Exhibit 10.3


 


EMPLOYEE
MATTERS AGREEMENT


 


BY AND AMONG


 


IAC/INTERACTIVECORP


 


TICKETMASTER,


 


INTERVAL
LEISURE GROUP, INC.,


 


HSN, INC.,


 


AND


 


TREE.COM, INC.


 


Dated as of August 20, 2008


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  GENERAL PRINCIPLES

  	
  10

  
	
  2.1

  	
  Employment

  	
  10

  
	
  2.2

  	
  Assumption and Retention of
  Liabilities; Related Assets

  	
  11

  
	
  2.3

  	
  SpinCo Participation in IAC
  Benefit Plans

  	
  12

  
	
  2.4

  	
  Terms of Participation by SpinCo
  Employees in SpinCo Benefit Plans

  	
  12

  
	
  2.5

  	
  Commercially Reasonable Efforts

  	
  13

  
	
  2.6

  	
  Regulatory Compliance

  	
  13

  
	
  2.7

  	
  Approval by IAC as Sole
  Stockholder

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  SAVINGS PLANS

  	
  14

  
	
  3.1

  	
  Savings Plans

  	
  14

  
	
  3.2

  	
  SpinCo Savings Plans

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  HEALTH AND WELFARE PLANS

  	
  16

  
	
  4.1

  	
  Transition Period

  	
  16

  
	
  4.2

  	
  Establishment of Health and
  Welfare Plans

  	
  16

  
	
  4.3

  	
  Retention of Sponsorship and
  Liabilities

  	
  17

  
	
  4.4

  	
  Vendor Contracts

  	
  18

  
	
  4.5

  	
  Flexible Benefit Plan

  	
  19

  
	
  4.6

  	
  Workers’ Compensation
  Liabilities

  	
  19

  
	
  4.7

  	
  Payroll Taxes and Reporting of
  Compensation

  	
  20

  
	
  4.8

  	
  COBRA and HIPAA Compliance

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  EXECUTIVE BENEFITS AND OTHER
  BENEFITS

  	
  21

  
	
  5.1

  	
  Assumption of Obligations

  	
  21

  
	
  5.2

  	
  IAC Incentive Plans

  	
  22

  
	
  5.3

  	
  IAC Long-Term Incentive Plans

  	
  22

  
	
  5.4

  	
  Registration Requirements

  	
  39

  
	
  5.5

  	
  Executive Deferred Compensation
  Plans

  	
  40

  
	
  5.6

  	
  Severance

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  GENERAL AND ADMINISTRATIVE

  	
  42

  
	
  6.1

  	
  Sharing of Participant
  Information

  	
  42

  
	
  6.2

  	
  Reasonable Efforts/Cooperation

  	
  42

  
	
  6.3

  	
  No Third-Party Beneficiaries

  	
  42

  
	
  6.4

  	
  Audit Rights With Respect to
  Information Provided

  	
  43

  
	
  6.5

  	
  Fiduciary Matters

  	
  43

  
	
  6.6

  	
  Consent of Third Parties

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  MISCELLANEOUS

  	
  44

  
	
  7.1

  	
  Effect If Effective Time Does
  Not Occur

  	
  44

  
	
  7.2

  	
  Relationship of Parties

  	
  44

  
	
  7.3

  	
  Affiliates

  	
  44

  
	
  7.4

  	
  Notices

  	
  44

  
	
  7.5

  	
  Abandonment

  	
  45

  
	
  7.6

  	
  Incorporation of Separation
  Agreement Provisions

  	
  45

  



 


i

















 


EMPLOYEE
MATTERS AGREEMENT


 


This Employee Matters Agreement (this “Agreement”),
dated as of August 20, 2008, with effect as of the Effective Time, is
entered into by and among IAC/InterActiveCorp, a Delaware corporation (“IAC”),
Ticketmaster, a Delaware corporation and a wholly owned subsidiary of IAC (“TM”),
Interval Leisure Group, Inc., a Delaware corporation and a wholly owned
subsidiary of IAC (“Interval”), HSN, Inc., a Delaware corporation
and a wholly owned subsidiary of IAC (“HSN”) and Tree.com, Inc., a
Delaware corporation and a wholly owned subsidiary of IAC (“Tree,”
together with TM, Interval and HSN, the “SpinCos,” the SpinCos and IAC,
collectively, the “Parties”).


