Document:

2004 PERFORMANCE METRIC LONG-TERM INCENTIVE PLAN

 

Exhibit 10.5

CENDANT CORPORATION

2004

PERFORMANCE METRIC

LONG TERM INCENTIVE PLAN

	1.	 	Purpose.

The purpose of the Cendant Corporation 2004 Performance Metric Long Term
Incentive Plan is to provide a performance-based incentive grant intended to
promote the Company’s efforts (i) to align the interests of key management
personnel with the interests of the Company’s stockholders, and incentivize key
management personnel to create stockholder value and (ii) to retain key
management personnel over a long-term period. Unless otherwise approved by the
Committee, awards granted under the Plan shall vest upon both the Company’s
attainment of pre-established performance goals determined by the Committee,
and Participants’ continuous employment with the Company.

	2.	 	Definitions.

The following terms, as used herein, shall have the following meanings:

	 	(a)	 	“Cendant” shall mean Cendant Corporation, a Delaware corporation.

	 
	 	(b)	 	“Award Agreement” shall mean a written agreement between
Cendant and a Participant evidencing an award of Restricted Stock
Units or Stock Options.

	 
	 	(c)	 	“Board” shall mean the Board of Directors of Cendant.

	 
	 	(d)	 	“Committee” shall mean the Compensation Committee of the
Board.

	 
	 	(e)	 	“Company” shall mean, collectively, Cendant and its
subsidiaries.

	 
	 	(f)	 	“Participant” shall mean an officer or key employee of the
Company who is, pursuant to Section 4 of the Plan, selected and
designated by the Committee in writing to participate herein, and
who has been provided an Award Agreement.

	 
	 	(g)	 	“Plan” shall mean this Cendant Corporation 2004 Performance
Metric Long Term Incentive Plan.

1

 

	 	(h)	 	“Change-of-Control Transaction” shall mean any transaction or
series of transactions pursuant to or as a result of which (i)
during any period of not
more than 24 months, individuals who at the beginning of such
period constitute the Board, and any new director (other than a
director designated by a third party who has entered into an
agreement to effect a transaction described in clause (ii), (iii)
or (iv) of this paragraph) whose election by the Board or
nomination for election by Cendant’s stockholders was approved by a
vote of at least a majority of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved
(other than approval given in connection with an actual or
threatened proxy or election contest), cease for any reason to
constitute at least a majority of the members of the Board, (ii)
any person or entity is or becomes, directly or indirectly, the
beneficial owner of 50% or more of the common stock of Cendant (or
other securities of Cendant having generally the right to vote for
election of the Board), (iii) Cendant or any subsidiary shall sell,
assign or otherwise transfer, directly or indirectly, assets
(including stock or other securities of subsidiaries) having a
fair market or book value or earning power of 50% or more of the
assets or earning power of Cendant and its subsidiaries (taken as a
whole) to any third party, other than Cendant or a wholly-owned
subsidiary thereof, (iv) control of 50% or more of the business of
Cendant shall be sold, assigned or otherwise transferred directly
or indirectly to any third party, (v) there is consummated a merger
or consolidation of Cendant with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of Cendant outstanding immediately prior to such event
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
any parent thereof) at least 50% of the combined voting power of
the securities of Cendant or such surviving entity or any parent
thereof outstanding immediately after such event or (B) a merger or
consolidation effected to implement a recapitalization of Cendant
(or similar transaction) in which no person or entity becomes the
beneficial owner or more than 50% or more of the combined voting
power of Cendant’s then outstanding securities or (vi) the
stockholders of Cendant approve a plan of liquidation or
dissolution.

	 
	 	(i)	 	“Award” shall mean an award of Restricted Stock Units or
Stock Options granted pursuant to this Plan.

	 
	 	(j)	 	“Restricted Stock Unit” shall mean an Award granted pursuant
to Section 5(c) of this Plan.

2

 

	 	(k)	 	“Stock Option” shall mean an Award granted pursuant to
Section 5(b) of this Plan.

	 
	 	(l)	 	“Cendant Stock Plans” shall mean the following stock plans
maintained by Cendant, as amended from time to time: (1) 1999
Broad-Based Employee Stock Option Plan; (2) 1997 Stock Option Plan
and (3) Galileo International 1999 Equity and Performance Incentive
Plan.

	 
	 	(m)	 	“Cendant Stock” shall mean common stock of Cendant, par value
$0.01 per share, of the series designated CD Common Stock.

