EXHIBIT 10.1

JACKSON HEWITT TAX SERVICE INC.

AMENDED AND RESTATED

2004 EQUITY AND INCENTIVE PLAN

(amended and restated effective July 11, 2006)

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JACKSON HEWITT TAX SERVICE INC.

AMENDED AND RESTATED

2004 EQUITY AND INCENTIVE PLAN

(amended and restated effective July 11, 2006)

 

Section

        Page

1.

   Purpose; Types of Awards; Construction    1

2.

   Definitions    1

3.

   Administration    4

4.

   Eligibility    5

5.

   Stock Subject to the Plan    5

6.

   Specific Terms of Awards    5

7.

   Change in Control Provisions    9

8.

   General Provisions    9

 

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JACKSON HEWITT TAX SERVICE INC.

AMENDED AND RESTATED

2004 EQUITY AND INCENTIVE PLAN

(amended and restated effective July 11, 2006)

1. Purpose; Types of Awards; Construction.

The purposes of the Jackson Hewitt Tax Service Inc. Amended and Restated 2004
Equity and Incentive Plan (the “Plan”) are to afford an incentive to
non-employee directors, selected officers and other employees, advisors and
consultants of Jackson Hewitt Tax Service Inc. (the “Company”), or any Parent or
Subsidiary of the Company that now exists or hereafter is organized or acquired,
to continue as non-employee directors, officers, employees, advisors or
consultants, as the case may be, to increase their efforts on behalf of the
Company and its Subsidiaries and to promote the success of the Company’s
business. The Plan provides for the grant of Options (including “incentive stock
options” and “nonqualified stock options”), stock appreciation rights,
restricted stock, restricted stock units and other stock- or cash-based awards.
The Plan is designed so that Awards granted hereunder intended to comply with
the requirements for “performance-based compensation” under Section 162(m) of
the Code may comply with such requirements, and the Plan and Awards shall be
interpreted in a manner consistent with such requirements.

2. Definitions.

For purposes of the Plan, the following terms shall be defined as set forth
below:

(a) “Annual Incentive Program” means the program described in Section 6(c)
hereof.

(b) “Award” means any Option, SAR, Restricted Stock, Restricted Stock Unit or
Other Stock-Based Award or Other Cash-Based Award granted under the Plan.

(c) “Award Agreement” means any written agreement, contract, or other instrument
or document evidencing an Award.

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

(e) “Cendant” means Cendant Corporation, a Delaware corporation.

(f) “Cendant Award” shall have the meaning set forth in Section 6(b)(v).

(g) “Change in Control” means a change in control of the Company, which will be
deemed to have occurred if:

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (A) the Company, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, and (C) any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Stock), is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company’s then outstanding voting securities
(excluding any person who becomes such a beneficial owner in connection with a
transaction immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the Board, the
entity surviving such transaction or, if the Company or the entity surviving the
transaction is then a subsidiary, the ultimate parent thereof);

(ii) the following individuals cease for any reason to constitute a majority of
the number of directors then serving: individuals who, on the Effective Date,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the Board
or nomination for election by the Company’s stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved or recommended;

 

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(iii) there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation, other
than a merger or consolidation immediately following which the individuals who
comprise the Board immediately prior thereto constitute at least a majority of
the Board, the entity surviving such merger or consolidation or, if the Company
or the entity surviving such merger is then a subsidiary, the ultimate parent
thereof; or

(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or there is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets (or any
transaction having a similar effect), other than a sale or disposition by the
Company of all or substantially all of the Company’s assets to an entity,
immediately following which the individuals who comprise the Board immediately
prior thereto constitute at least a majority of the board of directors of the
entity to which such assets are sold or disposed of or, if such entity is a
subsidiary, the ultimate parent thereof.

(v) Notwithstanding the foregoing, a Change in Control shall not be deemed to
have occurred by virtue of (x) a Public Offering or (y) the consummation of any
transaction or series of integrated transactions immediately following which the
holders of the Stock immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder.

(i) “Committee” means the committee established by the Board to administer the
Plan, the composition of which shall at all times satisfy the provisions of Rule
16b-3 and Section 162(m) of the Code.