 


RECITALS:


 


WHEREAS, IAC, TM, Interval, HSN and Tree have
entered into a Separation and Distribution Agreement pursuant to which the
Parties have set out the terms on which, and the conditions subject to which,
they wish to implement the Separation (as defined in the Separation Agreement)
(such agreement, as amended, restated or modified from time to time, the “Separation
Agreement”).


 


WHEREAS, in connection therewith, IAC, TM,
Interval, HSN and Tree have agreed to enter into this Agreement to allocate
between them assets, liabilities and responsibilities with respect to certain
employee compensation, pension and benefit plans, programs and arrangements and
certain employment matters.


 


NOW THEREFORE, in consideration of the mutual
agreements, covenants and other provisions set forth in this Agreement, the
Parties hereby agree as follows:


 


ARTICLE I

DEFINITIONS


 


Unless otherwise defined in this Agreement,
capitalized words and expressions and variations thereof used in this Agreement
or in its Schedules have the meanings set forth below.  Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Separation
Agreement.


 


“Accelerated RSUs” has the meaning set
forth in Section 5.3(g).


 


“Active HSN Participants” has the
meaning set forth in Section 5.5(c).


 


“Adjustment Ratio” means (a) the
IAC Stock Value divided by (b) the sum of (i) 0.5 of the IAC
Post-Separation Stock Value plus (ii) 0.2 of the TM Stock Value (or if IAC
does not distribute shares of TM Common Stock on the Distribution Date, zero)
plus (iii) 0.2 of the Interval Stock Value (or if IAC does not distribute
shares of Interval Common Stock on the Distribution Date, zero) plus (iv) 0.2
of the HSN Stock Value (or if IAC does not distribute shares of HSN Common
Stock on the Distribution Date, zero) plus (v) 0.03333 of the Tree Stock
Value (or if IAC does not distribute shares of Tree Common Stock on the
Distribution Date, zero).


 


“Affiliate” has the meaning given that
term in the Separation Agreement.


 


“Agreement” means this Employee Matters
Agreement, including all the Schedules hereto.


 

















 


“Ancillary Agreements” has the meaning
given that term in the Separation Agreement.


 


“Approved Leave of Absence” means an
absence from active service (a) due to an individual’s inability to
perform his or her regular job duties by reason of illness or injury and
resulting in eligibility to receive benefits pursuant to the terms of the IAC
Short-Term Disability Plan or the IAC Long-Term Disability Plan, or (b) pursuant
to an approved leave policy with a guaranteed right of reinstatement.


 


“ASO Contract” has the meaning set
forth in Section 4.4(a).


 


“Auditing Party” has the meaning set
forth in Section 6.4(b).


 


“Award” (a) when immediately
preceded by “IAC,” means IAC Restricted Stock and IAC Restricted Stock Units, (b) when
immediately preceded by “TM,” means TM Restricted Stock and TM Restricted Stock
Units, (c) when immediately preceded by “Interval,” means Interval
Restricted Stock and Interval Restricted Stock Units, (d) when immediately
preceded by “HSN,” means HSN Restricted Stock and HSN Restricted Stock Units
and (e) when immediately preceded by Tree means Tree Restricted Stock and
Tree Restricted Stock Units.


