ex10-3.htm


     

    Exhibit
      10.3


     

    Form
      of PHH Corporation Severance Agreement for Certain Executive Officers as
      approved by the PHH Corporation Compensation Committee on June 7,
      2007.

     

     

    PHH
      CORPORATION

    EXECUTIVE
      SEVERANCE AGREEMENT

    


        

    This
      AGREEMENT (“Agreement”) is made
      and entered into effective as of ____________, 2007, by and between
      ________________ (“Executive”) and PHH Corporation, a Maryland corporation (the
“Company”).

    


    WHEREAS,
      the Executive is employed by
      the Company or one of its subsidiaries and the Company desires to provide the
      Executive with certain severance benefits as consideration for the Executive’s
      continued service with the Company and its subsidiaries.

    


    NOW,
      THEREFORE, in consideration of the
      aforementioned and of the mutual covenants and conditions contained in this
      Agreement, it is agreed as follows:

    


     

    1.  Severance
      Benefits.  In the event the Executive incurs a separation from
      service (within the meaning of Section 409A of the Internal Revenue Code of
      1986
      (the “Code”)) with the Company and its Subsidiaries (as such term is defined in
      the Agreement and Plan of Merger Dated as of March 15, 2007 by and among PHH
      Corporation, General Electric Capital Corporation and Jade Merger Sub, Inc.
      (the
“Merger Agreement”)) on or before the first anniversary of the Effective Time
      (the date on which the merger closes and becomes effective, as more fully
      defined in the Merger Agreement) as the result of any (i) involuntary
      termination of employment other than for Cause (as defined below) or Disability
      (as defined below), or (ii) voluntary termination of employment by the Executive
      as a result of any (I) change in the required location of the Executive’s
      employment as of the date of this Agreement in excess of 20 miles, (II) material
      diminution in the Executive’s duties or responsibilities as of the date of this
      Agreement, provided that the mere occurrence of the Merger, the Mortgage
      Business Sale (as defined in the Merger Agreement) and other transactions
      contemplated by the Merger Agreement or the Mortgage Business Sale Agreement
      (including the failure of the Executive to (x) retain responsibilities and
      duties in respect of either the Mortgage Business or the Fleet Business (as
      defined in the Merger Agreement) or (y) hold a position in a public company)
      shall not constitute diminution in duties or responsibilities, or (III)
      reduction of the Executive’s base salary or material reduction in compensation
      opportunity as of the date of this Agreement, the Company shall pay the
      Executive a single lump sum payment equal to $________ (“Severance
      Benefits”); provided, that the Executive executes
      the General Release substantially in the form attached hereto as Exhibit
      A and does not revoke such General Release as set forth
      therein.  Severance Benefits shall be paid no later than five days
      after the expiration of the seven-day period for revocation of the General
      Release.  For purposes of this Agreement, “Cause” means (a) a material
      failure of the Executive to substantially perform the Executive’s duties with
      the Company or one of its Subsidiaries (other than failure resulting from
      incapacity due to physical or mental illness); (b) any act of fraud,
      misappropriation, dishonesty, embezzlement or similar conduct against, or
      relating to the assets of, the Company or its Subsidiaries; (c) conviction
      (or
      plea of nolo contendere) of a felony or any crime involving moral turpitude;
      (d)
      repeated instances of negligence in the performance of the Executive’s job or
      any instance of gross negligence in the performance of the Executive’s duties as
      an employee of the Company or one of its Subsidiaries; (e) any breach by the
      Executive of any fiduciary obligation owed to the Company or any Subsidiary
      or
      any material element of the Company’s Code of Ethics, the Company’s Code of
      Conduct or other applicable workplace policies; or (f) failure by the Executive
      to perform his or her job duties for the Company to the best of the Executive’s
      ability and in accordance with reasonable instructions and directions from
      the
      Executive’s supervisor, and the reasonable workplace policies and procedures
      established by the Company, as applicable, from time to time; and “Disability”
means any condition which entitles the Executive to benefits under the Company’s
      long-term disability plan covering the Executive, as in effect at the time
      of
      any termination of employment.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    2.  Notice
      and Opportunity to Cure.  Notwithstanding anything in Section 1 to
      the contrary, (i) no Severance Benefits shall be paid in connection with any
      voluntary termination of employment described in clause (ii) of Section 1 unless
      the Executive provides the Company with written notice of the existence of
      the
      condition described in clause (ii) no later than 90 days after the initial
      existence of such condition is known to Executive and the Company fails to
      remedy such condition within 30 days of the date of such written notice; and
      (ii) no termination shall be deemed to be for Cause as described in clauses
      (a),
      (d), (e) or (f) of Section 1 unless the Company provides the Executive with
      written notice of the existence of the conditions that constitute Cause no
      later
      than 90 days after the initial existence of such condition is known to the
      Company  and the Executive fails to remedy such condition within 30
      days of the date of such written notice.

