Document:

EX-10.7

 

Exhibit 10.7

TRANSITION SERVICES AGREEMENT

among

CENDANT CORPORATION,

CENDANT OPERATIONS, INC.

and

PHH CORPORATION

PHH VEHICLE MANAGEMENT SERVICES LLC (d/b/a PHH Arval)

CENDANT MORTGAGE CORPORATION

Dated as of January 31, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	

ARTICLE I SERVICES

	

	 	
	 	 	 	 
	Section 1.1
	 	Provision of Services	 	 	4	 
	Section 1.2
	 	Additional Services	 	 	4	 
	Section 1.3
	 	Obligations as to Additional Services	 	 	5	 
	Section 1.4
	 	Term of Agreement and Services	 	 	5	 
	Section 1.5
	 	Subcontracting of Services	 	 	5	 
	Section 1.6
	 	Standard of Service	 	 	5	 
	Section 1.7
	 	Right to Decline Services	 	 	6	 
	Section 1.8
	 	Compensation and Other Payments	 	 	6	 
	Section 1.9
	 	Billing and Payment Terms	 	 	6	 
	Section 1.10
	 	Interruption of Services	 	 	7	 
	Section 1.11
	 	Supervision and Compensation	 	 	8	 
	Section 1.12
	 	Staffing of Personnel	 	 	8	 
	Section 1.13
	 	Limitation of Damages	 	 	8	 
	

ARTICLE II MUTUAL OBLIGATIONS; COVENANTS

	

	 	
	 	 	 	 
	Section 2.1
	 	Legal Actions	 	 	8	 
	Section 2.2
	 	Providing Periodic Reports	 	 	9	 
	Section 2.3
	 	Means of Providing Services	 	 	9	 
	Section 2.4
	 	Further Assurances	 	 	9	 
	

ARTICLE III TAX MATTERS

	

	 	
	 	 	 	 
	Section 3.1
	 	Service Taxes	 	 	9	 
	Section 3.2
	 	Limitation of Damages	 	 	9	 
	

ARTICLE IV ACCESS TO INFORMATION AND PERSONNEL

	

	 	
	 	 	 	 
	Section 4.1
	 	Access to Information	 	 	10	 
	Section 4.2
	 	Litigation Cooperation	 	 	10	 
	Section 4.3
	 	Attorney Client Privilege	 	 	10	 
	

ARTICLE V CONFIDENTIALITY

	

	 	
	 	 	 	 
	Section 5.1
	 	Confidential Information	 	 	10	 
	

ARTICLE VI DISCLAIMER AND LIMITATION OF LIABILITY

	

	 	
	 	 	 	 
	Section 6.1
	 	Disclaimer of Warranties	 	 	11	 
	Section 6.2
	 	Limitation of Consequential Damages	 	 	11	 
	

 i 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	

ARTICLE VII INDEMNIFICATION

	

	 	
	 	 	 	 
	Section 7.1
	 	General Cross Indemnification	 	 	11	 
	Section 7.2
	 	Procedure	 	 	12	 
	Section 7.3
	 	Other Matters	 	 	13	 
	

ARTICLE VIII OTHER PROVISIONS

	

	 	
	 	 	 	 
	Section 8.1
	 	Records	 	 	13	 
	Section 8.2
	 	Inspection Rights	 	 	13	 
	

ARTICLE IX TERMINATION

	

	 	
	 	 	 	 
	Section 9.1
	 	Termination	 	 	13	 
	Section 9.2
	 	Termination Notices	 	 	14	 
	Section 9.3
	 	Consequences of Termination	 	 	14	 
	Section 9.4
	 	Survival	 	 	14	 
	

ARTICLE X MISCELLANEOUS

	

	 	
	 	 	 	 
	Section 10.1
	 	Force Majeure	 	 	15	 
	Section 10.2
	 	Assignment	 	 	15	 
	Section 10.3
	 	Relationship of the Parties	 	 	15	 
	Section 10.4
	 	Governing Law and Submission to Jurisdiction	 	 	15	 
	Section 10.5
	 	Entire Agreement	 	 	16	 
	Section 10.6
	 	Notices	 	 	16	 
	Section 10.7
	 	Negotiation and Mediation	 	 	17	 
	Section 10.8
	 	Conflicting Provisions	 	 	17	 
	Section 10.9
	 	Severability	 	 	17	 
	Section 10.10
	 	Interpretation	 	 	17	 
	Section 10.11
	 	Counterparts	 	 	18	 
	Section 10.12
	 	Further Cooperation	 	 	18	 
	Section 10.13
	 	Amendment and Waiver	 	 	18	 
	Section 10.14
	 	Duly Authorized Signatories	 	 	18	 
	Section 10.15
	 	Waiver of Trial By Jury	 	 	18	 
	Section 10.16
	 	Descriptive Headings	 	 	18	 
	Section 10.17
	 	No Third Party Beneficiaries	 	 	19	 
	Section 10.18
	 	Binding Nature of Agreement	 	 	19	 
	Section 10.19
	 	Certain Definitions	 	 	19	 
	

 ii 

 

 

Exhibits:

	 	 	 
	1

	 	Human Resources
	2

	 	Financial Systems Management
	3

	 	Payroll
	4

	 	Accounts Payable
	5

	 	Information Technology Services Between PHH and Avis
	6

	 	Information Technology Services Between Cendant and PHH VMS
	7

	 	Information Technology Services Between Cendant, PHH Mortgage and CSSG
	8

	 	Cendant Telecommunications Services
	9

	 	Treasury Services
	10

	 	External Reporting Services
	11

	 	Corporate Accounting Services
	12

	 	Procurement Solutions
	13

	 	Public and Regulatory Affairs
	

 iii 

 

 

TRANSITION
SERVICES AGREEMENT (this “Agreement”), dated as of January 31, 2005 (the
“Effective Date”), by and among Cendant Operations, Inc., a Delaware corporation
(“Cendant Operations”), Cendant Corporation, a Delaware corporation (“Cendant”),
PHH Corporation, a Maryland corporation (“PHH”), PHH Vehicle Management Services LLC (d/b/a
PHH Arval), a Delaware limited liability company (“PHH
Arval”), and Cendant Mortgage
Corporation (to be renamed “PHH Mortgage Corporation”), a New Jersey corporation (“PMC,” and together with PHH and PHH Arval, the
“PHH Entities”). Each of Cendant Operations, Cendant and the PHH Entities is sometimes
referred to herein as a “Party” and collectively, as the “Parties.”

W I T N E S S E T H:

WHEREAS, Cendant, Cendant Operations and the PHH Entities have each determined that it is
desirable to enter into this Agreement, which sets forth the terms of certain relationships and
other agreements among Cendant, Cendant Operations and the PHH Entities as of the Effective Date.

NOW, THEREFORE, in consideration of the premises and the representations, warranties,
covenants and agreements herein contained, and intending to be legally bound, the Parties hereby
agree as follows:

ARTICLE I

SERVICES

Section 1.1     Provision of Services. Upon the terms and subject to the conditions set
forth in this Agreement, Cendant Operations agrees to provide to PHH, PHH Arval and PMC, and PHH,
PHH Arval and PMC agree to provide to Cendant, those services described in the exhibits
(collectively, the “Exhibits”) attached hereto, each on and pursuant to the terms set forth
therein (together, with the Additional Services (as defined in Section 1.2), the
“Services”).

Section 1.2     Additional Services. From time to time during the Term (as defined in
Section 1.4), a Service Recipient may find it desirable to request, in addition to the Services
described in the applicable Exhibits, additional services to be made available to such Service
Recipient by the Service Provider (“Additional Services”). In the event that such Service
Recipient makes a written request that the Service Provider provide Additional Services and the
Service Provider agrees to provide such Additional Services, the relevant Parties shall negotiate
in good faith and execute amendments to the relevant Exhibits for such Additional Services that
shall set forth, among other things, (a) the time period during which the Additional Services shall
be provided, (b) a description of the Additional Services, and (c) the estimated charge for the
Additional Services. The Service Provider’s obligations with respect to providing any such
Additional Services shall
become effective only upon an amendment to the relevant Exhibits being duly executed and
delivered by the Service Provider and the relevant Service Recipient. It is understood that the
Service Provider has no obligation to provide

 

 

Additional Services and may reject any request by any
Service Recipient for Additional Services for any reason or for no reason.

Section 1.3     Obligations as to Additional Services. The Service Provider agrees to
enter into discussions with any Service Recipient to provide any Additional Services that (i) such
Service Recipient is unable to obtain from a third party provider, (ii) are directly dependent upon
or inextricably intertwined with the Services and (iii) were inadvertently and unintentionally
omitted from the list of Services; provided, however, that the Service Provider shall not be
obligated to provide such Additional Services if, following good-faith negotiation, the relevant
Parties are unable to reach agreement on such terms.