 


“Benefit Plan” means, with respect to
an entity or any of its Subsidiaries, (a) each “employee welfare benefit
plan” (as defined in Section 3(1) of ERISA) and all other employee
benefits arrangements, policies or payroll practices (including, without
limitation, severance pay, sick leave, vacation pay, salary continuation,
disability, retirement, deferred compensation, bonus, stock option or other
equity-based compensation, hospitalization, medical insurance or life
insurance) sponsored or maintained by such entity or by any of its Subsidiaries
(or to which such entity or any of its Subsidiaries contributes or is required
to contribute) and (b) all “employee pension benefit plans” (as defined in
Section 3(2) of ERISA), occupational pension plan or arrangement or
other pension arrangements sponsored, maintained or contributed to by such
entity or any of its Subsidiaries (or to which such entity or any of its
Subsidiaries contributes or is required to contribute).  For the avoidance of doubt, “Benefit Plans”
includes Health and Welfare Plans.  When
immediately preceded by
“IAC,” Benefit Plan means any Benefit Plan sponsored, maintained or contributed
to by IAC or any IAC Entity.  When
immediately preceded by “TM,” Benefit Plan means any Benefit Plan sponsored,
maintained or contributed to by TM or any TM Entity.  When immediately preceded by “Interval,”
Benefit Plan means any Benefit Plan sponsored, maintained or contributed to by
Interval or any Interval Entity.  When
immediately preceded by “HSN,” Benefit Plan means any Benefit Plan sponsored,
maintained or contributed to by HSN or any HSN Entity.  When immediately preceded by “Tree,” Benefit
Plan means any Benefit Plan sponsored, maintained or contributed to by Tree or
any Tree Entity.


 


“Cliff Vest” with respect to any Award
means the lump-sum vesting of 100% of such Award following the passage of a
multi-year period after the date of grant. 
The terms “Cliff Vesting” and “Cliff Vested” shall have
correlative meanings.


 


“Close of the Distribution Date” means
11:59:59 P.M. New York City time, on the Distribution Date.


 


“COBRA” means the continuation
coverage requirements for “group health plans” under Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as
codified in Code § 4980B and ERISA §§ 601 through 608.


 


2

















 


“Code” means the Internal Revenue Code
of 1986, as amended, or any successor federal income tax law.  Reference to a specific Code provision also
includes any proposed, temporary or final regulation in force under that provision.


 


“Committee” has the meaning set forth
in Section 5.3(a).


 


“Delayed Common Stock” has the meaning
set forth in Section 5.3(g).


 


“Delayed HSN Common Stock” has the
meaning set forth in Section 5.3(g).


 


“Delayed IAC Common Stock” has the
meaning set forth in Section 5.3(g).


 


“Delayed Interval Common Stock” has
the meaning set forth in Section 5.3(g).


 


“Delayed TM Common Stock” has the
meaning set forth in Section 5.3(g).


 


“Delayed Tree Common Stock” has the
meaning set forth in Section 5.3(g).


 


“Distribution Date” means the first
date on which one or more of the Distributions (as defined in the Separation
Agreement) occurs.


 


“Effective Time” has the meaning given
that term in the Separation Agreement.


 


“Effective Time Year” means the
calendar year during which the Effective Time occurs.


 


“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended. 
Reference to a specific provision of ERISA also includes any proposed,
temporary or final regulation in force under that provision.


 


“FICA” has the meaning set forth in Section 5.3(g).


 


“FICA Amount” has the meaning set
forth in Section 5.3(g).


 


“Five Way IAC RSUs” has the meaning
set forth in Section 5.3(g).


 


“Former HSN Employee” means any
individual who as of the Effective Time is a former employee of the IAC Group,
the TM Group (as defined in the Separation Agreement), the Interval Group (as
defined in the Separation Agreement), the HSN Group (as defined in the
Separation Agreement) or the Tree Group (as defined in the Separation
Agreement), and whose last employment with any such group, was with an HSN
Entity.


 


“Former IAC Employee” means any
individual who as of the Effective Time is a former employee of the IAC Group,
the TM Group (as defined in the Separation Agreement), the Interval Group (as
defined in the Separation Agreement), the HSN Group (as defined in the
Separation Agreement) or the Tree Group (as defined in the Separation
Agreement), and whose last employment with any such group, was with an IAC
Entity.


 


“Former Interval Employee” means any
individual who as of the Effective Time is a former employee of the IAC Group,
the TM Group (as defined in the Separation Agreement), the Interval Group (as
defined in the Separation Agreement), the HSN Group (as defined in the
Separation Agreement) or the Tree Group (as defined in the Separation
Agreement), and whose last employment with any such group, was with an Interval
Entity.


