Document:

Exhibit 10.5

 

ADVENT SOFTWARE, INC.

 

2002 STOCK PLAN

 

(as amended and restated effective as of May 18, 2005)

(as amended and restated effective as of April 1, 2008)

(as amended and restated effective as of April 1, 2009)

(as amended and restated effective as of April 1, 2010)

(as amended and restated effective as of April 1, 2012)

(as amended and restated effective as of June 12, 2013)

 

1.                                      Purposes of the Plan.  The purposes of this Plan are:

 

·                  to attract and retain the best available personnel for positions of substantial responsibility,

 

·                  to provide additional incentive to Employees, Directors and Consultants, and

 

·                  to promote the success of the Company’s business.

 

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.

 

2.                                      Definitions.  As used herein, the following definitions shall apply:

 

(a)                                 “Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.

 

(b)                                 “Affiliated SAR” means a SAR that is granted in connection with a related Option, and which automatically will be deemed to be exercised at the same time that the related Option is exercised.

 

(c)                                  “Annual Contract Value” means as to any Performance Period, the contribution to annual revenue from the contracts signed by the Company or business unit once they are fully implemented.

 

(d)                                 “Applicable Laws” means the requirements relating to the administration of equity based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

 

(e)                                  “Assets Under Administration” means financial properties that are managed by a bank or financial institution on behalf of clients.

 

(f)                                   “Assets Under Management” means assets that are actively managed by fund managers and portfolio managers on behalf of investors.

 

(g)                                  “Award” means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares.

 

(h)                                 “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms and conditions of the Plan.

 

 

(i)                                     “Board” means the Board of Directors of the Company.

 

(j)                                    “Cash Position” means as to any Performance Period, the Company’s level of cash and cash equivalents.

 

(k)                                 “Change in Control” means the occurrence of any of the following events:

 

(i)                                     Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities;

 

(ii)                                  The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

 

(iii)                               A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

 

(iv)                              The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

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

 

(m)                             “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.

 

(n)                                 “Common Stock” means the common stock of the Company.

 

(o)                                 “Company” means Advent Software, Inc., a Delaware corporation.

 

(p)                                 “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

 

(q)                                 “Director” means a member of the Board.

 

(r)                                    “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

(s)                                   “Earnings Per Share” means as to any Performance Period, the Company’s or a business unit’s Net Income, divided by a weighted average number of Common Stock outstanding and dilutive common equivalent shares deemed outstanding.

 

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(t)                                    “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

 

(u)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(v)                                 “Exchange Program” means a program established by the Administrator under which outstanding Awards are amended to provide for a lower exercise price or surrendered or cancelled in exchange for (i) Awards with a lower exercise price, (ii) a different type of Award, (iii) cash, or (iv) a combination of (i), (ii) and/or (iii).

 

(w)                               “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i)                                     If the Common Stock is listed on any established stock exchange or a national market system, The NASDAQ including without limitation The NASDAQ National Market or The NASDAQ SmallCap Market of The NASDAQ Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)                                  If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(iii)                               In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.

 

(x)                                 “Fiscal Year” means the fiscal year of the Company.

 

(y)                                 “FreeCash Flow” means as to any Performance Period, the Company’s Operating Cash Flow less cash used for purchases of property and equipment, and capitalized software development costs.

 

(z)                                  “Freestanding SAR” means a SAR that is granted independently of any Option.

 

(aa)                          “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

(bb)                          “Individual Objectives” means as to a Participant for any Performance Period, the objective and measurable goals set by a process and approved by the Administrator (in its discretion).

 

(cc)                            “Net Income” means as to any Performance Period, the Company’s or a business unit’s income after taxes.

 

(dd)                          “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

 

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(ee)                            “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(ff)                              “Operating Cash Flow” means as to any Performance Period, the Company’s or a business unit’s cash flows from operations.

 

(gg)                            “Operating Income” means as to any Performance Period, the Company’s or a business unit’s income from operations but excluding any unusual items.

 

(hh)                          “Option” means a stock option granted pursuant to the Plan.

 

(ii)                                  “Optioned Stock” means the Common Stock subject to an Award.

 

(jj)                                “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

 

(kk)                          “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(ll)                                  “Participant” means the holder of an outstanding Award, which shall include an Optionee.

