Exhibit 10.12
AMENDED AND RESTATED EXPEDIA, INC.
2005 STOCK AND ANNUAL INCENTIVE PLAN
Section 1. Purpose; Definitions
     The purpose of this Plan is (a) to give the Company a competitive advantage
in attracting, retaining and motivating officers, employees, directors and/or
consultants and to provide the Company and its Subsidiaries and Affiliates with
a stock and incentive plan granting new Awards to provide incentives directly
linked to stockholder value and (b) to assume and govern other awards pursuant
to the adjustment of awards granted under any IAC Long Term Incentive Plan (as
defined in the Employee Matters Agreement) in accordance with the terms of the
Employee Matters Agreement (“Adjusted Awards”). Certain terms used herein have
definitions given to them in the first place in which they are used. In
addition, for purposes of this 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 Company.
     (b) “Applicable Exchange” means Nasdaq or such other securities exchange as
may at the applicable time be the principal market for the Common Stock.
     (c) “Award” means an Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, or other stock-based award granted or assumed pursuant to
the terms of this Plan including Adjusted Awards.
     (d) “Award Agreement” means a written or electronic document or agreement
setting forth the terms and conditions of a specific Award.
     (e) “Board” means the Board of Directors of the Company.
     (f) “Bonus Award” means a bonus award made pursuant to Section 9.
     (g) “Cause” means, unless otherwise provided in an Award Agreement, (i)
“Cause” as defined in any Individual Agreement to which the applicable
Participant is a party, or (ii) if there is no such Individual Agreement or if
it does not define Cause: (A) the willful or gross neglect by a Participant of
his employment duties; (B) the plea of guilty or nolo contendere to, or
conviction for, the commission of a felony offense by a Participant; (C) a
material breach by a Participant of a fiduciary duty owed to the Company or any
of its subsidiaries; (D) a material breach by a Participant of any
nondisclosure, non-solicitation or non-competition obligation owed to the
Company or any of its Affiliates; or (E) before a Change in Control, such other
events as shall be determined by the Committee and set forth in a Participant’s
Award Agreement. Notwithstanding the general rule of Section 2(c), following a
Change in Control, any determination by the Committee as to whether “Cause”
exists shall be subject to de novo review.
     (h) “Change in Control” has the meaning set forth in Section 10(b).

 

--------------------------------------------------------------------------------

 

     (i) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto, the Treasury Regulations thereunder and other
relevant interpretive guidance issued by the Internal Revenue Service or the
Treasury Department. Reference to any specific section of the Code shall be
deemed to include such regulations and guidance, as well as any successor
provision of the Code.
     (j) “Commission” means the Securities and Exchange Commission or any
successor agency.
     (k) “Committee” has the meaning set forth in Section 2(a).
     (l) “Common Stock” means common stock, par value $.001 per share, of the
Company.
     (m) “Company” means Expedia, Inc., a Delaware corporation or its successor.
     (n) “Disability” means (i) “Disability” as defined in any Individual
Agreement to which the Participant is a party, (ii) if there is no such
Individual Agreement or it does not define “Disability,” (A) permanent and total
disability as determined under the Company’s long-term disability plan
applicable to the Participant, or (B) if there is no such plan applicable to the
Participant or the Committee determines otherwise in an applicable Award
Agreement, “Disability” as determined by the Committee. Notwithstanding the
above, with respect to an Incentive Stock Option, Disability shall mean
Permanent and Total Disability as defined in Section 22(e)(3) of the Code and,
with respect to all Awards, to the extent required by Section 409A of the Code,
“disability” within the meaning of Section 409A of the Code.
     (o) “Disaffiliation” means a Subsidiary’s or Affiliate’s ceasing to be a
Subsidiary or Affiliate for any reason (including, without limitation, as a
result of a public offering, or a spinoff or sale by the Company, of the stock
of the Subsidiary or Affiliate) or a sale of a division of the Company and its
Affiliates.
     (p) “EBITA” means for any period, operating profit (loss) plus
(i) amortization, including goodwill impairment, (ii) amortization of non-cash
distribution and marketing expense and non-cash compensation expense,
(iii) disengagement expenses, (iv) restructuring charges, (v) non cash
write-downs of assets or goodwill, (vi) charges relating to disposal of lines of
business, (vii) litigation settlement amounts and (viii) costs incurred for
proposed and completed acquisitions.
     (q) “EBITDA” means for any period, operating profit (loss) plus
(i) depreciation and amortization, including goodwill impairment,
(ii) amortization of cable distribution fees, (iii) amortization of non-cash
distribution and marketing expense and non-cash compensation expense, (iv)
disengagement expenses, (v) restructuring charges, (vi) non cash write-downs of
assets or goodwill, (vii) charges relating to disposal of lines of business,
(viii) litigation settlement amounts and (ix) costs incurred for proposed and
completed acquisitions.
     (r) “Eligible Individuals” means directors, officers, employees and
consultants of the Company or any of its Subsidiaries or Affiliates.

-2-

--------------------------------------------------------------------------------

 

     (s) “Employee Matters Agreement” means the Employee Matters Agreement by
and between IAC and the Company dated as of August 9, 2005.
     (t) “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
     (u) “Fair Market Value” means, unless otherwise defined in an Award
Agreement, if the Common Stock is listed on a national securities exchange, as
of any given date, the closing price for the Common Stock on such date on the
Applicable Exchange, or if Shares were not traded on the Applicable Exchange on
such measurement date, then on the next preceding date on which Shares were
traded, all as reported by such source as the Committee may select. If the
Common Stock is not listed on a national securities exchange, Fair Market Value
shall be determined by the Committee in its good faith discretion, taking into
account, to the extent appropriate, the requirements of Section 409A of the
Code.
     (v) “Free-Standing SAR” has the meaning set forth in Section 5(b).
     (w) “Grant Date” means (i) the date on which the Committee by resolution
selects an Eligible Individual to receive a grant of an Award and determines the
number of Shares to be subject to such Award or the formula for earning a number
of shares or cash amount, (ii) such later date as the Committee shall provide in
such resolution or (iii) the initial date on which an Adjusted Award was granted
under the IAC Long Term Incentive Plan.
     (x) “IAC” means IAC/InterActiveCorp, a Delaware corporation.
     (y) “Incentive Stock Option” means any Option that is designated in the
applicable Award Agreement as an “incentive stock option” within the meaning of
Section 422 of the Code, and that in fact so qualifies.
     (z) “Individual Agreement” means an employment, consulting or similar
agreement between a Participant and the Company or one of its Subsidiaries or
Affiliates.
     (aa) “Nonqualified Option” means any Option that is not an Incentive Stock
Option.

