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                                                                    EXHIBIT 4.06

               AS AMENDED AND RESTATED THROUGH OCTOBER 14, 1998

                         1997 STOCK INCENTIVE PLAN OF

                              CENDANT CORPORATION

SECTION 1. Purpose; Definitions

     The purpose of the Plan is to give the Corporation a competitive advantage
in attracting, retaining and motivating officers and employees and to provide
the Corporation and its Affiliates with a stock plan providing incentives
directly linked to the profitability of the Corporation's businesses and
increases in shareholder value.

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

     (a)  "Affiliate" means a corporation or other entity controlled by,
controlling or under common control with the Corporation.

     (b)  "Award" means the grant of a Stock Appreciation Right, Stock Option or
Restricted Stock pursuant to the Plan.

     (c)  "Board" means the Board of Directors of the Corporation.

     (d)  "Cause" means (except as otherwise provided by the Committee in the
agreement relating to any Award) (1) conviction of a participant for committing
a felony under federal law or the law of the state in which such action
occurred, (2) dishonesty in the course of fulfilling a participant's employment
duties or (3) willful and deliberate failure on the part of a participant to
perform his employment duties in any material respect. Notwithstanding the
foregoing, if a participant is a party to an employment agreement with the
Corporation or any Affiliate that contains a definition of "Cause," such
definition shall apply to such participant for purposes of the Plan except to
the extent otherwise provided by the Committee in the agreement relating to any
Award.

     (e)  "Code" means the Internal Revenue Code of 1988, as amended from time
to time, and any successor thereto.

     (f)  "Commission" means the Securities and Exchange Commission or any
successor agency.

     (g)  "Committee" means the Committee referred to in Section 2.

     (h)  "Common Stock" means common stock, par value $0.01 per share, of the
Corporation.

     (i)  "Corporation" means Cendant Corporation, a Delaware corporation.
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     (j)  "Covered Employee" means a participant designated prior to the grant
of shares of Restricted Stock by the Committee who is or may be a "covered
employee" within the meaning of Section 162(m)(3) of the Code in the year in
which Restricted Stock is expected to be taxable to such participant.

     (k)  "Disability" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.

     (l)  "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.

     (m)  "Fair Market Value" means, as of any given date, the fair market value
of the Common Stock as determined by the Committee in good faith, taking into
account the trading price of the Common Stock on the New York Stock Exchange
Composite Tape, or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed, or on NASDAQ, or in any
other regular public trading market for the Common Stock which may exist as of
such date. The determination of the Committee shall be conclusive in determining
the fair market value of the Common Stock.

     (n)  "Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of Section 422 of
the Code.

     (o)  "Non-Employee Director" means a member of the Board who qualifies as a
Non-Employee Director as defined in Rule 16b-3(b)(3), as promulgated by the
Commission under the Exchange Act, or any successor definition adopted by the
Commission.

     (p)  NonQualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

     (q)  "Qualified Performance-Based Award" means an Award of Restricted
Stock designated as such by the Committee at the time of grant, based upon a
determination that (i) the recipient is or may be a "covered employee" within
the meaning of Section 162(m)(3) of the Code in the year in which the
Corporation would expect to be able to claim a tax deduction with respect to
such Restricted Stock and (ii) the Committee wishes such Award to qualify for
the Section 162(m) Exemption.

     (r)  "Performance Goals" means the performance goals established by the
Committee in connection with the grant of Restricted Stock. In the case of
Qualified Performance-Based Awards, (i) such goals shall be based on the
attainment of specified levels of one or more of the following measures:
earnings per share, sales, net profit after tax, gross profit, operating profit,
cash generation, return on equity, change in working capital, return on capital
or shareholder return, and (ii) such

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Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m) of the Code and related regulations.

     (s)  "Plan" means the Cendant Corporation 1997 Stock Incentive Plan, as set
forth herein and as hereinafter amended from time to time.

     (t)  "Restricted Stock" means an Award granted under Section 7.

     (u)  "Retirement" means retirement from active employment with the
Corporation or an Affiliate at or after age 65.

     (v)  "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.

     (w)  "Section 162(m) Exemption" means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C) of the Code.

     (x)  "Stock Appreciation Right" means an Award granted under Section 6.

     (y)  "Stock Option" means an Award granted under Section 5.