 

(mm)                  “Performance Period” means any Fiscal Year of the Company or such other period as determined by the Administrator in its sole discretion.

 

(nn)                          “Performance Goals” means the goal(s) (or combined goal(s)) determined by the Administrator (in its discretion) to be applicable to a Participant with respect to an Award.  As determined by the Administrator, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (a) Assets Under Administration, (b) Assets Under Management, (c) Cash Position, (d) Earnings Per Share, (e) Free Cash Flow, (f) Individual Objectives, (g) Net Income, (h) Operating Cash Flow, (i) Operating Income, (j) Renewal Rate, (k) Return on Assets, (l) Return on Equity, (m) Return on Sales, (n) Revenue, (o) Sales Bookings (including Total Contract Value, Annual Contract Value, and other similar bookings measures), or (p) Total Shareholder Return.  The Performance Goals may differ from Participant to Participant and from Award to Award.  Prior to the Determination Date, the Plan Administrator shall determine whether any significant element(s) shall be included in or excluded from the calculation of any Performance Goal with respect to any Participant.  “Determination Date” means the latest possible date that will not jeopardize an Award’s qualification as performance-based compensation under Section 162(m) of the Code.  Notwithstanding the previous sentence, for Awards not intended to qualify as performance-based compensation, “Determination Date” shall mean such date as the Administrator may determine in its discretion.  For example (but not by way of limitation), the Administrator may determine that the measures for one or more Performance Goals shall be based upon the Company’s pro-forma results and/or results in accordance with generally accepted accounting principles.

 

(oo)                          “Performance Share” means an Award granted to a Participant pursuant to Section 9.

 

(pp)                          “Performance Unit” means an Award granted to a Participant pursuant to Section 9.

 

(qq)                          “Period of Restriction” means the period during which shares of Restricted Stock are subject to forfeiture and/or restrictions on transferability.

 

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(rr)                                “Plan” means this 2002 Stock Plan, as amended and restated.

 

(ss)                              “Renewal Rate” means as to any Performance Period, the percentage of customer contracts that were renewed.

 

(tt)                                “Restricted Stock” means an Award of Common Stock pursuant to Section 7 of the Plan.

 

(uu)                          “Restricted Stock Unit” means an Award granted to a Participant pursuant to Section 10.

 

(vv)                          “Return on Assets” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by average net Company or business unit, as applicable, assets.

 

(ww)                      “Return on Equity” means as to any Performance Period, the percentage equal to the Company’s Net Income divided by average stockholder’s equity.

 

(xx)                          “Return on Sales” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by the Company’s or the business unit’s, as applicable, revenue.

 

(yy)                          “Revenue” means as to any Performance Period, the Company’s or business unit’s net sales.

 

(zz)                            “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

 

(aaa)                   “Section 16(b)” means Section 16(b) of the Exchange Act.

 

(bbb)                   “Service Provider” means an Employee, Director or Consultant.

 

(ccc)                      “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan.

 

(ddd)                   “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an Option, that pursuant to Section 8 is designated as a SAR.

 

(eee)                      “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

(fff)                         “Tandem SAR” means a SAR that is granted in connection with a related Option, the exercise of which will require forfeiture of the right to purchase an equal number of Shares under the related Option (and when a Share is purchased under the Option, the SAR will be canceled to the same extent).

 

(ggg)                      “Total Contract Value” means as to any Performance Period, the contribution to revenue from the contracts signed by the Company or business unit once they are fully implemented.

 

(hhh)                   “Total Shareholder Return” means as to any Performance Period, the total return (change in Share price plus reinvestment of any dividends) of a Share.

 

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3.                                      Stock Subject to the Plan.