	 
	 	(n)	 	“Disability” shall mean a Participant’s termination of
employment by reason of “Disability” within the meaning of the
Company-sponsored Long Term Disability Plan, as in effect from time
to time, providing eligibility to employees of Cendant Operations,
Inc.

	 
	 	(o)	 	“Performance Goals” shall mean a set of pre-established
performance goals relating to the financial performance of Cendant
and/or any of its subsidiaries or divisions, including without
limitation, TUG.

	 
	 	(p)	 	“TUG” or “Total Unit Growth” shall mean, in respect of any
performance period, as the percentage change in the Company’s
Adjusted EBITDA, as defined below, plus, the Company’s Free
Cash Flow Yield, as defined below.

	 
	 	 	 	EBITDA means the Company’s “income before taxes and minority
interest,” (as reported); plus “non-program interest expense (net
of interest income and including early extinguishment of debt)” (as
reported); plus “non-program related depreciation and amortization”
(as reported); plus “acquisition and integration related costs:
amortization of pendings and listings” (as reported). “Adjusted
EBITDA” means EBITDA as adjusted solely to disregard (i) “gains and
losses on disposition of businesses” (as reported); (ii) any
financial impact relating to costs, liabilities, revenue, or income
in respect of any change in the reserves relating to the CUC
accounting irregularities and related litigation and the existing
BNP Paribas litigation (as reported); and (iii) “Acquisitions and
Dispositions” in the manner described on Annex A hereto.

	 
	 	 	 	To the extent that the Financial Accounting Standards Board issues
new accounting literature relating to “Business Combinations,”
Adjusted EBITDA will be further adjusted to exclude (i) deal
related costs currently capitalized under existing accounting
literature that would be required to be expensed in the Company’s
Income Statement (as reported); (ii) exit related costs as

3

 

	 	 	 	defined
by E.I.T.F. 95-3 that would be required to be expensed in the
Company’s Income Statement relating to acquisitions (as reported)
and (iii) any change in contingent consideration liability required
to be recorded in the
Company’s Income Statement that was previously recorded as purchase
price (as reported).

	 
	 	 	 	“Free Cash Flow Yield” means the Company’s “Free Cash Flow” divided
by the Company’s “Market Value.” “Free Cash Flow” means “net cash
provided by (used in) operating activities exclusive of management
and mortgage programs” (as reported); plus “management and mortgage
programs: cash provided by (used in) operating activities” (as
reported); plus “management and mortgage programs: cash provided by
(used in) investing activities” (as reported); plus “management and
mortgage programs: cash provided by (used in) financing activities”
(as reported); less “property and equipment additions” (as
reported); less “cash utilized for net assets acquired and
acquisition related payments” (as reported), adjusted to exclude
the cash impact of CUC accounting irregularities and related
litigation and the existing BNP Paribas litigation (as reported);
less “provision for income taxes” calculated assuming a 27%
aggregate effective tax rate (such taxes calculated on Adjusted
EBITDA, less “non-program related depreciation and amortization”
(as reported); less “acquisition and integration related costs:
amortization of pendings and listings” (as reported)).

	 
	 	 	 	“Market Value” equals the Company’s prior year Adjusted EBITDA
multiplied by the applicable “enterprise value multiple,” which the
Committee has determined to equal 9 (once set in respect of any
grant, such enterprise value multiple may not be changed for any
reason in respect of such grant).

	 
	 	 	 	Vesting will be determined by comparing the cumulative compounded
TUG over the term of a particular grant to the Performance Goals.
For example, in Year 1, vesting will be determined by comparing the
TUG for Year 1 to the Year 1 Performance Goals. In Year 2, vesting
will be determined by multiplying Year 1 TUG+1, by Year 2 TUG+1,
and then subtracting 1 from the product, and comparing such product
to the Year 2 cumulative Performance Goals. In Year 3, vesting
will be determined by multiplying Year 1 TUG+1, by Year 2 TUG+1, by
Year 3 TUG+1, and then subtracting 1 from the product, and
comparing such product to the Year 3 cumulative Performance Goals.
In Year 4, vesting will be determined by multiplying Year 1 TUG+1,
by Year 2 TUG+1, by Year 3 TUG+1, by Year 4 TUG+1, and then
subtracting 1 from the product, and comparing such result to the
Year 4 cumulative Performance Goals.

4

 

	 	 	 	Once determined for a particular year, TUG or cumulative TUG used
to determine vesting is fixed and is not adjusted as a result of
acquisitions, dispositions or other transactions.

	 
	 	(q)	 	“as reported” shall mean as disclosed in the Company’s Annual
Report on Form 10-K or, if combined within another line item or
immaterial to disclose separately, as set forth in the Company’s
books and records.