Section 1.4     Term of Agreement and Services. The term of each Service identified in
the Exhibits shall commence upon the Closing Date and, unless earlier terminated by the relevant
Parties as provided herein, shall expire on the date as set forth for each Service in the relevant
Exhibits (the “Term”).

Section 1.5     Subcontracting of Services. Each Service Recipient acknowledges that
prior to the Effective Date, the Service Provider may have subcontracted with unaffiliated third
parties to provide services in connection with all or any portion of the Services to be provided
hereunder. The Service Provider reserves the right at any time to subcontract with either an
affiliate or unaffiliated third parties to provide the Services or to enter into new subcontract
relationships for any Service provided that the level of service remains consistent with the level
of service previously provided to the Service Recipient.

Section 1.6     Standard of Service. The Service Provider agrees that in providing (or
causing others to provide) the Services under this Agreement, it shall (and shall cause each
affiliate or advisor and, to the extent practicable, any or other third-party service provider to):
(i) conduct itself in accordance with (A) standards of quality consistent with the standards
applied by the Service Provider as of the Effective Date with respect to the specific matters in
question, and (B) standards of quality consistent with those applied by the Service Provider
hereafter (or in the event of provision of Services by an unaffiliated third party, at the time of
entry into such subcontract) with respect to the specific matters in question in its own business;
(ii) comply in all material respects with all laws, regulations and orders applicable to the
conduct of the activities contemplated hereby; and (iii) comply in all material respects with any
applicable standards, procedures, policies, operating guidelines, practices and instructions set
forth in the Exhibits, describing the relevant Services. Notwithstanding the foregoing, it shall
not be deemed to be a breach of this Agreement if the Service Provider fails to meet the standards
required under this Section 1.6 because of the failure of a Service Recipient to cooperate
with or provide information or services to the Service Provider as required under this Agreement.

(a)     In addition to the provisions of Section 1.6, if a Service Recipient desires a higher
quality of the Services than the Service Provider is otherwise obligated to provide pursuant to
Section 1.6 or any of the other provisions of this

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Agreement, including the Exhibits, such Service
Recipient will be entitled to receive such higher level of quality after giving no less than 30
days’ prior written notice to the Service Provider if (i) such Service Recipient agrees to pay for
all additional Actual Costs associated with such increased level and (ii) in the sole judgment of
the Service Provider, such increased level does not impose an additional burden on the Service
Provider.

(b)     The Service Provider shall promptly notify the relevant Service Recipient of any event or
circumstance of which the Service Provider or any of its representatives has knowledge that would
or would be reasonably likely to cause a disruption in the Services.

Section 1.7     Right to Decline Services. Notwithstanding anything contained herein or
in the Exhibits, the Service Provider may decline to provide all or any part of any particular
Services, if the Service Provider reasonably believes that the performance of its obligations
relating thereto would violate any applicable law, regulation, judicial or administrative ruling or
decision, any property right or agreement or any announcement, policy or standard applicable to its
business, but only (a) to the extent reasonably necessary for the Service Provider to ensure
compliance therewith, (b) after the Service Provider has applied commercially reasonable efforts to
reduce the amount and/or effect of any such restrictions and (c) after the Service Provider has
delivered written notice to each relevant Service Recipient specifying in reasonable detail the
nature of the applicable restrictions and of any proposed resulting modification in the Service
Provider’s obligations.

Section 1.8     Compensation and Other Payments. Each Service Recipient agrees to pay the
Service Provider, in accordance with Section 1.9, an amount equal to the sum of the following items
(collectively, the “Service Recipient Payables”):

(a)     An amount in cash equal to the amounts set forth in the relevant Exhibits;

(b)     If applicable, the Actual Cost of any Additional Services provided by the Service Provider
pursuant to Section 1.2; and

(c)     If applicable, incremental increases in the Actual Cost of Services for increased levels
of Services provided by the Service Provider pursuant to Section 1.6(a).

Section 1.9 Billing and Payment Terms.

(a)     Each Service Recipient agrees to pay the Service Provider in accordance with, and subject
to, the billing and payment terms set forth in the Exhibits for each of the Services. Amounts not
paid in accordance with this Section 1.9(a) within the period due as set forth in the Exhibits
shall accumulate interest at the rate of 10 percent per annum or the maximum lawful rate, whichever
is less (such rate being referred to herein as the “Interest Rate”); provided,
however, that no Cendant Entity, in its capacity as a Service Recipient, shall have any
obligation whatsoever to pay to any PHH Entity, in its capacity as Service Provider, any such
interest. Upon the termination of the

6

 

Services, the Service Provider will invoice the Service
Recipient for Services incurred or other applicable charges since the last invoice in accordance
with the terms and conditions set forth herein and in the relevant Exhibits.

(b)     In the event a Service Recipient does not pay any sum, or any part thereof, in accordance
with this Section 1.9, the Service Provider shall, effective 30 days following the delivery of
written notice to such Service Recipient of such payment default, have no further obligation
pursuant to this Agreement to provide Services to such Service Recipient until such unpaid balance
plus all accrued interest at the applicable Interest Rate shall have been paid; provided that the
Service Provider shall not be relieved of any of its obligations to provide Services pursuant to
this Agreement if, following the delivery of such written notice but prior to 30 days following
such delivery, such Service Recipient delivers written notice to the Service Provider setting forth
in detail the reasons that such charges are not due and payable. If the Service Provider
determines in good faith that such amounts are still due and payable and such Service Recipient has
not paid such amounts within five (5) Business Days of such notice, the Service Provider may
suspend all Services under this Agreement and the disputed invoices shall be referred to resolution
under Section 10.7 hereunder.

(c)     Each Service Recipient shall promptly notify the Service Provider in writing of any
amounts billed to it that are in dispute. Upon receipt of such notice, the Service Provider will
research the items in question in a reasonably prompt manner and cooperate to resolve any
differences with such Service Recipient. In the event that the relevant Parties mutually agree
that any amount that was paid by such Service Recipient was not properly owed, the Service Provider
will refund that amount to such Service Recipient within 20 days of the delivery of such notice
(or, alternatively, the Service Provider may deduct the dollar amount from the next invoice
submitted to such Service Recipient). In the event agreement is not reached by the relevant
Parties within 30 days of delivery of the notice referred to above, the matter shall be referred to
resolution in accordance with Section 10.7.

Section 1.10     Interruption of Services. Except as otherwise provided herein, the
Service Provider will use its commercially reasonable efforts to provide uninterrupted Services
through the Term. In
the event, however, that the Service Provider or its respective suppliers or subcontractors
are wholly or partially prevented from providing a Service or Services to a Service Recipient or if
a Service or Services are interrupted or suspended, in either case by reason of any force majeure
event set forth in Section 10.1, or the Service Provider shall deem it reasonably necessary to
suspend delivery of a Service hereunder for purposes of maintenance, repair or replacement of
equipment parts or structures, the Service Provider shall not be obligated to deliver such Service
during such periods provided that the Service Provider: (a) has given, whenever possible,
reasonable written notice of the interruption in accordance with Section 10.6 within a reasonable
period of time, explaining the reason, purpose and likely duration thereof; and (b) use
commercially reasonable efforts to minimize the duration and impact of the interruption. If such
interruption of Services has a significant negative impact on a Service Recipient’s business and
the Service Provider cannot readily reinstate the Service involved, the Service Provider will use
its commercially reasonable efforts to assist any

7

 

such Service Recipient in securing alternative
services to minimize such negative impact on such Service Recipient.

Section 1.11     Supervision and Compensation. The Service Provider shall select, employ,
pay, supervise, direct and discharge all the personnel providing Services hereunder. Subject to
Section 1.7, the Service Provider shall be solely responsible for the payment of all benefits and
any other direct and indirect compensation for Service Provider personnel assigned to perform
services under this Agreement, as well as such personnel’s worker’s compensation insurance,
employment taxes, and other employer liabilities relating to such personnel as required by law.
The Service Provider shall be an independent contractor in connection with the performance of
Services hereunder and the employees performing Services in connection herewith shall not be deemed
to be employees of any Service Recipient.

Section 1.12     Staffing of Personnel. The Service Provider shall be solely responsible
for assigning personnel to perform the Services, which personnel will be instructed by the Service
Provider to perform the Services in a timely, efficient and workmanlike manner.

Section 1.13     Limitation of Damages. Notwithstanding anything to the contrary
contained in this Agreement, the Service Provider shall not be liable for any claim in respect of
Services relating to the external reporting of any Service Recipient or any of its Subsidiaries
(including those Services provided by the Service Provider to the Service Recipient(s) set forth in
the relevant Exhibits), except to the extent that such claim arises from the willful misconduct or
gross negligence of the Service Provider. Furthermore, Service Recipient agrees and acknowledges,
that notwithstanding any assistance from Service Provider in connection with the preparation of any
of Service Recipient’s financial statements, Service Recipient shall have sole responsibility and
control of the preparation and content of any of its financial statements.