(j) “Company” means Jackson Hewitt Tax Services Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.

(k) “Conversion Option” means an NQSO granted under Section 6(b)(v).

(l) “Conversion RSU Award” means an Award of RSUs granted under Section 6(b)(v).

(m) “Covered Employee” shall have the meaning set forth in Section 162(m)(3) of
the Code.

(n) “Effective Date” means April 21, 2004, the date that the Plan was adopted by
the Board.

(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.

(p) “Fair Market Value” means, with respect to Stock or other property, the fair
market value of such Stock or other property determined by such methods or
procedures as shall be established from time to time by the Committee. Unless
otherwise determined by the Committee in good faith, the per share Fair Market
Value of Stock as of a particular date shall mean (i) the mean between the
highest and lowest reported sales price per share of Stock on the national
securities exchange on which the Stock is principally traded, for the last
preceding date on which there was a sale of such Stock on such exchange, or
(ii) if the shares of Stock are then traded in an over-the-counter market, the
average of the closing bid and asked prices for the shares of Stock in such
over-the-counter market for the last preceding date on which there was a sale of
such Stock in such market, or (iii) if the shares of Stock are not then listed
on a national securities exchange or traded in an over-the-counter market, such
value as the Committee, in its sole discretion, shall determine.

(q) “Grantee” means a person who, as a non-employee director, officer or other
employee of the Company or a Parent or Subsidiary of the Company, has been
granted an Award under the Plan.

(r) “ISO” means any Option intended to be and designated as an incentive stock
option within the meaning of Section 422 of the Code.

(s) “Long Term Incentive Program” means the program described in Section 6(b)
hereof.

(t) “Non-Employee Director” means any director of the Company who is not also
employed by the Company or any of its Subsidiaries.

 

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(u) “NQSO” means any Option that is not designated as an ISO.

(v) “Option” means a right, granted to a Grantee under Section 6(b)(i) or
6(b)(v), to purchase shares of Stock. An Option may be either an ISO or an NQSO,
provided that ISOs may be granted only to employees of the Company or a Parent
or Subsidiary of the Company.

(w) “Other Cash-Based Award” means cash awarded under the Annual Incentive
Program or the Long Term Incentive Program, including cash awarded as a bonus or
upon the attainment of Performance Goals or otherwise as permitted under the
Plan.

(x) “Other Stock-Based Award” means a right or other interest granted to a
Grantee under the Annual Incentive Program or the Long Term Incentive Program
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, including but not limited to
(i) unrestricted Stock awarded as a bonus or upon the attainment of Performance
Goals or otherwise as permitted under the Plan, and (ii) a right granted to a
Grantee to acquire Stock from the Company containing terms and conditions
prescribed by the Committee.

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

(z) “Performance Goals” means performance goals based on one or more of the
following criteria, determined in accordance with generally accepted accounting
principles where applicable: (i) pre-tax income or after-tax income;
(ii) earnings including operating income, earnings before or after taxes,
earnings before or after interest, depreciation, amortization, or extraordinary
or special items; (iii) net income excluding amortization of intangible assets,
depreciation and impairment of goodwill and intangible assets; (iv) earnings or
book value per share (basic or diluted); (v) return on assets (gross or net),
return on investment, return on capital, or return on equity; (vi) return on
revenues; (vii) cash flow, free cash flow, cash flow return on investment
(discounted or otherwise), net cash provided by operations, or cash flow in
excess of cost of capital; (viii) economic value created; (ix) operating margin
or profit margin; (x) stock price or total stockholder return; (xi) earnings
from continuing operations; (xii) cost targets, reductions and savings,
productivity and efficiencies; (xiii) franchise sales targets; and
(xiv) strategic business criteria, consisting of one or more objectives based on
meeting specified market penetration or market share, geographic business
expansion, customer satisfaction, employee satisfaction, human resources
management, supervision of litigation, information technology, and goals
relating to divestitures, joint ventures and similar transactions. Where
applicable, the Performance Goals may be expressed in terms of attaining a
specified level of the particular criterion or the attainment of a percentage
increase or decrease in the particular criterion, and may be applied to one or
more of the Company or a Parent or Subsidiary of the Company, or a division or
strategic business unit of the Company, all as determined by the Committee. The
Performance Goals may include a threshold level of performance below which no
payment will be made (or no vesting will occur), levels of performance at which
specified payments will be paid (or specified vesting will occur), and a maximum
level of performance above which no additional payment will be made (or at which
full vesting will occur). Each of the foregoing Performance Goals shall be
evaluated in accordance with generally accepted accounting principles, where
applicable, and shall be subject to certification by the Committee. The
Committee shall have the authority to make equitable adjustments to the
Performance Goals in recognition of unusual or non-recurring events affecting
the Company or any Parent or Subsidiary of the Company or the financial
statements of the Company or any Parent or Subsidiary of the Company, in
response to changes in applicable laws or regulations, or to account for items
of gain, loss or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of a business
or related to a change in accounting principles.