     (z)  "Termination of Employment" means the termination of the
participant's employment with the Corporation and its Affiliates. A participant
employed by an Affiliate shall also be deemed to incur a Termination of
Employment if such Affiliate ceases to be an Affiliate and the participant does
not immediately thereafter become an employee of the Corporation or another
Affiliate. Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Corporation and its Affiliates shall
not be considered Terminations of Employment.

     In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.

SECTION 2. Administration

     The Plan shall be administered by the Compensation Committee or such other
committee of the Board as the Board may from time to time designate (the
"Committee"), which shall be composed of not less than two Non-Employee
Directors, each of whom shall be an "outside director" for purposes of Section
162(m)(4) of the Code, and who shall be appointed by and serve at the pleasure
of the Board.

     The Committee shall have plenary authority to grant Awards pursuant to the
terms of the Plan to directors, officers and employees of the Corporation and
its Affiliates.

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     Among other things, the Committee shall have the authority, subject to the
terms of the Plan:

     (a)  To select the directors, officers and employees to whom Awards may
from time to time be granted;

     (b)  To determine whether and to what extent Incentive Stock Options,
NonQualified Stock Options, Stock Appreciation Rights and Restricted Stock or
any combination thereof are to be granted hereunder;

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

     (d)  To determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Section 5(a)
hereof), any vesting condition, restriction or limitation (which may be related
to the performance of the participant, the Corporation or any Affiliate) and any
vesting acceleration or forfeiture waiver regarding any Award and the shares of
Common Stock relating thereto), based on such factors as the Committee shall
determine;

     (e)  To modify, amend or adjust the terms and conditions of any Award, at
any time or from time to time, including but not limited to Performance Goals;
provided, however, that the Committee may not adjust upwards the amount payable
with respect to a Qualified Performance-Based Award or waive or alter the
Performance Goals associated therewith;

     (f)  To determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred; and

     (g)  To determine under what circumstances an Award may be settled in cash
or Common Stock under Section 5(j) and 6(b)(ii).

     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.

     The Committee may act only by a majority of its members then in office,
except that the members thereof may authorize any one or more of their number or
any officer of the Corporation to execute and deliver documents on behalf of the
Committee.

     Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any time thereafter. All

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decisions made by the Committee or any appropriately delegated officer pursuant
to the provisions of the Plan shall be final and binding on all persons,
including the Corporation and Plan participants.

     Any authority granted to the Committee may also be exercised by the full
Board, except to the extent that the grant of exercise of such authority would
cause any Award or transaction to become subject to (or lose an exemption under)
the short-swing profit recovery provisions of Section 16 of the Exchange Act or
cause an award designated as a Qualified Performance-Based Award not to qualify
for, or to cease to qualify for, the Section 162(m) Exemption. To the extent
that any permitted action taken by the Board conflicts with action taken by the
Committee, the Board action shall control.

SECTION 3. Common Stock Subject to Plan

     The total number of shares of Common Stock reserved and available for grant
under the Plan shall be twenty-five million (25,000,000). No participant may be
granted Awards under the Plan covering in excess of ten million (10,000,000)
shares of Common Stock over any consecutive five (5) year period; provided, that
with respect to the five (5) year period beginning as of the date of the
consummation of the merger of HFS Incorporated ("HFS") into the Corporation
pursuant to the Agreement and Plan of Merger dated as of May 27, 1997, between
the Corporation and HFS, no participant may be granted Awards in excess of the
sum of (i) ten million (10,000,000) shares of Common Stock, plus (ii) the number
of shares of Common Stock covering the Awards specified on Schedule I hereto.
Shares subject to an Award under the Plan may be authorized and unissued shares
or may be treasury shares.

     If any shares of Restricted Stock are forfeited, or if any Stock Option
(and related Stock Appreciation Right, if any) terminates without being
exercised, or if any Stock Appreciation Right is exercised for cash, shares of
Common Stock subject to such Awards shall again be available for distribution in
connection with Awards under the Plan.