ARTICLE II

MUTUAL OBLIGATIONS; COVENANTS

Section 2.1     Legal Actions.

(a)     Within five Business Days of any Party becoming a party to, or threatened with, or
otherwise receiving notice of, any legal or regulatory proceeding or investigation (including
inquiries or complaints from any federal agency, state attorney general’s office, from a legislator
on behalf of a constituent or from any Better Business Bureau or similar organization) (in each
case, a “Proceeding”) arising out of or in connection with the Services provided hereunder,
it is agreed that such Party will promptly provide written notification of such event to the other
relevant Party and, to the extent reasonably requested or appropriate, the other relevant Party
will cooperate with such Party to defend, settle, compromise or otherwise resolve such Proceeding;
provided that any costs incurred by the other relevant Party related to its cooperation shall be
borne

8

 

by the Party against whom the Proceeding has been brought if it is determined that such Party
has been negligent or engaged in willful misconduct.

(b)     No Party shall have the authority to institute, prosecute or maintain any Proceeding on
behalf of any other Party without the prior written consent of the other Party.

(c)     This Section 2.1 shall not apply to the extent provided otherwise by the provisions of
ARTICLE VII.

Section 2.2     Providing Periodic Reports. The Service Provider will provide, upon
reasonable written notice, such periodic reports with respect to the Services it provides hereunder
as is reasonably requested by a Service Recipient, including such reports as are specified in the
relevant Exhibits.

Section 2.3     Means of Providing Services. With respect to any particular Service to be
provided hereunder, the Service Provider shall, unless otherwise specified in the Exhibits,
determine the means and resources used to provide such Service in accordance with its prudent
business judgment.

Section 2.4     Further Assurances. Each of Cendant, Cendant Operations and the PHH
Entities shall execute and deliver such further documents and shall take such other actions as each
of them may reasonably request of the other as may be necessary to effect or enable the provision
of the Services contemplated hereunder.

ARTICLE III

TAX MATTERS

Section 3.1     Service Taxes. Each Service Recipient shall pay or cause to be paid all
sales, service, valued added, use, excise, occupation, and other similar taxes and duties (together
in each case with all interest, penalties, fines and additions thereto) that are assessed against
the Parties on the provision of Services as a whole, or any particular Service (including with
respect to amounts paid by the Service Provider to third parties), including Additional Services,
received by any Service Recipient or any of its Subsidiaries from the Service Provider or any of
its Affiliates pursuant to the terms of this Agreement (collectively, “Service Taxes”). If
required under applicable law (or, in the case of Service Taxes relating to amounts paid by the
Service Provider to third parties), the Service Provider shall invoice the relevant Service
Recipient for the full amount of all Service Taxes, and such Service Recipient shall pay, in
addition to the other amounts required to be paid pursuant to the terms of this Agreement, such
Service Taxes to the Service Provider.

Section 3.2     Limitation of Damages. Notwithstanding anything to the contrary contained
in this Agreement, the Service Provider shall not be liable for any claim in respect of Services
relating to Taxes or Tax Returns of any Service Recipient or any of its Subsidiaries (including
those Services provided by the Service Provider to the

9

 

Service Recipient(s) set forth in the
relevant Exhibits), except to the extent that such claim arises from the willful misconduct or
gross negligence of the Service Provider.

ARTICLE IV

ACCESS TO INFORMATION AND PERSONNEL

Section 4.1     Access to Information. Subject to the confidentiality provisions set
forth in ARTICLE V below and any other restrictions contained in this Agreement, Cendant and the
PHH Entities shall, and shall cause their respective Affiliates to, provide, upon written request,
any information within such Party’s, or their respective Affiliates’, possession that the
requesting Party reasonably needs in connection with Services being provided by or to such
requesting Party (i) to comply with requirements imposed on the requesting Party by a governmental
authority; (ii) for use by such requesting Party in any proceeding or to satisfy audit, accounting,
tax or similar requirements; or (iii) to comply with such requesting Party’s obligations under this
Agreement.

Section 4.2     Litigation Cooperation. The Parties agree to the extent reasonably
necessary to cooperate and consult in the defense and settlement of any threatened or filed
third-party action, claim
or dispute which jointly involves Cendant or the PHH Entities or any of their Affiliates and
which relates primarily to the Services provided by or to the Parties (“Third Party
Action”). In addition, the Parties hereto will use their reasonable best efforts to provide
assistance to any other Party with respect to any Third Party Action, and to make available to the
other Party directors, officers, other employees and agents of such assisting Party as witnesses in
legal, administrative or other proceedings. The Party providing information, consulting or witness
services under this Section 4.2 shall be entitled to reimbursement from the other Party for
reasonable and documented expenses. This Section 4.2 shall not apply to the extent provided
otherwise by the provisions of ARTICLE VII.

Section 4.3     Attorney Client Privilege. Neither Cendant nor its Affiliates nor the PHH
Entities and their Affiliates will be required to provide any information pursuant to this
Agreement if the provision of such information would serve as a waiver of any Privilege afforded
such information.

ARTICLE V

CONFIDENTIALITY

Section 5.1     Confidential Information. This Agreement shall be subject to the
confidentiality provisions of Section 1.5 of the Separation Agreement entered into by and between
Cendant and PHH, dated January 31, 2005 (the “Separation Agreement”), and Cendant and PHH
acknowledge and agree that they shall, and shall cause each of their respective Affiliates, to
comply with such provision. The obligations of the Parties pursuant to this Section 5.1 shall
survive any termination of this Agreement or the Separation Agreement.

10

 

ARTICLE VI

DISCLAIMER AND LIMITATION OF LIABILITY

Section 6.1     Disclaimer of Warranties. EACH SERVICE PROVIDER MAKES NO REPRESENTATIONS
OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES TO BE PROVIDED BY IT
WITH RESPECT TO THE RELEVANT EXHIBITS UNDER THIS AGREEMENT.

Section 6.2     Limitation of Consequential Damages. NO PARTY SHALL UNDER ANY
CIRCUMSTANCES BE LIABLE TO ANY OTHER PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS OR REVENUE) RESULTING OR ARISING FROM THE
SERVICES, ANY
PERFORMANCE OR NONPERFORMANCE OF THE SERVICES OR TERMINATION OF THE SERVICES REGARDLESS OF
WHETHER SUCH DAMAGES OR OTHER RELIEF ARE SOUGHT BASED ON BREACH OF WARRANTY, BREACH OF CONTRACT,
NEGLIGENCE, STRICT LIABILITY IN TORT, OR ANY OTHER LEGAL OR EQUITABLE THEORY, EXCEPT TO THE EXTENT
THAT ANY SUCH DAMAGES RELATE TO A CLAIM FOR INDEMNIFICATION PURSUANT TO ARTICLE VII OF THIS
AGREEMENT OR A BREACH OF ANY OF THE CONFIDENTIALITY PROVISIONS OF THIS AGREEMENT OR THE SEPARATION
AGREEMENT.

ARTICLE VII

INDEMNIFICATION

Section 7.1     General Cross Indemnification.

(a)     Cendant agrees to indemnify and hold harmless the PHH Entities and each of the officers,
directors, employees and agents of the PHH Entities against any and all costs and expenses arising
out of third party claims (including, without limitation, attorneys’ fees, interest, penalties and
costs of investigation or preparation for defense), judgments, fines, losses, claims, damages,
liabilities, demands, assessments and amounts paid in settlement (collectively, “Losses”), in each
case, based on, arising out of, resulting from or in connection with any claim, action, cause of
action, suit, proceeding or investigation, whether civil, criminal, administrative, investigative
or other (collectively, “Actions”), based on, arising out of, pertaining to or in
connection with any breach by Cendant or its Affiliates of this Agreement; provided, however, that
Cendant shall have no obligation under this Section 7.1(a) with respect to (x) any Action arising
solely in regards to the Services being provided under Exhibit 10 or (y) any segment of an Action
relating to the Services being provided under Exhibit 10, except to the extent that any such claim
arises from the willful misconduct or gross negligence of the Service Provider.

11

 

(b)     Each of the PHH Entities agrees to individually, and not jointly and severally, indemnify
and hold harmless Cendant and its Affiliates and their officers, directors, employees and agents
against any and all Losses, in each case, based on, arising out of, resulting from or in connection
with any Actions, based on, arising out of, pertaining to or in connection with any breach by any
PHH Entity or their respective Affiliates of this Agreement.