 

(a)                                 Number of Shares.  Subject to adjustment as provided in Section 13 of the Plan, the maximum number of Shares available for issuance under the Plan shall equal the sum of (i) 3,643,325 Shares, plus an additional increase of 900,000 Shares effective as of April 1, 2008 and approved by stockholders at the 2008 Annual Meeting, plus an additional increase of 1,800,000 Shares effective as of April 1, 2009 and approved by stockholders at the 2009 Annual Meeting, plus an additional increase of 1,500,000 Shares effective as of April 1, 2010 and approved by stockholders at the 2010 Annual Meeting, plus an additional increase of 1,900,000 Shares effective as of April 1, 2012 and approved by stockholders at the 2012 Annual Meeting, plus (ii) any Shares (not to exceed 1,937,592) that otherwise would have been returned to the 1992 Stock Plan after December 31, 2004 on account of the expiration, cancellation or forfeiture of awards granted under the 1992 Stock Plan, plus (iii) any Shares (not to exceed 92,837) that otherwise would have been returned to the 1998 Stock Plan after December 31, 2004 on account of the expiration, cancellation or forfeiture of awards granted under the 1998 Stock Plan.  The Shares may be authorized, but unissued, or reacquired Common Stock.  Shares will not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash.  Upon payment in Shares pursuant to the exercise of an SAR, the number of Shares available for issuance under the Plan will be reduced by the gross number of Shares covered by the SAR, not the net number actually issued in such payment.  If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of Shares owned by the Participant, the number of Shares available for issuance under the Plan will be reduced by the gross number of Shares for which the Option is exercised.  Similarly, if Shares are withheld to satisfy the minimum statutory withholding obligations arising in connection with the vesting, exercise or issuance of any Award (or delivery of the related Shares), such withheld Shares will not be available for future issuance under the Plan.

 

(b)                                 Share Usage.

 

(i)                                     If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise of an Award, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of Restricted Stock are repurchased by the Company, such Shares shall become available for future grant under the Plan.

 

(ii)                                  Notwithstanding the foregoing and, subject to adjustment provided in Section 13, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan under paragraph (i) above.

 

(iii)                               Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units shall reduce the number of Shares available for issuance under the Plan by 1.79 Shares for each Share covered by such Awards.  To the extent that a Share that was subject to an Award of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units is recycled back into the Plan under Section 3(b)(i), the Plan shall be credited with 1.79 Shares.

 

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4.                                      Administration of the Plan.

 

(a)                                 Procedure.

 

(i)                                     Multiple Administrative Bodies.  Different Committees with respect to different groups of Service Providers may administer the Plan.

 

(ii)                                  Section 162(m).  To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.

 

(iii)                               Rule 16b-3.  To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.

 

(iv)                              Other Administration.  Other than as provided above, the Plan shall be administered by (A) the Board, or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws.

 

(b)                                 Powers of the Administrator.  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, at its discretion:

 

(i)                                     to determine the Fair Market Value;

 

(ii)                                  to select the Service Providers to whom Awards may be granted hereunder;

 

(iii)                               to determine the number of shares of Common Stock to be covered by each Award granted hereunder;

 

(iv)                              to approve forms of agreement for use under the Plan;

 

(v)                                 to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(vi)                              to reduce the exercise price of any SAR or Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such SAR or Option shall have declined since the date the SAR or Option was granted, subject to the provisions of Section 4(c);

 

(vii)                           to institute an Exchange Program, subject to the provisions of Section 4(c);

 

(viii)                        to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;

 

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(ix)                              to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

 

(x)                                 to modify or amend each Award (subject to Section 17(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan;

 

(xi)                              to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld.  The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by a Participant to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

 

(xii)                           to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

 

(xiii)                        to determine whether Awards will be settled in Shares, cash or in any combination thereof; and

 

(xiv)                       to make all other determinations deemed necessary or advisable for administering the Plan.

 

(c)                                  Exchange Program; Option/SAR Repricing.  Notwithstanding anything in this Plan to the contrary, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or SARs or cancel outstanding Options or SARS in exchange for cash, other Awards or Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs without stockholder approval.

 

(d)                                 Effect of Administrator’s Decision.  The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards.

 

5.                                      Eligibility.  Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares may be granted to Service Providers.  Incentive Stock Options may be granted only to Employees.

 

6.                                      Stock Options.

 

(a)                                 Limitations.

 

(i)                                     Each Option shall be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted.  The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

 

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(ii)                                  No Participant shall be granted, in any Fiscal Year, Options to purchase more than 1,000,000 Shares.  Notwithstanding the foregoing limitation, in connection with his or her initial service as an Employee, an Employee may be granted Options to purchase up to an additional 1,000,000 Shares.