 


3

















 


“Former SpinCo Employee” means a
Former TM Employee, Former Interval Employee, Former HSN Employee and/or Former
Tree Employee as the context requires.


 


“Former TM Employee” means any
individual who as of the Effective Time is a former employee of the IAC Group,
the TM Group (as defined in the Separation Agreement), the Interval Group (as
defined in the Separation Agreement), the HSN Group (as defined in the
Separation Agreement) or the Tree Group (as defined in the Separation
Agreement), and whose last employment with any such group, was with a TM
Entity.


 


“Former Tree Employee” means any
individual who as of the Effective Time is a former employee of the IAC Group,
the TM Group (as defined in the Separation Agreement), the Interval Group (as
defined in the Separation Agreement), the HSN Group (as defined in the
Separation Agreement) or the Tree Group (as defined in the Separation
Agreement), and whose last employment with any such group, was with a Tree
Entity.


 


“Group Insurance Policies” has the
meaning set forth in Section 4.4(a).


 


“Growth Share Awards” has the meaning
set forth in Section 5.3(g).


 


“H&W Transition Period” has the
meaning set forth in Section 4.1(a).


 


“Health and Welfare Plans” means any
plan, fund or program which was established or is maintained for the purpose of
providing for its participants or their beneficiaries, through the purchase of
insurance or otherwise, medical, dental, surgical or hospital care or benefits,
or benefits in the event of sickness, accident, disability, death or
unemployment, or vacation benefits, apprenticeship or other training programs
or day care centers, scholarship funds, or prepaid legal services, including
any such plan, fund or program as defined in Section 3(1) of
ERISA.  When immediately preceded by “IAC,”
Health and Welfare Plans means each Health and Welfare Plan that is an IAC
Benefit Plan.  When immediately preceded
by “TM,” Health and Welfare Plans means each Health and Welfare Plan that is a
TM Benefit Plan.  When immediately
preceded by “Interval,” Health and Welfare Plans means each Health and Welfare
Plan that is an Interval Benefit Plan. When immediately preceded by “HSN,”
Health and Welfare Plans means each Health and Welfare Plan that is an HSN
Benefit Plan. When immediately preceded by “Tree,” Health and Welfare Plans
means each Health and Welfare Plan that is a Tree Benefit Plan.


 


“HIPAA” means the health insurance
portability and accountability requirements for “group health plans” under the
Health Insurance Portability and Accountability Act of 1996, as amended.


 


“HMO” means a health maintenance
organization that provides benefits under the IAC Medical Plans, the TM Medical
Plans, the Interval Medical Plans, the HSN Medical Plans or the Tree Medical
Plans.


 


“HMO Agreements” has the meaning set
forth in Section 4.4(a).


 


“HSN” has the meaning set forth in the
Preamble of this Agreement.


 


“HSN Common Stock” means common stock,
par value $0.01 per share, of HSN.


 


“HSN Deferred Compensation Plan” has
the meaning set forth in Section 5.5(c).


 


4

















 


“HSN Employee” means any individual
who, immediately prior to the Effective Time, is either actively employed by,
or then on Approved Leave of Absence from, an HSN Entity.


 


“HSN Entities” has the meaning given
that term in the Separation Agreement.


 


“HSN Executive Benefit Plans” means
the executive benefit and nonqualified plans, programs, and arrangements
established, sponsored, maintained, or agreed upon, by any HSN Entity for the
benefit of employees and former employees of any HSN Entity before the Close of
the Distribution Date.


 


“HSN Factor” means the product
obtained by multiplying (a) 0.2 and (b) the Adjustment Ratio.


 


“HSN Long-Term Incentive Plan” means
the long-term incentive plan or program to be established by HSN, effective
prior to the Effective Time.


 


“HSN Ratio” means the quotient
obtained by dividing (a) the IAC Stock Value by (b) the HSN Stock
Value.