Section 7.2     Procedure. If any Action shall be brought against any person entitled to
indemnification pursuant to this ARTICLE VII (the “Indemnitees”) in respect of which
indemnity may be sought against any Indemnifying Party, such Indemnitee shall promptly notify the
relevant Indemnifying Party, and such Indemnifying Party shall
assume the defense thereof, including the employment of counsel and payment of all fees and
expenses. Such Indemnitee shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such person unless (i) the relevant Indemnifying Party has agreed in
writing to pay such fees and expenses, (ii) such Indemnifying Party has failed to assume the
defense and employ counsel, or (iii) the named parties to an Action (including any impleaded
parties) include both an Indemnitee and such Indemnifying Party and such Indemnitee shall have been
advised by its counsel that representation of such indemnified party and such Indemnifying Party by
the same counsel would be inappropriate under applicable standards of professional conduct (whether
or not such representation by the same counsel has been proposed) due to actual or potential
differing interests between them (in which case such Indemnifying Party shall not have the right to
assume the defense of such Action on behalf of such Indemnitee). It is understood, however, that
the relevant Indemnifying Party shall, in connection with any one such Action or separate but
substantially similar or related Actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of only one separate
firm of attorneys (in addition to any local counsel) at any time for all such indemnified persons
not having actual or potential differing interests among themselves, and that all such fees and
expenses shall be reimbursed as they are incurred. Such Indemnifying Party shall not be liable for
any settlement of any such Action effected without its written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such Action, such
Indemnifying Party agrees to indemnify and hold harmless each Indemnitee, to the extent provided in
this ARTICLE VII, from and against any Losses by reason of such settlement or judgment.

Section 7.3     Other Matters.

(a)     No Indemnifying Party shall, without the prior written consent of an Indemnitee, effect
any settlement of any pending or threatened Action in respect of which any Indemnitee is or could
have been a party and indemnity could have been sought hereunder by such Indemnitee, unless such
settlement includes an unconditional release of such Indemnitee from all liability on claims that
are the subject matter of such Action.

12

 

(b)     Any Losses for which an Indemnitee is entitled to indemnification or contribution under
this ARTICLE VII shall be paid by the Indemnifying Party to the Indemnitee as such Losses are
incurred. The indemnity and contribution agreements contained in this ARTICLE VII shall remain
operative and in full force and effect, regardless of (i) any investigation made by or on behalf of
any Indemnitee, Indemnifying Party, their directors, officers, employees or agents and (ii) any
termination of this Agreement.

(c)     The Parties shall, and shall cause their respective Subsidiaries to, cooperate with each
other in a reasonable manner with respect to access
to unprivileged information and similar matters in connection with any Action. The provisions
of this ARTICLE VII are for the benefit of, and are intended to create third party beneficiary
rights in favor of, each of the Indemnitees referred to herein.

ARTICLE VIII

OTHER PROVISIONS

Section 8.1     Records. The Service Provider agrees to maintain accurate records arising
from or related to any Services provided under the relevant Exhibits hereunder, including
accounting records and documentation produced in connection with the rendering of any Services.
Each Service Provider’s accounting records shall be reasonably sufficient to permit the computation
and verification of all payments due hereunder.

Section 8.2     Inspection Rights. During the Term and for 60 days thereafter, the
Service Provider shall, upon 20 days’ prior written notice from the relevant Service Recipient,
permit such Service Recipient or its authorized representatives to inspect and audit the Service
Provider’s records relating to the Services during regular business hours; provided that the
Service Recipient shall comply with the Service Provider’s reasonable security and safety
procedures as such procedures are communicated to the Service Recipient and that any expenses
(including relating to copying) in connection the inspection or audit shall be the sole obligation
of the Service Recipients.

ARTICLE IX

TERMINATION

Section 9.1     Termination.

(a)     Any Service provided hereunder may be terminated (x) by mutual written agreement of the
Parties, (y) as set forth in the Exhibits or (z) by any of the Parties upon written notice to the
other Parties if:

(i)     the other Party fails to adequately perform in any material respect any
of its obligations under this Agreement or otherwise breaches a material
obligation under this

13

 

Agreement (the “Defaulting Party”) and such failure
to perform or breach of an obligation is not cured within 30 days of the date on
which written notice is received by the Defaulting Party setting forth in
reasonable detail the manner in which the Defaulting Party failed to perform its
obligations hereunder; or

(ii)     the other Party makes a general assignment for the benefit of creditors,
becomes insolvent, a receiver is appointed, or a court approves reorganization or
arrangement proceedings.

(b)     Any Service or Services provided hereunder may be terminated by the Service Provider upon
written notice to the Service Recipient of such Service or Services if performance of any such
Service or Services has been rendered impossible or impracticable by reason of the occurrence of
any of the events described in Section 10.1.

Section 9.2     Termination Notices. Any termination notice delivered by any of the
Parties shall specify the effective date of termination and, where applicable, in detail the
Service or Services to be terminated.

Section 9.3     Consequences of Termination. In the event any Service is terminated for
any reason (other than the expiration of the Term):

(a)     Upon request, each Party shall return to the other Parties all tangible personal property,
books and records owned by the other Party and relating to the Services in their possession
(including all Confidential Information (as defined in the Separation Agreement)) as of the
termination date; and

(b)     Other than in the event of a termination that is the result of the expiration of the Term,
as set forth in the relevant Exhibits or pursuant to Section 9.1(b), each Service Recipient will be
responsible to the Service Provider for reasonable and proper termination charges that will include
all reasonable cancellation costs incurred by the Service Provider or costs for materials acquired
in connection with the provision of the Services; provided, however, that the Service Provider
agrees to use commercially reasonable efforts to minimize the cost associated with such
cancellation or materials. Invoices for such charges shall be prepared in reasonable detail by the
Service Provider and payment shall be due 30 days from the date of such invoice.

Section 9.4     Survival. Expiration or termination of all or a portion of the Services
for any reason shall not terminate the other obligations of the Parties hereunder, which shall
survive any such termination. Subject to the foregoing, expiration or termination of the Services
for any reason shall not terminate any Parties’ obligations and rights arising out of any willful
misconduct or gross negligence of the other Party occurring prior to such termination or
expiration, including the obligation to pay any money owed hereunder up to or as a result of the
termination of such Services.

14

 

ARTICLE X

MISCELLANEOUS

Section 10.1     Force Majeure. None of the Parties shall be responsible for the delay in
the performance of any obligation hereunder due to labor disturbances, accidents, fires, storms,
floods, earthquake, explosion, wars, acts of terrorism, riots, rebellions, insurrections,
blockages, strike or labor disruption, acts of governments, governmental requirements and
regulations, restrictions imposed by law or any other similar conditions, beyond the reasonable
control and without the fault or negligence of such Party, and the time for performance by such
Party shall be extended by the period of such delay. Notwithstanding the foregoing, in no event
shall any of the Service Recipients be relieved of their payment obligations to any Service
Provider for Services delivered.

Section 10.2     Assignment. Except as otherwise provided in this Agreement, neither this
Agreement nor any of the rights, interests or obligations of any Party hereto under this Agreement
shall be assigned, in whole or in part, by operation of law or otherwise by any of the Parties
without the prior written consent of the other Parties; provided, however, that Cendant may assign
any of the foregoing to one or more of its Subsidiaries of affiliates. Any assignment in violation
of the preceding sentence shall be void. Subject to the preceding two sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their
respective successors and assigns. Other than the Indemnitees under ARTICLE VII, nothing in this
Agreement shall be construed to grant any person or entity not a Party any rights or powers
whatsoever, and no person or entity shall be a third party beneficiary of this Agreement. Nothing
in this Section 10.2 affects the ability of any of the Parties to terminate any of the Services in
accordance with the provisions of this Agreement.

Section 10.3     Relationship of the Parties. None of the Parties is an agent of the
other and has any authority to bind the other Party, transact any business in the other Party’s
name or on its behalf, or make any promises or representations on behalf of the other Party unless
provided for in the Exhibits or agreed to in writing. Each Party will perform all of its
respective obligations under this Agreement as an independent contractor, and no joint venture,
partnership or other relationship shall be created or implied by this Agreement.

Section 10.4     Governing Law and Submission to Jurisdiction. This Agreement shall be
governed by, enforced under and construed in accordance with the laws of the State of New York,
without giving effect (to the fullest extent provided by law) to any choice or conflict of law
provision or rule thereof which might result in the application of the laws of any other
jurisdiction. Subject to Section 10.7, each of the Parties hereby irrevocably and unconditionally
consents to submit to the
exclusive jurisdiction of the courts of the State of New York and of the United States of
America in each case located in the County of New York for any litigation arising out of or
relating to this Agreement (and agrees not to commence any litigation relating thereto except in
such courts) and further agrees that service of any process, summons, notice or document

15

 

by U.S.
registered mail to its respective address set forth in Section 10.6 (or to such other address for
notice that such Party has given the other Party written notice of in accordance with Section 10.6)
shall be effective service of process for any litigation brought against it in any such court.
Each Party hereby irrevocably and unconditionally waives any objection to the laying of venue of
any litigation arising out of this Agreement in the courts of the State of New York or of the
United States of America in each case located in the County of New York and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any
such litigation brought in any such court has been brought in an inconvenient forum.