(aa) “Plan” means this Hewitt Jackson Tax Services Inc. 2004 Equity and
Incentive Plan, as amended from time to time.

(bb) “Plan Year” means a calendar year.

(cc) “Public Offering” means an offering of securities of the Company that is
registered with the Securities and Exchange Commission.

(dd) “Restricted Stock” means an Award of shares of Stock to a Grantee under
Section 6(b)(iii) that may be subject to certain restrictions and to a risk of
forfeiture.

 

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(ee) “Restricted Stock Unit” or “RSU” means a right granted to a Grantee under
Section 6(b)(iv) or 6(b)(v) to receive Stock or cash at the end of a specified
period, which right may be conditioned on the satisfaction of specified
performance or other criteria.

(ff) “Rule 16b-3” means Rule 16b-3, as from time to time in effect promulgated
by the Securities and Exchange Commission under Section 16 of the Exchange Act,
including any successor to such Rule.

(gg) “Securities Act” means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.

(hh) “Stock” means shares of the common stock, par value $0.01 per share, of the
Company.

(ii) “Stock Appreciation Right” or “SAR” means the right, granted to a Grantee
under Section 6(b)(ii), to be paid an amount measured by the appreciation in the
Fair Market Value of Stock from the date of grant to the date of exercise of the
right.

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

3. Administration.

The Plan shall be administered by the Board or by such Committee that the Board
may appoint for this purpose. If a Committee is appointed to administer the
Plan, all references herein to the “Committee” shall be references to such
Committee. If no Committee is appointed by the Board to administer the Plan, all
references herein to the “Committee” shall be references to the Board. The
Committee shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Awards; to determine the
persons to whom and the time or times at which Awards shall be granted; to
determine the type and number of Awards to be granted, the number of shares of
Stock to which an Award may relate and the terms, conditions, restrictions and
performance criteria relating to any Award; to determine Performance Goals no
later than such time as required to ensure that an underlying Award which is
intended to comply with the requirements of Section 162(m) of the Code so
complies; and to determine whether, to what extent, and under what circumstances
an Award may be settled, cancelled, forfeited, exchanged, or surrendered; to
make adjustments in the terms and conditions of, and the Performance Goals (if
any) included in, Awards; to construe and interpret the Plan and any Award or
Loan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Award Agreements (which need
not be identical for each Grantee); and to make all other determinations deemed
necessary or advisable for the administration of the Plan. Notwithstanding the
foregoing, neither the Board, the Committee nor their respective delegates shall
have the authority to reprice (or cancel and regrant) any Option or, if
applicable, other Award at a lower exercise, base or purchase price without
first obtaining the approval of the Company’s stockholders.

The Committee may appoint a chairperson and a secretary and may make such rules
and regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings. All determinations of the Committee shall be
made by a majority of its members either present in person or participating by
conference telephone at a meeting or by written consent. The Committee may
delegate to one or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee or any person
to whom it has delegated duties as aforesaid may employ one or more persons to
render advice with respect to any responsibility the Committee or such person
may have under the Plan. All decisions, determinations and interpretations of
the Committee shall be final and binding on all persons, including but not
limited to the Company, any Parent or Subsidiary of the Company or any Grantee
(or any person claiming any rights under the Plan from or through any Grantee)
and any stockholder.