     In the event of any change in corporate capitalization, such as a stock
split or a corporate transaction, or any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Corporation, any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Corporation, the Committee or Board may make such
substitution or adjustments in the aggregate number and kind of shares reserved
for issuance under the Plan, in the number, kind and option price of shares
subject to outstanding Stock Options and Stock Appreciation Rights, in the
number and kind of shares subject to other outstanding Awards granted under the
Plan and/or such other equitable substitution or adjustments as it may determine
to be appropriate in its sole discretion; provided, however, that the number of
shares subject to any Award shall always be a whole number. Such adjusted option
price shall also be used to determine the amount payable by the Corporation upon
the exercise of any Stock Appreciation Right associated with any Stock Option.

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SECTION 4. Eligibility

     Directors, officers and employees of the Corporation and its Affiliates who
are responsible for or contribute to the management, growth and profitability of
the business of the Corporation and its Affiliates are eligible to be granted
Awards under the Plan.

SECTION 5. Stock Options

     Stock Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and NonQualified
Stock Options. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve.

     The Committee shall have the authority to grant any optionee Incentive
Stock Options, NonQualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights); provided, however, that
grants hereunder are subject to the aggregate limit on grants to individual
participants set forth in Section 3. Incentive Stock Options may be granted only
to employees of the Corporation and its subsidiaries within the meaning of
Section 424(f) of the Code). To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a NonQualified Stock
Option.

     Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
NonQualified Stock Option. The grant of a Stock Option shall occur on the date
the Committee by resolution selects an individual to be a participant in any
grant of a Stock Option, determines the number of shares of Common Stock to be
subject to such Stock Option to be granted to such individual and specifies the
terms and provisions of the Stock Option. The Corporation shall notify a
participant of any grant of a Stock Option, and a written option agreement or
agreements shall be duly executed and delivered by the Corporation to the
participant. Such agreement or agreements shall become effective upon execution
by the Corporation.

     Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee affected, to disqualify any Incentive Stock Option under such Section
422.

     Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:

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     (a)  Option Price. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee and set forth in the
option agreement, and shall not be less than the Fair Market Value of the Common
Stock subject to the Stock Option on the date of grant.

     (b)  Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten (10)
years after the date the Stock Option is granted.

     (c)  Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may at
any time waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine. In addition, the Committee may
at any time accelerate the exercisability of any Stock Option.

     (d)  Method of Exercise. Subject to the provisions of this Section 5, Stock
Options may be exercised, in whole or in part, at any time during the option
term by giving written notice of exercise to the Corporation specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.

     Such notice shall be accompanied by payment in full of the purchase price
by certified or bank check or such other instrument as the Corporation may
accept. If approved by the Committee, payment, in full or in part, may also be
made in the form of unrestricted Common Stock already owned by the optionee of
the same class as the Common Stock subject to the Stock Option (based on the
Fair Market Value of the Common Stock on the date the Stock Option is
exercised); provided, however, that, in the case of an Incentive Stock Option,
the right to make a payment in the form of already owned shares of Common Stock
of the same class as the Common Stock subject to the Stock Option may be
authorized only at the time the Stock Option is granted and provided, further,
that such already owned shares have been held by the optionee for at least six
(6) months at the time of exercise.

     In the discretion of the Committee, payment for any shares subject to a
Stock Option may also be made by delivering a properly executed exercise notice
to the Corporation, together with a copy of the irrevocable instructions to a
broker to deliver promptly to the Corporation the amount of sale or loan
proceeds necessary to pay the purchase price, and, if requested, by the amount
of any federal, state, local or foreign withholding taxes. To facilitate the
foregoing, the Corporation may enter into agreements for coordinated procedures
with one or more brokerage firms.

     In addition, in the discretion of the Committee, payment for any shares
subject to a Stock Option may also be made by instructing the Committee to
withhold a number of

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such shares having a Fair Market Value on the date of exercise equal to the
aggregate exercise price of such Stock Option.

     No shares of Common Stock shall be issued until full payment therefor has
been made. Except as otherwise provided in Section 5(k) below, an optionee shall
have all of the rights of a shareholder of the Corporation holding the class or
series of Common Stock that is subject to such Stock Option (including, if
applicable, the right to vote the shares and the right to receive dividends),
when the optionee has given written notice of exercise, has paid in full for
such shares and, if requested, has given the representation described in Section
11(a).