	3.	 	Administration.

The Plan shall be administered by the Committee. The Committee shall have
the authority in its sole 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 terms,
conditions and restrictions relating to any Award; to determine whether, to
what extent, and under what circumstances an Award may be settled, canceled,
forfeited, or surrendered; to determine the terms and provisions of Award
Agreements; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.

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. All decisions, determinations and interpretations of the Committee
shall be final and binding on all persons, including the Company, the
Participant (or any person claiming any rights under the Plan from or through
any Participant) and any stockholder.

Without limiting the generality of the foregoing, the Committee shall have
the full and absolute authority (i) to determine and establish any and all
applicable Performance Goals and (ii) to determine whether any Performance
Goals have been attained and to certify to such attainment.

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

5

 

	4.	 	Eligibility.

Awards may be granted to key personnel of the Company in the sole and
absolute discretion of the Committee. No employee of the Company or any other
person shall have any right to participate in the Plan absent an express
designation by the Committee.

	5.	 	Terms of Awards.

Awards granted pursuant to the Plan shall be evidenced by Award Agreements
substantially in such form as the Committee shall from time to time approve and
the terms and conditions of such Awards shall be set forth therein. Awards
under the Plan may not be memorialized or evidenced other than pursuant to an
Award Agreement.

(a)      Participation. The Committee shall grant participation in the
Plan to key personnel of the Company in its sole and absolute discretion. The
Committee may determine that participation in the Plan is subject to and
contingent upon:

	 	(i)	 	the Participant executing a covenant not to
compete and confidentiality agreement in such form as the
Committee shall prescribe; and/or

	 
	 	(ii)	 	the Participant executing a covenant to devote
his or her best efforts to create and deliver value to the
stockholders of Cendant; and/or

	 
	 	(iii)	 	such other conditions as the Committee shall
determine in its sole discretion.

(b)      Stock Options. The Committee may grant to a Participant an
Award of Stock Options which shall become vested subject to (i) the Participant
remaining continuously employed in good standing with the Company through one
or more dates determined by the Committee and/or (ii) the Company’s attainment
of Performance Goals. All such Awards shall be evidenced by an Award
Agreement. Except as set forth in Section 5(e) below or as otherwise
determined by the Committee in its sole discretion, such Awards shall not vest
and shall immediately terminate if such Participant’s employment terminates
prior to an applicable vesting date, irrespective of the reason for termination
of employment. Upon the occurrence of a Change-of-Control Transaction, each
Award granted pursuant to this paragraph shall become immediately and fully
vested and payable; provided, that the Participant (i) remains employed
with the

6

 

Company (or its successor) during a 90 day transition period
immediately following such Change-of-Control Transaction or (ii) is terminated
during such 90 day transition period by the Company or its successor. Awards
granted hereunder shall be granted pursuant to and in accordance with any one
or more of the Cendant Stock Plans, as determined by the Committee and set
forth in an Award Agreement, and accordingly such Awards shall be subject to
the terms of such Cendant Stock Plan (except as
otherwise provided in this Plan), including without limitation all
provisions regarding stock options, the exercising of stock options and
restrictions thereto, tax withholding obligations and equitable adjustment
provisions. Notwithstanding the foregoing, the Committee shall have the sole
discretion to accelerate the vesting of any Award granted pursuant to this
paragraph at any time and for any reason.

(c)      Restricted Stock Unit Awards. The Committee may grant to a
Participant an Award of Restricted Stock Units which shall become vested
subject to (i) the Participant remaining continuously employed in good standing
with the Company through one or more dates determined by the Committee and/or
(ii) the Company’s attainment of Performance Goals. Except as set forth in
Section 5(e) below or as otherwise determined by the Committee in its sole
discretion, such Awards shall not vest and shall immediately terminate if such
Participant’s employment terminates prior to an applicable vesting date,
irrespective of the reason for termination of employment. Upon the occurrence
of a Change-of-Control Transaction, each Award granted pursuant to this
paragraph shall become immediately and fully vested and payable;
provided, that the Participant (i) remains employed with the Company (or
its successor) during a 90 day transition period immediately following such
Change-of-Control Transaction or (ii) is terminated during such 90 day
transition period by the Company or its successor. Notwithstanding the
foregoing, the Committee shall have the sole discretion to accelerate the
vesting and payment of an Award granted pursuant to this paragraph at any time
and for any reason. Awards granted hereunder shall be granted pursuant to and
in accordance with any one or more of the Cendant Stock Plans, as determined by
the Committee and set forth in an Award Agreement, and accordingly such Awards
shall be subject to the terms of such Cendant Stock Plan (except as otherwise
provided in this Plan), including without limitation any equitable adjustment
provisions. As soon as practicable following the vesting of each Restricted
Stock Unit, the Participant shall be entitled to receive one share of Cendant
Stock; provided, however, that the Participant shall remain
required to remit to the Company such amount that the Company determines is
necessary to meet all required minimum withholding taxes. In the event that
Cendant shall determine to pay a dividend in respect of Cendant Stock, a cash
dividend-equivalent in respect of each then outstanding Restricted Stock Unit
shall be paid to the holder thereof; provided, however, that any
such dividend-equivalents shall be subject to the same vesting schedules,
Performance Goals, forfeiture provisions and deferral elections as the
Restricted Stock Unit to which it relates.

