Exhibit 10.8

 

STOCK OPTION AGREEMENT

 

THIS AGREEMENT, dated as of June 7, 2005, between IAC/InterActiveCorp, a
Delaware corporation (“IAC” or the “Corporation”), and Barry Diller (the
“Optionee”).

 

W I T N E S S E T H

 

In consideration of the mutual promises and covenants made herein and the mutual
benefits to be derived herefrom, the parties hereto agree as follows:

 

1.             GRANT OF STOCK OPTIONS.

 

Subject to the provisions of this Agreement, the provisions of the
IAC/InterActiveCorp 2005 Stock and Annual Incentive Plan (the “Plan”) and
approval of the Plan by the Corporation’s stockholders, the Corporation hereby
grants to the Optionee as of June 7, 2005 (the “Grant Date”) (i) an option  to
purchase 4,800,000 shares of common stock of the Corporation, par value $.01 per
share (“Common Stock”), at the exercise price of $32.03 per share and (ii) an
option to purchase 2,800,000 shares of Common Stock at the exercise price of
$43.12 per share (collectively, the “Stock Options”).  The Stock Options shall
be Nonqualified Stock Options.  Unless earlier terminated pursuant to the terms
of this Agreement, the Stock Options shall expire on the tenth anniversary of
the Grant Date.  Capitalized terms not defined herein shall have the meaning set
forth in the Plan.

 

2.             EXERCISABILITY OF THE STOCK OPTIONS.

 

The Stock Options shall become vested and exercisable with respect to 100% of
the shares of Common Stock covered thereby on the fifth anniversary of the Grant
Date, subject to the Optionee’s continued employment through such anniversary
and Paragraphs 4 and 6 of this Agreement.  Upon the Optionee’s Termination of
Employment, the portion of the Stock Options that is not vested as of such date,
in accordance with the foregoing provisions of this Paragraph 2 or the
provisions of Paragraphs 4 and 6 of this Agreement, shall cease vesting and
terminate immediately.

 

3.             METHOD OF EXERCISE OF THE STOCK OPTIONS.

 

(A)           THE VESTED PORTION OF THE STOCK OPTIONS SHALL BE EXERCISABLE BY
DELIVERY TO THE CORPORATION OF A WRITTEN NOTICE STATING THE NUMBER OF WHOLE
SHARES TO BE PURCHASED PURSUANT TO THIS AGREEMENT AND ACCOMPANIED BY PAYMENT OF
THE FULL PURCHASE PRICE OF THE SHARES OF COMMON STOCK TO BE PURCHASED.  THE
STOCK OPTIONS MAY NOT BE EXERCISED AT ANY ONE TIME AS TO FEWER THAN 100 SHARES
(OR SUCH NUMBER OF SHARES AS TO WHICH THE STOCK OPTIONS ARE THEN EXERCISABLE IF
LESS THAN 100).  FRACTIONAL SHARE INTERESTS SHALL BE DISREGARDED EXCEPT THEY MAY
BE ACCUMULATED.

 

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(B)           THE EXERCISE PRICE OF THE STOCK OPTIONS SHALL BE PAID: (I) IN CASH
OR BY CERTIFIED CHECK OR BANK DRAFT PAYABLE TO THE ORDER OF THE CORPORATION;
(II) BY EXCHANGE (OR ATTESTATION) OF SHARES OF UNRESTRICTED COMMON STOCK ALREADY
OWNED BY THE OPTIONEE AND HAVING AN AGGREGATE FAIR MARKET VALUE EQUAL TO THE
AGGREGATE PURCHASE PRICE, PROVIDED, THAT THE OPTIONEE REPRESENTS AND WARRANTS TO
THE CORPORATION THAT THE OPTIONEE HOLDS THE SHARES OF COMMON STOCK FREE AND
CLEAR OF LIENS AND ENCUMBRANCES; (III) UNLESS THE COMMITTEE DETERMINES
OTHERWISE, BY WITHHOLDING A NUMBER OF SHARES OF COMMON STOCK HAVING A FAIR
MARKET VALUE EQUAL TO THE AGGREGATE PURCHASE PRICE; OR (IV) BY ANY OTHER
PROCEDURE APPROVED BY THE COMMITTEE, OR BY A COMBINATION OF THE FOREGOING.