     (bb) “Option” means an Award described under Section 5.
     (cc) “Participant” means an Eligible Individual to whom an Award is or has
been granted.
     (dd) “Performance Goals” means the performance goals established by the
Committee in connection with the grant of Restricted Stock, Restricted Stock
Units or Bonus Awards or other stock-based awards. In the case of
Qualified-Performance Based Awards that are intended to qualify under
Section 162(m)(4) of the Code, (i) such goals shall be based on the attainment
of one or any combination of the following: specified levels of earnings per
share from continuing operations, net profit after tax, EBITDA, EBITA, gross
profit, cash generation, unit volume, market share, sales, asset quality,
earnings per share, operating income, revenues, return on assets, return on
operating assets, return on equity, profits, total stockholder return (measured
in terms of stock price appreciation and/or dividend growth), cost saving
levels, marketing-

-3-

--------------------------------------------------------------------------------

 

spending efficiency, core non-interest income, change in working capital, return
on capital, and/or stock price, with respect to the Company or any subsidiary,
division or department of the Company that are intended to qualify under
Section 162(m)(4)(c) of the Code and (ii) such Performance Goals shall be set by
the Committee within the time period prescribed by Section 162(m) of the Code
and related regulations. Such Performance Goals also may be based upon the
attaining of specified levels of Company, Subsidiary, Affiliate or divisional
performance under one or more of the measures described above relative to the
performance of other entities, divisions or subsidiaries.
     (ee) “Plan” means this Amended and Restated Expedia, Inc. 2005 Stock and
Annual Incentive Plan, as set forth herein and as hereafter amended from time to
time.
     (ff) “Plan Year” means the calendar year or, with respect to Bonus Awards,
the Company’s fiscal year if different.
     (gg) “Qualified Performance-Based Award” means an Award intended to qualify
for the Section 162(m) Exemption, as provided in Section 11.
     (hh) “Restricted Stock” means an Award described under Section 6.
     (ii) “Restricted Stock Units” means an Award described under Section 7.
     (jj) “Retirement” means retirement from active employment with the Company,
a Subsidiary or Affiliate at or after the Participant’s attainment of age 65.
     (kk) “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.
     (ll) “Separation” has the meaning set forth in the Employee Matters
Agreement.
     (mm) “Share” means a share of Common Stock.
     (nn) “Stock Appreciation Right” has the meaning set forth in Section 5(b).
     (oo) “Subsidiary” means any corporation, partnership, joint venture or
other entity during any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the Company or any successor to
the Company.
     (pp) “Tandem SAR” has the meaning set forth in Section 5(b).
     (qq) “Term” means the maximum period during which an Option or Stock
Appreciation Right may remain outstanding, subject to earlier termination upon
Termination of Employment or otherwise, as specified in the applicable Award
Agreement.
     (rr) “Termination of Employment” means the termination of the applicable
Participant’s employment with, or performance of services for, the Company and
any of its Subsidiaries or Affiliates. Unless otherwise determined by the
Committee, if a Participant’s

-4-

--------------------------------------------------------------------------------

 

employment with, or membership on a board of directors of, the Company and its
Affiliates terminates but such Participant continues to provide services to the
Company and its Affiliates in a non-employee director capacity or as an
employee, as applicable, such change in status shall not be deemed a Termination
of Employment. A Participant employed by, or performing services for, a
Subsidiary or an Affiliate or a division of the Company and its Affiliates shall
be deemed to incur a Termination of Employment if, as a result of a
Disaffiliation, such Subsidiary, Affiliate, or division ceases to be a
Subsidiary, Affiliate or division, as the case may be, and the Participant does
not immediately thereafter become an employee of, or member of the board of
directors of, the Company or another Subsidiary or Affiliate. Temporary absences
from employment because of illness, vacation or leave of absence and transfers
among the Company and its Subsidiaries and Affiliates shall not be considered
Terminations of Employment. For the avoidance of doubt, the Separation shall not
constitute a Termination of Employment for purposes of any Adjusted Award.
Notwithstanding the foregoing, with respect to any Award that constitutes a
“nonqualified deferred compensation plan” within the meaning of Section 409A of
the Code, “Termination of Employment” shall mean a “separation from service” as
defined under Section 409A of the Code.
Section 2. Administration
     (a) Committee. The Plan shall be administered by the Compensation Committee
of the Board 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
directors, and shall be appointed by and serve at the pleasure of the Board. The
Committee shall, subject to Section 11, have plenary authority to grant Awards
pursuant to the terms of the Plan to Eligible Individuals. Among other things,
the Committee shall have the authority, subject to the terms of the Plan and the
Employee Matters Agreement (including the original terms of the grant of the
Adjusted Award):
     (i) to select the Eligible Individuals to whom Awards may from time to time
be granted;
     (ii) to determine whether and to what extent Incentive Stock Options,
Nonqualified Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units, other stock-based awards, or any combination thereof, are to be
granted hereunder;
     (iii) to determine the number of Shares to be covered by each Award granted
hereunder;
     (iv) to determine the terms and conditions of each Award granted hereunder,
based on such factors as the Committee shall determine;
     (v) subject to Section 12, to modify, amend or adjust the terms and
conditions of any Award, at any time or from time to time;
     (vi) to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable;

-5-

--------------------------------------------------------------------------------

 

     (vii) to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreement relating thereto);
     (viii) to establish any “blackout” period that the Committee in its sole
discretion deems necessary or advisable; and
     (ix) to otherwise administer the Plan.
     (b) Procedures.
     (i) The Committee may act only by a majority of its members then in office,
except that the Committee may, except to the extent prohibited by applicable law
or the listing standards of the Applicable Exchange and subject to Section 11,
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it.
     (ii) Subject to Section 11(c), any authority granted to the Committee may
also be exercised by the full Board. To the extent that any permitted action
taken by the Board conflicts with action taken by the Committee, the Board
action shall control.
     (c) Discretion of Committee. Subject to Section 1(g), any determination
made by the Committee or by an appropriately delegated officer pursuant to
delegated authority under 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 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 Company, Participants, and
Eligible Individuals.
     (d) Award Agreements. The terms and conditions of each Award, as determined
by the Committee, shall be set forth in an Award Agreement, which shall be
delivered to the Participant receiving such Award upon, or as promptly as is
reasonably practicable following, the grant of such Award. The effectiveness of
an Award shall not be subject to the Award Agreement’s being signed by the
Company and/or the Participant receiving the Award unless specifically so
provided in the Award Agreement. Award Agreements may be amended only in
accordance with Section 12 hereof.
Section 3. Common Stock Subject to Plan
     (a) Plan Maximums. The maximum number of Shares that may be delivered
pursuant to Awards under the Plan shall be the sum of (a) the number of Shares
that may be issuable upon exercise or vesting of the Adjusted Awards and
(b) 19,500,000. Shares subject to an Award under the Plan may be authorized and
unissued Shares or may be treasury Shares.
     (b) Individual Limits. No Participant may be granted Awards covering in
excess of 8,000,000 Shares during the term of the Plan; provided, that Adjusted
Awards shall not be subject to this limitation.