No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
hereunder.

 

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4. Eligibility.

Awards may be granted to selected non-employee directors, officers and other
employees, advisors or consultants of the Company or any Parent or Subsidiary of
the Company, in the discretion of the Committee. In determining the persons to
whom Awards shall be granted and the type of any Award (including the number of
shares to be covered by such Award), the Committee shall take into account such
factors as the Committee shall deem relevant in connection with accomplishing
the purposes of the Plan.

5. Stock Subject to the Plan.

The maximum number of shares of Stock reserved for the grant of Awards under the
Plan shall be 6,500,000 (including all shares to be issued pursuant to
Conversion Options or Conversion RSU Awards), subject to adjustment as provided
herein. No more than 400,000 shares of Stock may be made subject to Options
(other than Conversion Options) or SARs to a single individual in a single Plan
Year, subject to adjustment as provided herein, and no more than 200,000 shares
of Stock may be made subject to stock-based awards other than Options or SARs
(including Restricted Stock and Restricted Stock Units (other than Conversion
RSU Awards) or Other Stock-Based Awards denominated in shares of Stock) to a
single individual in a single Plan Year, in either case, subject to adjustment
as provided herein. Determinations made in respect of the limitations set forth
in the immediately preceding sentence shall be made in a manner consistent with
Section 162(m) of the Code. Such shares may, in whole or in part, be authorized
but unissued shares or shares that shall have been or may be reacquired by the
Company in the open market, in private transactions or otherwise. If any shares
subject to an Award are forfeited, cancelled, exchanged or surrendered or if an
Award terminates or expires without a distribution of shares to the Grantee, or
if shares of Stock are surrendered or withheld as payment of either the exercise
price of an Award and/or withholding taxes in respect of an Award, the shares of
Stock with respect to such Award shall, to the extent of any such forfeiture,
cancellation, exchange, surrender, withholding, termination or expiration, again
be available for Awards under the Plan. Upon the exercise of any Award granted
in tandem with any other Award, such related Award shall be cancelled to the
extent of the number of shares of Stock as to which the Award is exercised and,
notwithstanding the foregoing, such number of shares shall no longer be
available for Awards under the Plan.

In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, Stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Grantees under the Plan, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of
(i) the number and kind of shares of Stock or other property (including cash)
that may thereafter be issued in connection with Awards, (ii) the number and
kind of shares of Stock or other property (including cash) issued or issuable in
respect of outstanding Awards, (iii) the exercise price, grant price, or
purchase price relating to any Award; provided, that, with respect to ISOs, such
adjustment shall be made in accordance with Section 424(h) of the Code; and
(iv) the Performance Goals applicable to outstanding Awards.

6. Specific Terms of Awards.

(a) General. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable
Award Agreement, payments to be made by the Company or a Parent or Subsidiary of
the Company upon the grant, vesting, maturation, or exercise of an Award may be
made in such forms as the Committee shall determine at the date of grant or
thereafter, including, without limitation, cash, Stock, or other property, and
may be made in a single payment or transfer, in installments, or on a deferred
basis. The Committee may make rules relating to installment or deferred payments
with respect to Awards, including the rate of interest to be credited with
respect to such payments. In addition to the foregoing, the Committee may impose
on any Award or the exercise thereof, at the date of grant or thereafter, such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine.

(b) Long Term Incentive Program. Under the Long Term Incentive Program, the
Committee is authorized to grant the Awards described in this Section 6(b),
under such terms and conditions as deemed by the Committee to be consistent with
the purposes of the Plan. Such Awards may be granted with value and payment
contingent upon Performance Goals. Except as otherwise set forth herein or as
may be determined by the Committee, each Award granted under the Long Term
Incentive Program shall be evidenced by an Award Agreement containing such terms
and conditions applicable to such Award as the Committee shall determine at the
date of grant or thereafter.

 

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(i) Options. The Committee is authorized to grant Options to Grantees on the
following terms and conditions:

(A) Type of Award. The Award Agreement evidencing the grant of an Option under
the Plan shall designate the Option as an ISO or an NQSO.