 

(iii)                               The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 13.

 

(iv)                              If an Option is cancelled in the same Fiscal Year of the Company in which it was granted (other than in connection with a transaction described in Section 13), the cancelled Option will be counted against the limits set forth in subsections (i) and (ii) above.  For this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option.

 

(b)                                 Term of Option.  The term of each Option shall be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement.  Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

 

(c)                                  Option Exercise Price and Consideration.

 

(i)                                     Exercise Price.  The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:

 

(A)                               In the case of an Incentive Stock Option

 

a)                                     granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant; and

 

b)                                     granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(B)                               In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(C)                               Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction.

 

(ii)                                  Waiting Period and Exercise Dates.  At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised.

 

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(iii)                               Form of Consideration.  The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment.  In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant.  Such consideration may consist entirely of:

 

(A)                               cash;

 

(B)                               check;

 

(C)                               promissory note;

 

(D)                               other Shares which, in the case of Shares acquired directly or indirectly from the Company, (x) have been owned by the Participant for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

 

(E)                                consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;

 

(F)                                 a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or arrangement;

 

(G)                               any combination of the foregoing methods of payment; or

 

(H)                              such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

 

(d)                                 Exercise of Option.

 

(i)                                     Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement.  An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.

 

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Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

(ii)                                  Termination of Relationship as a Service Provider.  If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for three (3) months following the Participant’s termination.  If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Participant does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(iii)                               Disability of Participant.  If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination.  If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Participant does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

(iv)                              Death of Participant.  If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution.  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following Participant’s death.  If, at the time of death, Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan.  If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

7.                                      Restricted Stock.

 

(a)                                 Grant of Restricted Stock.  Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Employees, Directors and Consultants in such amounts as the Administrator, in its sole discretion, shall determine.  The Administrator, in its sole discretion, will determine the number of Shares to be granted to each Participant, provided that during any Fiscal Year, no Participant will receive more than an aggregate of 100,000 Shares of Restricted Stock.  Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted an aggregate of up to an additional 250,000 Shares of Restricted Stock.

 

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(b)                                 Restricted Stock Agreement.  Each Award of Restricted Stock shall be evidenced by a Restricted Stock Agreement that shall specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, shall determine.  Unless the Administrator determines otherwise, Shares of Restricted Stock shall be held by the Company as escrow agent until the restrictions on such Shares have lapsed.

 

(c)                                  Transferability.  Except as provided in this Section 7, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

 

(d)                                 Other Restrictions.  The Restricted Stock Agreement will contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator.

 

(i)                                     General Restrictions.  The Administrator may set restrictions based upon the achievement of specific performance objectives (Company-wide, divisional, or individual), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.

 

(ii)                                  Section 162(m) Performance Restrictions.  For purposes of qualifying grants of Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals.  The Performance Goals will be set by the Administrator on or before the latest date permissible to enable the Restricted Stock to qualify as “performance-based compensation” under Section 162(m) of the Code.  In granting Restricted Stock which is intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Restricted Stock under Section 162(m) of the Code (e.g., in determining the Performance Goals).

 

(iii)                               Legend on Certificates.  The Administrator, in its discretion, may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions.  For example, the Administrator may determine that some or all certificates representing Shares of Restricted Stock shall bear the following legend:

 

“The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Advent Software, Inc. 2002 Stock Plan, and in a Restricted Stock Agreement.  A copy of the Plan and such Restricted Stock Agreement may be obtained from the Secretary of Advent Software, Inc.”

 

(e)                                  Removal of Restrictions.  Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall be released from escrow as soon as practicable after the last day of the Period of Restriction.  The Administrator, in its discretion, may accelerate the time at which any restrictions shall lapse or be removed.  After the restrictions have lapsed, the Participant shall be entitled to have any legend or legends under Section 7(d)(iii) removed from his or her Share certificate, and the Shares shall be freely transferable by the Participant.

 

(f)                                   Voting Rights.  During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Committee determines otherwise.

 

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(g)                                  Dividends and Other Distributions.  During the Period of Restriction, Participants holding Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.  If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

 

(h)                                 Return of Restricted Stock to Company.  On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed shall revert to the Company and again shall become available for grant under the Plan.