-6-

--------------------------------------------------------------------------------

 

     (c) Rules for Calculating Shares Delivered.
     (i) With respect to Awards other than Adjusted Awards, to the extent that
any Award is forfeited, or any Option and the related Tandem SAR (if any) or
Free-Standing SAR terminates, expires or lapses without being exercised, or any
Award is settled for cash, the Shares subject to such Awards not delivered as a
result thereof shall again be available for Awards under the Plan.
     (ii) With respect to Awards other than Adjusted Awards, if the exercise
price of any Option and/or the tax withholding obligations relating to any Award
are satisfied by delivering Shares to the Company (by either actual delivery or
by attestation), only the number of Shares issued net of the Shares delivered or
attested to shall be deemed delivered for purposes of the limits set forth in
Section 3(a). To the extent any Shares subject to an Award are withheld to
satisfy the exercise price (in the case of an Option) and/or the tax withholding
obligations relating to such Award, such Shares shall not be deemed to have been
delivered for purposes of the limits set forth in Section 3(a).
     (d) Adjustment Provision. Subject to the provisions of Section 3(e), in the
event of (i) a stock dividend, stock split, reverse stock split, share
combination, or recapitalization or similar event affecting the capital
structure of the Company (each, a “Share Change”), or (ii) a merger,
consolidation, acquisition of property or shares, separation, spinoff,
reorganization, stock rights offering, liquidation, Disaffiliation, payment of
cash dividends other than an ordinary dividend or similar event affecting the
Company or any of its Subsidiaries (each, a “Corporate Transaction”), the
Committee or the Board may in its discretion make such substitutions or
adjustments as it deems appropriate and equitable to (A) the aggregate number
and kind of Shares or other securities reserved for issuance and delivery under
the Plan, (B) the various maximum limitations set forth in Sections 3(a) and
3(b) upon Awards and upon the grants to individuals of Awards, (C) the number
and kind of Shares or other securities subject to outstanding Awards; and
(D) the exercise price of outstanding Options and Stock Appreciation Rights. In
the case of Corporate Transactions, such adjustments may include, without
limitation, (1) the cancellation of outstanding Awards in exchange for payments
of cash, property or a combination thereof having an aggregate value equal to
the value of such Awards, as determined by the Committee or the Board in its
sole discretion (it being understood that in the case of a Corporate Transaction
with respect to which shareholders of Common Stock receive consideration other
than publicly traded equity securities of the ultimate surviving entity, any
such determination by the Committee that the value of an Option or Stock
Appreciation Right shall for this purpose be deemed to equal the excess, if any,
of the value of the consideration being paid for each Share pursuant to such
Corporate Transaction over the exercise price of such Option or Stock
Appreciation Right shall conclusively be deemed valid); (2) the substitution of
other property (including, without limitation, cash or other securities of the
Company and securities of entities other than the Company) for the Shares
subject to outstanding Awards; and (3) in connection with any Disaffiliation,
arranging for the assumption of Awards, or replacement of Awards with new awards
based on other property or other securities (including, without limitation,
other securities of the Company and securities of entities other than the
Company), by the affected Subsidiary, Affiliate, or division or by the entity
that controls such Subsidiary, Affiliate, or division following such
Disaffiliation (as well as any corresponding

-7-

--------------------------------------------------------------------------------

 

adjustments to Awards that remain based upon Company securities). Any adjustment
under this Section 3(d) need not be the same for all Participants.
     (e) Section 409A. Notwithstanding the foregoing: (i) any adjustments made
pursuant to Section 3(d) to Awards that are considered “deferred compensation”
within the meaning of Section 409A of the Code shall be made in compliance with
the requirements of Section 409A of the Code; (ii) any adjustments made pursuant
to Section 3(d) to Awards that are not considered “deferred compensation”
subject to Section 409A of the Code shall be made in such a manner as to ensure
that after such adjustment, the Awards either (A) continue not to be subject to
Section 409A of the Code or (B) comply with the requirements of Section 409A of
the Code; and (iii) in any event, neither the Committee nor the Board shall have
the authority to make any adjustments pursuant to Section 3(d) to the extent the
existence of such authority would cause an Award that is not intended to be
subject to Section 409A of the Code at the Grant Date to be subject thereto.
Section 4. Eligibility
     Awards may be granted under the Plan to Eligible Individuals and, with
respect to Adjusted Awards, in accordance with the terms of the Employee Matters
Agreement; provided, however, that Incentive Stock Options may be granted only
to employees of the Company and its subsidiaries or parent corporation (within
the meaning of Section 424(f) of the Code) and, with respect to Adjusted Awards
that are intended to qualify as incentive stock options within the meaning of
Section 421 of the Code, in accordance with the terms of the Employee Matters
Agreement.
Section 5. Options and Stock Appreciation Rights
     With respect to Adjusted Awards, the provisions below will be applicable
only to the extent that they are not inconsistent with the Employee Matters
Agreement and the terms of the Adjusted Award assumed under the Employee Matters
Agreement:
     (a) Types of Options. Options may be of two types: Incentive Stock Options
and Nonqualified Options. The Award Agreement for an Option shall indicate
whether the Option is intended to be an Incentive Stock Option or a Nonqualified
Option.
     (b) Types and Nature of Stock Appreciation Rights. Stock Appreciation
Rights may be “Tandem SARs,” which are granted in conjunction with an Option, or
“Free-Standing SARs,” which are not granted in conjunction with an Option. Upon
the exercise of a Stock Appreciation Right, the Participant shall be entitled to
receive an amount in cash, Shares, or both, in value equal to the product of
(i) the excess of the Fair Market Value of one Share over the exercise price of
the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares
in respect of which the Stock Appreciation Right has been exercised. The
applicable Award Agreement shall specify whether such payment is to be made in
cash or Common Stock or both, or shall reserve to the Committee or the
Participant the right to make that determination prior to or upon the exercise
of the Stock Appreciation Right.
     (c) Tandem SARs. A Tandem SAR may be granted at the Grant Date of the
related Option. A Tandem SAR shall be exercisable only at such time or times and
to the extent that the

