AMENDMENT NO. 2 TO
PHH CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
THIS AMENDMENT NO. 2 is dated as of this February 26, 1996, to the PHH
Corporation Executive Deferred Compensation Plan approved by the Board of
Directors on February 28, 1994, and as amended pursuant to Amendment No.1 dated
as of April 10, 1995 (the "Plan").
PREAMBLE
The Compensation Committee of the Board of Directors of PHH Corporation (the
"Corporation") desires that the Plan be amended to provide for the revocation of
Optional Deferral Elections and Matching Contributions in certain events.
Accordingly, the Plan is hereby amended as follows:
1. Section 1. (Definitions) is amended as follows:
a. The following term shall be added after the term "Board of
Directors":
(c) "Change in Control" shall be deemed to have taken place on the date
of the earlier to occur of either of the following events: (i) a third
person, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of shares
of the Corporation having 20% or more of the total number of votes that
may be cast for the election of directors of the Corporation; or (ii)
as the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Corporation
before the Transaction shall cease to constitute a majority of the
Board of Directors of the Corporation or any successor to the
Corporation.
b. The following term shall be added after the term "ERISA":
(k) "Financial Trigger" shall be deemed to have occurred if the
Corporation's Net Income for any fiscal quarter is less than 50% of the
Corporation's Net Income for the same fiscal quarter for the
immediately preceding year. The term "Net Income" shall mean the
consolidated net income of the Corporation and its consolidated
subsidiaries, determined on the basis of generally accepted accounting
principles, excluding extraordinary gains and gains from discontinued
operations but including extraordinary losses and losses from
discontinued operations. The Corporation's Net Income for the fiscal
quarter in question shall be determined by reference to the
Corporation's quarterly report on Form 10-Q as filed with the
Securities and Exchange Commission for that fiscal quarter and shall be
deemed to have occurred at the time such filing is made.
c. The following term shall be added after the term "Plan Year":
(r) "Potential Change in Control" shall be deemed to have taken place
if (i) any third person commences a tender or exchange offer (other
than a tender or exchange offer which, if consummated, would not result
in a change of control) for twenty percent (20%) or more of the then
outstanding shares of common stock or combined voting power of the
Corporation's then outstanding voting securities; (ii) the Corporation
enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control; (iii) any person (including the
Corporation) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a Change in
Control; or (iv) the Board of Directors of the Corporation adopts a
resolution to the effect that, for purposes of this Plan, a Change in
Control is imminent.
d. The terms listed in Section 1. shall be re-lettered as
appropriate.
2. Section 3. (Participation) is hereby amended as follows:
a. In subsection 3(b) (Termination), the word "or" prior to subclause
(iii) in the first sentence of that subsection shall be deleted and the
following inserted prior to the period at the end of that sentence: ";
or (iv) immediately upon a Change in Control, Potential Change in
Control or Financial Trigger pursuant to Section 4(e) and Section 5(c)
hereof."
b. The following shall be added at the end of that Section:
"(c) Re-Election. A Participant whose Optional Deferral Election has
been revoked under Section 4(e) herein during any Plan Year may make an
Optional Deferral Election for any subsequent Plan Year by following
the procedure set forth in Section 4(b) herein. The Participant shall
be entitled to have credited to his Account the amount of any matching
contributions on such new optional deferrals to which he or she is
entitled pursuant to Sections 5(a) and 5(b) herein."
3. Section 4. (Optional Deferrals) is amended by:
a. inserting the words: "Except as provided in Section 4(e)," at the
beginning of the first sentence of Section 4(c) (Optional Deferral Election
Irrevocable).
b. inserting the following at the end of that Section:
"(e) Revocation of Optional Deferral Election. In the event of a Change
in Control, a Potential Change in Control, or a Financial Trigger, all
Optional Deferral Elections then in effect shall be automatically
revoked for the remainder of the Plan Year, and the amount of
Compensation to be otherwise deferred in accordance with such Optional
Deferral Election shall be payable directly to the Participant as if no
Optional Deferral Election were in effect."
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4. Section 5. (Matching Contributions Relating to Employee Investment
Plan) is amended as follows:
(a) In Subsection (b) (Vesting), the following sentence shall be
inserted at the end of that subsection: "Notwithstanding the above,
upon a Change in Control a Participant shall become vested immediately
in the portion of his or her Account attributable to matching
contributions."
(b) The following subsection shall be inserted at the end of that
Section:
"(c) Cessation of Matching Contributions. Notwithstanding anything to
the contrary herein, in the event of a Change in Control, any matching
contribution to be credited to a Participant's Account subsequent to
such event shall be automatically withheld, and a Participant will
receive additional compensation from the Corporation equal to the
amount of the matching contribution to be otherwise be credited to his
or her Account in accordance with this Section 5."
5. Section 10 (Forfeiture of Right to Matching Contributions) is hereby
amended as follows:
(a) The parenthetical: "(except that this Section shall not apply in
the event of a Change in Control, Potential Change in Control or
Financial Trigger as provided in Section 5(b) and 5(c) herein)," shall
be inserted after the words "Notwithstanding any other provision of
this Plan" in the first line of that Section.
6. Miscellaneous.
6.1 Except as otherwise expressly provided herein, the terms of the
Plan shall remain in full force and effect.
6.2 Capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Plan.
This Amendment No. 2 to the Executive Deferred Compensation Plan is hereby
executed as of the date first above written pursuant to the approval of the
Corporation's Board of Directors on February 26, 1996.
PHH CORPORATION
By: /s/ Robert D. Kunisch
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Robert D. Kunisch
Chief Executive Officer
and President
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