 

8.                                      Stock Appreciation Rights.

 

(a)                                 Grant of SARs.  Subject to the terms and conditions of the Plan, a SAR may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.  The Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof.

 

(b)                                 Number of Shares.  The Administrator will have complete discretion to determine the number of SARs granted to any Service Provider, provided that during any Fiscal Year, no Participant will be granted SARs covering more than 1,000,000 Shares.  Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted SARs covering up to an additional 1,000,000 Shares.

 

(c)                                  Exercise Price and Other Terms.  The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of SARs granted under the Plan.  However, the exercise price of a Freestanding SAR will not be less than one hundred percent (100%) of the Fair Market Value of a Share on the grant date.  The exercise price of Tandem or Affiliated SARs will equal the exercise price of the related Option.

 

(d)                                 Exercise of Tandem SARs.  Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option.  A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.  With respect to a Tandem SAR granted in connection with an Incentive Stock Option: (a) the Tandem SAR will expire no later than the expiration of the underlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR will be for no more than one hundred percent (100%) of the difference between the exercise price of the underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR will be exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option.

 

(e)                                  Exercise of Affiliated SARs.  An Affiliated SAR will be deemed to be exercised upon the exercise of the related Option.  The deemed exercise of an Affiliated SAR will not necessitate a reduction in the number of Shares subject to the related Option.

 

(f)                                   Exercise of Freestanding SARs.  Freestanding SARs will be exercisable on such terms and conditions as the Administrator, in its sole discretion, will determine.

 

(g)                                  SAR Agreement.  Each SAR grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

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(h)                                 Expiration of SARs.  An SAR granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement, but not later than ten (10) years from the date of grant.  Notwithstanding the foregoing, the rules of Section 6(d)(ii), 6(d)(iii) and 6(d)(iv) also will apply to SARs.

 

(i)                                     Payment of SAR Amount.  Upon exercise of an SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

 

(i)                                     The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

 

(ii)                                  The number of Shares with respect to which the SAR is exercised.  At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.  Unless the Administrator determines otherwise, SARs for which payment upon exercise is made in cash will comply with the requirements of Section 409A of the Code and the regulations issued thereunder.

 

9.                                      Performance Units and Performance Shares.

 

(a)                                 Grant of Performance Units/Shares.  Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion.  The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant, provided that during any Fiscal Year, (a) no Participant will receive Performance Units having an initial value greater than $2,000,000 and (b) no Participant will receive more than 100,000 Performance Shares.  Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted up to an additional 250,000 Performance Shares.

 

(b)                                 Value of Performance Units/Shares.  Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant.  Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

 

(c)                                  Performance Objectives and Other Terms.  The Administrator will set performance objectives in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Participants.  The time period during which the performance objectives must be met will be called the “Performance Period.”  Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(i)                                     General Performance Objectives.  The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.

 

(ii)                                  Section 162(m) Performance Objectives.  For purposes of qualifying grants of Performance Units/Shares as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its discretion, may determine that the performance objectives applicable to Performance Units/Shares will be based on the achievement of Performance Goals.  The Performance Goals will be set by the Committee on or before the latest date permissible to enable the Performance Units/Shares to qualify as “performance-based compensation” under Section 162(m) of the Code.  In granting Performance Units/Shares which are intended to qualify under Section 162(m) of the Code, the Committee will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Performance Units/Shares under Section 162(m) of the Code (e.g., in determining the Performance Goals).

 

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(d)                                 Earning of Performance Units/Shares.  After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved.  After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.

 

(e)                                  Form and Timing of Payment of Performance Units/Shares.  Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period.  The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.

 

(f)                                   Cancellation of Performance Units/Shares.  On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.

 

10.                               Restricted Stock Units.  Restricted Stock Units shall consist of Restricted Stock, Performance Share or Performance Unit Awards that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator.  Awards may be paid out to Participants in the form of cash or Shares at the Administrator’s discretion.  The Administrator will have complete discretion in determining the number of Restricted Stock Units granted to each Participant, provided that during any Fiscal Year, (a) no Participant will receive more than 100,000 Restricted Stock Units.  Notwithstanding the foregoing limitation, in connection with a Participant’s initial service as an Employee, the Participant may be granted up to an additional 250,000 Restricted Stock Units.