-8-

--------------------------------------------------------------------------------

 

related Option is exercisable in accordance with the provisions of this
Section 5, and shall have the same exercise price as the related Option. A
Tandem SAR shall terminate or be forfeited upon the exercise or forfeiture of
the related Option, and the related Option shall terminate or be forfeited upon
the exercise or forfeiture of the Tandem SAR.
     (d) Exercise Price. The exercise price per Share subject to an Option or
Free-Standing SAR shall be determined by the Committee and set forth in the
applicable Award Agreement, and shall not be less than the Fair Market Value of
a share of the Common Stock on the applicable Grant Date. In no event may any
Option or Free-Standing SAR granted under this Plan be amended, other than
pursuant to Section 3(d), to decrease the exercise price thereof or otherwise be
subject to any action that would be treated, for accounting purposes, as a
“repricing” of such Option or Free-Standing SAR, unless such amendment,
cancellation, or action is approved by the Company’s stockholders.
     (e) Term. The Term of each Option and each Free-Standing SAR shall be fixed
by the Committee, but shall not exceed ten years from the Grant Date in the case
of an Incentive Stock Option.
     (f) Vesting and Exercisability. Except as otherwise provided herein,
Options and Free-Standing SARs 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 Option or Free-Standing SAR will become
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 Option or Free-Standing SAR.
     (g) Method of Exercise. Subject to the provisions of this Section 5,
Options and Free-Standing SARs may be exercised, in whole or in part, at any
time during the applicable Term by giving written notice of exercise to the
Company or through the procedures established with the Company’s appointed
third-party Option administrator specifying the number of Shares as to which the
Option or Free-Standing SAR is being exercised; provided, however, that, unless
otherwise permitted by the Committee, any such exercise must be with respect to
a portion of the applicable Option or Free-Standing SAR relating to no less than
the lesser of the number of Shares then subject to such Option or Free-Standing
SAR or 100 Shares. In the case of the exercise of an Option, such notice shall
be accompanied by payment in full of the purchase price (which shall equal the
product of such number of Shares multiplied by the applicable exercise price) by
certified or bank check or such other instrument as the Company may accept. If
approved by the Committee, payment, in full or in part, may also be made as
follows:
     (i) Payments may be made in the form of unrestricted Shares (by delivery of
such Shares or by attestation) of the same class as the Common Stock subject to
the Option already owned by the Participant (based on the Fair Market Value of
the Common Stock on the date the 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 the same class as the Common Stock subject to
the Option may be authorized only at the time the Option is granted.

-9-

--------------------------------------------------------------------------------

 

     (ii) To the extent permitted by applicable law, payment may be made by
delivering a properly executed exercise notice to the Company, together with a
copy of irrevocable instructions to a broker to deliver promptly to the Company
the amount of sale or loan proceeds necessary to pay the purchase price, and, if
requested, the amount of any federal, state, local or foreign withholding taxes.
To facilitate the foregoing, the Company may, to the extent permitted by
applicable law, enter into agreements for coordinated procedures with one or
more brokerage firms. To the extent permitted by applicable law, the Committee
may also provide for Company loans to be made for purposes of the exercise of
Options.
     (iii) Payment may be made by instructing the Committee to withhold a number
of Shares having a Fair Market Value (based on the Fair Market Value of the
Common Stock on the date the applicable Option is exercised) equal to the
product of (A) the exercise price multiplied by (B) the number of Shares in
respect of which the Option shall have been exercised.
     (h) Delivery; Rights of Stockholders. No Shares shall be delivered pursuant
to the exercise of an Option until the exercise price therefor has been fully
paid and applicable taxes have been withheld. The applicable Participant shall
have all of the rights of a stockholder of the Company holding the class or
series of Common Stock that is subject to the Option or Stock Appreciation Right
(including, if applicable, the right to vote the applicable Shares and the right
to receive dividends), when the Participant (i) has given written notice of
exercise, (ii) if requested, has given the representation described in
Section 14(a), and (iii) in the case of an Option, has paid in full for such
Shares.
     (i) Terminations of Employment. Subject to Section 10(c), a Participant’s
Options and Stock Appreciation Rights shall be forfeited upon such Participant’s
Termination of Employment, except as set forth below:
     (i) Upon a Participant’s Termination of Employment by reason of death, any
Option or Stock Appreciation Right held by the Participant that was exercisable
immediately before the Termination of Employment may be exercised at any time
until the earlier of (A) the first anniversary of the date of such death and
(B) the expiration of the Term thereof;
     (ii) Upon a Participant’s Termination of Employment by reason of Disability
or Retirement, any Option or Stock Appreciation Right held by the Participant
that was exercisable immediately before the Termination of Employment may be
exercised at any time until the earlier of (A) the first anniversary of such
Termination of Employment and (B) the expiration of the Term thereof;
     (iii) Upon a Participant’s Termination of Employment for Cause, any Option
or Stock Appreciation Right held by the Participant shall be forfeited,
effective as of such Termination of Employment;
     (iv) Upon a Participant’s Termination of Employment for any reason other
than death, Disability, Retirement or for Cause, any Option or Stock
Appreciation Right

-10-

--------------------------------------------------------------------------------

 