(B) Exercise Price. The exercise price per share of Stock purchasable under an
Option shall be determined by the Committee, but, subject to Section 6(b)(v), in
no event shall the per share exercise price of any Option be less than the Fair
Market Value of a share of Stock on the date of grant of such Option. The
exercise price for Stock subject to an Option may be paid in cash or by an
exchange of Stock previously owned by the Grantee for at least six months (if
acquired from the Company), through a “broker cashless exercise” procedure
approved by the Committee (to the extent permitted by law), or a combination of
the above, in any case in an amount having a combined value equal to such
exercise price. An Award Agreement may provide that a Grantee may pay all or a
portion of the aggregate exercise price by having shares of Stock with a Fair
Market Value on the date of exercise equal to the aggregate exercise price
withheld by the Company.

(C) Term and Exercisability of Options. The date on which the Committee adopts a
resolution expressly granting an Option shall be considered the day on which
such Option is granted. Options shall be exercisable over the exercise period
(which shall not exceed ten years from the date of grant), at such times and
upon such conditions as the Committee may determine, as reflected in the Award
Agreement; provided, that the Committee shall have the authority to accelerate
the exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. An Option may be
exercised to the extent of any or all full shares of Stock as to which the
Option has become exercisable, by giving written notice of such exercise to the
Committee or its designated agent.

(D) Termination of Employment. An Option may not be exercised unless the Grantee
is then a director of, in the employ of, or providing services to, the Company
or a Parent or Subsidiary of the Company, and unless the Grantee has remained
continuously so employed, or continuously maintained such relationship, since
the date of grant of the Option; provided, that the Award Agreement may contain
provisions extending the exercisability of Options, in the event of specified
terminations of employment or service, to a date not later than the expiration
date of such Option.

(E) Other Provisions. Options may be subject to such other conditions including,
but not limited to, restrictions on transferability of the shares acquired upon
exercise of such Options, as the Committee may prescribe in its discretion or as
may be required by applicable law.

(ii) SARs. The Committee is authorized to grant SARs to Grantees on the
following terms and conditions:

(A) In General. Unless the Committee determines otherwise, an SAR (1) granted in
tandem with an NQSO may be granted at the time of grant of the related NQSO or
at any time thereafter or (2) granted in tandem with an ISO may only be granted
at the time of grant of the related ISO. An SAR granted in tandem with an Option
shall be exercisable only to the extent the underlying Option is exercisable.
Payment of an SAR may made in cash, Stock, or property as specified in the Award
or determined by the Committee.

(B) Right Conferred. An SAR shall confer on the Grantee a right to receive an
amount with respect to each share subject thereto, upon exercise thereof, equal
to the excess of (1) the Fair Market Value of one share of Stock on the date of
exercise over (2) the grant price of the SAR (which in the case of an SAR
granted in tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other SAR shall be such price as
the Committee may determine).

(C) Term and Exercisability of SARs. The date on which the Committee adopts a
resolution expressly granting an SAR shall be considered the day on which such
SAR is granted. SARs shall be exercisable over the exercise period (which shall
not exceed the lesser of ten years from the date of grant or, in the case of a
tandem SAR, the expiration of its related Award), at such times and upon such
conditions as the Committee may determine, as reflected in the Award Agreement;
provided, that the Committee shall have the authority to accelerate the
exercisability of any outstanding SAR at such time and under such circumstances
as it, in its sole discretion, deems appropriate. An SAR may be exercised to the
extent of any or all full shares of Stock as to which the SAR (or, in the case
of a tandem SAR, its related Award) has become exercisable, by giving written
notice of such exercise to the Committee or its designated agent.

 

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(D) Termination of Employment. An SAR may not be exercised unless the Grantee is
then a director of, in the employ of, or providing services to, the Company or a
Parent or Subsidiary of the Company, and unless the Grantee has remained
continuously so employed, or continuously maintained such relationship, since
the date of grant of the SAR; provided, that the Award Agreement may contain
provisions extending the exercisability of SAR, in the event of specified
terminations of employment or service, to a date not later than the expiration
date of such SAR (or, in the case of a tandem SAR, its related Award).

