Exhibit 10.2


 


SECOND
AMENDED AND RESTATED


TREE.COM, INC.


2008
STOCK AND ANNUAL INCENTIVE PLAN


 


Section 1. Purpose; Definition


 


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 providing
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)  “Beneficial
Ownership” shall have the meaning given in Rule 13d-3
promulgated under the Exchange Act.


 


(f)  “Board”
means the Board of Directors of the Company.


 


(g)  “Bonus
Award” means a bonus award made pursuant to Section 9.


 


(h)  “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.


 


(i)  “Change
in Control” has the meaning set forth in Section 10(c).


 


(j)  “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.


 


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(k)  “Commission”
means the Securities and Exchange Commission or any successor agency.


 


(l)  “Committee”
has the meaning set forth in Section 2(a).


 


(m)  “Common
Stock” means common stock, par value $0.01 per share, of the
Company.


 


(n)  “Company”
means Tree.com, Inc., a Delaware corporation, or its successor.


 


(o)  “Disability”
means (i) “Disability” as defined in any Individual Agreement to which the
Participant is a party, or (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 each
Award that constitutes a “nonqualified deferred compensation plan” within the
meaning of Section 409A of the Code, the foregoing definition shall apply
for purposes of vesting of such Award, provided that such Award shall not be
settled until the earliest of: (i) the Participant’s “disability” within
the meaning of Section 409A of the Code, or (ii) the Participant’s “separation
from service” within the meaning of Section 409A of the Code and (iii) the
date such Award would otherwise be settled pursuant to the terms of the Award
Agreement.


 


(p)  “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.


 


(q)  “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) restructuring
charges, (iv) non-cash write-downs of assets or goodwill, (v) charges
relating to disposal of lines of business, (vi) litigation settlement
amounts and (vii) costs incurred for proposed and completed acquisitions.


 


(r)  “EBITDA”
means for any period, operating profit (loss) plus (i) depreciation and
amortization, including goodwill impairment, (ii) amortization of non-cash
distribution and marketing expense and non-cash compensation expense, (iii) restructuring
charges, (iv) non-cash write-downs of assets or goodwill, (v) charges
relating to disposal of lines of business, (vi) litigation settlement
amounts and (vii) costs incurred for proposed and completed acquisitions.


 


(s)  “Eligible
Individuals” means directors, officers, employees and consultants of
the Company or any of its Subsidiaries or Affiliates, and prospective employees
and consultants who have accepted offers of employment or consultancy from the
Company or its Subsidiaries or Affiliates.


 


(t)  “Employee
Matters Agreement” means the Employee Matters Agreement by and among
IAC, Ticketmaster, Interval Leisure Group, Inc., HSN, Inc. and
Tree.com, Inc.


 


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


 


(v)  “Fair
Market Value” means, unless otherwise determined by the Committee,
the closing price of a share of Common Stock on the Applicable Exchange on the
date of measurement, 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.


 


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(w)                 “Free-Standing SAR”
has the meaning set forth in Section 5(b).


 


(x)                     “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.


 


(y)                   “Group”
shall have the meaning given in Section 13(d)(3) and 14(d)(2) of
the Exchange Act.


 


(z)                     “IAC”
means IAC/InterActiveCorp, a Delaware corporation.


 


(aa)              “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.


 


(bb)            “Individual
Agreement” means an employment, consulting or similar agreement
between a Participant and the Company or one of its Subsidiaries or Affiliates.


 


(cc)              “Nasdaq”
means the National Association of Securities Dealers Inc. Automated
Quotation System.


 


(dd)            “Nonqualified
Option” means any Option that is not an Incentive Stock Option.


 


(ee)              “Option”
means an Award granted under Section 5.


 


(ff)                  “Participant”
means an Eligible Individual to whom an Award is or has been granted.


 


(gg)            “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, (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-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,
Affiliate, division or department of the Company 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.


 


(hh)            “Plan”
means this Tree.com, Inc. 2008 Stock and Annual Incentive Plan, as set
forth herein and as hereafter amended from time to time.


 


(ii)                    “Plan Year”
means the calendar year or, with respect to Bonus Awards, the Company’s fiscal
year if different.