held by the Participant that was exercisable immediately before the Termination
of Employment may be exercised at any time until the earlier of (A) the 90th day
following such Termination of Employment and (B) expiration of the Term thereof;
and
     (v) Notwithstanding the above provisions of this Section 5(i), if a
Participant dies after such Participant’s Termination of Employment but while
any Option or Stock Appreciation Right remains exercisable as set forth above,
such Option or Stock Appreciation Right may be exercised at any time until the
later of (A) the earlier of (1) the first anniversary of the date of such death
and (2) expiration of the Term thereof and (B) the last date on which such
Option or Stock Appreciation Right would have been exercisable, absent this
Section 5(i)(v).
     Notwithstanding the foregoing, the Committee shall have the power, in its
discretion, to apply different rules concerning the consequences of a
Termination of Employment; provided, however, that if such rules are less
favorable to the Participant than those set forth above, such rules are set
forth in the applicable Award Agreement. 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 Option will thereafter be treated as a
Nonqualified Option.
     (j) Nontransferability of Options and Stock Appreciation Rights. No Option
or Free-Standing SAR shall be transferable by a Participant other than (i) by
will or by the laws of descent and distribution, or (ii) in the case of a
Nonqualified Option or Free-Standing SAR, pursuant to a qualified domestic
relations order or as otherwise expressly permitted by the Committee including,
if so permitted, pursuant to a transfer to the Participant’s family members or
to a charitable organization, whether directly or indirectly or by means of a
trust or partnership or otherwise. For purposes of this Plan, unless otherwise
determined by the Committee, “family member” shall have the meaning given to
such term in General Instructions A.1(a)(5) to Form S-8 under the Securities Act
of 1933, as amended, and any successor thereto. A Tandem SAR shall be
transferable only with the related Option as permitted by the preceding
sentence. Any Option or Stock Appreciation Right shall be exercisable, subject
to the terms of this Plan, only by the applicable Participant, the guardian or
legal representative of such Participant, or any person to whom such Option or
Stock Appreciation Right is permissibly transferred pursuant to this Section
5(j), it being understood that the term “Participant” includes such guardian,
legal representative and other transferee; provided, however, that the term
“Termination of Employment” shall continue to refer to the Termination of
Employment of the original Participant.
Section 6. Restricted Stock
     With respect to Adjusted Awards, the provisions below will be applicable
only to the extent that they are not inconsistent with the Employee Matters
Agreement and the terms of the Adjusted Award assumed under the Employee Matters
Agreement:
     (a) Nature of Awards and Certificates. Shares of Restricted Stock are
actual Shares issued to a Participant, and 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 the

-11-

--------------------------------------------------------------------------------

 

applicable 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
[Amended and Restated] Expedia, Inc. 2005 Stock and Annual Incentive Plan and an
Award Agreement. Copies of such Plan and Agreement are on file at the offices of
Expedia, Inc.”
     The Committee may require that the certificates evidencing such shares be
held in custody by the Company until the restrictions thereon shall have lapsed
and that, as a condition of any Award of Restricted Stock, the applicable
Participant shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.
     (b) 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 provisions of Restricted Stock Awards (including
without limitation any applicable Performance Goals) need not be the same with
respect to each recipient. Subject to Section 11(b), the Committee may at any
time, in its sole discretion, accelerate or waive, in whole or in part, any of
the foregoing restrictions.
     (ii) Subject to the provisions of the Plan and the applicable Award
Agreement, during the period, if any, set by the Committee, commencing with the
date of such Restricted Stock Award for which such Participant’s continued
service is required (the “Restriction Period”), and until the later of (A) the
expiration of the Restriction Period and (B) 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.
     (iii) Except as provided in this Section 6 and in the applicable Award
Agreement, the applicable Participant shall have, with respect to the Shares of
Restricted Stock, all of the rights of a stockholder of the Company holding the
class or series of Common Stock that is the subject of the Restricted 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 Award
Agreement and subject to Section 14(e), (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

-12-

--------------------------------------------------------------------------------

 

Stock, held subject to the vesting of the underlying Restricted Stock, and
(B) subject to any adjustment pursuant to Section 3(d), 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.
     (iv) Except as otherwise set forth in the applicable Award Agreement, 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 such
Participant; provided, however, that subject to Section 11(b), the Committee
shall have the discretion to waive, in whole or in part, any or all remaining
restrictions with respect to any or all of such Participant’s Shares of
Restricted Stock.
     (v) If and when any applicable Performance Goals are satisfied and the
Restriction Period expires without a prior forfeiture of the Shares of
Restricted Stock for which legended certificates have been issued, unlegended
certificates for such Shares shall be delivered to the Participant upon
surrender of the legended certificates.
Section 7. Restricted Stock Units
     With respect to Adjusted Awards, the provisions below will be applicable
only to the extent that they are not inconsistent with the Employee Matters
Agreement and the terms of the Adjusted Award assumed under the Employee Matters
Agreement:
     (a) Nature of Award. Restricted Stock Units are Awards denominated in
Shares that will be settled, subject to the terms and conditions of the
Restricted Stock Units, either by delivery of Shares to the Participant or by
the payment of cash based upon the Fair Market Value of a specified number of
Shares.
     (b) Terms and Conditions. Restricted Stock Units shall be subject to the
following terms and conditions:
     (i) The Committee may, in connection with the grant of Restricted Stock
Units, designate them as Qualified Performance-Based Awards, in which event it
shall condition the grant or vesting thereof upon the attainment of Performance
Goals. If the Committee does not designate Restricted Stock Units as Qualified
Performance-Based Awards, it may also condition the grant or vesting thereof
upon the attainment of Performance Goals. Regardless of whether Restricted Stock
Units are Qualified Performance-Based Awards, the Committee may also condition
the vesting thereof upon the continued service of the Participant. The
conditions for grant or vesting and the other provisions of Restricted Stock
Awards (including without limitation any applicable Performance Goals) need not
be the same with respect to each recipient. Subject to Section 11(b), the
Committee may at any time, in its sole discretion, accelerate or waive, in whole
or in part, any of the foregoing restrictions. Except as otherwise provided in
Section 7(b)(iv) or in the applicable Award Agreement, an Award of Restricted
Stock Units shall be settled if and when the Restricted Stock Units vest.

-13-

--------------------------------------------------------------------------------

 

     (ii) Subject to the provisions of the Plan and the applicable Award
Agreement, during the period, if any, set by the Committee, commencing with the
date of such Restricted Stock Units Award for which such Participant’s continued
service is required (the “Restriction Period”), and until the later of (A) the
expiration of the Restriction Period and (B) the date the applicable Performance
Goals (if any) are satisfied, the Participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber Restricted Stock Units.
     (iii) The Award Agreement for Restricted Stock Units shall specify whether,
to what extent and on what terms and conditions the applicable Participant shall
be entitled to receive current or deferred payments of cash, Common Stock or
other property corresponding to the dividends payable on the Common Stock
(subject to Section 14(e) below).
     (iv) Except as otherwise set forth in the applicable Award Agreement, upon
a Participant’s Termination of Employment for any reason during the Restriction
Period or before the applicable Performance Goals are satisfied, all Restricted
Stock Units still subject to restriction shall be forfeited by such Participant;
provided, however, that subject to Section 11(b), the Committee shall have the
discretion to waive, in whole or in part, any or all remaining restrictions with
respect to any or all of such Participant’s Restricted Stock Units; provided,
further, however, that in the event of such waiver, if any of such Participant’s
Restricted Stock Units constitute a “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Code, unless otherwise provided in an
award agreement and in a manner that is compliant with Section 409A of the Code,
settlement of such Restricted Stock Units shall not occur until the earliest of
(A) the date such Restricted Stock Units would otherwise be settled pursuant to
the terms of the Award Agreement or (B) the Participant’s “separation of
service” within the meaning of Section 409A of the Code.
Section 8. Other Stock-Based Awards
     Other Awards of Common Stock and other Awards that are valued in whole or
in part by reference to, or are otherwise based upon or settled in, Common
Stock, including (without limitation), unrestricted stock, performance units,
dividend equivalents, and convertible debentures, may be granted under the Plan.
Section 9. Bonus Awards
     (a) Determination of Awards. The Committee shall determine the total amount
of Bonus Awards for each Plan Year or such shorter performance period as the
Committee may establish in its sole discretion. Prior to the beginning of the
Plan Year or such shorter performance period as the Committee may establish in
its sole discretion (or such later date as may be prescribed by the Internal
Revenue Service under Section 162(m) of the Code), the Committee shall establish
Performance Goals for Bonus Awards for the Plan Year or such shorter period;
provided, that such Performance Goals may be established at a later date for
Participants who are not “covered employees” (within the meaning of
Section 162(m)(3) of the Code). Bonus amounts payable to any individual
Participant with respect to a Plan Year will be

