Document:

<PAGE>
                                                                   EXHIBIT 10(c)

             AMENDMENT TO ALLETE DIRECTOR COMPENSATION DEFERRAL PLAN
             -------------------------------------------------------
                            Effective January 1, 2005

         WHEREAS, ALLETE, Inc. (the "Company")  maintains  the  ALLETE  Director
Compensation Deferral Plan (the "Plan"); and

         WHEREAS, the American Jobs  Creation Act of  2004 added  a new  section
409A to the Internal Revenue Code  establishing new rules regarding the taxation
of non-qualified  deferred  compensation  plans,  effective for amounts deferred
after December 31, 2004 (the "New Law"); and

         WHEREAS, under the  new law, amounts  deferred on and  after January 1,
2005 under the Plan would be immediately taxable to participants; and

         WHEREAS, the Executive Compensation Committee of the Board of Directors
of the Company has instructed  management to prepare a new deferred compensation
plan (a "New  Plan")  that will  comply  with the New Law to be  adopted  by the
Company no later than December 31, 2005; and

         WHEREAS,  recent  guidance  issued  by  the  Internal  Revenue  Service
specifies that amounts earned by Plan  participants  in 2004 that become payable
in 2005 will, if subject to a deferral election,  be treated as amounts deferred
after December 31, 2004 for purposes of the New Law; and

         WHEREAS, such recent guidance  also allows deferred  compensation plans
to be amended to give  participants  the  opportunity to revoke,  in whole or in
part, certain outstanding elections to defer compensation; and

         WHEREAS, such  recent  guidance also  allows  participants to  elect to
defer certain performance-based  compensation based on services performed over a
period  of at least 12  months  no later  than 6 months  before  the end of that
period; and

         WHEREAS, it is  desirable to  preserve  the deferral of  taxes on  2004
compensation  (which is  payable  in 2005),  and 2005  compensation  subject  to
deferral  elections for Plan  participants  who do not revoke their elections to
defer such compensation; and

         WHEREAS, it is therefore desirable to amend the Plan (1) to reflect the
cessation  of further  deferrals  thereunder  after  2004;  (2) to provide  Plan
participants  with the opportunity to revoke their deferral  elections for their
2004 compensation  (which is payable in 2005) and 2005 compensation and make new
deferral elections for their 2005  compensation;  and (3) to the extent that any
such  deferral  elections  are not so revoked,  to redirect the deferral of 2004
deferred  compensation (which is payable in 2005) and 2005 deferred compensation
to a New Plan.

         NOW, THEREFORE, effective as of  January 1, 2005, the  Plan  is  hereby
amended as follows:

1.       Section 3 of the Plan is  hereby amended by adding  the  following  new
sections 3.4 and 3.5 to the end thereof:

<PAGE>

         3.4      CESSATION OF DEFERRALS.

         Notwithstanding any other Plan provision to  the contrary, no amount of
         compensation  as a Director  which is  payable  by the  Company in cash
         earned for services  performed in Plan years  beginning  after December
         31, 2004 shall be deferred under this Plan.  Accordingly,  any election
         to make any deferral under this plan shall  terminate as to future cash
         compensation as of December 31, 2004 and shall no longer have any force
         or effect  under this Plan as to future cash  compensation.  Subject to
         Section 3.5 hereof,  cash compensation that was earned in 2004 but paid
         in 2005 and cash  compensation  that was earned in 2005,  in each case,
         that are  subject to  deferral  elections  made under the terms of this
         Plan shall not be credited under this Plan, but shall be credited under
         a new plan to be adopted in 2005 (a "New Plan") in accordance  with the
         terms of the New Plan and shall be subject to the terms and  conditions
         of such New  Plan,  including,  without  limitation,  its  distribution
         provisions.  No new deferral elections shall be made under this Article
         3 with respect to amounts  earned after  December 31, 2004.  Investment
         earnings  (and  losses)  shall  continue to be credited (or debited) to
         each Director's account as provided in this Article 3.

         3.5      OPPORTUNITY TO REVOKE ELECTION.

         Notwithstanding  anything  contained  herein to the  contrary,  (i) any
         Director who elected to defer 2004 cash  compensation  which is payable
         in 2005  may  revoke  his or her  election  in its  entirety;  (ii) any
         Director who elected a 2005  deferral may revoke his or her election in
         part or in its  entirety;  and (iii) any  Director  who  elected a 2005
         deferral  may file a new  deferral  election  with respect to such 2005
         deferral, in each case as provided in this Section 3.5. Such revocation
         election  with respect to a 2004  deferral  and/or 2005 deferral or new
         deferral election with respect to 2005 deferral must be in writing on a
         form  provided  by  the  administrator  and  must  be  filed  with  the
         administrator  on or before  January 28, 2005. Any Director who revokes
         his or her 2004 deferral election as provided herein shall receive such
         compensation in cash at or about the same time that such amount is paid
         to other Directors of the Company.  Any Director who revokes his or her
         2005 deferral  election  will be paid in accordance  with the Company's
         standard Director compensation practices.