Section 10.5     Entire Agreement. This Agreement and the Exhibits referred to in this
Agreement, as such Exhibits may be amended from time to time in accordance with Section 10.13, are
incorporated and made a part of this Agreement by reference, constitute the entire agreement
between Cendant, Cendant Operations and the PHH Entities relating to the Services and obligations
to be provided by the Parties, and there are no further agreements or understandings, written or
oral, between the Parties with respect thereto.

Section 10.6     Notices. All notices, requests, claims, consents, demands and other
communications under this Agreement shall be in writing and shall be deemed given if delivered
personally, by facsimile (that is confirmed) or sent by overnight courier (providing proof of
delivery) to the Parties at the following addresses (or at such other address for a Party as shall
be specified by like notice):

If to Cendant or Cendant Operations:

	 	 	 	 	 
	 	 	Cendant Corporation
	 	 	9 West 57th Street
	 	 	New York, New York 10021
	 	 	Facsimile: (212) 413-1922
	

	 	Attention:
	 	Eric J. Bock,
	

	 	 	 	Executive Vice President-Law
	

	 	 	 	and Corporate Secretary

If to any of the PHH Entities:

	 	 	 	 	 
	 	 	PHH Corporation, PHH Vehicle Management Services LLC (d/b/a PHH Arval) or
	 	 	PHH Mortgage Corporation, as appropriate
	 	 	3000 Leadenhall Road
	 	 	Mail Stop ACC
	 	 	Mt. Laurel, NJ 08054
	 	 	Facsimile: (856) 917-0950
	

	 	Attention:
	 	William F. Brown,
	

	 	 	 	Senior Vice President
	

	 	 	 	and General Counsel

16

 

Copies of all notices hereunder shall be delivered to:

	 	 	 
	 

	 	Skadden, Arps, Slate, Meagher & Flom LLP
	

	 	Four Times Square
	

	 	New York, New York 10036
	

	 	Facsimile: (212) 735-2000
	

	 	Attention: Fred B. White III, Esq.

All such notices, requests and other communications shall be deemed received on the date of receipt
by the recipient thereof if received prior to 5:00 p.m., New York City time, and such day is a
Business Day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next succeeding Business Day in the place of receipt.

Section 10.7     Negotiation and Mediation.

Any disputes among the Parties hereto arising under this Agreement shall be resolved pursuant
to the dispute resolution procedures contained in Section 1.9 of the Separation Agreement as if
such provision applied to the Parties hereto. The obligations of the Parties pursuant to this
Section 10.7 shall survive any termination of this Agreement or the Separation Agreement.

Section 10.8     Conflicting Provisions. In the event any provision of the Exhibits
conflicts with the provisions of this Agreement, the provisions of this Agreement shall be
controlling unless and to the extent such Exhibit specifically provides to the contrary.

Section 10.9     Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to a Party. Upon such determination that any term or other
provisions are invalid, illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the transactions be consummated as
originally contemplated to the fullest extent possible.

Section 10.10     Interpretation.

(a)     When a reference is made in this Agreement to an Article, Section or Exhibit, such
reference shall be to an Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. Whenever the words “include”, “includes” or “including” are used in this Agreement,
they shall be deemed to be followed by the words “without limitation”. The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement. All terms defined
in this Agreement shall

17

 

have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all attachments thereto
and instruments incorporated therein.

(b)     The Parties have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

Section 10.11     Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by all Parties and delivered to the other
Party.

Section 10.12     Further Cooperation. Each Party agrees to cooperate with the other, at
any other Party’s request, to execute any and all documents or instruments, or to obtain any
consents, in order to assign, transfer, perfect, record, maintain, enforce or otherwise carry out
the intent of the terms of this Agreement.

Section 10.13     Amendment and Waiver. This Agreement (including the Exhibits) may not
be amended or modified except by a writing signed by an authorized signatory of each Party. No
waiver by any Party or any breach or default hereunder shall be deemed to be a waiver of any
preceding or subsequent breach or default.

Section 10.14     Duly Authorized Signatories. Each Party represents and warrants that
its signatory whose signature appears below has been and is on the date of this Agreement duly
authorized by all necessary corporate or other appropriate action to execute this Agreement.

Section 10.15     Waiver of Trial By Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.

Section 10.16     Descriptive Headings. The descriptive headings of the several articles
and sections of this Agreement are inserted for reference only and shall not limit or otherwise
affect the meaning hereof.

18

 

Section 10.17     No Third Party Beneficiaries. Other than the Indemnitees under ARTICLE
VII, nothing in this Agreement shall convey any rights upon any person or entity, which is not a
party or a permitted assignee of a party to this Agreement.

Section 10.18     Binding Nature of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto or their successors in interest,
except as expressly otherwise provided herein.

Section 10.19     Certain Definitions. For purposes of this Agreement:

(a)     “Actual
Cost” means the actual cost incurred by the relevant division or business
unit of the Service Provider providing the Services to the Service Recipient under the relevant
Exhibits to this Agreement, which shall equal the sum (without duplication) of (x) all actual
out-of-pocket costs, including any sales, use, excise, service, occupation, privilege, value-added
or other similar taxes (together in each case with all interest, penalties, fines and additions
thereto) in connection with the Services, paid by the Service Provider to third parties in
connection with providing such Services; (y) all direct or indirect costs incurred by the Service
Provider in connection with providing such Services; and (z) a reasonable allocation of all general
overhead and other similar expenses attributable to the provision of the Services allocated in
accordance with the Service Provider’s then-existing methods for assessing and allocating similar
such expenses among its Affiliates.

(b)     “Actions” has the meaning set forth in Section 7.1(a).

(c)     “Additional Services” has the meaning set forth in Section 1.2.

(d)     “Affiliate” or “affiliate” of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person, where “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract, as trustee or executor, or
otherwise.

(e)     “Agreement” has the meaning set forth in the preamble to this Agreement.

(f)     “Business Day” or “business day” means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.

(g)     “Cendant” has the meaning set forth in the preamble.

(h)     “Cendant Operations” has the meaning set forth in the preamble.

19

 

(i)     “Code” means the Internal Revenue Code of 1986, as amended.

(j)     “Confidential Information” has the meaning set forth in the Separation Agreement.

(k)     “Defaulting Party” has the meaning set forth in Section 9.1(a).

(l)     “Effective Date” has the meaning set forth in the preamble.

(m)     “Exhibits” has the meaning set forth in Section 1.1.

(n)     “Indemnifying Party” means a Party having the indemnification obligations set
forth in Section 7.1.

(o)     “Indemnitees” has the meaning set forth in Section 7.2.

(p)     “Interest Rate” has the meaning set forth in Section 1.9(a).

(q)     “Losses” has the meaning set forth in Section 7.1(a).

(r)     “Party” or “Parties” has the meaning set forth in the preamble.

(s)     “PHH Entities” has the meaning set forth in the preamble.

(t)     “Privilege” means any privilege, including privileges arising under or related to
the attorney-client or attorney work product privileges.

(u)     “Proceeding” has the meaning set forth in Section 2.1(a).

(v)     “Securities
Act” means the Securities Act of 1933.

(w)     “Separation Agreement” has the meaning set forth in Section 5.1.

(x)     “Service Provider” means a Party providing the Services, as set forth in the
relevant Exhibits.

(y)     “Service Recipient” means a Party receiving the Services, as set forth in the
relevant Exhibits.

(z)     “Service Recipient Payables” has the meaning set forth in Section 1.8.

(aa)     “Service
Taxes” has the meaning set forth in Section 3.1.

(bb)     “Services” has the meaning set forth in Section 1.1.

20

 

(cc)     “Subsidiary” or “subsidiary” of shall include all corporations,
partnerships, joint ventures, limited liability companies, associations and other entities (a) in
which Cendant or any PHH Entity, as applicable, owns (directly or indirectly) 50% or more of the
outstanding voting stock, voting power, partnership interests or similar ownership interests, (b)
of which Cendant or any PHH Entity, as applicable, otherwise directly or indirectly controls or
directs the policies or operations and (c) which would be considered subsidiaries of Cendant or any
PHH Entity, as applicable, within the meaning of Regulation S-K or Regulation S-X of the General
Rules and Regulations under the Securities Act.

(dd)     “Taxes” means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll, premium, withholding,
alternative or added minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge or any kind whatsoever, together with any
interest or penalty or addition thereto, whether disputed or not, imposed by any governmental
entity.