7

 

(d)      Performance Based Vesting. Unless otherwise approved by the
Committee and set forth in writing in an Award Agreement, Awards granted
hereunder will vest only upon the attainment of Performance Goals (as well as
any other additional vesting requirements).

(e)      Disability. A Participant’s Award shall immediately vest upon
his or her termination of employment by reason of Disability.

	6.	 	General Provisions.

(a)      Compliance with Legal Requirements. The Plan and the granting
and payment of Awards, and the other obligations of the Company under the Plan
and any Award Agreement or other agreement, entered into pursuant hereto, shall
be subject to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be required.
The selling of shares of Cendant Stock and the exercise of Stock Options may be
restricted by virtue of any “blackout period” or any other restrictive policy
imposed by the Company for any reason or for no reason. No Participant shall
have any actual or implied right to sell Cendant Stock or exercise any Stock
Option at any particular time or particular date, and any such transactions may
be limited or delayed by the Company at any time, with or without prior notice
to the Participant, for any reason or for no reason. The foregoing
specifically includes the Company’s discretionary determination to suspend any
such transactions during a Company investigation of any Participant’s alleged
misconduct.

(b)      Nontransferability. Awards shall not be transferable by a
Participant for any reason whatsoever, other than pursuant to the applicable
laws of descent and distribution.

(c)      No Right To Continued Employment. Nothing in the Plan, any
Award or any Award Agreement or other agreement entered into pursuant hereto
shall confer upon any Participant the right to continue in the employ 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 to terminate such Participant’s employment.

(d)      Withholding Taxes. All Awards hereunder, and the vesting
thereof, are subject to any and all required minimum withholding taxes and
similar required withholding obligations.

8

 

(e)      Amendment, Termination and Duration of the Plan. The Board or
the Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part. Notwithstanding the foregoing, no
amendment shall affect adversely any of the rights of any Participant, without
such Participant’s consent, under any Award theretofore granted under the Plan.

(f)      Participant Rights. No Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment for Participants.

(g)      Unfunded Status of Awards. The Plan is intended to constitute
an “unfunded” plan for incentive and deferred compensation for a select group
of management and highly compensated employees. Nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company. The Plan is not intended to
provide retirement benefits, retirement income or welfare benefits.

(h)      Deferral. Cendant may (but is not obligated to) establish
procedures pursuant to which certain designated Participants may elect to
defer, until a time or times later than the vesting of a Restricted Stock Unit,
receipt of all or a portion of the shares of Cendant Stock deliverable in
respect of a Restricted Stock Unit, all on such terms and conditions as Cendant
shall determine in its sole discretion. If any such deferrals are permitted
for some or all Participants, then notwithstanding any provision of this Plan
to the contrary, a Participant who elects such deferral shall not have any
rights as a stockholder with respect to any such deferred shares of Cendant
Stock unless and until certificates representing such shares are actually
delivered to the Participant, except to the extent otherwise determined by the
Committee.

(i)      Other Provisions. Notwithstanding any other provision of the
Plan, an Award Agreement or any other agreement (written or oral) to the
contrary, for purposes of the Plan and any Award hereunder, a termination of
employment shall be deemed to have occurred on the date upon which the
Participant ceases to perform active employment duties for the Company
following the provision of any notification of termination or resignation from
employment, and without regard to any period of notice of termination of
employment (whether expressed or implied) or any period of severance or salary
continuation. Notwithstanding any other provision of the Plan, an Award
Agreement or any other agreement (written or oral) to the contrary, a
Participant shall not be entitled (and by accepting any Award, thereby
irrevocably waives any such entitlement), by way of compensation for loss of
office or otherwise, to any sum or other benefit to compensate the Participant
for the loss of any rights under the Plan as a result of the termination or
expiration in of any Award in connection with any termination of

9

 

employment.
No amounts earned pursuant to the Plan or any Award shall be deemed to be
eligible compensation in respect of any other plan of Cendant Corporation or
any of its subsidiaries.