 

11.                               Transferability of Awards.  Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant.  If the Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate.  Options may not be transferred to a third party for consideration without the approval of Company stockholders.

 

12.                               Leaves of Absence.  Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence.  A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.  For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

 

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13.                               Adjustments Upon Changes in Capitalization, Merger or Change in Control.

 

(a)                                 Changes in Capitalization.  Subject to any required action by the stockholders of the Company, the number of shares of Common Stock that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Award, the number of shares of Common Stock as well as the price per share of Common Stock covered by each such outstanding Award, and the numerical Share limits in Sections 3, 6, 7(a), 8(b), 9(a) and 10 shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Award.

 

In the event of an extraordinary cash dividend by the Company, Participants holding an outstanding Award of Restricted Stock Units shall be entitled to receive a cash payment, with respect to each Share subject to the Award, in an amount equal to the per Share extraordinary cash dividend amount.  Further, in the event of an extraordinary cash dividend by the Company, the per Share exercise price of each outstanding Award of Options or SARs shall be adjusted by reducing the per Share exercise price by an amount equal to the per Share extraordinary cash dividend amount; provided, however, that in the event that the Administrator determines in its sole discretion that a cash payment shall be made to a Participant holding an Award of Options or SARs, whether partially or entirely in lieu of a reduction to the Award’s exercise price in order to prevent adverse tax consequences to the Participant with respect to the Award, then each such Award of Options or SARs shall be adjusted to reduce the Award’s per Share exercise price to the extent the Administrator determines appropriate and advisable (unless the Administrator determines that no reduction shall be made) and with respect to each Share subject to such Award, a cash payment shall be made to the Participant holding the Award in an amount equal to the per Share extraordinary cash dividend amount less the amount of any reduction applied to the Award’s per Share exercise price.  Unless determined otherwise by the Administrator, any cash payment to be made pursuant to this paragraph shall be subject to the same restrictions on transferability and forfeitability as the Shares subject to the Award with respect to which the cash payment may be made.  The foregoing Award adjustments, if any, shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive.  Notwithstanding anything to the contrary, the Administrator, in its sole discretion, may determine not to apply the provisions of this paragraph to some or all Awards.

 

(b)                                 Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction.  The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Award until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable.  In addition, the Administrator may provide that any Company repurchase option applicable to any Restricted Stock shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated.  To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

 

(c)                                  Merger or Change in Control.  In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Award shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.

 

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In the event that the successor corporation refuses to assume or substitute for the Award, the Participant shall fully vest in and have the right to exercise his or her Options or Stock Appreciation Right as to all of the Optioned Stock, including Shares as to which such Awards would not otherwise be vested or exercisable.  All restrictions on Restricted Stock and, with respect to Performance Shares and Performance Units, all Performance Goals or other vesting criteria will be as determined by the Board.  In addition, if an Option or Stock Appreciation Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Change in Control, the Administrator shall notify the Participant in writing or electronically that the Option or Stock Appreciation Right shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon the expiration of such period.

 

For the purposes of this subsection (c), an Award shall be considered assumed if, following the merger or Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash or a Performance Share or Performance Unit which the Administrator can determine to pay in cash, the fair market value of the consideration received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Appreciation Right or upon the payout of a Performance Share or Performance Unit, for each Share subject to such Award (or in the case of Performance Units, the number of implied shares determined by dividing the value of the Performance Units by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control.

 

Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant’s consent; provided, however, a modification to such Performance Goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

 

14.                               No Effect on Employment or Service.  Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor shall they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause.

 

15.                               Date of Grant.  The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator.  Notice of the determination shall be provided to each Participant within a reasonable time after the date of such grant.

 

16.                               Term of Plan.  Subject to Section 21 of the Plan, the amended and restated Plan shall become effective upon the date, in 2012, of its adoption by the Board.  It shall continue in effect until February 12, 2017, unless terminated earlier under Section 17 of the Plan.

 

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17.                               Amendment and Termination of the Plan.

 

(a)                                 Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

 

(b)                                 Stockholder Approval.  The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c)                                  Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

 

18.                               Conditions Upon Issuance of Shares.

 

(a)                                 Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)                                 Investment Representations.  As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

19.                               Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

20.                               Reservation of Shares.  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

21.                               Stockholder Approval.  The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted.  Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws.