    


    3.  Parachute
      Payments.  In the event that any payment or distribution by the
      Company for the benefit of the Executive (whether paid or payable or distributed
      or distributable pursuant to the terms of this Agreement, or, including without
      limitation, pursuant to the vesting and acceleration provisions under the PHH
      2005 Equity and Incentive Plan) (a “Payment”) would be subject to the excise tax
      imposed by Section 4999 of the Code (such excise tax is hereinafter referred
      to
      as the “Excise Tax”), then with the consent of the Executive, Severance Benefits
      shall be reduced to the extent necessary so that no portion of the Payment
      shall
      be subject to the Excise Tax but only if, by reason of such reduction, the
      net
      after-tax benefit received by the Executive shall exceed the net after-tax
      benefit that would be received by the Executive if no such reduction was made.
      The “net after-tax benefit” shall equal the total of all Payments, less the
      Excise Tax.  The Company shall retain a nationally recognized
      accounting firm (the "Accounting Firm") that is reasonably acceptable to the
      Executive (which may be, but will not be required to be, the Company's
      independent auditors) to make a determination of whether the Severance Benefits
      should be reduced.  The Accounting Firm shall submit its determination
      and detailed supporting calculations to both the Executive and the Company
      no
      later than 10 days prior to the date on which the Severance Benefits are to
      be
      paid.  If the Accounting Firm determines that the Severance Benefits
      should be reduced and the Executive consents, the Severance Benefits shall
      be
      reduced but only to the extent necessary so that no portion of the Payments
      shall be subject to the Excise Tax, and the Company shall pay such reduced
      amount to the Executive at the time prescribed by Section 1 of the
      Agreement.  If the Accounting Firm determines that none of the
      Payments, after taking into account any reduction pursuant to this Section
      3,
      constitutes a “parachute payment” within the meaning of Section 280G of the
      Code, it will, at the same time as it makes such determination, furnish the
      Executive and the Company an opinion that the Executive has substantial
      authority not to report any Excise Tax.  The Executive and the Company
      shall each provide the Accounting Firm access to and copies of any books,
      records, and documents in the possession of the Executive or the Company, as
      the
      case may be, reasonably requested by the Accounting Firm, and otherwise
      cooperate with the Accounting Firm in connection with the preparation and
      issuance of the determinations and calculations contemplated by this Section
      3.  The fees and expenses of the Accounting Firm for its services in
      connection with the determinations and calculations contemplated by this Section
      3 shall be borne by the Company.

     

     

    
      
        
        

      

      
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    4.           Arbitration.  Any
      dispute, controversy or claim arising under or in connection with this Agreement
      shall be settled exclusively by arbitration, conducted before a panel of three
      arbitrators sitting in a location selected by Executive within fifty (50) miles
      from the location of the Executive’s employment as of the date hereof, in
      accordance with the JAMS Employment Arbitration Rules and Procedures then in
      effect.  Judgment may be entered on the arbitrator’s award in any
      court having jurisdiction.  Any dispute or controversy or claim in
      connection with this Agreement shall be reviewed based on the de novo
      standard of review with respect to any determinations made by the
      Company.  In the event that the Executive substantially prevails in
      any such dispute, controversy or claim, all costs and reasonable attorneys’ fees
      paid or incurred by the Executive in connection with such dispute, controversy
      or claim shall be paid or reimbursed by the Company.