(j)      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.

(k)      Effective Date. The Plan shall take effect upon its adoption
by the Committee.

10

 

Annex A

Adjustments to EBITDA and Free Cash Flow for

Acquisitions and Dispositions

Dispositions of Subsidiaries and Business Units

	1.	 	If a disposition is accounted for as “discontinued operations” in
accordance with U.S. GAAP, then all historical years of EBITDA and Free
Cash Flow shall be adjusted by eliminating the historical results of the
disposed entity in the manner reported on the Company’s Annual Report on
Form 10-K. Further, any assets, cash or other consideration (if any)
received in connection with such disposition shall not be considered Free
Cash Flow.

	 
	2.	 	If a disposition with greater than $50 million of “total consideration”
(as defined below) is not accounted for as “discontinued operations” in
accordance with U.S. GAAP, then all historical years of EBITDA and Free
Cash Flow shall be adjusted by the Company by eliminating the historical
results of the disposed entity by making such appropriate adjustments
which would have otherwise been made assuming the disposition was
accounted for as “discontinued operations.” Further, any assets, cash or
other consideration (if any) received in connection with such disposition
shall not be considered Free Cash Flow.

	 
	 	 	If a disposition with $50 million or less of total consideration is not
accounted for as discontinued operations in accordance with U.S. GAAP, then
there shall be no adjustment made to EBITDA and Free Cash Flow. In this
case, the total consideration received will be included as a cash inflow to
Free Cash Flow.

	 
	3.	 	Once determined for a particular year, TUG or cumulative TUG used to
determine vesting is fixed and is not adjusted as a result of
acquisitions, dispositions or other transactions.

Acquisitions of Subsidiaries and Business Units

	1.	 	There shall be no adjustment to EBITDA or Free Cash Flow in respect of
any acquisition with a “total consideration” of $15 million or less
(“Small Acquisitions”) (specifically, Free Cash Flow will be reduced by
such “total consideration” in the year of acquisition). The “total
consideration” will consist of all cash consideration paid (including
“earn-out” payments), related deal costs, any assumed debt and any

11

 

	 	 	Cendant
equity issued (Cendant common stock issued and conversion of stock
options).

	 
	2.	 	For acquisitions other than Small Acquisitions, EBITDA shall be adjusted
in order to neutralize the impact of such acquisition in the year of such
acquisition.

	 
	 	 	For such acquisitions, EBITDA shall be adjusted to exclude the results of
the acquired entity for the entirety of the fiscal year in which the
acquisition occurs. The amount of the EBITDA adjustment will be exactly as
set forth in the applicable Cendant Investment Committee Memorandum (all
such acquisitions require presentation of key financial projections in a
memorandum to such committee) used to review and approve the transaction
(the “ICM”). Notwithstanding Company procedure, for purposes of this Plan,
in the event that any acquisition closes more than 90 days following the
date of the ICM, or in the event that an acquisition closes in the calendar
year following the date of the ICM, then an updated ICM will be required.
For all adjustments made pursuant to any ICM, whether an original ICM or an
updated ICM, the financial information set forth in the ICM shall be pro
rated to account for the period of time which elapses following the date of
the ICM through the date of closing. The EBITDA noted in the ICM for the
current year (relating to the period owned by the Company) will be removed
from the actual results of the Company without regard to the actual results
of the acquired entity. However, solely for purposes of determining EBITDA
growth in the following year, the EBITDA for the year in which the
acquisition occurred shall be adjusted to include the results of the
acquired entity as if it was owned for the full year (for such purpose, the
EBITDA for the period the acquired entity is not owned by the Company will
equal the EBITDA for such period indicated in the ICM; note: the EBITDA for
the period the acquired entity is owned by the Company will equal the actual
EBITDA for such period). TUG calculated for prior years shall not be
adjusted due to this calculation.