(E) Other Provisions. SARs may be subject to such other conditions including,
but not limited to, restrictions on transferability of the shares acquired upon
exercise of such SARs, as the Committee may prescribe in its discretion or as
may be required by applicable law.

(iii) Restricted Stock. The Committee is authorized to grant Restricted Stock to
Grantees on the following terms and conditions:

(A) Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, if any, as the Committee
may impose at the date of grant or thereafter, which restrictions may lapse
separately or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. The Committee may
place restrictions on Restricted Stock that shall lapse, in whole or in part,
only upon the attainment of Performance Goals. Except to the extent restricted
under the Award Agreement relating to the Restricted Stock, a Grantee granted
Restricted Stock shall have all of the rights of a stockholder including,
without limitation, the right to vote Restricted Stock and the right to receive
dividends thereon.

(B) Forfeiture. Upon termination of employment with or service to the Company,
or upon termination of the director or independent contractor relationship, as
the case may be, during the applicable restriction period, Restricted Stock and
any accrued but unpaid dividends that are then subject to restrictions shall be
forfeited; provided, that the Committee may provide, by rule or regulation or in
any Award Agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Restricted Stock.

(C) Certificates for Stock. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Grantee, such
certificates shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, and the
Company shall retain physical possession of the certificate.

(D) Dividends. Dividends paid on Restricted Stock shall be either paid at the
dividend payment date, or deferred for payment to such date as determined by the
Committee, in cash or in shares of unrestricted Stock having a Fair Market Value
equal to the amount of such dividends. Stock distributed in connection with a
stock split or stock dividend, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other property has been
distributed.

(iv) Restricted Stock Units. The Committee is authorized to grant Restricted
Stock Units to Grantees, subject to the following terms and conditions:

(A) Award and Restrictions. Delivery of Stock or cash, as determined by the
Committee, will occur upon expiration of the deferral period specified for
Restricted Stock Units by the Committee. The Committee may place restrictions on
Restricted Stock Units that shall lapse, in whole or in part, only upon the
attainment of Performance Goals.

(B) Forfeiture. Upon termination of employment with or service to the Company,
or upon termination of the director or independent contractor relationship, as
the case may be, during the applicable deferral period or portion thereof to
which forfeiture conditions apply, or upon failure to satisfy any other
conditions precedent to the delivery of Stock or cash to which such Restricted
Stock

 

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Units relate, all Restricted Stock Units and any accrued but unpaid dividend
equivalents that are then subject to deferral or restriction shall be forfeited;
provided, that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock Units will be waived in whole
or in part in the event of termination resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Restricted Stock Units.

(C) Director Deferred Compensation Awards. The Company shall issue RSUs pursuant
to this Section 6(b)(iv)(C) for the purpose of fulfilling the Company’s
obligations under its Non-Employee Director Deferred Compensation Plan (the
“Deferred Compensation Plan”); provided, that certain terms and conditions of
the grant and payment of such RSUs set forth in the Deferred Compensation Plan
(and only to the extent set forth in such plan) shall supercede the terms
generally applicable to RSUs granted under the Plan. RSUs granted under this
paragraph need not be evidenced by an Award Agreement unless the Committee
determines that such an Award Agreement is desirable for the furtherance of the
purposes of the Plan and the Deferred Compensation Plan.

(D) Non-Employee Director Compensatory Awards. The Company shall issue RSUs
payable only in Stock (unless the Committee determines otherwise) pursuant to
this Section 6(b)(iv)(D) for the purpose of fulfilling the Company’s obligation
to compensate each Non-Employee Director, in part, in the form of RSUs. Such
RSUs shall be awarded at such times as the Company shall otherwise pay to
Non-Employee Directors their annual retainer fees, as well as such other fees,
stipends and payments determined by the Committee to be subject to such
Non-Employee Director compensation policy (each such award date, a “Fee Payment
Date”). The Company shall keep a separate book account in the name of each
Non-Employee Director. The number of RSUs to be credited to each Non-Employee
Director’s account as of each Fee Payment Date shall be calculated by dividing
(1) fifty percent (50%) of the total retainer or fee otherwise to be paid to
such Non-Employee Director on such Fee Payment Date by (2) the Fair Market Value
of a share of Stock as of such Deferral Date. The Restricted Stock Units so
credited shall be immediately vested and non-forfeitable and shall become
payable within 60 days immediately following the date upon which such Director’s
service as a member of the Board terminates for any reason.

