Exhibit 10.7


 


INTERVAL LEISURE GROUP, 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 Interval
Leisure Group, 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 Interval
Leisure Group, 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.


 


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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.


 


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(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 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) 5,000,000.  The maximum
number of Shares that may be granted pursuant to Options intended to be
Incentive Stock Options shall be 3,333,333 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 3,333,333 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, or any Award is settled for cash, the Shares


 


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subject to such Awards
not delivered as a result thereof shall again be available for Awards under the
Plan.


 


(ii)           With respect to Awards other than
Adjusted Awards, if the exercise price of any Option and/or the tax withholding
obligations relating to any Award are satisfied by delivering Shares to the
Company (by either actual delivery or by attestation), only the number of
Shares issued net of the Shares delivered or attested to shall be deemed
delivered for purposes of the limits set forth in Section 3(a).  To the extent any Shares subject to an Award
are withheld to satisfy the exercise price (in the case of an Option) and/or
the tax withholding obligations relating to such Award, such Shares shall not
be deemed to have been delivered for purposes of the limits set forth in Section 3(a).


 


(d)           Adjustment Provision.  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


 


8

















 


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
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 Nonqualified Options.  The
Award Agreement for an Option shall indicate whether the Option is intended to
be an Incentive Stock Option or a Nonqualified Option.


 


(b)           Types and Nature of Stock
Appreciation Rights.  Stock
Appreciation Rights may be “Tandem SARs,” which are granted in conjunction with
an Option, or “Free-Standing SARs,” which are not granted in conjunction with
an Option.  Upon the exercise of a Stock
Appreciation Right, the Participant shall be entitled to receive an


 


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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 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


 


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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


 


11

















 


the earlier of
(A) the first anniversary of the date of such death and (B) the expiration
of the Term thereof;


 


(ii)           Upon a
Participant’s Termination of Employment by reason of Disability or Retirement,
any Option or Stock Appreciation Right held by the Participant that was
exercisable immediately before the Termination of Employment may be exercised
at any time until the earlier of (A) the first anniversary of such
Termination of Employment and (B) the expiration of the Term thereof;


 


(iii)          Upon
a Participant’s Termination of Employment for Cause, any Option or Stock
Appreciation Right held by the Participant shall be forfeited, effective as of
such Termination of Employment;


 


(iv)          Upon
a Participant’s Termination of Employment for any reason other than death,
Disability, Retirement or for Cause, any Option or Stock Appreciation Right 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 


 


12

















 


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 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 Interval Leisure Group, Inc. 2008 Stock and Annual
Incentive Plan and an Award Agreement. 
Copies of such Plan and Agreement are on file at the offices of Interval
Leisure Group, Inc., 6262 Sunset Drive, Miami FL, 33143.”


 


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.


 


13

















 


(ii)           Subject
to the provisions of the Plan and the applicable Award Agreement, during the
period, if any, set by the Committee, commencing with the date of such
Restricted Stock 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 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 


 


14

















 


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.  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 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 


 


15

















 


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 pro-rated 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 applicable Award Agreement and except as otherwise
provided in paragraph (a) of this 


 


16

















 


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)


 


(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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