	 
	3.	 	For such acquisitions other than Small Acquisitions, Free Cash Flow shall
be adjusted to exclude the free cash flow results of the acquired entity
for the entirety of the fiscal year in which the acquisition occurs. The
amount of the Free Cash Flow adjustment will be exactly as set forth in
the applicable ICM used to review and approve the transaction.
Notwithstanding Company procedure, for purposes of this Plan, in the event
that any acquisition closes more than 90 days following the date of the
ICM, or in the event that an acquisition closes in the calendar year
following the date of the ICM, then an updated ICM will be required. For
all adjustments made pursuant to any ICM, whether an original ICM or an
updated ICM, the financial information set forth in the ICM shall be pro
rated to account for the period of time which elapses following the date
of the ICM through the date of closing. The Free Cash Flow noted in the
ICM for the current year will be removed from the actual results of the

12

 

	 	 	Company without regard to the actual results of the acquired entity. Free
Cash Flow will be adjusted to exclude the total consideration paid for the
acquisition.

	 
	4.	 	For acquisitions other than Small Acquisitions, but only those for which
the Company pays “total consideration” in excess of the “enterprise value
multiple” (determined by the Committee to equal 9), multiplied by the
acquired entity’s prior calendar year GAAP earnings before interest,
taxes, depreciation and amortization (as set forth in the ICM) (“Acquiree
EBITDA”), Free Cash Flow shall be adjusted.

	 
	 	 	For such acquisitions, the total consideration paid by the Company in excess
of the “enterprise value multiple” (determined by the Committee to equal 9),
multiplied by Acquiree EBITDA shall be referred to as the “Acquisition
Premium.” Commencing on the year following the acquisition, 25% of the
Acquisition Premium shall be included as a cash outflow from Free Cash Flow
in each of the following remaining years of the grant.

	 
	5.	 	Once determined for a particular year, TUG or cumulative TUG used to
determine vesting is fixed and is not adjusted as a result of
acquisitions, dispositions or other transactions.

132003 LONG-TERM INCENTIVE PLAN

 

Exhibit 10.6

CENDANT CORPORATION

2003 LONG TERM INCENTIVE PLAN

	1.	 	Purpose.

The purpose of the Cendant Corporation 2003 Long Term Incentive Plan is to
provide an annual incentive grant intended to promote the Company’s efforts (i)
to align the interests of key management personnel with the interests of the
Company’s stockholders, and incentivize key management personnel to create
stockholder value and (ii) to retain key management personnel over a long-term
period during which the Company contemplates competitive business markets and a
challenging economic environment.

	2.	 	Definitions.

The following terms, as used herein, shall have the following meanings:

	 	(a)	 	“Cendant” shall mean Cendant Corporation, a Delaware corporation.

	 
	 	(b)	 	“Award Agreement” shall mean a written agreement between
Cendant and a Participant evidencing an award of Restricted Stock
Units or Restricted Cash Units.

	 
	 	(c)	 	“Board” shall mean the Board of Directors of Cendant.

	 
	 	(d)	 	“Committee” shall mean the Compensation Committee of the
Board.

	 
	 	(e)	 	“Company” shall mean, collectively, Cendant and its
subsidiaries.

	 
	 	(f)	 	“Participant” shall mean an officer or key employee of the
Company who is, pursuant to Section 4 of the Plan, selected and
designated by the Committee in writing to participate herein.

	 
	 	(g)	 	“Plan” shall mean this Cendant Corporation 2003 Long Term
Incentive Plan.

	 
	 	(h)	 	“Change-of-Control Transaction” shall mean any transaction or
series of transactions pursuant to or as a result of which (i)
during any period of not more than 24 months, individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by

1

 

	 	 	 	a third party who has entered into an agreement to effect a transaction
described in clause (ii), (iii) or (iv) of this paragraph) whose
election by the Board or nomination for election by Cendant’s
stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved (other than approval given in
connection with an actual or threatened proxy or election contest),
cease for any reason to constitute at least a majority of the
members of the Board, (ii) any person or entity is or becomes,
directly or indirectly, the beneficial owner of 50% or more of the
common stock of Cendant (or other securities of Cendant having
generally the right to vote for election of the Board), (iii)
Cendant or any subsidiary shall sell, assign or otherwise transfer,
directly or indirectly, assets (including stock or other securities
of subsidiaries) having a fair market or book value or earning
power of 50% or more of the assets or earning power of Cendant and
its subsidiaries (taken as a whole) to any third party, other than
Cendant or a wholly-owned subsidiary thereof, (iv) control of 50%
or more of the business of Cendant shall be sold, assigned or
otherwise transferred directly or indirectly to any third party,
(v) there is consummated a merger or consolidation of Cendant with
any other corporation, other than (A) a merger or consolidation
which would result in the voting securities of Cendant outstanding
immediately prior to such event continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 50% of the
combined voting power of the securities of Cendant or such
surviving entity or any parent thereof outstanding immediately
after such event or (B) a merger or consolidation effected to
implement a recapitalization of Cendant (or similar transaction) in
which no person or entity becomes the beneficial owner or more than
50% or more of the combined voting power of Cendant’s then
outstanding securities or (vi) the stockholders of Cendant approve
a plan of liquidation or dissolution.