 

18Exhibit 10.1

 

EXECUTION VERSION

 

FIRST AMENDMENT TO PARENT GUARANTY

 

FIRST AMENDMENT, dated as of July 31, 2013 (this “Amendment”), to the Parent Guaranty, dated as of September 25, 2012 (the “Existing Guaranty Agreement”; as amended by this Amendment, the “Guaranty Agreement”), made by PHH Corporation, a Maryland corporation (the “Parent”), in favor of The Bank of Nova Scotia, in its capacity as administrative agent (in such capacity, the “Administrative Agent”) under the Credit Agreement referred to below, for and on behalf of and for the benefit of itself and the other Secured Parties.

 

W I T N E S S E T H :

 

WHEREAS, pursuant to the Existing Guaranty Agreement, the Parent has absolutely and unconditionally guaranteed the due and punctual payment and performance when due of all of the Guaranteed Obligations;

 

WHEREAS, the Parent has requested certain amendments to the Existing Guaranty Agreement as more fully set forth herein; and

 

WHEREAS, the Administrative Agent has agreed to such amendments but only on the terms and conditions contained in this Amendment;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

Section 1.              Defined Terms.

 

Capitalized terms used herein and not herein defined shall be construed in accordance with the Existing Guaranty Agreement.

 

Section 2.              Amendments.

 

(a)           Schedule A of the Existing Guaranty Agreement is amended by adding the following definitions in alphabetical order:

 

“2014 Convertible Notes Escrow Account” shall mean the escrow account to be established by the Parent with any lender under the Parent Credit Agreement whom the Parent elects in its sole discretion from time to time.  The terms of the escrow arrangements shall provide that the Parent may deposit up to $150,000,000 in the 2014 Convertible Notes Escrow Account and may withdraw amounts from the 2014 Convertible Notes Escrow Account solely to pay, redeem or purchase the 2014 Convertible Notes and pay related interest and premiums (it being understood and agreed that the Parent may transfer all or any portion of such deposit from an escrow account with one such lender to an escrow account with another such lender at any time).

 

“Medium Term Notes” shall mean the Parent’s (i) 7.850% Callable InterNotes due April 15, 2018 in the aggregate principal amount of $4,126,000 and (ii) 7.650% Callable InterNotes due April 15, 2018 in the aggregate principal amount of $3,777,000.

 

 

“Parent Credit Agreement” shall mean that certain Amended and Restated Credit Agreement, dated as of August 2, 2012, among the Parent, the lenders and agents from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as amended, restated, amended and restated, or otherwise modified from time to time.

 

(b)           The defined term “Minimum Liquidity” contained in Schedule A of the Existing Guaranty Agreement is amended by adding the phrase “(including, for purposes hereof, the balance in the 2014 Convertible Notes Escrow Account at such time)” immediately after the phrase “wholly-owned Subsidiaries”.

 

(c)           Section 8.7 of the Existing Guaranty Agreement is amended by adding the phrase “(less the balance in the 2014 Convertible Notes Escrow Account at such time)” immediately after the word “Indebtedness”.

 

(d)           Section 8.11(a) of the Existing Guaranty Agreement is amended by adding the phrase “the Parent,” immediately before the phrase “any Material Subsidiary”.

 

(e)           Section 8.11(a)(ii) of the Existing Guaranty Agreement is amended by replacing the phrase “the Specified Senior Notes” with the phrase “the Medium Term Notes”.

 

(f)            Section 8.11(a)(iv) of the Existing Guaranty Agreement is amended by replacing clause (D) with the following:

 

(D) the aggregate outstanding principal amount of the 2014 Convertible Notes less the balance in the 2014 Convertible Notes Escrow Account is no more than $100,000,000;

 

(g)           Section 8.11(d) of the Existing Guaranty Agreement is amended by (i) adding the phrase “(including related interest and premiums)” immediately after the phrase “any such Indebtedness” and (ii) deleting the phrase “substantially similar terms” and replacing it with the phrase “terms not materially more restrictive, in the aggregate, than the terms in such Indebtedness being refinanced (as determined in good faith by a financial officer of the Parent)”.