 

4.             DEATH OR DISABILITY OF THE OPTIONEE OR TERMINATION BY EMPLOYEE
FOR GOOD REASON OR BY THE CORPORATION WITHOUT CAUSE.

 

In the event of the Optionee’s Termination of Employment due to death,
Disability, by the Optionee for Good Reason or by the Corporation without Cause
(each a “Qualifying Termination”), the Stock Options shall vest and be
exercisable with respect to a percentage of the shares of Common Stock covered
thereby equal to 20% for each full year of the Optionee’s completed service with
the Corporation from the Grant Date through the Qualifying Termination.  The
portion of the Stock Options, if any, which are exercisable at the time of such
Qualifying Termination may be exercised by the Optionee (or the Optionee’s
guardian or legal representative or beneficiary, in the event of the Optionee’s
Disability or death) at any time prior to the first to occur of (a) one (1) year
after such Qualifying Termination or (b) the expiration date of the Stock
Options.

 

For purposes of this Agreement, “Good Reason” means, any of the following
actions taken without the Optionee’s prior written consent:  (A) a reduction in
the Optionee’s rate of annual base salary from the rate of annual base salary in
effect for the Optionee, (B) a relocation of the Optionee’s principal place of
business more than 35 miles from New York City or (C) a material and
demonstrable adverse change in the nature and scope of the Optionee’s duties
from those in effect on the Grant Date.  Following the effective time of the
spin-off (the “Spin-Off”) of Expedia (“Expedia”) by the Corporation (the
“Effective Time”), the Optionee’s salary for purposes of determinations under
clause (A) above, and duties for purposes of determinations under clause
(C) above, will be based upon the salaries and duties, respectively, of Optionee
at the Corporation and Expedia, as applicable.

 

5.             TERMINATION OF EMPLOYMENT BY THE OPTIONEE WITHOUT GOOD REASON OR
BY CORPORATION FOR CAUSE.

 

(a)           In the event of the Optionee’s Termination of Employment by the
Optionee without Good Reason, the portion of the Stock Options, if any, which is
exercisable at the time of such Termination of Employment (including any portion
of the Stock Options that have vested as a result of a Change in Control in
accordance with Paragraph 6 of this Agreement) may be exercised prior to the
first to occur of (a) the first anniversary of such Termination of Employment or
(b) the expiration date of the Stock Options.

 

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(b)  In the event of the Optionee’s Termination of Employment for Cause, the
entire Stock Options (whether or not vested) shall be forfeited and canceled in
its entirety upon such Termination of Employment.  In the event the Optionee
exercised the Stock Options within one year prior to the Optionee’s Termination
of Employment for Cause, the Corporation shall be entitled to recover from the
Optionee at any time within two (2) years following such exercise, and the
Optionee shall pay over to the Corporation, the excess of the aggregate Fair
Market Value of the Common Stock subject to such exercise on the date of
exercise over the aggregate exercise price of the Common Stock subject to such
exercise.

 

(c)           Nothing in this Agreement or the Plan shall confer upon the
Optionee any right to continue in the employ of the Corporation or any of its
Subsidiaries or affiliates or interfere in any way with the right of the
Corporation or any such Subsidiaries or affiliates to terminate the Optionee’s
employment at any time.