    


    5.           Amendment
      and Termination.  This Agreement may not be amended or terminated
      without written consent by both the Executive and the Company.

    


    6.           Employment
      and Assumption by Pearl.  In the event that Pearl Mortgage
      Acquisition 2, L.L.C. (“Pearl”) or any of its Subsidiaries (i) offers Executive
      employment in the Mortgage Business (as defined in the Merger Agreement) under
      terms and conditions which, if provided by the Company, would not constitute
      a
      (I) change in required location as described in Section 1(ii)(I) of this
      Agreement, (II) material diminution in the Executive’s duties or
      responsibilities as described in Section 1(ii)(II) of the Agreement, or (III)
      reduction in the Executive’s base salary or material reduction in compensation
      opportunities as described in Section 1(ii)(III) of this Agreement, and (ii)
      assumes all obligations of the Company under this Agreement, then (x) if the
      Executive does not accept such offer of employment, he will not be entitled
      to
      any Severance Benefits under Section 1 of this Agreement in the event the
      Executive’s employment is terminated on account of the failure to accept such
      employment, and (y) if the Executive does accept such employment, on and after
      the effective date of such employment with Pearl, all references in the
      Agreement to “Company” shall be deemed to be references to Pearl (except where
      the context requires otherwise) and Pearl shall be liable for the payment of
      all
      Severance Benefits as provided in Section 1 of this Agreement in connection
      with
      any termination of employment described in clause (i) or (ii) of Section 1
      of
      this Agreement which occurs after Executive accepts employment with Pearl or
      one
      of its Subsidiaries.  Except as otherwise provided in this Section 6,
      none of the rights or obligations of either of the parties to the Agreement
      may
      be assigned or assumed without the written agreement of the Executive and the
      Company.

    


    7.           No
      Duty to Mitigate; Obligations of the Company.  The Executive shall
      not be required to mitigate the amount of any payment or benefit contemplated
      by
      this Agreement by seeking employment with a new employer or otherwise, nor
      shall
      any such payment or benefit be reduced by any compensation or benefits that
      the
      Executive may receive from employment by another employer.  Except as
      otherwise provided by this Agreement, the obligations of the Company to make
      payment to the Executive as described herein are absolute and unconditional
      and
      may not be reduced by any circumstances, including without limitation any
      set-off, counterclaim, recoupment, defense or other right which the Company
      may
      have against the Executive or any third party at any time.

     

     

    
      
        
        

      

      
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    8.           Facility
      of Payment.If the Executive is under legal disability or, in the
      Company’s reasonable opinion, is in any way incapacitated so as to be unable to
      manage his or her affairs, the Company may cause payments or benefits that
      would
      otherwise be provided to such person to be provided to the Executive’s legal
      representative for his or her benefit or to be applied for the benefit of such
      person in any other manner that the Company may determine.  Such
      provision shall completely discharge the liability of the Company for payments
      and benefits hereunder.

    


    9.           Application
      of Section 409A. Notwithstanding any inconsistent provision of this
      Agreement, to the extent the Company determines in good faith that
      (i) payments or benefits received or to be received by the Executive
      pursuant to this Agreement in connection with the Executive’s termination of
      employment would constitute deferred compensation subject to the rules of
      Section 409A of the Code, and (ii) the Executive is a “specified
      employee” under Section 409A of the Code, then only to the extent required
      to avoid the Executive’s incurrence of any additional tax or interest under
      Section 409A, such payment or benefit will be delayed until the earliest
      date following the Executive’s “separation from service” within the meaning of
      Section 409A which will permit the Executive to avoid such additional tax
      or interest.  The Company and the Executive agree to negotiate in good
      faith to reform any provisions of this Agreement to maintain to the maximum
      extent practicable the original intent of the applicable provisions without
      violating the provisions of Section 409A, if the Company deems such
      reformation necessary or advisable pursuant to guidance under Section 409A
      to avoid the incurrence of any such interest and penalties.  Such
      reformation shall not result in a reduction of the aggregate amount of payments
      or benefits under this Agreement. 