-14-

--------------------------------------------------------------------------------

 

limited to a maximum of $10 million. For performance periods that are shorter
than a Plan Year, such $10 million maximum may be pro-rated to the extent
provided by the Committee.
     (b) Payment of Awards. Bonus Awards under the Plan shall be paid in cash or
in shares of Common Stock (valued at Fair Market Value as of the date of
payment) as determined by the Committee, as soon as practicable following the
close of the Plan Year or such shorter performance period as the Committee may
establish. It is intended that a Bonus Award will be paid no later than the
fifteenth (15th) day of the third month following the later of: (i) the end of
the Participant’s taxable year in which the requirements for such Bonus Award
have been satisfied by the Participant or (ii) the end of the Company’s fiscal
year in which the requirements for such Bonus Award have been satisfied by the
Participant. To the extent provided by the Executive Committee of the Board, a
Participant may elect to defer receipt of amounts payable under a Bonus Award
for a specified period, or until a specified event, subject in each case to the
approval of the Executive Committee of the Board and the terms of the Expedia,
Inc. Executive Deferred Compensation Plan (or any successor plan that complies
with Section 409A of the Code). The Bonus Award for any Plan Year or such
shorter performance period to any Participant may be reduced or eliminated by
the Committee in its discretion.
Section 10. Change in Control Provisions
     (a) Impact of Event/Single Trigger. Unless otherwise provided in the
applicable Award Agreement, subject Sections 3(d), 3(e), 10(e) and 14(k), and
with respect to Adjusted Awards only, to the extent specified in an Award
Agreement or the applicable IAC Long Term Incentive Plan (it being understood
that any reference in a “change in control,” “change of control” or similar
definition of an Award Agreement or the applicable IAC Long Term Incentive Plan
for any such Adjusted Award shall be deemed to refer to a “change in control,”
“change of control” or similar transaction with respect to the Company (as
successor to the originally-referenced entity) for such Adjusted Award assumed
hereunder), notwithstanding any other provision of the Plan to the contrary,
immediately upon the occurrence of a Change in Control, with respect to Awards
held by officers of the Company (and not the Company’s Subsidiaries) with a
title of Senior Vice President or above as of immediately prior to the Change in
Control, and with respect to all other Participants solely to the extent
provided in the applicable Award Agreement:
     (i) any Options and Stock Appreciation Rights outstanding which are not
then exercisable and vested shall become fully exercisable and vested;
     (ii) the restrictions applicable to any Restricted Stock shall lapse, and
such Restricted Stock shall become free of all restrictions and become fully
vested and transferable;
     (iii) all Restricted Stock Units shall be considered to be earned and
payable in full, and any restrictions shall lapse and such Restricted Stock
Units shall be settled as promptly as is practicable in the form set forth in
the applicable Award Agreement; provided, however, that with respect to any
Restricted Stock Unit that constitutes a “nonqualified deferred compensation
plan” within the meaning of Section 409A of the Code, unless otherwise provided
in an award agreement and in a manner that is compliant

-15-

--------------------------------------------------------------------------------

 

with Section 409A of the Code, the settlement of each such Restricted Stock Unit
pursuant to this Section 10(a)(iii) shall not occur until the earliest of
(A) the Change in Control if such Change in Control constitutes a “change in the
ownership of the corporation,” a “change in effective control of the
corporation” or a “change in the ownership of a substantial portion of the
assets of the corporation,” within the meaning of Section 409A(a)(2)(A)(v) of
the Code, (B) the date such Restricted Stock Units would otherwise be settled
pursuant to the terms of the Award Agreement and (C) the Participant’s
“separation of service” within the meaning of Section 409A of the Code.
     (b) Definition of Change in Control. Except as otherwise may be provided in
an applicable Award Agreement, for purposes of the Plan, a “Change in Control”
shall mean any of the following events:
     (i) The acquisition by any individual entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than Barry Diller,
Liberty Media Corporation, and their respective Affiliates (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of equity securities of the Company representing more than 50% of
the voting power of the then outstanding equity securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition by the Company, (B) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (C) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii); or
     (ii) Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date, whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
     (iii) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company or
the purchase of assets or stock of another entity (a “Business Combination”), in
each case, unless immediately following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Company Voting Securities immediately prior to such Business
Combination will beneficially own, directly or indirectly, more than 50% of the
then outstanding combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors (or equivalent governing
body, if applicable) of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of such transaction