 

(h)           Section 8 of the Existing Guaranty Agreement is amended by adding the following new Section 8.15:

 

Section 8.15  2014 Convertible Notes Escrow Account.

 

Until the 2014 Convertible Notes have been paid in full, utilize any amounts in the 2014 Convertible Notes Escrow Account other than to pay, redeem or purchase the 2014 Convertible Notes and pay related interest and premiums.

 

Section 3.              Conditions to Effectiveness.  This Amendment shall become effective upon the first date on which each of the following shall have occurred (the date of effectiveness, the “First Amendment Effective Date”):

 

(a)           the Administrative Agent shall have received this Amendment, executed and delivered by a duly authorized officer of the Parent;

 

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(b)           the First Amendment, dated as of July 29, 2013, to the Parent Credit Agreement shall have become effective; and

 

(c)           all other fees of the Administrative Agent (including the reasonable fees and expenses of counsel to the Administrative Agent) due and payable on or prior to the First Amendment Effective Date shall have been paid.

 

Section 4.              Representations and Warranties.  The Parent hereby represents and warrants to the Administrative Agent  that (before and after giving effect to this Amendment):

 

(a)           as of the First Amendment Effective Date, each of the representations and warranties set forth in Article 6 of the Guaranty Agreement (other than those set forth in Section 6.17 of the Guaranty Agreement) shall be true and correct in all material respects on and as of the First Amendment Effective Date (except to the extent that such representations and warranties expressly relate to an earlier date in which case the Parent hereby confirms, reaffirms and restates such representations and warranties as of such earlier date) with the same effect as if made on and as of the First Amendment Effective Date; and

 

(b)           there does not exist any Default or Event of Default.

 

Section 5.              Payment of Expenses. The Parent agrees to pay or reimburse the Administrative Agent for all of its reasonable and invoiced out-of-pocket costs and expenses incurred in connection with this Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable and invoiced fees and disbursements of counsel to the Administrative Agent.

 

Section 6.              No Other Amendment or Waivers; Confirmation.  Except as expressly provided hereby, all of the terms and provisions of the Existing Guaranty Agreement are and shall remain in full force and effect.  The amendments contained herein shall not be construed as an amendment of any other provision of the Existing Guaranty Agreement or for any purpose except as expressly set forth herein or a consent to any further or future action on the part of the Parent that would require the waiver or consent of the Administrative Agent.

 

Section 7.              GOVERNING LAW; WAIVER OF JURY TRIAL; MISCELLANEOUS.

 

(a)           THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

(b)           EACH PARTY HERETO HEREBY AGREES AS SET FORTH IN SECTION 21 OF THE EXISTING GUARANTY AGREEMENT AS IF SUCH SECTION WERE SET FORTH IN FULL HEREIN.

 

(c)           On and after the First Amendment Effective Date, each reference in the Existing Guaranty Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of

 

3

 

like import referring to the Existing Guaranty Agreement shall mean and be a reference to the Guaranty Agreement.

 

(d)           This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  A set of the copies of this Amendment signed by all the parties shall be lodged with the Parent and the Administrative Agent.  This Amendment may be delivered by facsimile or electronic transmission of the relevant signature pages hereof.

 

Section 8.              Severability.  If any provision of this Amendment shall be determined to be illegal or invalid as to one or more of the parties hereto, then such provision shall remain in effect with respect to all parties, if any, as to whom such provision is neither illegal nor invalid, and in any event all other provisions hereof shall remain effective and binding on the parties hereto.

 

Section 9.              Headings.  Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.

 

[Signature pages follow.]

 

4

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.

 

	
 
    	
PHH   CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard J. Bradfield
    
	
 
    	
Name:
    	
Richard   J. Bradfield
    
	
 
    	
Title:
    	
Senior   Vice President and Treasurer
    

 

PHH Corporation - First Amendment to Parent Guaranty

 

 

	
 
    	
THE   BANK OF NOVA SCOTIA, in its capacity as Administrative Agent
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Robert Boomhour
    
	
 
    	
Name:
    	
Robert   Boomhour
    
	
 
    	
Title:
    	
Director
    

 

PHH Corporation - First Amendment to Parent Guaranty

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