 


(jj)                    “Qualified
Performance-Based Award” means an Award intended to qualify for the Section 162(m) Exemption,
as provided in Section 11.


 


(kk)              “Restricted Stock”
means an Award granted under Section 6.


 


(ll)                    “Restricted Stock
Units” means an Award granted under Section 7.


 


(mm)        “Resulting Voting
Power” shall mean the 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 a Business Combination (including, without 


 


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limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries).


 


(nn)            “Retirement”
means retirement from active employment with the Company, a Subsidiary or
Affiliate at or after the Participant’s attainment of age 65.


 


(oo)            “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.


 


(pp)            “Separation”
has the meaning set forth in the Employee Matters Agreement.


 


(qq)            “Share”
means a share of Common Stock.


 


(rr)                  “Specified Employee”
shall mean any individual who is a “key employee” (as defined in Section 416(i) of
the Code without regard to paragraph (5) thereof) with respect to the
Company and its Affiliates, as determined by the Company (or the Affiliate, in
the event that the Affiliate and the Company are not considered a single
employer under Sections 414(b) or 414(c) of the Code) in accordance
with its uniform policy with respect to all arrangements subject to Section 409A
of the Code, based upon the twelve (12) month period ending on each December 31st.
All individuals who are determined to be key employees under Section 416(i)(1)(A)(i),
(ii) or (iii) of the Code (without regard to paragraph (5) thereof)
on December 31st shall be treated as Specified Employees for purposes
of the Plan during the twelve (12) month period that begins on the
following April 1st.


 


(ss)              “Stock Appreciation
Right” has the meaning set forth in Section 5(b).


 


(tt)                  “Subsidiary”
means any corporation, partnership, joint venture, limited liability company 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.


 


(uu)            “Tandem SAR”
has the meaning set forth in Section 5(b).


 


(vv)            “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.


 


(ww)        “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 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 service provider for), 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. 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. For the avoidance of doubt, the
Separation shall not constitute a Termination of Employment for purposes of any
Adjusted Award.


 


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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 and conditions 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;


 


(vi)                             to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
Plan as it shall from time to time deem advisable;


 


(vii)                          subject to Section 11,
to accelerate the vesting or lapse of restrictions of any outstanding Award,
based in each case on such considerations as the Committee in its sole
discretion determines;


 


(viii)                      to interpret
the terms and provisions of the Plan and any Award issued under the Plan (and
any agreement relating thereto);


 


(ix)                               to establish
any “blackout” period that the Committee in its sole discretion deems necessary
or advisable;


 


(x)                                 to determine
whether, to what extent, and under what circumstances cash, Shares, and other
property and other amounts payable with respect to an Award under this Plan
shall be deferred either automatically or at the election of the Participant;


 


(xi)                               to decide all
other matters that must be determined in connection with an Award; and


 


(xii)                            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(h), 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


 


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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. Notwithstanding any
provision of the Plan or an Award Agreement to the contrary, in the event that
any term of an Award Agreement conflicts with any provision of the Plan that
specifically pertains to Section 409A of the Code, the provision of the
Plan shall govern.


 


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) 2,750,000. The maximum number of Shares that may be granted
pursuant to Options intended to be Incentive Stock Options shall be 1,833,333
Shares. 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 1,833,333 Shares during the term of the Plan; provided that Adjusted Awards shall not be
subject to this limitation.


 


(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 (specifically including
the Award contemplated by clause (iii) below), or any Award is
settled for cash, (A) the Shares subject to such Awards not delivered as a
result thereof shall again be available for Awards under the Plan and (B) other
than with respect to any Awards settled for cash, such Shares shall no longer
be counted when calculating the respective Participant’s individual limit set
forth in Section 3(b).


 


(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).


 


(iii)                             Notwithstanding
anything in this Plan to the contrary (including Sections 5(d) and 12(c) hereof),
Douglas R. Lebda may surrender for cancellation an option to purchase 589,500
shares of Common Stock with an exercise price of $25.43 per share awarded on August 21,
2008 and the Shares subject to such Option shall be available for future Awards
under the Plan (including to Mr. Lebda) immediately following such
surrender.