-16-

--------------------------------------------------------------------------------

 

owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Voting Securities, (B) no Person (excluding Barry
Diller, Liberty Media Corporation, and their respective Affiliates, any employee
benefit plan (or related trust) of the Company or such entity resulting from
such Business Combination) will beneficially own, directly or indirectly, more
than a majority of the combined voting power of the then outstanding voting
securities of such entity except to the extent that such ownership of the
Company existed prior to the Business Combination and (C) at least a majority of
the members of the board of directors (or equivalent governing body, if
applicable) of the entity resulting from such Business Combination will have
been members of the Incumbent Board at the time of the initial agreement, or
action of the Board, providing for such Business Combination; or
     (iv) Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
     Notwithstanding the foregoing, the Separation shall not constitute a Change
in Control.
     (c) Impact of Event/Double Trigger. Unless otherwise provided in the
applicable Award Agreement, subject to Sections 3(d), 3(e), 10(e) and 14(k), and
with respect to Adjusted Awards only, to the extent specified in an Award
Agreement, notwithstanding any other provision of this Plan to the contrary,
upon a Participant’s Termination of Employment, during the two-year period
following a Change in Control, by the Company other than for Cause or Disability
or by the Participant for Good Reason (as defined below):
     (i) any Options and Stock Appreciation Rights outstanding as of such
Termination of Employment which were outstanding as of the date of such Change
in Control (including any Options and Stock Appreciation Rights that became
vested pursuant to Section 10(a)) shall be fully exercisable and vested and
shall remain exercisable until the later of (i) the last date on which such
Option or Stock Appreciation Right would be exercisable in the absence of this
Section 10(c) and (ii) the earlier of (A) the first anniversary of such Change
in Control and (B) expiration of the Term of such Option or Stock Appreciation
Right;
     (ii) the restrictions applicable to any Restricted Stock shall lapse, and
such Restricted Stock outstanding as of such Termination of Employment which
were outstanding as of the date of such Change in Control shall become free of
all restrictions and become fully vested and transferable; and
     (iii) all Restricted Stock Units outstanding as of such Termination of
Employment which were outstanding as of the date of such Change in Control shall
be considered to be earned and payable in full, and any restrictions shall lapse
and such Restricted Stock Units shall be settled as promptly as is practicable
in (subject to Section 3(d)) the form set forth in the applicable Award
Agreement.

-17-

--------------------------------------------------------------------------------

 

     (d) For purposes of this Section 10, “Good Reason” means (i) “Good Reason”
as defined in any Individual Agreement or Award Agreement to which the
applicable Participant is a party, or (ii) if there is no such Individual
Agreement or if it does not define Good Reason, without the Participant’s prior
written consent: (A) a material reduction in the Participant’s rate of annual
base salary from the rate of annual base salary in effect for such Participant
immediately prior to the Change in Control, (B) a relocation of the
Participant’s principal place of business more than 35 miles from the city in
which such Participant’s principal place of business was located immediately
prior to the Change in Control or (C) a material and demonstrable adverse change
in the nature and scope of the Participant’s duties from those in effect
immediately prior to the Change in Control. In order to invoke a Termination of
Employment for Good Reason, a Participant shall provide written notice to the
Company of the existence of one or more of the conditions described in clauses
(A) through (C) within 90 days following the Participant’s knowledge of the
initial existence of such condition or conditions, and the Company shall have
30 days following receipt of such written notice (the “Cure Period”) during
which it may remedy the condition. In the event that the Company fails to remedy
the condition constituting Good Reason during the Cure Period, the Participant
must terminate employment, if at all, within 90 days following the Cure Period
in order for such Termination of Employment to constitute a Termination of
Employment for Good Reason.
     (e) Notwithstanding the foregoing, if any Award is subject to Section 409A
of the Code, this Section 10 shall be applicable only to the extent specifically
provided in the Award Agreement or in the Individual Agreement and as permitted
pursuant to Section 14(k).
Section 11. Qualified Performance-Based Awards; Section 16(b)
     (a) The provisions of this Plan are intended to ensure that all Options and
Stock Appreciation Rights granted hereunder to any Participant who is or may be
a “covered employee” (within the meaning of Section 162(m)(3) of the Code) in
the tax year in which such Option or Stock Appreciation Right is expected to be
deductible to the Company qualify for the Section 162(m) Exemption, and all such
Awards shall therefore be considered Qualified Performance-Based Awards and this
Plan shall be interpreted and operated consistent with that intention
(including, without limitation, to require that all such Awards be granted by a
committee composed solely of members who satisfy the requirements for being
“outside directors” for purposes of the Section 162(m) Exemption (“Outside
Directors”)). When granting any Award other than an Option or Stock Appreciation
Right, the Committee may designate such Award as a Qualified Performance-Based
Award, 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) with respect to
such Award, and (ii) the Committee wishes such Award to qualify for the Section
162(m) Exemption, and the terms of any such Award (and of the grant thereof)
shall be consistent with such designation (including, without limitation, that
all such Awards be granted by a committee composed solely of Outside Directors).
     (b) Each Qualified Performance-Based Award (other than an Option or Stock
Appreciation Right) shall be earned, vested and payable (as applicable) only
upon the achievement of one or more Performance Goals, together with the
satisfaction of any other conditions, such as continued employment, as the
Committee may determine to be appropriate, and no Qualified Performance-Based
Award may be amended, nor may the Committee exercise

-18-

--------------------------------------------------------------------------------

 

any discretionary authority it may otherwise have under this Plan with respect
to a Qualified Performance-Based Award under this Plan, in any manner that would
cause the Qualified Performance-Based Award to cease to qualify for the Section
162(m) Exemption; provided, however, that (i) the Committee may provide, either
in connection with the grant of the applicable Award or by amendment thereafter,
that achievement of such Performance Goals will be waived upon the death or
Disability of the Participant or under any other circumstance with respect to
which the existence of such possible waiver will not cause the Award to fail to
qualify for the Section 162(m) Exemption as of the Grant Date, and (ii) the
provisions of Section 10 shall apply notwithstanding this Section 11(b).
     (c) The full Board shall not be permitted to exercise authority granted to
the Committee to the extent that the grant or exercise of such authority would
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.
     (d) The provisions of this Plan are intended to ensure that no transaction
under the Plan is subject to (and all such transactions will be exempt from) the
short-swing recovery rules of Section 16(b) of the Exchange Act
(“Section 16(b)”). Accordingly, the composition of the Committee shall be
subject to such limitations as the Board deems appropriate to permit
transactions pursuant to this Plan to be exempt (pursuant to Rule 16b-3
promulgated under the Exchange Act) from Section 16(b), and no delegation of
authority by the Committee shall be permitted if such delegation would cause any
such transaction to be subject to (and not exempt from) Section 16(b).
Section 12. Term, Amendment and Termination
     (a) Effectiveness. The Plan shall be effective as of the date (the
“Effective Date”) it is adopted by the Board, subject to the approval by the
holders of at least a majority of the voting power represented by outstanding
capital stock of the Company that is entitled generally to vote in the election
of directors.
     (b) Termination. The Plan will terminate on the tenth anniversary of the
Effective Date. Awards outstanding as of such date shall not be affected or
impaired by the termination of the Plan.
     (c) Amendment of Plan. The Board may amend, alter, or discontinue the Plan,
but no amendment, alteration or discontinuation shall be made which would
materially impair the rights of the Participant with respect to a previously
granted Award without such Participant’s consent, except such an amendment made
to comply with applicable law (including without limitation Section 409A of the
Code), stock exchange rules or accounting rules. In addition, no such amendment
shall be made without the approval of the Company’s stockholders to the extent
such approval is required by applicable law or the listing standards of the
Applicable Exchange.
     (d) Amendment of Awards. Subject to Section 5(d), the Committee may
unilaterally amend the terms of any Award theretofore granted, prospectively or
retroactively, but no such amendment shall (i) cause a Qualified
Performance-Based Award to cease to qualify for the Section 162(m) Exemption or
(ii) without the Participant’s consent, materially impair the rights

