EX-10.9



 





Exhibit 10.9


PHH CORPORATION




2005 EQUITY AND INCENTIVE PLAN





 









 








PHH CORPORATION




2005 EQUITY AND INCENTIVE PLAN




	 	 	 	 	 	 	 
	 	 	Section	 	Page	 
	 
	 	 	 	 	 	 
	1.
	 	Purpose; Types of Awards; Construction	 	 	1	 
	 
	 	 	 	 	 	 
	2.
	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	3.
	 	Administration	 	 	6	 
	 
	 	 	 	 	 	 
	4.
	 	Eligibility	 	 	7	 
	 
	 	 	 	 	 	 
	5.
	 	Stock Subject to the Plan	 	 	7	 
	 
	 	 	 	 	 	 
	6.
	 	Specific Terms of Awards	 	 	8	 
	 
	 	 	 	 	 	 
	7.
	 	Change in Control Provisions	 	 	14	 
	 
	 	 	 	 	 	 
	8.
	 	General Provisions	 	 	15	 







 









 








PHH CORPORATION




2005 EQUITY AND INCENTIVE PLAN



1.      Purpose; Types of Awards; Construction.


The purposes of the PHH Corporation 2005 Equity and Incentive Plan (the “Plan”) are to afford
an incentive to non-employee directors, selected officers and other employees, advisors and
consultants of PHH Corporation (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;


(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.



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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.


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


(g)      “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.


(h)      “Company” means PHH Corporation, a corporation organized under the laws of the State of
Delaware, or any successor corporation.


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


(j)      “Conversion Stock” means an Award of Stock granted under Section 6(b)(v).


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



(l)      “Effective Date” means
January 14, 2005, the date that the Plan was originally adopted
by the Board.


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


(n)      “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.



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(o)      “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.


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


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


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


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


(t)      “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.


(u)      “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.


(v)      “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.


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


(x)      “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) income or 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 and/or excluding charges attributable
to the adoption of new accounting pronouncements; (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



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margin; (x) stock price or total stockholder return; (xi) income or earnings from continuing
operations; (xii) cost targets, reductions and savings, expense management, productivity and
efficiencies; and (xiii) 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.


(y)      “Plan” means this PHH Corporation 2005 Equity and Incentive Plan, as amended from time to
time.


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


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


(bb)      “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.


(cc)      “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.


(dd)      “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.



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


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


(gg)      “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.


(hh)      “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



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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.


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
[7,500,000] including all shares to be issued pursuant to Conversion Options or Conversion Stock,
subject to adjustment as provided herein. No more than [1,000,000] 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 [1,000,000] shares of Stock may be
made subject to stock-based awards other than Options or SARs (including Restricted Stock and
Restricted Stock Units (but other than Conversion Stock) 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



7









 




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.


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



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(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.



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(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, a
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.
A SAR granted in tandem with an Option shall be exercisable only to the
extent the underlying Option is exercisable. Payment of a SAR may made in
cash, Stock, or property as specified in the Award or determined by the
Committee.


(B)      Right Conferred. A 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 a 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. A 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.


(D)      Termination of Employment. A 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



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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 the 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



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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 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 Directors
Deferred Compensation Plan (the



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“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 on the first anniversary
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 Stock awards (such Options and Stock awards, “Conversion Options” and
“Conversion Stock,” respectively) either in consideration of the cancellation by
Cendant of certain stock options and restricted stock unit awards previously
granted to Participants by Cendant or in connection with the equitable adjustment
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 Stock shall be determined by the Committee and (ii)
the per share exercise price of a



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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.


(v)      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 Plan Year is $1 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 respect of any Plan Year
is [$1 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



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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.



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(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.


(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



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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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