for by law will not
prevent the concurrent or subsequent employment of any other appropriate remedy or remedies or
preclude the Company or PHH Group’s recovery of monetary damages and compensation.

Cooperation.

     Danahy further agrees that, subject to reimbursement of his reasonable expenses, he will
cooperate fully with the Company and any of its subsidiaries and affiliates and their counsel with
respect to any matter (including any pending or future litigation, investigations, or governmental
proceedings) which relates to matters with which Danahy was involved during his employment with the
Company. Danahy will render such cooperation in a timely manner upon reasonable notice from the
Company.

Challenge.

     If Danahy violates or successfully challenges the enforceability of any provisions of this
Agreement, no further payments, rights or benefits provided under the “Consideration” section this
Agreement will be due to Danahy. However, Danahy may seek clarification from the Company of his
rights and obligations under this Agreement, and, if a dispute remains after seeking clarification,
Danahy may raise a dispute regarding his rights under this Agreement pursuant to the Arbitration
provisions of this Agreement.

7

 

Arbitration.

     Any and all disputes arising under this Agreement or out of Danahy’s employment with the
Company will be resolved exclusively by arbitration administered exclusively in New Jersey by JAMS,
pursuant to its then-prevailing Employment Arbitration Rules & Procedures, before an arbitrator or
arbitrators whose decision shall be final, binding and conclusive on the parties, and judgment on
the award may be entered in any court having jurisdiction. The Company shall bear any and all
costs of the arbitration process, excluding any attorneys’ fees incurred by Danahy with regard to
such arbitration. Danahy and the Company further acknowledge and agree that, due to the nature of
the confidential information, trade secrets, and intellectual property belonging to the PHH Group
to which Danahy has been given access, and the likelihood of significant harm that the PHH Group
would suffer in the event that such information was disclosed to third parties, nothing in this
paragraph shall preclude the Company or any other member of the PHH Group from seeking declaratory
or injunctive relief to prevent Danahy from violating, or threatening to violate, the terms under
the “Covenants Not to Compete,” “Confidential Information” and “Non-Disparagement” sections of this
Agreement. The exclusive forum for any action seeking declaratory or injunctive relief under this
Agreement shall be the state and federal courts sitting in the state of New Jersey and each party
to this Agreement consents to the exercise of personal jurisdiction and venue by such courts.

     Acknowledgment (initial below):

     Company:                                                                    
  Danahy:                    

Miscellaneous.

     No Admission of Liability. This Agreement is not to be construed as an admission of
any violation of any federal, state or local statute, ordinance or regulation or of any duty owed
by the Company or any other person to Danahy, or by Danahy or any other person to the Company.
There have been no such violations, and both the Company and Danahy specifically deny any such
violations.

     Absence of Reliance. Danahy acknowledges that in agreeing to this Agreement, he has
not relied in any way upon representations or statements of the Company other than those
representations or statements set forth in this Agreement.

     No Reinstatement. Danahy agrees that he will not apply for reinstatement with the
Company or any other member of the PHH Group or seek in any way to be reinstated, reemployed or
hired by the Company or any other member of the PHH Group in the future.

     Section Headings. The section headings are solely for convenience of reference and
shall not in any way affect the interpretation of this Agreement.

     Notice: All notices, requests, demands and other communications made or given in
connection with this Agreement shall be in writing and shall be deemed to have been duly given (a)
if hand delivered, at the same time delivered, or (b) at the time shown on the return receipt if
mailed in a certified postage prepaid envelope (return receipt requested) addressed to the
respective parties as follows:

8

 

     If to PHH Corporation:

PHH Corporation

c/o General Counsel

3000 Leadenhall Road

Mt. Laurel, NJ 08054

     If to Danahy:

Mr. Mark Danahy

227 East Main Street

Moorestown, NJ 08057

or to such other address as the party to whom notice is to be given may have previously furnished
to the other party in writing in the manner set forth above.

     409A Compliance: The payments and benefits provided under this Agreement will not be
paid or provided to Danahy until six months and one day following the Termination Date, to the
extent necessary to avoid the imposition of additional tax under Section 409A of the Internal
Revenue Code and the Treasury Regulations thereunder (“Section 409A”). All such payments and
benefits that would otherwise have been paid or provided prior to six months and one day following
the Termination Date shall accrue and be paid in one lump sum or provided, as applicable, on such
date; provided, however, that benefits and payments under this Agreement may be made prior to such
date to the extent that the payments and benefits under “Consideration” in this Agreement are not
subject to the 6 month delay in payment described in Section 409A due to application of the
exemptions in Treasury Regulation Section 1.409A-1(b)(9)(iii) (the “two times, two year rule”),
Treasury Regulation Section 1.409A-1(b)(4) (the “short-term deferral rule”), Treasury Regulation
Section 1.409A- 1(b)(9)(v)(B) (medical benefits), and Treasury Regulation Section
1.409A-1(b)(9)(v)(A) (outplacement services).

     For purposes of Section 409A, the right to a series of installment payments under this
Agreement shall be treated as a right to a series of separate payments. “Termination of
employment,” or words of similar import, as used in this Agreement means, for purposes of any
payments under this Agreement that are payments of deferred compensation subject to Section 409A,
Danahy’s “separation from service” as defined in Section 409A.

     With respect to any reimbursement of expenses of, or any provision of in-kind benefits to,
Danahy, as specified under this Agreement, such reimbursement of expenses or provision of in-kind
benefits shall be subject to the following conditions to the extent necessary to avoid the
imposition of additional tax under Section 409A: (1) the expenses eligible for reimbursement or the
amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for
reimbursement or the amount of in-kind benefits provided in any other taxable year; (2) the
reimbursement of an eligible expense shall be made no later than the end of the year after the year
in which such expense was incurred; and (3) the right to reimbursement or in-kind benefits shall
not be subject to liquidation or exchange for another benefit.

     Successors and Assigns. This Agreement will inure to the benefit of and be binding
upon the Company and Danahy and their respective successors, executors, administrators and heirs.

9

 

Danahy may not make any assignment of this Agreement or any interest herein, by operation of
law or otherwise. The Company may assign this Agreement to any successor to all or substantially
all of its assets and business by means of liquidation, dissolution, merger, consolidation,
transfer of assets, or otherwise.

     Severability. Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law. However, if any provision of
this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability will be modified or reformed to the extent necessary to bring the
provision into compliance with applicable law and then enforced as reformed or modified.

     Entire Agreement; Amendments. Except as otherwise provided herein, this Agreement
contains the entire agreement and understanding of the parties hereto relating to the subject
matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature relating to the subject matter hereof. This Agreement may not be
changed or modified, except by an agreement in writing signed by each of the parties hereto.

     Governing Law. This Agreement will be governed by, and enforced in accordance with,
the laws of the State of New Jersey without regard to the application of the principles of
conflicts of laws.

     Counterparts and Facsimiles. This Agreement may be executed, including execution by
facsimile signature, in multiple counterparts, each of which will be deemed an original, and all of
which together will be deemed to be one and the same instrument.

[signature page to follow]

10

 

     IN WITNESS WHEREOF, Danahy and the Company have executed this Agreement as of the date first
above written.

	 	 	 	 	 
	 	 	 
	 	/s/ Mark R. Danahy
 	 
	 	Mark R. Danahy 	 
	 	 	 
	 
	 	PHH CORPORATION

 	 
	 	By:  	/s/ Jerome J. Selitto
 	 
	 	 	Name:  	Jerome J. Selitto 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

11

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