-19-

--------------------------------------------------------------------------------

 

of any Participant with respect to an Award, except such an amendment made to
cause the Plan or Award to comply with applicable law, stock exchange rules or
accounting rules.
Section 13. Unfunded Status of Plan
     It is presently intended that the Plan constitute an “unfunded” plan for
incentive and deferred compensation. Solely to the extent permitted under
Section 409A, 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 the existence of such trusts or
other arrangements is consistent with the “unfunded” status of the Plan.
Notwithstanding any other provision of this Plan to the contrary, with respect
to any Award that constitutes a “nonqualified deferred compensation plan” within
the meaning of Section 409A of the Code, no trust shall be funded with respect
to any such Award if such funding would result in taxable income to the
Participant by reason of Section 409A(b) of the Code and in no event shall any
such trust assets at any time be located or transferred outside of the United
States, within the meaning of Section 409A(b) of the Code.
Section 14. General Provisions
     (a) Conditions for Issuance. The Committee may require each person
purchasing or receiving Shares pursuant to an Award to represent to and agree
with the Company 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 Company shall not be required to issue or deliver any
certificate or certificates for Shares under the Plan prior to fulfillment of
all of the following conditions: (i) listing or approval for listing upon notice
of issuance, of such Shares on the Applicable Exchange; (ii) any registration or
other qualification of such Shares of the Company 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 (iii) 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) Additional Compensation Arrangements. Nothing contained in the Plan
shall prevent the Company or any Subsidiary or Affiliate from adopting other or
additional compensation arrangements for its employees.
     (c) No Contract of Employment. The Plan shall not constitute a contract of
employment, and 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 Company or any Subsidiary or Affiliate to terminate the employment of any
employee at any time.
     (d) Required Taxes. No later than the date as of which an amount first
becomes includible in the gross income of a Participant for federal, state,
local or foreign income or employment or other tax purposes with respect to any
Award under the Plan, such Participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the

-20-

--------------------------------------------------------------------------------

 

payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. If determined by the Company,
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 Company under the Plan shall be conditional on such payment
or arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to such 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) Limitation on Dividend Reinvestment and Dividend Equivalents.
Reinvestment of dividends in additional Restricted Stock at the time of any
dividend payment, and the payment of Shares with respect to dividends to
Participants holding Awards of Restricted Stock Units, shall only be permissible
if sufficient Shares are available under Section 3 for such reinvestment or
payment (taking into account then outstanding Awards). In the event that
sufficient Shares are not available for such reinvestment or payment, such
reinvestment or payment shall be made in the form of a grant of Restricted Stock
Units equal in number to the Shares that would have been obtained by such
payment or reinvestment, the terms of which Restricted Stock Units shall provide
for settlement in cash and for dividend equivalent reinvestment in further
Restricted Stock Units on the terms contemplated by this Section 14(e).
     (f) Designation of Death Beneficiary. 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 such Participant’s death are to be
paid or by whom any rights of such eligible Individual, after such Participant’s
death, may be exercised.
     (g) Subsidiary Employees. In the case of a grant of an Award to any
employee of a Subsidiary of the Company, the Company may, if the Committee so
directs, issue or transfer the Shares, if any, covered by the Award to the
Subsidiary, for such lawful consideration as the Committee may specify, upon the
condition or understanding that the Subsidiary will transfer the Shares to the
employee in accordance with the terms of the Award specified by the Committee
pursuant to the provisions of the Plan. All Shares underlying Awards that are
forfeited or canceled should revert to the Company.
     (h) Governing Law and Interpretation. 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. The captions of this Plan are not part of the provisions hereof and
shall have no force or effect.
     (i) Non-Transferability. Except as otherwise provided in Section 5(j) or by
the Committee, Awards under the Plan are not transferable except by will or by
laws of descent and distribution.
     (j) Foreign Employees and Foreign Law Considerations. The Committee may
grant Awards to Eligible Individuals who are foreign nationals, who are located
outside the United States or who are not compensated from a payroll maintained
in the United States, or who are otherwise subject to (or could cause the
Company to be subject to) legal or regulatory provisions

-21-

--------------------------------------------------------------------------------

 

of countries or jurisdictions outside the United States, on such terms and
conditions different from those specified in the Plan as may, in the judgment of
the Committee, be necessary or desirable to foster and promote achievement of
the purposes of the Plan, and, in furtherance of such purposes, the Committee
may make such modifications, amendments, procedures, or subplans as may be
necessary or advisable to comply with such legal or regulatory provisions.
     (k) Section 409A of the Code. It is the intention of the Company that no
Award shall be “deferred compensation” subject to Section 409A of the Code,
unless and to the extent that the Committee specifically determines otherwise as
provided in this Section 14(k), and the Plan and the terms and conditions of all
Awards shall be interpreted accordingly. The terms and conditions governing any
Awards that the Committee determines will be subject to Section 409A of the
Code, including any rules for elective or mandatory deferral of the delivery of
cash or Shares pursuant thereto and any rules regarding treatment of such Awards
in the event of a Change in Control, shall be set forth in the applicable Award
Agreement, and shall comply in all respects with Section 409A of the Code.
Notwithstanding any other provision of the Plan to the contrary, with respect to
any Award that constitutes a “nonqualified deferred compensation plan” subject
to Section 409A of the Code, any payments (whether in cash, Shares or other
property) to be made with respect to the Award upon the Participant’s
Termination of Employment shall be delayed until the earlier of (A) the first
day of the seventh month following the Participant’s Termination of Employment
if the Participant is a “specified employee” within the meaning of Section 409A
of the Code and (B) the Participant’s death.
     (l) Employee Matters Agreement. Notwithstanding anything in this Plan to
the contrary, to the extent that the terms of this Plan are inconsistent with
the terms of an Adjusted Award, the terms of the Adjusted Award shall be
governed by the Employee Matters Agreement, the applicable IAC Long-Term
Incentive Plan and the award agreement granted thereunder.

-22-