(v) Converted Cendant Awards. The Committee is authorized to grant Options and
Restricted Stock Unit Awards (such Options and Restricted Stock Unit Awards,
“Conversion Options” and Conversion RSUs,” respectively) in consideration of the
cancellation by Cendant of certain stock options and restricted stock unit
awards previously granted to Participants by Cendant (such Cendant awards, the
“Cendant Awards”). Notwithstanding any other provision of the Plan to the
contrary, and in any event in accordance with a formula for the conversion of
Cendant Awards determined by the Board in its sole discretion, (i) the number of
shares to be subject to a Conversion Option or Conversion RSU shall be
determined by the Committee and (ii) the per share exercise price of a
Conversion Option shall be determined by the Committee and may be less than the
Fair Market Value of a share of Stock on the date of grant.

(vi) Other Stock- or Cash-Based Awards. The Committee is authorized to grant
Awards to Grantees in the form of Other Stock-Based Awards or Other Cash-Based
Awards, as deemed by the Committee to be consistent with the purposes of the
Plan. Awards granted pursuant to this paragraph may be granted with value and
payment contingent upon Performance Goals, so long as such goals relate to
periods of performance in excess of one calendar year. The Committee shall
determine the terms and conditions of such Awards at the date of grant or
thereafter. Performance periods under this Section 6(b)(vi) may overlap. The
maximum value of the aggregate payment that any Grantee may receive pursuant to
this Section 6(b)(vi) in respect of any performance period designated by the
Committee under this Section 6(b)(vi) is $5 million. Payments earned hereunder
may be decreased or, with respect to any Grantee who is not a Covered Employee,
increased in the sole discretion of the Committee based on such factors as it
deems appropriate. No such payment shall be made to a Covered Employee prior to
the certification by the Committee that the Performance Goals have been
attained. The Committee may establish such other rules applicable to the Other
Stock- or Cash-Based Awards to the extent not inconsistent with Section 162(m)
of the Code.

(c) Annual Incentive Program. The Committee is authorized to grant Awards to
Grantees pursuant to the Annual Incentive Program, under such terms and
conditions as deemed by the Committee to be consistent with the purposes of the
Plan. Grantees will be selected by the Committee with respect to participation
for a Plan Year. The maximum value of the aggregate payment that any Grantee may
receive under the Annual Incentive Program in

 

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respect of any Plan Year is $3 million. Payments earned hereunder may be
decreased or, with respect to any Grantee who is not a Covered Employee,
increased in the sole discretion of the Committee based on such factors as it
deems appropriate. No such payment shall be made to a Covered Employee prior to
the certification by the Committee that the Performance Goals relating to Awards
hereunder have been attained. The Committee may establish such other rules
applicable to the Annual Incentive Program to the extent not inconsistent with
Section 162(m) of the Code.

7. Change in Control Provisions.

Unless otherwise determined by the Committee and evidenced in an Award
Agreement, in the event of a Change of Control:

(a) any Award carrying a right to exercise that was not previously vested and
exercisable shall become fully vested and exercisable; and

(b) the restrictions, deferral limitations, payment conditions, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse and
such Awards shall be deemed fully vested, and any performance conditions imposed
with respect to Awards shall be deemed to be fully achieved.

8. General Provisions.

(a) Nontransferability. Unless otherwise provided in an Award Agreement, Awards
shall not be transferable by a Grantee except by will or the laws of descent and
distribution and shall be exercisable during the lifetime of a Grantee only by
such Grantee or his guardian or legal representative.