 


“HSN Retirement Savings Plan” means
the 401(k) and profit sharing plan to be established by HSN pursuant to Section 3.2
of this Agreement, as in effect as of the time relevant to the applicable
provision of this Agreement.


 


“HSN Retirement Savings Plan Trust”
means a trust relating to the HSN Retirement Savings Plan intended to qualify
under Section 401(a) and be exempt under Section 501(a) of
the Code.


 


“HSN Stock Value” means the closing
per-share price of HSN Common Stock in the “when issued market” as listed on
the NASDAQ as of 4:00 P.M. New York City time on August 20, 2008.


 


“IAC” has the meaning set forth in the
Preamble of this Agreement.


 


“IAC Common Stock” means shares of
common stock, $0.001 par value per share, of IAC.


 


“IAC Deferred Compensation Plan” has
the meaning set forth in Section 5.5(a).


 


“IAC Employee” means any individual
who, immediately prior to the Effective Time, is either actively employed by,
or then on Approved Leave of Absence from, any IAC Entity.


 


“IAC Entities” means the members of
the IAC Group, as defined in the Separation Agreement, and their respective
Subsidiaries and Affiliates, excluding any business or operations (whether
current or historical, regardless of whether discontinued or sold) that are
included in the TM Group, the Interval Group, the HSN Group or the Tree Group.


 


“IAC Executive Benefit Plans” means
the executive benefit and nonqualified plans, programs, and arrangements
established, sponsored, maintained, or agreed upon, by any IAC Entity for the benefit of employees and former employees
of any IAC Entity before the Close of the Distribution Date.


 


“IAC Factor” means the product
obtained by multiplying (a) 0.5 and (b) the Adjustment Ratio.


 


5

















 


“IAC Flexible Benefit Plan” has the
meaning set forth in Section 4.5.


 


“IAC Incentive Plans” means any of the
annual or short term incentive plans of IAC, all as in effect as of the time
relevant to the applicable provisions of this Agreement.


 


“IAC Long-Term Incentive Plans” means
any of the HSN, Inc. 1997 Stock and Annual Incentive Plan, USA Interactive
Amended and Restated 2000 Annual Stock and Incentive Plan, IAC/InterActiveCorp
2005 Stock and Annual Incentive Plan, Home Shopping Network, Inc. 1996
Stock Option Plan for Employees, Equity and Bonus Compensation Agreement with
Barry Diller, Ticketmaster Stock Plan, Expedia, Inc. Amended and Restated
2001 Stock Plan, Expedia, Inc. 1999 Stock Option Plan, the Hotels
Reservations Network, Inc. 2000 Stock Plan, Ticketmaster Online-Citysearch, Inc.
1996 Stock Option Plan, Ticketmaster Online-Citysearch, Inc. 1998 Stock
Option Plan, Ticketmaster 1999 Stock Plan, ServiceMagic, Inc. Amended and
Restated 1999 Stock Option Plan, 1998 Stock Option Plan of LendingTree, Inc.,
LendingTree Amended and Restated 1999 Stock Incentive Plan, Amended and
Restated 2001 Stock Incentive Plan of LendingTree, Inc., the Silver King
Communications, Inc. Directors Stock Option Plan, Hotwire, Inc. 2000
Equity Incentive Plan, Cornerstone Brands, Inc. 1998 Stock Incentive Plan,
AskJeeves, Inc. 1996 Equity Incentive Plan, AskJeeves, Inc 1999 Equity
Incentive Plan and any other stock incentive plan of IAC, all as in effect as
of the time relevant to the applicable provisions of this Agreement.


 


“IAC Post-Separation Stock Value”
means the closing per-share price of IAC Common Stock trading in the “ex-distribution
market” as listed on the NASDAQ as of 4:00 P.M. New York City time on August 20,
2008.


 


“IAC Rabbi Trust” has the meaning set
forth in Section 5.5(a).


 


“IAC Ratio” means the quotient
obtained by dividing (a) the IAC Stock Value by (b) the IAC
Post-Separation Stock Value.