 

6.             CHANGE IN CONTROL.

 

In the event of a Change in Control of the Corporation (as defined below), each
Stock Option shall vest and be exercisable with respect to a percentage of the
shares of Common Stock covered thereby equal to 20% plus an additional 20% for
each full year of the Optionee’s completed service with the Corporation from the
Grant Date through the Change in Control.  For purposes of this Agreement,
“Change in Control” shall have the meaning set forth in the Plan; provided,
that, no Change in Control shall occur under this Agreement so long as Optionee
has sufficient voting power with respect to the Corporation (or ultimate parent
entity of the company resulting from such Change in Control transaction) such
that, taking into account all of the circumstances, he effectively controls the
election of a majority of the Board of the Corporation or the board of directors
of such ultimate parent entity (it being understood that, depending upon the
circumstances, the Optionee may exercise effective control even if he has the
right to vote shares representing significantly less than a majority of the
total voting power of the Corporation in the election of directors).  Following
a Change in Control, vesting of those portions of the Stock Options, if any,
which did not vest as a result of the Change of Control will continue pursuant
to the other terms of this Agreement.

 

7.             NONTRANSFERABILITY OF THE STOCK OPTIONS.

 

Unless the Committee determines otherwise, the Stock Options are
non-transferable by the Optionee other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order or, as set
forth in Section 5(j) of the Plan, to the Optionee’s family members or to a
charitable organization, and the Stock Options may be exercised, during the
lifetime of the Optionee, only by the Optionee or by the Optionee’s guardian or
legal representative or any transferee described above.

 

8.             RIGHTS AS A STOCKHOLDER.

 

Neither Optionee nor any transferee of the Stock Options shall have any rights
as a stockholder with respect to any shares covered by such Stock Options until
the date of the issuance of a stock certificate to such individual for such
shares.  No adjustment shall be made

 

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for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distribution of other rights for which the record date is prior to
the date a stock certificate is issued, except as provided in the Plan.

 

9.             ADJUSTMENT IN THE EVENT OF CHANGE IN STOCK.

 

Immediately following the Effective Time, the Stock Options will be adjusted and
vesting conditions will be set in the manner set forth in Section 5.3(d) of the
Employee Matters Agreement by and between the Corporation and Expedia, Inc. (the
“EMA”).  Following the adjustments in Section 5.3(d) of the EMA, the term “Stock
Options” (when used in this Agreement) shall cover any securities into which
Stock Options are adjusted and the term “Common Stock” (when used in this
Agreement) shall cover any securities into which Common Stock is adjusted, any
adjustments of the Stock Options in the event of future corporate transactions
with respect to the Corporation or changes in the Common Stock shall be
effectuated based upon the adjustment provisions of the Plan or any successor
plan with respect to the Stock Options, and with respect to Stock Options
adjusted into stock options for the common stock of Expedia (“Expedia Common
Stock”) the term “Corporation” (when used in this Agreement) shall refer to
Expedia.  Following the adjustments in Section 5.3(d) of the EMA, employment
with IAC, corporate transactions with respect to IAC and changes in Common Stock
of IAC shall not affect the Stock Options for Expedia Common Stock, and
employment with Expedia, corporate transactions with respect to Expedia and
changes in the Common Stock of Expedia shall not affect the Stock Options for
IAC Common Stock.

 

10.           PAYMENT OF TRANSFER TAXES, FEES AND OTHER EXPENSES.

 

The Corporation agrees to pay any and all original issue taxes and stock
transfer taxes that may be imposed on the issuance of shares acquired pursuant
to exercise of the Stock Options, together with any and all other fees and
expenses necessarily incurred by the Corporation in connection therewith. 
Notwithstanding the foregoing, the Optionee shall be solely responsible for any
other taxes (including, without limitation, federal, state, local or foreign
income, social security, withholding, estate or excise taxes) that may be
payable as a result of the Optionee’s participation in the Plan or as a result
of the exercise of the Stock Options and/or the sale, disposition or transfer of
any shares of Common Stock acquired upon the Optionee’s exercise of the Stock
Options.