(b) No Right to Continued Employment, etc. Nothing in the Plan or in any Award,
any Award Agreement or other agreement entered into pursuant hereto shall confer
upon any Grantee the right to continue in the employ of, or to continue as a
director of, or to continue to provide services to, the Company or any Parent or
Subsidiary of the Company or to be entitled to any remuneration or benefits not
set forth in the Plan or such Award Agreement or other agreement or to interfere
with or limit in any way the right of the Company or any such Parent or
Subsidiary to terminate such Grantee’s employment, or director or independent
contractor relationship.

(c) Taxes. The Company or any Parent or Subsidiary of the Company is authorized
to withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Grantees to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Grantee’s tax obligations. The Committee may provide in the Award Agreement that
in the event that a Grantee is required to pay any amount to be withheld in
connection with the issuance of shares of Stock in settlement or exercise of an
Award, the Grantee may satisfy such obligation (in whole or in part) by electing
to have a portion of the shares of Stock to be received upon settlement or
exercise of such Award equal to the minimum amount required to be withheld.

(d) Stockholder Approval; Amendment and Termination.

(i) The Plan shall take effect upon its adoption by the Board but the Plan (and
any grants of Awards made prior to the stockholder approval mentioned herein)
shall be subject to the requisite approval of the stockholders of the Company.
In the event that the stockholders of the Company do not ratify the Plan at a
meeting of the stockholders at which such issue is considered and voted upon,
then upon such event the Plan and all rights hereunder shall immediately
terminate and no Grantee (or any permitted transferee thereof) shall have any
remaining rights under the Plan or any Award Agreement entered into in
connection herewith.

(ii) The Board may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; provided, however, that unless otherwise
determined by the Board, an amendment that requires stockholder approval in
order for the Plan to continue to comply with Section 162(m) or any other law,
regulation or stock exchange requirement shall not be effective unless approved
by the requisite vote of stockholders. Notwithstanding the foregoing, no
amendment to or termination of the Plan shall affect adversely any of the rights
of any Grantee, without such Grantee’s consent, under any Award theretofore
granted under the Plan.

 

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(e) Expiration of Plan. Unless earlier terminated by the Board pursuant to the
provisions of the Plan, the Plan shall expire on the tenth anniversary of the
Effective Date. No Awards shall be granted under the Plan after such expiration
date. The expiration of the Plan shall not affect adversely any of the rights of
any Grantee, without such Grantee’s consent, under any Award theretofore
granted.

(f) Deferrals. The Committee shall have the authority to establish such
procedures and programs that it deems appropriate to provide Grantees with the
ability to defer receipt of cash, Stock or other property payable with respect
to Awards granted under the Plan.

(g) No Rights to Awards; No Stockholder Rights. No Grantee shall have any claim
to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Grantees. Except as provided specifically herein, a
Grantee or a transferee of an Award shall have no rights as a stockholder with
respect to any shares covered by the Award until the date of the issuance of a
stock certificate to him for such shares.

(h) Unfunded Status of Awards. The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Grantee any rights that are greater than those of a
general creditor of the Company.

(i) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

(j) Regulations and Other Approvals.

(i) The obligation of the Company to sell or deliver Stock with respect to any
Award granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

(ii) Each Award is subject to the requirement that, if at any time the Committee
determines, in its absolute discretion, that the listing, registration or
qualification of Stock issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the issuance of
Stock, no such Award shall be granted or payment made or Stock issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions not acceptable to the
Committee.

(iii) In the event that the disposition of Stock acquired pursuant to the Plan
is not covered by a then-current registration statement under the Securities Act
and is not otherwise exempt from such registration, such Stock shall be
restricted against transfer to the extent required by the Securities Act or
regulations thereunder, and the Committee may require a Grantee receiving Stock
pursuant to the Plan, as a condition precedent to receipt of such Stock, to
represent to the Company in writing that the Stock acquired by such Grantee is
acquired for investment only and not with a view to distribution.

(iv) The Committee may require a Grantee receiving Stock pursuant to the Plan,
as a condition precedent to receipt of such Stock, to enter into a stockholder
agreement or “lock-up” agreement in such form as the Committee shall determine
is necessary or desirable to further the Company’s interests.

(k) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware without
giving effect to the conflict of laws principles thereof.

 

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