 


“IAC Retirement Savings Plan” means
the InterActiveCorp Retirement Savings Plan as in effect as of the time
relevant to the applicable provision of this Agreement.


 


“IAC Stock Value” means the closing
per share price of IAC Common Stock trading “regular way with due bills” as
listed on the NASDAQ as of 4:00 P.M. New York City time on August 20,
2008.


 


“Immediately after the Distribution Date”
means on the first moment of the day after the Distribution Date.


 


“Interval” has the meaning set forth
in the Preamble of this Agreement.


 


“Interval Common Stock” means common
stock, par value $0.01 per share, of Interval.


 


“Interval Employee” means any
individual who, immediately prior to the Effective Time, is either actively
employed by, or then on Approved Leave of Absence from, an Interval Entity.


 


“Interval Entities” has the meaning
given that term in the Separation Agreement.


 


“Interval Executive Benefit Plans”
means the executive benefit and nonqualified plans, programs, and arrangements
established, sponsored, maintained, or agreed upon, by 


 


6

















 


any Interval
Entity for the benefit of employees and former employees of any Interval Entity
before the Close of the Distribution Date.


 


“Interval Factor” means the product
obtained by multiplying (a) 0.2 and (b) the Adjustment Ratio.


 


“Interval Long-Term Incentive Plan”
means the long-term incentive plan or program to be established by Interval,
effective prior to the Effective Time.


 


“Interval Ratio” means the quotient
obtained by dividing (a) the IAC Stock Value by (b) the Interval
Stock Value.


 


“Interval Retirement Savings Plan”
means the 401(k) and profit sharing plan to be established by Interval
pursuant to Section 3.2 of this Agreement, as in effect as of the time
relevant to the applicable provision of this Agreement.


 


“Interval Retirement Savings Plan Trust”
means a trust relating to the Interval Retirement Savings Plan intended to
qualify under Section 401(a) and be exempt under Section 501(a) of
the Code.


 


“Interval Stock Value” means the
closing per-share price of Interval Common Stock in the “when issued market” as
listed on the NASDAQ as of 4:00 P.M. New York City time on August 20,
2008.


 


“Liability” has the meaning given that
term in the Separation Agreement.


 


“Medical Plan” when immediately
preceded by “IAC,” means the Benefit Plan under which medical benefits are
provided to IAC Employees established and maintained by IAC.  When immediately preceded by TM, Medical Plan
means the Benefit Plan under which medical benefits are provided to TM Employees
to be established by TM pursuant to Article IV.  When immediately preceded by Interval,
Medical Plan means the Benefit Plan under which medical benefits are provided
to Interval Employees to be established by Interval pursuant to Article IV.
When immediately preceded by HSN, Medical Plan means the Benefit Plan under
which medical benefits are provided to HSN Employees to be established by HSN
pursuant to Article IV. When immediately preceded by Tree, Medical Plan
means the Benefit Plan under which medical benefits are provided to Tree Employees
to be established by Tree pursuant to Article IV.


 


“NASDAQ” means the National
Association of Securities Dealers Inc. Automated Quotation System.


 


“Net RSU Shares” has the meaning set
forth in Section 5.3(l).


 


“Non-parties” has the meaning set forth
in Section 6.4(c).


 


“Option” when immediately preceded by “IAC,”
means an option (either nonqualified or incentive) to purchase shares of IAC
Common Stock pursuant to an IAC Long-Term Incentive Plan.  When immediately preceded by “TM,” Option
means an option (either nonqualified or incentive) to purchase shares of TM
Common Stock following the Effective Time pursuant to the TM Long-Term
Incentive Plan.  When immediately
preceded by “Interval,” Option means an option (either nonqualified or
incentive) to purchase shares of Interval Common Stock following the Effective
Time pursuant to the Interval Long-Term Incentive Plan.  When immediately preceded by “HSN,” Option
means an option (either 


 


7

















 


nonqualified or
incentive) to purchase shares of HSN Common Stock following the Effective Time
pursuant to the HSN Long-Term Incentive Plan. 
When immediately preceded by “Tree,” Option means an option (either
nonqualified or incentive) to purchase shares of Tree Common Stock following
the Effective Time pursuant to the Tree Long-Term Incentive Plan.