	 
	 	(i)	 	“Award” shall mean an award of Restricted Stock Units or
Restricted Cash Units granted pursuant to this Plan.

	 
	 	(j)	 	“Restricted Stock Unit” shall mean an Award granted pursuant
to Section 5(c) of this Plan.

	 
	 	(k)	 	“Restricted Cash Unit” shall mean an Award granted pursuant
to Section 5(b) of this Plan.

2

 

	 	(l)	 	“Cendant Stock Plans” shall mean the following stock plans
maintained by Cendant, as amended from time to time: (1) 1999
Broad-Based Employee
Stock Option Plan; (2) 1997 Stock Option Plan and (3) Galileo
International 1999 Equity and Performance Incentive Plan.

	 
	 	(m)	 	“Cendant Stock” shall mean common stock of Cendant, par value
$0.01 per share, of the series designated CD Common Stock.

	 
	 	(n)	 	Disability shall mean a Participant’s termination of
employment by reason of “Disability” within the meaning of Cendant’s
Long Term Disability Plan as in effect from time to time.

	3.	 	Administration.

The Plan shall be administered by the Committee. The Committee shall have
the authority in its sole 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 terms,
conditions and restrictions relating to any Award; to determine whether, to
what extent, and under what circumstances an Award may be settled, canceled,
forfeited, or surrendered; to determine the terms and provisions of Award
Agreements; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.

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. All decisions, determinations and interpretations of the Committee
shall be final and binding on all persons, including the Company, the
Participant (or any person claiming any rights under the Plan from or through
any Participant) and any stockholder.

No member of the Board or the 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.

3

 

Awards may be granted to key management personnel of the Company in the
sole discretion of the Committee.

	5.	 	Terms of Awards.

Awards granted pursuant to the Plan shall be evidenced by Award Agreements
substantially in such form as the Committee shall from time to time approve and
the terms and conditions of such Awards shall be set forth therein.

(a)      Participation. The Committee shall grant participation in the
Plan to key management personnel in its sole and absolute discretion. The
Committee may determine that participation in the Plan is subject to and
contingent upon:

	 	(i)	 	the Participant executing a covenant not to
compete and confidentiality agreement in such form as the
Committee shall prescribe; and/or

	 
	 	(ii)	 	the Participant executing a covenant to devote
his or her best efforts to create and deliver value to the
stockholders of Cendant; and/or

	 
	 	(iii)	 	such other conditions as the Committee shall
determine in its sole discretion.

(b)      Restricted Cash Units Awards. The Committee may grant to a
Participant an Award of Restricted Cash Units, subject to the Participant
remaining continuously employed in good standing with the Company through one
or more dates determined by the Committee, and upon which dates such Award may
become fully or partially vested and payable. All such Awards shall be
evidenced by an Award Agreement. Such Award will not vest or become payable
and shall immediately terminate if such Participant’s employment terminates
prior to an applicable vesting date, irrespective of the reason for termination
of employment. Upon the occurrence of a Change-of-Control Transaction, each
Award of Restricted Cash Units granted pursuant to this paragraph shall become
immediately and fully vested and payable; provided, that the Company
shall retain the right in its sole discretion to make such payment contingent
upon the Participant executing an agreement to remain employed with the Company
(or its successor) during a 90 day transition period immediately following such
Change-of-Control Transaction. Notwithstanding the foregoing, the Committee
shall have the sole discretion to accelerate the vesting and payment of a
Restricted Cash Unit Award at any time and for any reason. As soon as
practicable following the vesting of each Restricted

4

 

Cash Unit, the Participant
will be entitled to receive an amount of cash equal to one dollar ($1.00), less
any and all required minimum withholding taxes.