     (e)  Transferability of Stock Options. Stock Options shall be transferable
by the optionee only pursuant to the following methods, and, with respect to
Incentive Stock Options, only to the extent permitted under the Code for options
to qualify as Incentive Stock Options: (i) by will or the laws of descent and
distribution; (ii) pursuant to a domestic relations order, as defined in the
Code or Title 1 of the Employee Retirement Income Security Act, as amended, or
the regulations thereunder; or (iii) subject to the approval of the Committee,
as a gift to family members of the optionee or trusts for the benefit of family
members of the optionee. Except to the extent provided in this Section 5(e) or
in Sections 5(f), (g) and (h) below, Stock Options may not be assigned,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise), shall not be subject to execution, attachment or
similar process, and may be exercised during the lifetime of the holder thereof
only by such holder.

     (f)  Termination by Death or Disability. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason of death or
Disability, any Stock Option held by such optionee may thereafter be exercised,
whether or not it was exercisable at the time of such termination, for a period
of twelve (12) months (or such other period as the Committee may specify in the
option agreement) from the date of such termination or until the expiration of
the stated term of such Stock Option, whichever period is the shorter.

     (g)  Termination by Reason of Retirement. Unless otherwise determined by
the Committee, if an optionee's employment terminates by reason of Retirement,
any Stock Option held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of such Retirement, or on
such accelerated basis as the Committee may determine, for a period of five (5)
years (or such other period as the Committee may specify in the option
agreement) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter; provided, however, that if the optionee dies within such period any
unexercised Stock Option held by such optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it
was exercisable at the time of death for a period of twelve (12) months from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.

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     (h)  Other Termination. Unless otherwise determined by the Committee, if an
optionee incurs a Termination of Employment for any reason other than death,
Disability or Retirement, any Stock Option held by such optionee, to the extent
then exercisable, or on such accelerated basis as the Committee may determine,
may be exercised for the lesser of three (3) months from the date of such
Termination of Employment or the balance of such Stock Option's term; provided,
however, that if the optionee dies within such three (3) month period, any
unexercised Stock Option held by such optionee shall, notwithstanding the
expiration of such three (3) month period, continue to be exercisable to the
extent to which it was exercisable at the time of death for a period of twelve
(12) months from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is the shorter.

     (i)  Post-Employment Exercise of Incentive Stock Option. In the event of
any Termination of Employment, if an Incentive Stock Option is exercised after
the expiration of the exercise periods that apply for purposes of Section 422 of
the Code, such Stock Option will thereafter be treated as a NonQualified Stock
Option.

     (j)  Cashing Out of Stock Option. On receipt of written notice of exercise,
the Committee may elect to cash out all or part of the portion of the shares of
Common Stock for which a Stock Option is being exercised by paying the optionee
an amount, in cash or Common Stock, as determined by the Committee, equal to the
excess of the Fair Market Value of the Common Stock over the option price times
the number of shares of Common Stock for which the Option is being exercised on
the effective date of such cash-out.

     (k)  Deferral of Option Shares. The Committee may from time to time
establish procedures pursuant to which an optionee may elect to defer, until a
time or times later than the exercise of an Option, receipt of all or a portion
of the shares subject to such Option and/or to receive cash at such later time
or times in lieu of such deferred shares, all on such terms and conditions as
the Committee shall determine. If any such deferrals are permitted, then
notwithstanding Section 5(d) above, an optionee who elects such deferral shall
not have any rights as a stockholder with respect to such deferred shares unless
and until certificates representing such shares are actually delivered to the
optionee with respect thereto, except to the extent otherwise determined by the
Committee.

SECTION 6. Stock Appreciation Rights

     (a)  Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a NonQualified Stock Option, such rights may be granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.

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     A Stock Appreciation Right may be exercised by an optionee in accordance
with Section 6(b) by surrendering the applicable portion of the related Stock
Option in accordance with procedures established by the Committee. Upon such
exercise and surrender, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock Options which have
been so surrendered shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.

     (b)  Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:

          (i)   Stock Appreciation Rights shall be exercisable only at such
     time or times and to the extent that the Stock Options to which they relate
     are exercisable in accordance with the provisions of Section 5 and this
     Section 6.