 


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(d)  Adjustment Provision.  In the event of a merger, consolidation,
acquisition of property or shares, stock rights offering, liquidation,
Disaffiliation, 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 (i) the aggregate
number and kind of Shares or other securities reserved for issuance and
delivery under the Plan, (ii) the various maximum limitations set forth in
Sections 3(a) and 3(b) upon certain types of Awards and upon the
grants to individuals of certain types of Awards, (iii) the number and
kind of Shares or other securities subject to outstanding Awards; and (iv) the
exercise price of outstanding Options and Stock Appreciation Rights. In the
event of a stock dividend, stock split, reverse stock split, separation,
spinoff, reorganization, extraordinary dividend of cash or other property,
share combination, or recapitalization or similar event affecting the capital
structure of the Company (each, a “Share
Change”), the Committee or the Board shall make such substitutions
or adjustments as it deems appropriate and equitable to (i) the aggregate
number and kind of Shares or other securities reserved for issuance and
delivery under the Plan, (ii) the various maximum limitations set forth in
Sections 3(a) and 3(b) upon certain types of Awards and upon the
grants to individuals of certain types of Awards, (iii) the number and
kind of Shares or other securities subject to outstanding Awards; and (iv) 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 stockholders 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 adjustments to Awards that
remain based upon Company securities). The Committee may adjust in its sole
discretion the Performance Goals applicable to any Awards to reflect any Share
Change and any Corporate Transaction and any unusual or non-recurring events
and other extraordinary items, impact of charges for restructurings, discontinued
operations, and the cumulative effects of accounting or tax changes, each as
defined by generally accepted accounting principles or as identified in the
Company’s financial statements, notes to the financial statements, management’s
discussion and analysis or the Company’s other SEC filings, provided that in the case of Performance
Goals applicable to any Qualified Performance-Based Awards, such adjustment
does not violate Section 162(m) of the Code. 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


 


7

















 


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 as of the Grant Date.


 


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 Non-qualified 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 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, be
cancelled in conjunction with the grant of any new Option or Free-Standing SAR
with a lower exercise price 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.


 


(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


 


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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.


 


(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 Company 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,
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


 


9






 


 












 


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 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 applicable Participant
and, in the case 


 


10

















 


of Restricted Stock, 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 Tree.com, Inc. 2008
Stock and Annual Incentive Plan and an Award Agreement. Copies of such Plan and
Agreement are on file at the offices of Tree.com, Inc., 11115 Rushmore
Drive, Charlotte, NC 28277.”


 


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 shall, prior to or at the time of grant,
condition the vesting or transferability of an Award of Restricted Stock upon
the continued service of the applicable Participant or the attainment of
Performance Goals, or the attainment of Performance Goals and the continued
service of the applicable Participant. In the event that the Committee
conditions the grant or vesting of an Award of Restricted Stock upon the
attainment of Performance Goals or the attainment of Performance Goals and the
continued service of the applicable Participant, the Committee may, prior to or
at the time of grant, designate such an Award as a Qualified Performance-Based
Award. The conditions for grant, vesting, or transferability and the other
provisions of Restricted Stock Awards (including without limitation any
Performance Goals) need not be the same with respect to each Participant.


 


(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 vesting
restrictions apply and until the expiration of such vesting restrictions (the “Restriction Period”), 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 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, 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


 


11

















 


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 Awards. 
Restricted Stock Units are Awards denominated in Shares that will be
settled, subject to the terms and conditions of the Restricted Stock Units, in
an amount in cash, Shares or both, 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 shall, prior to or at the time of grant,
condition the grant, vesting, or transferability of Restricted Stock Units upon
the continued service of the applicable Participant or the attainment of
Performance Goals, or the attainment of Performance Goals and the continued
service of the applicable Participant. In the event that the Committee
conditions the grant or vesting of Restricted Stock Units upon the attainment
of Performance Goals or the attainment of Performance Goals and the continued
service of the applicable Participant, the Committee may, prior to or at the
time of grant, designate such Awards as Qualified Performance-Based Awards. The
conditions for grant, vesting or transferability and the other provisions of
Restricted Stock Units (including without limitation any Performance Goals)
need not be the same with respect to each Participant. 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(but in no event later than two and a half months after the end
of the fiscal year in which the Restricted Stock Unit vest).