    


    10.           Confidential
      Information and Return of Company Property.  Executive recognizes
      and acknowledges that all information pertaining to the affairs, business,
      results of operations, accounting methods, practices and procedures, members,
      acquisition candidates, financial condition, clients, customers or other
      relationships of the Company (“Information”) is confidential and is a unique and
      valuable asset of the Company.  Executive shall not, at any time,
      including following Executive’s separation from service with the Company, give
      to any person, firm, associate, corporation, or governmental agency any
      Information, except as may be required by law.  Executive will not
      make use of the Information for Executive’s own purposes or for the benefit of
      any person or organization other than the Company.  Executive will
      also use Executive’s best efforts to prevent the disclosure of Information by
      others.  All records, memoranda, etc. relating to the business of the
      Company are confidential and will remain the property of the
      Company.  Executive shall return all Company property to the Company
      within three days of  the effective date of Executive’s separation
      from service.  If Executive violates the terms of this
      Section 10, the Company will be entitled, upon making the requisite showing,
      to,
      among other things, 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 10 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 the Company may have
      under this Agreement.

     

     

    
      
        
        

      

      
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    11.           Notices.  Notices
      and all other communications provided for herein shall be in writing and shall
      be deemed to have been duly given when personally delivered or when mailed
      by
      United States certified mail, return receipt requested, or by overnight courier,
      postage prepaid, as follows:

     

    
      	
              a.  

            	
              if
                to the Company,

            


    

    


    PHH
      CORPORATION

    3000
      Leadenhall Road

    Mt.
      Laurel, New Jersey  08054

    Attn:  General
      Counsel

    


    
      	
              b.  

            	
              if
                to the Executive, at the home address which the Executive most recently
                communicated to the Company in
                writing.

            


    

     

    Either
      party may provide the other with notice of a change of address, which shall
      be
      effective upon receipt.

     

    12.           Gender
      and Number. A pronoun or adjective in the masculine gen­der
      includes the feminine gender, the singular includes the plural and the plural
      includes the singular, unless the context clearly indicates
      otherwise.

     

    13.           Waiver
      of Certain Severance Benefits. The Executive hereby agrees to waive any
      rights to receive severance benefits under the Company’s Severance Pay Plan for
      Officers or the Company’s Severance Pay Plan for Non-Officers, as applicable,
      during the period commencing on the effective date of this Agreement and ending
      after the first anniversary of the Effective Time of the Merger.

     

    14.           Governing
      Law.  This Agreement shall be construed, admin­istered
      and enforced in accordance with the laws of the [State of Maryland/New Jersey]
      to the extent not superseded by federal law.

     

    15.           Integration
      with Other Benefit Programs.  Except as provided in Section
      13, benefits payable under this Agreement will not increase or decrease the
      benefits otherwise available to the Executive under any of the Company’s
      retirement plans, welfare plans or any other employee benefit plans or programs
      unless otherwise expressly provided in any particular plan or
      program.

     

    16.           No
      Employment Rights Created.This Agreement does not constitute a
      contract of employment and the Agreement does not give any person the right
      to
      be retained in the employ or service of the Company.

     

    17.           Severability.  If
      any provision of this Agreement shall be held to be invalid or unenforceable
      by
      a court of competent jurisdiction, then the remaining provisions of this
      Agreement shall remain operative and in full force and effect. 

     

     

    
      
        
        

      

      
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    18.           Tax
      Withholding.  The Company retains the right to withhold from any
      amounts due under this Agreement, any income, employment, payroll, excise and
      other taxes as the Company may, in its sole discretion, deem
      necessary.  

     

    19.           Successors.  This
      Agreement shall inure to the benefit of, and be binding upon, each successor
      of
      the Company, whether by merger, consolidation, transfer of all or substantially
      all of its assets or otherwise.