(ee)     “Tax Return” means any return, report or similar statement required to be filed
with respect to any Tax (including any attached schedules), including any information return, claim
for refund, amended return or declaration of estimated Tax.

(ff)     “Third Party Action” has the meaning set forth in Section 4.2.

(gg)     “Term” has the meaning set forth in Section 1.4.

21

 

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf
on the day and year first above written.

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PHH CORPORATION
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 		 	 	 	 
	

	 	By:	 	 	 	/s/ Terence W. Edwards	 	 
	 	 	 	 	 
	

	 	 	 	 	 	Name:
	 	Terence W. Edwards
	

	 	 	 	 	 	Title:
	 	President and Chief Executive Officer
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PHH VEHICLE MANAGEMENT SERVICES LLC (d/b/a PHH Arval)
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:	 	 	 	/s/ Terence W. Edwards	 	 
	 	 	 	 	 
	

	 	 	 	 	 	Name:
	 	Terence W. Edwards
	

	 	 	 	 	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CENDANT MORTGAGE CORPORATION
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:	 	 	 	/s/ Terence W. Edwards	 	 
	 	 	 	 	 
	

	 	 	 	 	 	Name:
	 	Terence W. Edwards
	

	 	 	 	 	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CENDANT OPERATIONS, INC.
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:	 	 	 	/s/ Eric J. Bock	 	 
	 	 	 	 	 
	

	 	 	 	 	 	Name:
	 	Eric J. Bock
	

	 	 	 	 	 	Title:
	 	Executive Vice President, Law
and Corporate Secretary

22

 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CENDANT CORPORATION
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:	 	 	 	/s/ Eric J. Bock	 	 
	 	 	 	 	 
	

	 	 	 	 	 	Name:
	 	Eric J. Bock
	

	 	 	 	 	 	Title:
	 	Executive Vice President, Law
and Corporate Secretary

23EX-10.8

 

Exhibit 10.8

EMPLOYMENT AGREEMENT

This Employment Agreement dated as of January 31, 2005, but effective as of and contingent
upon the distribution by Cendant Corporation to its stockholders of all of the common stock of PHH
Corporation during the first quarter of 2005 (the “Transaction”), is hereby made by and among
Cendant Corporation (“Cendant”), PHH Corporation (“PHH”) and Terry Edwards (the “Executive”).

WHEREAS, PHH desires to employ the Executive as its President and Chief Executive Officer, and
the Executive desires to serve PHH in such capacity.

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

SECTION I

EMPLOYMENT

Subject to the consummation of the Transaction, PHH agrees to employ the Executive and the
Executive agrees to be employed by PHH for the Period of Employment as provided in Section III
below and upon the terms and conditions provided in this Agreement. Subject to and effective upon
the consummation of the Transaction, the Executive will no longer be an employee, officer or
director of Cendant or any of its subsidiaries or affiliates, and agrees to provide Cendant, upon
request, with written resignations from any such positions.

SECTION II

POSITION AND RESPONSIBILITIES

During the Period of Employment, the Executive will serve as President and Chief Executive
Officer of PHH and, subject to the direction of the Board of Directors of PHH (the “Board”), will
perform such duties and exercise such supervision with regard to the business of PHH as are
associated with such position, as well as such additional duties as may be prescribed from time
to time by the Board. Further, effective upon the consummation of the Transaction, the Executive
will serve as a member of the Board; provided, however, that nothing contained in
this Agreement shall require PHH to maintain the Executive’s status

 

 

as a member of the Board or to re-nominate him for election for additional terms of service on
the Board.

The Executive will, during the Period of Employment, devote substantially all of his time
and attention during normal business hours to the performance of services for PHH. The Executive
will maintain a primary office and conduct his business in Mount Laurel, New Jersey, except for
normal and reasonable business travel in connection with his duties hereunder. Nothing contained
in this Agreement will prevent the Executive from serving on civic and charitable boards or from
conducting his personal affairs.

The Executive will, in accordance with PHH policy and procedures and applicable law, certify
to the accuracy of PHH’s publicly filed financial statements.

SECTION III

PERIOD OF EMPLOYMENT

The period of the Executive’s employment under this Agreement (the “Period of Employment”)
will begin contingent upon, and effective as of, the consummation of the Transaction, and end on
the third anniversary of such date, subject to earlier termination as provided in this Agreement.

SECTION IV

COMPENSATION AND BENEFITS

Compensation. For all services rendered by the Executive pursuant to this Agreement
during the Period of Employment, including services as an executive, officer, director or committee
member of PHH or any subsidiary or affiliate of thereof, the Executive will be compensated as
follows:

i.      Base Salary.

PHH will pay the Executive a fixed base salary (“Base Salary”) of not less than $625,000, per
year. From time to time, the Executive may be eligible to receive annual increases as PHH deems
appropriate, in accordance with PHH’s customary policies and procedures regarding the salaries of
senior officers, including pursuant to annual compensation reviews to occur no less than once per
year, and with due consideration given to the published Consumer Price Index applicable to

 

 

the Philadelphia greater metropolitan area. Base Salary will be payable according to the customary
payroll practices of PHH, but in no event less frequently than once each month.

ii.      Annual Incentive Awards.

The Executive will be eligible for discretionary annual incentive compensation awards;
provided, that the Executive will be eligible to receive an annual bonus opportunity in
respect of each fiscal year of PHH during the Period of Employment based upon a target bonus equal
to no less than 100% of his earned Base Salary during such fiscal year; provided,
however, that such bonus will be subject to the attainment by PHH of applicable performance
targets reasonably established and certified by the Board or the Compensation Committee of the
Board (the “Committee”). The parties acknowledge that it is currently contemplated that such
performance targets will be stated in terms of “earnings before interest and taxes” of PHH, however
such targets may relate to such other financial and/or business criteria of PHH, or any of their
respective subsidiaries or business units, as determined by the Board and/or the Committee in its
sole discretion (each such annual bonus, an “Incentive Compensation Award”).

iii.      Long-Term Incentive Awards

(a)      Cendant Awards. The Executive holds previously granted Cendant stock options and
Cendant restricted stock units, all of which will be equitably adjusted as determined by the
Compensation Committee of the Cendant Board of Directors in its sole discretion, and accordingly
all or any portion of such awards may be converted in equivalent awards relating to PHH common
stock and may be assumed by, and become liabilities of, PHH. Any such equitable adjustment and
conversion will be on the same terms and conditions applicable to other active employees of PHH.
The Executive, Cendant, and PHH each hereby waive any and all of their respective rights (including
the Executive’s right to acceleration of vesting and/or extension of exercise period) relating to
any “Subsidiary Change of Control” provisions set forth in any outstanding Cendant stock option or
Cendant restricted stock unit award granted prior to the Transaction.

(b)      Annual Incentive Awards. At such times as the Board or the Committee determines
to conduct annual or periodic grants of long term incentive awards to employees and officers of
PHH, the Executive will be eligible to receive such grants, subject to the sole and complete
discretion of the Board or the Commit-

 

 

tee, and upon such terms and conditions as determined by the Board or the Committee, but with due
consideration given to the Executive’s position with PHH and the Executive’s historical performance
and anticipated future contributions to PHH.

(c)      Founder’s Grant. Within 60 days following the Transaction, subject to the
approval of the Board or the Committee, the Executive will be granted an equity incentive award
relating to the common stock of PHH on such terms and conditions determined by the Board or the
Committee in its sole discretion. The “value” of such award (within the meaning of the PHH equity
incentive program but consistent with the meaning of recent Cendant programs) shall be $2.5
million; provided, that the vesting of such award will be subject to such performance
criteria and other reasonable contingencies determined by the Board of the Committee in its sole
discretion.

iv.      Additional Benefits

The Executive will be entitled to participate in all other compensation and employee benefit
plans or programs offered generally to employees of PHH, and will receive all perquisites offered
to senior executive officers of PHH, in either case pursuant to any plan or program now in effect,
or later established by PHH. The Executive will participate to the extent permissible under the
terms and provisions of such plans or programs, and in accordance with the terms of such plans and
programs.

Effective upon the consummation of the Transaction, the Executive will no longer be eligible
to participate (as an active employee) in any employee benefit plans, officer perquisite programs,
or other benefit or perquisite policies or programs of Cendant and its subsidiaries and affiliates.

SECTION V

BUSINESS EXPENSES

PHH will reimburse the Executive for all reasonable travel and other expenses incurred by the
Executive in connection with the performance of his duties and obligations under this Agreement.
The Executive will comply with such limitations and reporting requirements with respect to expenses
as may be established by PHH from time to time and will promptly provide all appropriate and
requested documentation in connection with such expenses.