 

11.           OTHER RESTRICTIONS.

 

The exercise of the Stock Options shall be subject to the requirement that, if
at any time the Committee shall determine that (i) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, or (ii) the consent or
approval of any government regulatory body or (iii) an agreement by the Optionee
with respect to the disposition of shares of Common Stock is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such listing, registration,
qualification, consent, or approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.

 

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12.           TAXES AND WITHHOLDINGS.

 

No later than the date of exercise of the Stock Options granted hereunder, the
Optionee shall pay to the Corporation or make arrangements satisfactory to the
Committee regarding payment of any federal, state or local taxes of any kind
required by law to be withheld upon the exercise of such Stock Options and the
Corporation shall, to the extent permitted or required by law, have the right to
deduct from any payment of any kind otherwise due to the Optionee, federal,
state and local taxes of any kind required by law to be withheld upon the
exercise of such Stock Options.  The Optionee may settle this withholding
obligation with Common Stock, including the Common Stock that is otherwise to be
received upon exercise of the Stock Options, unless the Committee determines
otherwise.

 

13.           NOTICES.

 

All notices and other communications under this Agreement shall be in writing
and shall be given by hand delivery to the other party or by facsimile,
overnight courier, or registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

 

If to the Optionee:

 

Barry Diller
c/o IAC/InterActiveCorp
152 W. 57th Street
New York, NY 10019

 

If to the Corporation:

 

IAC/InteractiveCorp
Carnegie Hall Tower
152 West 57th Street
New York, NY  10019
Attention:  General Counsel
Facsimile:  (212) 632-9642

 

or to such other address or facsimile number as any party shall have furnished
to the other in writing in accordance with this Paragraph 13.  Notice and
communications shall be effective when actually received by the addressee.

 

14.           EFFECT OF AGREEMENT.

 

Except as otherwise provided hereunder, this Agreement shall be binding upon and
shall inure to the benefit of any successor or successors of the Corporation,
and to any transferee or successor of the Optionee pursuant to Paragraph 7.

 

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15.           LAWS APPLICABLE TO CONSTRUCTION.

 

The interpretation, performance and enforcement of this Agreement shall be
governed by the laws of the State of Delaware without reference to principles of
conflict of laws, as applied to contracts executed in and performed wholly
within the State of Delaware.

 

16.           SEVERABILITY.

 

The invalidity or enforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

 

17.           CONFLICTS AND INTERPRETATION.

 

This Agreement is subject to all the terms, conditions and provisions of the
Plan. In the event of any conflict between this Agreement and the Plan, this
Agreement shall control.  In the event of any ambiguity in this Agreement, any
term which is not defined in this Agreement, or any matters as to which this
Agreement is silent, the Plan shall govern including, without limitation, the
provisions thereof pursuant to which the Committee has the power, among others,
to (i) interpret the Plan, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan and (iii) make all other determinations deemed
necessary or advisable for the administration of the Plan.

 

18.           HEADINGS.

 

The headings of paragraphs herein are included solely for convenience of
reference and shall not affect the meaning or interpretation of any of the
provisions of this Agreement.

 

19.           AMENDMENT.

 

This Agreement may not be modified, amended or waived except by an instrument in
writing signed by both parties hereto.  The waiver by either party of compliance
with any provision of this Agreement shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent breach by
such party of a provision of this Agreement.

 

20.           COUNTERPARTS.

 

This Agreement may be executed in counterparts, which together shall constitute
one and the same original.

 

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IN WITNESS WHEREOF, as of the date first above written, the Corporation has
caused this Agreement to be executed on its behalf by a duly authorized officer
and the Optionee has hereunto set the Optionee’s hand.

 

 

IAC/INTERACTIVECORP

 

 

 

/s/ Gregory R. Blatt

 

 

Gregory R. Blatt

 

Executive Vice President, General
Counsel & Secretary

 

 

 

 

 

/s/ Barry Diller

 

 

Barry Diller

 

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