Exhibit 10.7


 


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.


 


(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 all Awards, to the extent required by Section 409A
of the Code, “disability” within the meaning of Section 409A of the Code.


 


(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.


 


 


 


 


 


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(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.


 


(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.


 


 


 


 


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(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 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.


 


 


 


 


 


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


 


(ss)         “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.


 


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


 


(uu)         “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.


 


(vv)         “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 “nonqualified deferred compensation” 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.


 


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 




 


 


 


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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 




 


 


 


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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 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) 2,200,000.  The
maximum number of Shares that may be granted pursuant to Options intended to be
Incentive Stock Options shall be 1,466,666 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 1,466,666 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, 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 




 


 


 


7

















 


 


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.  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 




 


 


 


8

















 


 


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
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.


 


 


 


 


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(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 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


 


 


 


 


 


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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
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;


 


 


 


 


11

















 


 


 


(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.


 


 


 


 


12

















 


 


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 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 


 


 


 


 


13

















 


 


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 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 


 


 


 


14

















 


 


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.  An Award of Restricted
Stock Units shall be settled as and when the Restricted Stock Units vest or at
a later time specified by the Committee or in accordance with an election of
the Participant, if the Committee so permits.


 


(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.


 


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 


 


 


 


15

















 


 


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 paragraph (e) of this Section 10, 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 (subject to Section 3(d)) the
form set forth in the applicable Award Agreement.


 


(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 


 


 


 


 


16

















 


 


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 


 


 


 


17

















 


 


the 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)xxx


 


(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


 


 


 


 


18

















 


 


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),
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 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.


 


 


 


 


 


19

















 


 


(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.  The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that
unless the Committee otherwise determines, the existence of such trusts or
other arrangements is consistent with the “unfunded” status of the Plan.


 


Section 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 


 


 


 


 


20

















 


 


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 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


 


 


 


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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 the immediately following sentence, 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 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.


 


(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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