 

 

SECTION VI

DISABILITY

If the Executive becomes Disabled, as defined below, during the Period of Employment, the
Period of Employment may be terminated at the option of the Executive upon notice of resignation to
PHH, or at the option of PHH upon 30 days’ advance notice of termination to the Executive. PHH’s
obligation to make payments to the Executive under this Agreement will cease as of such date of
termination, except for Base Salary and Incentive Compensation Awards earned but unpaid as of the
date of such termination, and except for payment of a pro rata portion of his Incentive
Compensation Award in respect of the year in which such Disability occurs (paid at target level).
For purposes of this Agreement, “Disabled” means the Executive’s inability to perform his duties
hereunder as a result of serious physical or
mental illness or injury for a period of no less than 180 days, together with a determination by an
independent medical authority that the Executive is currently unable to perform such duties. Such
medical authority shall be mutually and reasonably agreed upon by PHH and the Executive and such
opinion shall be binding on PHH and the Executive.

SECTION VII

DEATH

In the event of the death of the Executive during the Period of Employment, the Period of
Employment will end and PHH’s obligation to make payments under this Agreement will cease as of the
date of death, except for Base Salary and Incentive Compensation Awards earned but unpaid through
the date of death, and except for payment of a pro rata portion of his Incentive Compensation Award
in respect of the year in which his death occurs (paid at target level), which will be paid to the
Executive’s surviving spouse, estate or personal representative, as applicable.

SECTION VIII

EFFECT OF TERMINATION OF EMPLOYMENT

A.      Without Cause Termination and Constructive Discharge. If the Executive’s
employment terminates due to either a Without Cause Termination or a Constructive Discharge, as
defined below, PHH will pay the Executive (or his surviving spouse, estate or personal
representative, as applicable) upon such Without Cause Termination or Constructive Discharge (i) a
lump sum cash payment equal to the sum of the Executive’s then current Base Salary plus his then
current target In-

 

 

centive Compensation Award, multiplied by 200% and (ii) any and all Base Salary and Incentive
Compensation Awards earned but unpaid through the date of such termination. In addition, upon such
event, all of the Executive’s outstanding and unvested PHH stock options and restricted stock units
will become immediately vested. In addition, in the event that the Executive elects to continue
medical and dental benefits pursuant to COBRA, for the first 12 months of such coverage, the
Executive’s cost will be no greater than the cost applicable to active full time employees of PHH.

B.      Termination for Cause; Resignation. If the Executive’s employment terminates due
to a Termination for Cause or a Resignation, Base Salary and any Incentive Compensation Awards
earned but unpaid as of the date of such termination will be paid to the Executive in a lump sum.
Except as provided in this paragraph, PHH will have no further obligations to the Executive
hereunder.

C.      For purposes of this Agreement, the following terms have the following meanings:

i.      “Termination for Cause” means (i) the Executive’s willful failure to substantially perform
his duties as an employee of PHH or any subsidiary thereof (other than any such failure resulting
from incapacity due to physical or mental illness), (ii) any act of fraud, misappropriation,
embezzlement, dishonesty or similar conduct, in each case against PHH or any subsidiary, (iii) the
Executive’s conviction of a felony or any crime involving moral turpitude (which conviction, due to
the passage of time or otherwise, is not subject to further appeal), (iv) the Executive’s gross
negligence in the performance of his duties or (v) the Executives makes (or has been found to have
made) a false certification to PHH pertaining to its financial statements. PHH will provide the
Executive a written notice which describes the circumstances being relied on for the termination
with respect to this paragraph.

ii.      “Constructive Discharge” means (i) any material failure of PHH to fulfill its obligations
under this Agreement (including without limitation any reduction of the Base Salary, as the same
may be increased during the Period of Employment, or other element of compensation), (ii) a
material and adverse change to the Executive’s titles, positions, duties and responsibilities to
PHH (but specifically excluding the Executive no longer serving as a member of the Board for any
reason or PHH failing to re-nominate to election, or re-appoint the Executive, to the Board), (iii)
the relocation of the Executive’s primary business office to a location more than 50 miles from
Mount Laurel, New Jersey or (iv) PHH fails to cause this Agreement

 

 

to be assumed by any successor to the business of PHH. The Executive will provide PHH a written
notice which describes the circumstances being relied on for the termination with respect to this
Agreement within sixty (60) days after the event giving rise to the notice. PHH will have sixty
(60) days after receipt of such notice to remedy the situation prior to the termination for
Constructive Discharge.

iii.      “Without Cause Termination” or “Terminated Without Cause” means termination of the
Executive’s employment by PHH other than due to death, disability, or Termination for Cause.

iv.      “Resignation” means a termination of the Executive’s employment by the Executive, other
than in connection with a Constructive Discharge.

D.      Conditions to Payment and Acceleration. All payments due to the Executive under
this Section VIII shall be made as soon as practicable; provided, however, that
such payments, shall be subject to, and contingent upon, the execution by the Executive (or his
beneficiary or estate) of a release of any and all claims against PHH and its affiliates in such
reasonable form agreed to by PHH and the Executive. The payments due to the Executive under this
Section VIII shall be in lieu of any other severance benefits otherwise payable to the Executive
under any severance plan of PHH or its affiliates and/or any other agreement or arrangement.
Nothing herein shall be construed as limiting the Executive’s entitlement to any other vested
accrued benefits to which he (or his estate if applicable) is then entitled under PHH’s applicable
employee benefit plans, including without limitation any disability or life insurance plan benefits
which may become payable.

SECTION IX

OTHER DUTIES OF THE EXECUTIVE

DURING AND AFTER THE PERIOD OF EMPLOYMENT

A.      The Executive will, with reasonable notice during or after the Period of Employment,
furnish information as may be in his possession and fully cooperate with PHH and its affiliates as
may be requested in connection with any claims or legal action in which PHH or any of its
affiliates is or may become a party. The foregoing shall not unreasonably interfere with the
Executive’s duties to any successor employer.

B.      The Executive recognizes and acknowledges that all information pertaining to this Agreement
or to the affairs; business; results of operations;

 

 

accounting methods, practices and procedures; members; acquisition candidates; financial
condition; clients; customers or other relationships of PHH or any of its affiliates
(“Information”) is confidential and is a unique and valuable asset of PHH or any of its affiliates.
Access to and knowledge of certain of the Information is essential to the performance of the
Executive’s duties under this Agreement. The Executive will not during the Period of Employment or
thereafter, except to the extent reasonably necessary in performance of his duties under this
Agreement, give to any person, firm, association, corporation, or governmental agency any
Information, except as may be required by law. The Executive will not make use of the Information
for his own purposes or for the benefit of any person or organization other than PHH or any of its
affiliates. The Executive will also use his best efforts to prevent the disclosure of this
Information by others. All records, memoranda, etc. relating to the business of PHH or its
affiliates, whether made by the Executive or otherwise coming into his possession, are confidential
and will remain the property of PHH or its affiliates.

C.      i.      During the Period of Employment and for the Post Termination Period thereafter
(collectively, the “Restricted Period”), the Executive will not use his status with PHH or any of
its affiliates to obtain loans, goods or services from another organization on terms that would not
be available to him in the absence of his relationship to PHH or any of its affiliates. The Post
Termination Period means a period of two (2) years following the Executive’s termination of
employment if, in connection with such termination, the Executive receives severance under Section
VIII.A. of this Agreement, and the Post Termination Period means a period of one (1) year following
the Executive’s termination in all other cases, irrespective of the cause, manner or time of such
termination.

ii.      During the Restricted Period, the Executive will not make any statements or perform any
acts intended to or which may have the effect of advancing the interest of any existing or
prospective competitors of PHH or any of its affiliates or in any way injuring the interests of PHH
or any of its affiliates. During the Restricted Period, the Executive, without prior express
written approval by the Board, will not engage in, or directly or indirectly (whether for
compensation or otherwise) own or hold proprietary interest in, manage, operate, or control, or
join or participate in the ownership, management, operation or control of, or furnish any capital
to or be connected in any manner with, any party which competes in any way or manner with the
business of PHH or any of its affiliates, as such business or businesses may be conducted from time
to time, either as a general or limited partner, proprietor, common or preferred shareholder,
officer, director, agent, employee, consultant, trustee,

 

 

affiliate, or otherwise. The Executive acknowledges that PHH’s and its affiliates’ businesses are
conducted nationally and internationally and agrees that the provisions in the foregoing sentence
will operate throughout the United States and the world.

iii.      During the Restricted Period, the Executive, without express prior written approval from
the Board, will not solicit any then-current clients of PHH or any of its affiliates for any
existing business of PHH or any of its affiliates or discuss with any employee of PHH or any of its
affiliates information or operation of any business intended to compete with PHH or any of its
affiliates.

iv.      During the Restricted Period, the Executive will not interfere with the employees or
affairs of PHH or any of its affiliates or solicit or induce any person who is an employee of PHH
or any of its affiliates to terminate any relationship such person may have with PHH or any of its
affiliates, nor will the Executive during such period directly or indirectly engage, employ or
compensate, or cause or permit any person with which the Executive may be affiliated, to engage,
employ or compensate, any employee of PHH or any of its affiliates. The Executive hereby
represents and warrants that the Executive has not entered into any agreement, understanding or
arrangement with any employee of PHH or any of its affiliates pertaining to any business in which
the Executive has participated or plans to participate, or to the employment, engagement or
compensation of any such employee.

v.      For the purposes of this Agreement, proprietary interest means legal or equitable
ownership, whether through stock holding or otherwise, of an equity interest in a business, firm or
entity or ownership of more than 5% of any class of equity interest in a publicly-held company and
the term “affiliate” will include without limitation all subsidiaries and licensees of PHH.