     

    20.           Counterparts.  For
      convenience of the parties and to facilitate execution, this Agreement may
      be
      executed in two or more counterparts, each of which shall be deemed an original,
      but all of which shall constitute one and the same document. Transmission by
      facsimile of an executed counterpart signature page hereof by a party hereto
      shall constitute due execution and delivery of this Agreement by such
      party.

    


    ***Signature
      on Following Page***


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Executive and
      the Company have executed this Agreement effective as of the date written
      below.

    


    


    Executed
      this ___ day of ________, 2007

    By:

    


    ______________________________

    [Executive’s
      Name]

    


    


    PHH
      CORPORATION

    


    


    By:
      __________________________

    Its:
      __________________________

    


    Date:
      ________________________

    


     

    


    ASSUMPTION
      BY PEARL MORTGAGE ACQUISITION 2, L.L.C.

    


    Pursuant
      to Section 6 of the Agreement, Pearl Mortgage Acquisition 2, L.L.C. hereby
      assumes this Agreement effective as of _______________, 200__, and agrees to
      be
      bound by the terms and conditions hereof as described in Section 6 of the
      Agreement.

    


    


    PEARL
      MORTGAGE ACQUISITION 2,
      L.L.C.

    


    By:
      __________________________

    


    Date:
      _________________________

    


    


    

      
        
          
          

        

        
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    EXHIBIT
      A

    


    GENERAL
      RELEASE

     

    THIS
      RELEASE (the “Release”) is entered into between
      _____________________(“Executive”) and PHH Corporation, a Maryland
      corporation (the “Company”), for the benefit of the
      Company.  The entering into and non-revocation of this Release is a
      condition to Executive’s right to receive the payments under the Executive
      Severance Agreement.  Capitalized terms used and not defined herein
      shall  have the meaning provided in the Executive Severance
      Agreement.

     

    Accordingly,
      Executive and the Company agree as follows.

     

    1.           In
      consideration for the payments and other benefits provided to Executive by
      the
      Executive Severance Agreement, to which Executive is not otherwise entitled,
      and
      the sufficiency of which Executive acknowledges, Executive represents and
      agrees, as follows:

     

    (a)           Executive,
      for himself, his heirs, administrators, representatives, executors, successors
      and assigns (collectively “Releasers”), hereby irrevocably and
      unconditionally releases, acquits and forever discharges and agrees not to
      sue
      the Company or any of its subsidiaries, divisions, affiliates and related
      entities and their respective current and former directors, officers,
      shareholders, trustees, employees, consultants, independent contractors,
      representatives, agents, servants, successors and assigns and all persons acting
      by, through or under or in concert with any of them (collectively
“Releasees”), from all rights and liabilities up to and including the
      date of this Release arising under or relating to the employment of the
      Executive and from any and all charges, complaints, claims, liabilities,
      obligations, promises, agreements, controversies, damages, actions, causes
      of
      actions, suits, rights, demands, costs, losses, debts and expenses of any nature
      whatsoever, known or unknown, suspected or unsuspected and any claims of
      wrongful discharge, breach of contract, implied contract, promissory estoppel,
      defamation, slander, libel, tortious conduct, employment discrimination or
      claims under any federal, state or local employment statute, law, order or
      ordinance, including any rights or claims arising under Title VII of the Civil
      Rights Act of 1964, as amended, the Age Discrimination in Employment Act of
      1967, as amended, 29 U.S.C. § 621 etseq. (“ADEA”), or any
      other federal, state or municipal ordinance relating to discrimination in
      employment.  Nothing contained herein shall restrict the parties’
rights to enforce the terms of this Release or the Executive Severance
      Agreement.

     

    (b)           To
      the maximum extent permitted by law, Executive agrees that he/she has not filed,
      nor will he ever file, a lawsuit asserting any claims which are released by
      this
      Release, or to accept any benefit from any lawsuit which might be filed by
      another person or government entity based in whole or in part on any event,
      act,
      or omission which is the subject of this Release.