          (ii)  Upon the exercise of a Stock Appreciation Right, an optionee
     shall be entitled to receive an amount in cash, shares of Common Stock or
     both, in value equal to the excess of the Fair Market Value of one share of
     Common Stock over the option price per share specified in the related Stock
     Option multiplied by the number of shares in respect of which the Stock
     Appreciation Right shall have been exercised, with the Committee having the
     right to determine the form of payment.

          (iii) Stock Appreciation Rights shall be transferable only to
     permitted transferees of the underlying Stock Option in accordance with
     Section 5(e).

          (iv)  Upon the exercise of a Stock Appreciation Right, the Stock
     Option or part thereof to which such Stock Appreciation Right is related
     shall be deemed to have been exercised for the purpose of the limitation
     set forth in Section 3 on the number of shares of Common Stock to be issued
     under the Plan, but only to the extent of the number of shares covered by
     the Stock Appreciation Right at the time of exercise based on the value of
     the Stock Appreciation Right at such time.

SECTION 7. Restricted Stock

     (a)  Administration. Shares of Restricted Stock may be awarded either alone
or in addition to other Awards granted under the Plan. The Committee shall
determine the directors, officers and employees to whom and the time or times at
which grants of Restricted Stock will be awarded, the number of shares of
Restricted Stock to be awarded to any participant (subject to the aggregate
limit on grants to individual participants set forth in Section 3), the
conditions for vesting, the time or times within which such Awards may be
subject to forfeiture and any other terms and conditions of the Awards, in
addition to those contained in Section 7(c).

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     (b)  Awards and Certificates. Shares of Restricted Stock shall be evidenced
in such manner as the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. Any certificate
issued in respect of shares of Restricted Stock shall be registered in the name
of such participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:

          "The transferability of this certificate and the shares of stock
          represented hereby are subject to the terms and conditions (including
          forfeiture) of the Cendant Corporation 1997 Stock Incentive Plan and a
          Restricted Stock Agreement. Copies of such Plan and Agreement are on
          file at the offices of Cendant Corporation."

          "This security has not been registered under the Securities Act of
          1933, as amended. Neither this security nor any interest or
          participation herein may be reoffered, sold, assigned, transferred,
          pledged, encumbered or otherwise disposed of in the absence of such
          registration unless an exemption from such registration is available."

 The Committee may require that the certificates evidencing such shares of
 Restricted Stock be held in custody by the Corporation until the restrictions
 thereon shall have lapsed and that, as a condition of any Award of Restricted
 Stock, the participant shall have delivered a stock power, endorsed in blank,
 relating to the Common Stock covered by such Award.

     (c)  Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:

          (i)  The Committee may, prior to or at the time of grant, designate
     an Award of Restricted Stock as a Qualified Performance-Based Award, in
     which event it shall condition the grant or vesting, as applicable, of such
     Restricted Stock upon the attainment of Performance Goals. If the Committee
     does not designate an Award of Restricted Stock as a Qualified Performance-
     Based Award, it may also condition the grant or vesting thereof upon the
     attainment of Performance Goals. Regardless of whether an Award of
     Restricted Stock is a Qualified Performance-Based Award, the Committee may
     also condition the grant or vesting thereof upon the continued service of
     the participant. The conditions for grant or vesting and the other
     provision of Restricted Stock Awards (including, without limitation, any
     applicable Performance Goals) need not be the same with respect to each
     recipient, The Committee may at any time, in its sole discretion,
     accelerate or waive, in whole or in part, any of the foregoing
     restrictions; provided, however, that in the case of Restricted Stock that
     is a Qualified Performance-Based Award, the applicable Performance Goals
     shall have been satisfied.

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          (ii)  Subject to the provisions of the Plan and the Restricted
     Stock Agreement referred to in Section 7(c)(vii), during the period, if
     any, set by the Committee, commencing with the date of such Award for which
     such participant's continued service is required (the "Restriction
     Period"), and until the later of (i) the expiration of the Restriction
     Period and (ii) the date the applicable Performance Goals (if any) are
     satisfied, the participant shall not be permitted to sell, assign,
     transfer, pledge or otherwise encumber shares of Restricted Stock received
     pursuant to such Award; provided that the foregoing shall not prevent a
     participant from pledging Restricted Stock received pursuant to such Award
     as security for a loan, the sole purpose of which is to provide funds to
     pay the option price for Stock Options.