(c)      Restricted Stock Unit Awards. The Committee may grant to a
Participant an Award of Restricted Stock Units, subject to the Participant
remaining continuously employed in good standing with the Company through one
or more dates determined by the Committee, and upon which dates such Award may become
fully or partially vested and payable. All such Awards shall be evidenced by an
Award Agreement. Such Award will not vest and will immediately terminate if
such Participant’s employment terminates prior to an applicable vesting date,
irrespective of the reason for termination of employment. Upon the occurrence
of a Change-of-Control Transaction, each Award of Restricted Stock Units
granted pursuant to this paragraph shall become immediately and fully vested
and payable; provided, that Company shall retain the right in its sole
discretion to make such payment contingent upon the Participant executing an
agreement to remain employed with the Company (or its successor) during a 90
day transition period immediately following such Change-of-Control Transaction.
Notwithstanding the foregoing, the Committee shall have the sole discretion to
accelerate the vesting and payment of a Restricted Stock Unit Award at any time
and for any reason. Restricted Stock Units granted hereunder shall be granted
pursuant to and in accordance with any one or more of the Cendant Stock Plans,
as determined by the Committee and set forth in an Award Agreement, and
accordingly such Awards shall be subject to the terms of such Cendant Stock
Plan (except as otherwise provided in this Plan), including without limitation
any equitable adjustment provisions. As soon as practicable following the
vesting of each one Restricted Stock Unit, the Participant will be entitled to
receive one share of Cendant Stock; provided, however, that the
Participant shall remain required to remit to the Company such amount that the
Company determines is necessary to meet all required minimum withholding taxes.
In the event that Cendant shall determine to pay a dividend in respect of
Cendant Stock, a cash dividend-equivalent in respect of each then outstanding
Restricted Stock Unit will be paid to the holder thereof; provided,
however, that any such dividend-equivalents shall be subject to the same
vesting schedules, forfeiture provisions and deferral elections as the
Restricted Stock Unit to which it relates.

(d)      Disability. A Participant’s Restricted Stock Units and/or
Restricted Cash Units shall immediately vest upon his or her termination of
employment by reason of Disability.

	6.	 	General Provisions.

(a)      Compliance with Legal Requirements. The Plan and the granting
and payment of Awards, and the other obligations of the Company under the Plan
and any

5

 

Award Agreement or other agreement, entered into pursuant hereto, shall
be subject to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be required.

(b)      Nontransferability. Awards shall not be transferable by a
Participant for any reason whatsoever.

(c)      No Right To Continued Employment. Nothing in the Plan, any
Award or any Award Agreement or other agreement entered into pursuant hereto
shall confer upon any Participant the right to continue in the employ 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 to terminate such Participant’s employment.

(d)      Withholding Taxes. All Awards hereunder are subject to any
and all required minimum withholding taxes and similar required withholding
obligations.

(e)      Amendment, Termination and Duration of the Plan. The Board or
the Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part. Notwithstanding the foregoing, no
amendment shall affect adversely any of the rights of any Participant, without
such Participant’s consent, under any Award theretofore granted under the Plan.

(f)      Participant Rights. No Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment for Participants.

(g)      Unfunded Status of Awards. The Plan is intended to constitute
an “unfunded” plan for incentive and deferred compensation for a select group
of management and highly compensated employees. Nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company.

(h)      Deferral. Cendant may establish procedures pursuant to which
certain designated Participants may elect to defer, until a time or times later
than the vesting of an Award, receipt of all or a portion of the shares of
Cendant Stock deliverable in respect of a Restricted Stock Unit and/or receipt
of all or a portion of the amounts payable in respect of a Restricted Cash
Unit, all on such terms and conditions as Cendant shall determine in its sole
discretion. If any such deferrals are permitted for some or all Participants,
then notwithstanding any provision of this Plan to the contrary, a Participant
who elects such deferral shall not have any rights as a stockholder with
respect to any

6

 

such deferred shares of Cendant Stock unless and until
certificates representing such shares are actually delivered to the
Participant, except to the extent otherwise determined by the Committee.

(i)      Other Provisions. Notwithstanding any other provision of the
Plan, an Award Agreement or any other agreement (written or oral) to the
contrary, for purposes of the Plan and any Award hereunder, a termination of employment
shall be deemed to have occurred on the date upon which the Participant ceases
to perform active employment duties for the Company following the provision of
any notification of termination or resignation from employment, and without
regard to any period of notice of termination of employment (whether expressed
or implied) or any period of severance or salary continuation. Notwithstanding
any other provision of the Plan, an Award Agreement or any other agreement
(written or oral) to the contrary, a Participant shall not be entitled (and by
accepting any Award, thereby irrevocably waives any such entitlement), by way
of compensation for loss of office or otherwise, to any sum or other benefit to
compensate the Participant for the loss of any rights under the Plan as a
result of the termination or expiration in of any Award in connection with any
termination of employment. No amounts earned pursuant to the Plan or any Award
shall be deemed to be eligible compensation in respect of any other plan of
Cendant Corporation or any of its subsidiaries.

(j)      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.

(k)      Effective Date. The Plan shall take effect upon its adoption
by the Committee.

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]