     

    (c)           This
      Release specifically excludes any claim for vested benefits to which the
      Executive may be entitled under any benefit plan or special retention bonus
      arrangement of the Company or any affiliate in which the Executive participates
      (the “Company Plans”).  The Executive’s entitlement to benefits
      under the Company Plans shall be determined in accordance with the provisions
      of
      those Company Plans.  This Release specifically excludes the
      Executive’s indemnification as an officer and employee of the Company or any
      affiliate thereof.  Nothing contained in this Release shall release
      the Executive from his/her obligations, including any obligations to abide
      by
      restrictive covenants under the Executive Severance Agreement, that continue
      or
      are to be performed following termination of employment.

     

     

    
      
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    (d)           Executive
      represents that he is not aware of any facts or circumstances that would give
      rise, based on his/her actions, to any claims or lawsuits against the Company
      or
      any Release.

     

    (e)           The
      parties agree that this Release shall not affect the rights and responsibilities
      of the US Equal Employment Opportunity Commission (hereinafter “EEOC”) to
      enforce ADEA and other laws.  In addition, the parties agree that this
      Release shall not be used to justify interfering with the Executive’s protected
      right to file a charge or participate in an investigation or proceeding
      conducted by the EEOC.  The parties further agree that the Executive
      knowingly and voluntarily waives all rights or claims (that arose prior to
      the
      Executive’s execution of this Release) the Releasers may have against the
      Releasees, or any of them, to receive any benefit or remedial relief (including,
      but not limited to, reinstatement, back pay, front pay, damages, attorneys’
fees, experts’ fees) as a consequence of any investigation or proceeding
      conducted by the EEOC.

     

    2.           The
      Executive acknowledges that the Company has specifically advised him/her of
      the
      right to seek the advice of an attorney concerning the terms and conditions
      of
      this Release.  The Executive further acknowledges receipt of a copy of
      this Release, and has been afforded twenty-one (21) days in which to consider
      the terms and conditions set forth above prior to this Release.  By
      executing this Release, the Executive affirmatively acknowledges sufficient
      and
      reasonable time to review this Release and to consult with an attorney
      concerning Executive’s legal rights prior to the final execution of this
      Release.  Executive has carefully read this Release and fully
      understands its terms.  The Executive understands that he/she may
      revoke this Release within seven (7) days after signing this
      Release.  Revocation of this Release must be made in writing and must
      be received by [__________________________________________] within the time
      period set forth above.

     

    3.           This
      Release will be governed by and construed in accordance with the laws of the
      State of [Maryland/New Jersey], without giving effect to any choice of law
      or
      conflicting provision or rule (whether of the State of [Maryland/New Jersey]
      or
      any other jurisdiction) that would cause the laws of any jurisdiction other
      than
      the State of [Maryland/New Jersey] to be applied.  In furtherance of
      the foregoing, the internal law of the State of [Maryland/New Jersey] will
      control the interpretation and construction of this agreement, even if under
      such jurisdiction’s choice of law or conflict of law analysis, the substantive
      law of some other jurisdiction would ordinarily apply. The provisions of this
      Release are severable, and if any part or portion of it is found to be
      unenforceable, the other paragraphs shall remain fully valid and
      enforceable.  This Release shall become effective and enforceable on
      the eighth day following its execution by Executive, provided he/she does not
      exercise his right of revocation as described above.  If Executive
      fails to sign this Release or revokes his signature, this Release will be
      without force or effect, and Executive shall not be entitled to the payment
      under the Executive Severance Agreement.

     

    I,
      ___________________________, HAVING READ THE FOREGOING RELEASE, UNDERSTANDING
      ITS CONTENT AND HAVING HAD AN OPPORTUNITY TO CONSULT WITH COUNSEL OF MY CHOICE,
      DO HEREBY KNOWINGLY AND VOLUNTARILY SIGN THIS AGREEMENT, THEREBY WAIVING AND
      RELEASING MY CLAIMS, ON _______________________, 200_.

     

    ______________________________

     

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