 


(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 for which such vesting
restrictions apply and until the expiration of such vesting restrictions (the “Restriction Period”), 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, 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, however, if any of such Participant’s Restricted Stock Units
constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A
of the Code, settlement of such Restricted Stock Units shall not occur until
the earliest of (1) the date such Restricted Stock Units would otherwise
be settled pursuant to the terms of the Award Agreement or (2) 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),


 


12

















 


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 limited to a maximum of $10 million. For performance
periods that are shorter than a Plan Year, such $10 million maximum may be
prorated if so determined 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. The Committee may at its option establish
procedures pursuant to which Participants are permitted to defer the receipt of
Bonus Awards payable hereunder. 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)  Adjusted Awards.  With respect to all Adjusted Awards, subject
to Sections 3(d), 3(e), 10(e) and 14(k) unless otherwise
provided in the applicable 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 outstanding as of such Termination of
Employment which were outstanding as of the date of such Change in Control
shall be fully exercisable and vested and shall remain exercisable until the
later of (i) the last date on which such Option would be exercisable in
the absence of this Section 10(a) and (ii) the earlier of (A) the
first anniversary of such Change in Control and (B) expiration of the Term
of such Option;


 


(ii)         the restrictions and deferral limitations 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 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, the settlement of each such Restricted Stock
Unit pursuant to this Section 10(a)(iii) shall not occur until the
earliest of (1) the Change in Control if such change in Control
constitutes a


 


13

















 


“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, (2) the
date such Restricted Stock Units would otherwise be settled pursuant to the
terms of the Award Agreement and (3) the Participant’s “separation of
service” within the meaning of Section 409A of the Code.


 


(b)        Impact of Event on
Awards other than Adjusted Awards.  Subject to
paragraph (e) of this Section 10, and paragraph (d) of
Section 12, unless otherwise provided in any applicable Award Agreement
and except as otherwise provided in paragraph (a) of this Section 10,
in connection with a Change of Control, the Committee may make such adjustments
and/or settlements of outstanding Awards as it deems appropriate and consistent
with the Plan’s purposes, including, without limitation, the acceleration of
vesting of Awards either upon a Change of Control or upon various terminations
of employment following a Change of Control. The Committee may provide for such
adjustments as a term of the Award or may make such adjustments following the
granting of the Award.


 


(c)         Definition of Change in
Control.  For purposes of the Plan, unless otherwise
provided in an option agreement or other agreement relating to an Award, a “Change
in Control” shall mean the happening of any of the following events:


 


(i)            The acquisition by any individual, entity or Group (a “Person”), other than the Company, of
Beneficial Ownership 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 any acquisition
that would constitute a Change in Control under this subsection (i) that
is also a Business Combination shall be determined exclusively under
subsection (iii) below; or


 


(ii)         Individuals who, as of the Effective Date, constitute
the Board (the “Incumbent Directors”)
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 Incumbent Directors at such time shall become an
Incumbent Director, 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,
consolidation, sale or other disposition of all or substantially all of the
assets of the Company, the purchase of assets or stock of another entity, or
other similar corporate transaction (a “Business
Combination”), in each case, unless immediately following such
Business Combination, (A) more than 50% of the Resulting Voting Power
shall reside in Outstanding Company Voting Securities retained by the Company’s
stockholders in the Business Combination and/or voting securities received by
such stockholders in the Business Combination on account of Outstanding Company
Voting Securities, and (B) 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 were Incumbent Directors 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. For the avoidance of doubt, with respect to
Adjusted Awards, any reference in an Award Agreement or the 


 


14
















 


applicable IAC Long Term Incentive Plan to a “change
in control,” “change of control” or similar definition shall be deemed to refer
to a Change of Control hereunder.


 


(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
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 (as certified in writing by the Committee, except if compensation is
attributable solely to the increase in the value of the Common Stock) (but in
no event shall such Award be payable later than two and a half months after the
end of the fiscal year in which the Qualified Performance-Based Award becomes
earned and vested (as applicable)), 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 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


 


15

















 


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 not
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, but no such amendment shall cause a Qualified Performance-Based Award
to cease to qualify for the Section 162(m) Exemption or without the
Participant’s consent materially impair the rights 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.


 


16

















 


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 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,


 


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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 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 entered into thereunder.


 


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