D.      The Executive hereby acknowledges that damages at law may be an insufficient remedy to PHH
if the Executive violates the terms of this Agreement and that PHH will be entitled, upon making
the requisite showing, to preliminary and/or permanent injunctive relief in any court of competent
jurisdiction to restrain the breach of or otherwise to specifically enforce any of the covenants
contained in this Section IX without the necessity of showing any actual damage or that monetary
damages would not provide an adequate remedy. Such right to an injunction will be in addition to,
and not in limitation of, any other rights or remedies PHH may have. Without limiting the
generality of the foregoing, neither party will oppose

 

 

any motion the other party may make for any expedited discovery or hearing in connection with
any alleged breach of this Section IX.

E.      The period of time during which the provisions of this Section IX will be in effect will be
extended by the length of time during which the Executive is in breach of the terms hereof as
determined by any court of competent jurisdiction on PHH’s application for injunctive relief.

F.      The Executive agrees that the restrictions contained in this Section IX are an essential
element of the compensation the Executive is granted hereunder and but for the Executive’s
agreement to comply with such restrictions, PHH would not have entered into this Agreement.

SECTION X

INDEMNIFICATION; CENDANT RELEASE

PHH will indemnify the Executive to the fullest extent permitted by the laws of the state of
PHH’s incorporation in effect at that time, or the certificate of incorporation and by-laws of PHH,
whichever affords the greater protection to the Executive. If applicable, PHH will maintain D&O
insurance for the Executive on a basis no less favorable than it maintains for other officers of
PHH.

Following the consummation of the Transaction, Cendant will indemnify the Executive with
respect to events occurring prior to the Transaction, in accordance with Cendant’s current policies
relating to indemnification of former officers.

The Executive hereby represents and agrees that, as of the effective date of the Transaction,
all financial and monetary obligations owing to the Executive from Cendant and its subsidiaries and
affiliates (including without limitation any and all bonus and potential bonus entitlements under
each and every bonus, incentive, retention and similar compensation schemes sponsored by Cendant
and each of its subsidiaries and affiliates, and under each and every other actual or purported
compensation entitlement pursuant to any agreement or otherwise) have been paid to the Executive in
full, and that the Executive has no further financial claims against Cendant or its subsidiaries
and affiliates (other than accrued benefits under any tax qualified employee pension plan). The
Executive agrees that he has no legal claim or cause of action against Cendant and its subsidiaries
and affiliates, and hereby releases Cendant and its subsidiaries, affiliates, officers, directors,
agents and em-

 

 

ployee benefit, equity and compensation plans (and the administrators and fiduciaries of such
plans) from and against any such actual or purported claims and causes of action. The Executive
acknowledges that Cendant entered into this Agreement in reliance of the accuracy of the foregoing
representation.

SECTION XI

MITIGATION

The Executive will not be required to mitigate the amount of any payment provided for
hereunder by seeking other employment or otherwise, nor will the amount of any such payment be
reduced by any compensation earned by the Executive as the result of employment by another employer
after the date the Executive’s employment hereunder terminates or by offset against any amount
claimed to be owed by the Executive to PHH, or otherwise.

SECTION XII

WITHHOLDING TAXES

The Executive acknowledges and agrees that PHH may directly or indirectly withhold from any
payments under this Agreement all federal, state, city or other taxes that will be required
pursuant to any law or governmental regulation.

SECTION XIII

EFFECT OF PRIOR AGREEMENTS

This Agreement will supersede any prior employment agreement between the Executive on the one
hand, and PHH on the other hand, and any such prior employment agreement will be deemed terminated
without any remaining obligations of either party thereunder.

SECTION XIV

CONSOLIDATION, MERGER OR SALE OF ASSETS

Nothing in this Agreement will preclude PHH from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation which assumes this
Agreement and all obligations and undertakings of PHH hereunder. Upon such a consolidation, merger
or sale of assets the term “PHH” will mean the other corporation and this Agreement will continue
in full force and effect.

 

 

SECTION XV

MODIFICATION; WAIVER

This Agreement may not be modified or amended except in writing signed by the parties. No
term or condition of this Agreement will be deemed to have been waived except in writing by the
party charged with waiver. A waiver will operate only as to the specific term or condition waived
and will not constitute a waiver for the future or act on anything other than that which is
specifically waived.

SECTION XVI

GOVERNING LAW

This Agreement has been executed and delivered in the State of New Jersey and its validity,
interpretation, performance and enforcement will be governed by the internal laws of that state.

SECTION XVII

ARBITRATION

A.      Any controversy, dispute or claim arising out of or relating to this Agreement or the
breach hereof which cannot be settled by mutual agreement (other than with respect to the matters
covered by Section IX for which PHH may, but will not be required to, seek injunctive relief) will
be finally settled by binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state arbitration law) as follows: Any party who is aggrieved will
deliver a notice to the other party setting forth the specific points in dispute. Any points
remaining in dispute twenty (20) days after the giving of such notice may be submitted to
arbitration in New York, New York, to the American Arbitration Association, before a single
arbitrator appointed in accordance with the arbitration rules of the American Arbitration
Association, modified only as herein expressly provided. After the aforesaid twenty (20) days,
either party, upon ten (10) days notice to the other, may so submit the points in dispute to
arbitration. The arbitrator may enter a default decision against any party who fails to
participate in the arbitration proceedings.

B.      The decision of the arbitrator on the points in dispute will be final, unappealable and
binding, and judgment on the award may be entered in any court having jurisdiction thereof.

 

 

C.      Except as otherwise provided in this Agreement, the arbitrator will be authorized to
apportion its fees and expenses and the reasonable attorneys’ fees and expenses of any such party
as the arbitrator deems appropriate. In the absence of any such apportionment, the fees and
expenses of the arbitrator will be borne equally by each party, and each party will bear the fees
and expenses of its own attorney.

D.      The parties agree that this Section XVII has been included to rapidly and inexpensively
resolve any disputes between them with respect to this Agreement, and that this Section XVII will
be grounds for dismissal of any court action commenced by either party with respect to this
Agreement, other than post-arbitration actions seeking to enforce an arbitration award. In the
event that any court determines that this arbitration procedure is not binding, or otherwise allows
any litigation regarding a dispute, claim, or controversy covered by this Agreement to proceed, the
parties hereto hereby waive any and all right to a trial by jury in or with respect to such
litigation.

E.      The parties will keep confidential, and will not disclose to any person, except as may be
required by law, the existence of any controversy hereunder, the referral of any such controversy
to arbitration or the status or resolution thereof.

SECTION XVIII

SURVIVAL

Sections IX, X, XI, XII, XIV and XVII will continue in full force in accordance with their
respective terms notwithstanding any termination of the Period of Employment.

 

 

SECTION XIX

SEPARABILITY

All provisions of this Agreement are intended to be severable. In the event any provision or
restriction contained herein is held to be invalid or unenforceable in any respect, in whole or in
part, such finding will in no way affect the validity or enforceability of any other provision of
this Agreement. The parties hereto further agree that any such invalid or unenforceable provision
will be deemed modified so that it will be enforced to the greatest extent permissible under law,
and to the extent that any court of competent jurisdiction determines any restriction herein to be
unreasonable in any respect, such court may limit this Agreement to render it reasonable in the
light of the circumstances in which it was entered into and specifically enforce this Agreement as
limited.

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

	 	 	 	 	 
	 	 	PHH CORPORATION
	 
	 	 	 	 
	 	 	/s/ William F. Brown
	 	 	 
	

	 	By:
	 	William F. Brown
	

	 	Title:
	 	Senior Vice President, General Counsel
 and Corporate Secretary
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	CENDANT CORPORATION
	 
	 	 	 	 
	 	 	/s/ Terry Conley
	 	 	 
	

	 	By:
	 	Terry Conley
	

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	TERRY EDWARDS
	 
	 	 	 	 
	 	 	/s/ Terry Edwards

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