          (iii) Except as provided in this paragraph (iii) and Sections
     7(c)(i) and 7(c)(ii) and the Restricted Stock Agreement, the participant
     shall have, with respect to the shares of Restricted Stock, all of the
     rights of a stockholder of the corporation holding the class or series of
     Common Stock that is the subject of the Registered Stock, including, if
     applicable, the right to vote the shares and the right to receive any cash
     dividends. If so determined by the Committee in the applicable Restricted
     Stock Agreement and subject to Section 11(e) of the Plan, (A) cash
     dividends on the class or series of Common Stock that is the subject of the
     Restricted Stock Award shall be automatically deferred and reinvested in
     additional Restricted Stock, held subject to the vesting of the underlying
     Restricted Stock, or held subject to meeting Performance Goals applicable
     only to dividends, and (B) dividends payable in Common Stock shall be paid
     in the form of Restricted Stock of the same class as the Common Stock with
     which such dividend was paid, held subject to the vesting of the underlying
     Restricted Stock, or held subject to meeting Performance Goals applicable
     only to dividends.

          (iv)  Except to the extent otherwise provided in the applicable
     Restricted Stock Agreement and Sections 7(c)(i), 7(c)(ii), and 7(c)(v),
     upon a participant's Termination of Employment for any reason during the
     Restriction Period or before the applicable Performance Goals are
     satisfied, all shares of Restricted Stock still subject to restriction
     shall be forfeited by the participant.

          (v)   In the event of a participant's Retirement, or if such
     participant's employment is involuntarily terminated (other than for
     Cause), the Committee shall1 have the discretion to waive, in whole or in
     part, any or all remaining restrictions (other than, in the case of
     Restricted Stock with respect to which a participant is a Covered Employee,
     satisfaction of the applicable Performance Goals unless the participant's
     employment is terminated by reason of death or Disability) with respect to
     any or all of such participant's shares of Restricted Stock.

                                       12
<PAGE>

          (vi)  If and when any applicable Performance Goals are satisfied and
     the Restriction Period expires without a prior forfeiture of the Restricted
     Stock, unlegended certificates for shares of Common Stock that are the
     subject of the Restricted Stock Award shall be delivered to the participant
     upon surrender of the legended certificates.

          (vii) Each Award of Restricted Stock shall be confirmed by, and be
     subject to, the terms of a Restricted Stock Agreement executed by the
     Corporation.

SECTION 8. Tax Offset Bonuses

     At the time an Award is made hereunder or at any time thereafter, the
Committee may grant to the participant receiving such Award the right to receive
a cash payment in an amount specified by the Committee, to be paid at such time
or times (if ever) as the Award results in compensation income to the
participant, for the purpose of assisting the participant to pay the resulting
taxes, all as determined by the Committee and on such other terms and conditions
as the Committee shall determine.

SECTION 9. Term, Amendment and Termination

     The Plan will terminate ten (10) years after the effective date of the
Plan. Under the Plan, Awards outstanding as of such date shall not be affected
or impaired by the termination of the Plan.

     The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee under a Stock Option or a recipient of a Stock Appreciation Right or
Restricted Stock Award theretofore granted without the optionee's or recipient's
consent, except such an amendment made to cause the Plan to qualify for any
exemption provided by Rule 16b-3. In addition, no such amendment shall be made
without the approval of the Corporation's stockholders to the extent such
approval is required by law or agreement.

     The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
cause a Qualified Performance-Based Award to cease to qualify for the Section
162(m) Exemption or impair the rights of any holder without the holder's consent
except such an amendment made to cause the Plan or Award to qualify for any
exemption provided by Rule 16b-3.

     Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.

SECTION 10. Unfunded Status of Plan

                                       13
<PAGE>

     It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

SECTION 11. General Provisions

     (a)  The Committee may require each person purchasing or receiving shares
pursuant to an Award to represent to and agree with the Corporation in writing
that such person is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.

     Notwithstanding any other provision of the Plan or agreements made pursuant
thereto, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:

          (1)  Listing or approval for listing upon notice of issuance, of such
     shares on the New York Stock Exchange, Inc., or such other securities
     exchange as may at the time be the principal market for the Common Stock;

          (2)  Any registration or other qualification of such shares of the
     Corporation under any state or federal law or regulation, or the
     maintaining in effect of any such registration or other qualification which
     the Committee shall, in its absolute discretion upon the advice of counsel,
     deem necessary or advisable; and

          (3)  Obtaining any other consent, approval, or permit from any state
     or federal governmental agency which the Committee shall, in its absolute
     discretion after receiving the advice of counsel, determine to be necessary
     or advisable.