<PAGE>

IN WITNESS WHEREOF, ALLETE, Inc. has  caused this  instrument to be executed  by
its duly authorized officers.

                                      ALLETE, Inc.

                                      /s/ Donald J. Shippar
                                      -------------------------------------
                                      Donald J. Shippar
                                      President and Chief Executive Officer

ATTEST:

/s/ Deborah A. Amberg
-------------------------------
Deborah A. Amberg
Vice President, General Counsel
and Secretary2004 Performance Metric Long Term Incentive Plan

	 	
       
	
      EXHIBIT
      10.1

 

CENDANT
CORPORATION

2004

PERFORMANCE
METRIC

LONG TERM
INCENTIVE PLAN

Amended
and Restated as of April 26, 2005

.1

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:

 

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

	(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. 

	(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.

	(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 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 non-program related interest actually paid; 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) (plus cash taxes actually paid); 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.

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
advis-able 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. 

 

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 ap-prove 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 Commit-tee 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 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.

(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.

(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 con-sent, under any Award theretofore
granted under the Plan.

(f)
Participant
Rights. No
Participant shall have any claim to be grant-ed 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 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 deter-mi-nations 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.

 

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 (i) the historical results of the
      disposed entity in the manner reported on the Company’s Annual Report on
      Form 10-K and (ii) any one-time costs or benefits directly related to such
      disposition. 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 (i) 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” and (ii) any one-time costs
      or benefits directly related to such disposition. 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.

For any
disposition described in 1 or 2 above (but excluding pursuant to a direct
dividend, spin-off or distribution to Company stockholders), the total
consideration received by the Company is in excess of the “enterprise value
multiple” (determined by the Committee to equal 9), multiplied by EBITDA of such
disposed of entity (relating to the latest 12 month results immediately
preceding the month of the disposition), if any, shall be referred to as the
“Disposition Premium.” Commencing in the year of the disposition (the “Base
Year”), 25% of the Disposition Premium shall be included as a cash inflow in the
calculation of Free Cash Flow in such Base Year and in each of the three years
immediately following such Base Year (such 4 year period, the “Disposition
Premium Amortization Period”). Additional disposition payments (such as earn-out payments) and disposition-related payments (i)
shall be added to the Disposition Premium if received by the Company during the
Disposition Premium Amortization Period and shall be amortized ratably over the
remaining years in the Disposition Premium Amortization Period and (ii) shall be
included as a cash inflow in the calculation of Free Cash Flow in the year
received by the Company if received by the Company in any year following the
Disposition Premium Amortization Period.  Notwithstanding
the foregoing, in any calendar year, the aggregate value of all Disposition
Premiums applied to Free Cash Flow may not exceed the aggregate value of all
Acquisition Premiums applied to Free Cash Flow. The value of any Disposition
Premiums not applied to Free Cash Flow in any calendar year by virtue of the
operation of the preceding sentence shall be applied in the following calendar
year (or in subsequent years until applied).

 

	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 the total cash cost of the acquisition (as
      reported) (i.e.,
      total cash dispersed less cash acquired) plus non-amortization related
      acquisition and integration related costs and any assumed debt and any
      equity issued (stock issued and conversion of stock options, valued as of
      the closing or as otherwise provided under
GAAP).

	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). Also, with respect to this EBITDA adjustment, if the acquired entity
does not report on a GAAP basis, reasonable adjustments will be made to the
extent necessary and appropriate to align the financial statements of the
acquired entity with GAAP. Any such adjustments should be included within the
ICM. 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
      Company without regard to the actual results of the acquired entity. Free
      Cash Flow will be adjusted to exclude the total cash cost of the
      acquisition (as reported) (i.e.,
      total cash dispersed less cash acquired) plus non-amortization related
      acquisition and integration related costs.

 

 

 

	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 (relating to the latest 12 month results immediately
preceding the month of the acquisition), if any, shall be referred to as the
“Acquisition Premium.” The Acquisition Premium shall not exceed “total
consideration” as defined above. Commencing in the year following the
acquisition (the “Base Year”), 25% of the Acquisition Premium shall be included
as a cash outflow from Free Cash Flow in such Base Year and in each of the three
years immediately following Base Year (such 4 year period, the “Acquisition
Premium Amortization Period”). Additional acquisition payments (such as earn-out
payments) and acquisition-related payments (i) shall be added to the Acquisition
Premium if paid by the Company during the Acquisition Premium Amortization
Period and shall be amortized ratably over the remaining years in the
Acquisition Premium Amortization Period and (ii) shall be included as a cash
outflow in the calculation of Free Cash Flow in the year paid by the Company if
paid by the Company in any year following the Acquisition Premium Amortization
Period.

	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.

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