     (b)  Nothing contained in the Plan shall prevent the Corporation or any
Affiliate from adopting other or additional compensation arrangements for its
employees.

     (C)  Adoption of the Plan shall not confer upon any employee any right to
continued employment, nor shall it interfere in any way with the right of the
corporation or any Affiliate to terminate the employment of any employee at any
time.

     (d)  No later than the date as of which an amount first becomes includible
in the gross income of the participant for federal income tax purposes with
respect to any Award under the Plan, the participant shall pay to the
Corporation, or make

                                       14
<PAGE>

arrangements satisfactory to the Corporation regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Corporation, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding
requirement. The obligations of the Corporation under the Plan shall be
conditional on such payment or arrangements, and the Corporation and its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Common Stock.

     (e)  Reinvestment of dividends in additional Restricted Stock at the time
of any dividend payment shall only be permissible if sufficient shares Common
Stock are available under Section 3 for such reinvestment (taking into account
then outstanding Stock Options and other Awards).

     (f)  The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts payable in the
event of the participant's death are to be paid or by whom any rights of the
participant, after the participant's death, may be exercised.

     (g)  In the case of a grant of an Award to any employee of an Affiliate of
the Corporation, the Corporation may, if the Committee so directs, issue or
transfer the shares of Common Stock, if any, covered by the Award to the
Affiliate, for such lawful consideration as the Committee may specify, upon the
condition or understanding that the Affiliate will transfer the shares of Common
Stock to the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan.

     (h)  The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.

     (i)  Anything in this Plan to the contrary notwithstanding, the Board may,
without further approval by the stockholders, substitute new options for, or
assume, prior options of any corporation which engages with the Corporation or
any of its Affiliates in a transaction to which Section 424(a) of the Code
applies (or would apply if the option assumed or substituted were an incentive
stock option), or any parent or any subsidiary of such corporation.

     (j)  With respect to optionees subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule l6b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.

                                       15
<PAGE>

SECTION 12. Effective Date of Plan

     The Plan shall be effective as of the date it is approved by at least a
majority of the shares of Common Stock of the Corporation voted with respect to
such approval.

                                       16
<PAGE>

                                  Schedule I

     Awards shall be made pursuant to the Plan upon consummation of the merger
of HFS into the Corporation pursuant to the Agreement and Plan of Merger dated
as of May 27, 1997, between the Corporation and HFS, as required by employment
agreements with the following individuals, which awards will not exceed the
amounts described below:

     Options on 4 million shares to Walter A. Forbes;

     Options of 14,418,600 shares to Henry R. Silverman;

     Options on 1.8 million shares to E. Kirk Shelton;

     Options on 1.8 million shares to Christopher K. McLeod;

     Options on 600,000 shares to Cosmo Corigliano;

     Options on 600,000 shares to Amy Lipton;

     Options on 360,000 shares and shares of restricted stock having a value of
     $1.1 million to Michael P. Monaco;

     Options on 360,000 shares and shares of restricted stock having a value of
     $1.1 million to Stephen P. Holmes; and

     Options on 360,000 shares and shares of restricted stock having a value of
     $1.4 million to James E. Buckman.

                                       17<PAGE>

                                                                    EXHIBIT 4.07

                                 AMENDMENT TO
                             AMENDED AND RESTATED
                           1997 STOCK INCENTIVE PLAN
                            OF CENDANT CORPORATION

The Amended and Restated 1997 Stock Incentive Plan of Cendant Corporation (the
"Plan") is hereby amended as follows:

1. The first sentence of Section 3 of the Plan is hereby amended and restated to
   read, in its entirety, as follows:

               The total number of shares of Common Stock reserved and available
               for grant under the Plan shall be [forty] million [(40,000,000)].

2. Ratification. Except as expressly set forth in this Amendment, the Plan is
   hereby ratified and confirmed without modification.

3. Effective Date. This Amendment shall be effective as of March 27, 200O.

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