 


“Participating Company” means (a) IAC
and (b) any other Person (other than an individual) that participates in a
plan sponsored by any IAC Entity.


 


“Parties” has the meaning set forth in
the Preamble of this Agreement.


 


“Person” has the meaning given that
term in the Separation Agreement.


 


“Restricted Stock” (a) when
immediately preceded by “IAC,” means shares of IAC Common Stock that are
subject to restrictions on transferability and a risk of forfeiture and are
issued under an IAC Benefit Plan, (b) when immediately preceded by “TM,”
means shares of TM Common Stock that are subject to restrictions on
transferability and a risk of forfeiture and are issued under a TM Benefit Plan,
(c) when immediately preceded by “Interval,” means shares of Interval
Common Stock that are subject to restrictions on transferability and a risk of
forfeiture and are issued under an Interval Benefit Plan, (d) when
immediately preceded by “HSN,” means shares of HSN Common Stock that are
subject to restrictions on transferability and a risk of forfeiture and are
issued under an HSN Benefit Plan and (e) when immediately preceded by “Tree,”
means shares of Tree Common Stock that are subject to restrictions on
transferability and a risk of forfeiture and are issued under a Tree Benefit
Plan.


 


“Restricted Stock Unit” (a) when
immediately preceded by “IAC,” means units issued under an IAC Benefit Plan
representing a general unsecured promise by IAC to pay the value of shares of
IAC Common Stock in cash or shares of IAC Common Stock, (b) when
immediately preceded by “TM,” means units issued under the TM Long-Term
Incentive Plan representing a general unsecured promise by TM to pay the value
of shares of TM Common Stock in cash or shares of TM Common Stock, (c) when
immediately preceded by “Interval,” means units issued under the Interval
Long-Term Incentive Plan representing a general unsecured promise by Interval
to pay the value of shares of Interval Common Stock in cash or shares of
Interval Common Stock, (d) when immediately preceded by “HSN,” means units
issued under the HSN Long-Term Incentive Plan representing a general unsecured
promise by HSN to pay the value of shares of HSN Common Stock in cash or shares
of HSN Common Stock and (e) when immediately preceded by “Tree,” means
units issued under the Tree Long-Term Incentive Plan representing a general
unsecured promise by Tree to pay the value of shares of Tree Common Stock in
cash or shares of Tree Common Stock.


 


“Securities Act” has the meaning set
forth in Section 5.4(a).


 


“Separation” has the meaning given
that term in the Separation Agreement.


 


“Separation Agreement” has the meaning
set forth in the Recitals to this Agreement.


 


“SpinCos” has the meaning set forth in
the Preamble of this Agreement.


 


“SpinCo Employee” means a TM Employee,
Interval Employee, HSN Employee and/or Tree Employee as the context requires.


 


8
















 


“SpinCo Long-Term Incentive Plans”
means the HSN Long-Term Incentive Plan, the Interval Long-Term Incentive Plan,
the TM Long-Term Incentive Plan and/or the Tree Long-Term Incentive Plan, as
applicable.


 


“TM” has the meaning set forth in the
Preamble of this Agreement.


 


“TM Common Stock” means common stock,
par value $0.01 per share, of TM.


 


“TM Deferred Compensation Plan” has
the meaning set forth in Section 5.5(a).


 


“TM Employee” means any individual
who, immediately prior to the Effective Time, is either actively employed by,
or then on Approved Leave of Absence from, a TM Entity.


 


“TM Entities” has the meaning given
that term in the Separation Agreement.


 


“TM Executive Benefit Plans” means the
executive benefit and nonqualified plans, programs, and arrangements
established, sponsored, maintained, or agreed upon, by any TM Entity for the
benefit of employees and former employees of any TM Entity before the Close of
the Distribution Date.


 


“TM Factor” means the product obtained
by multiplying (a) 0.2 and (b) the Adjustment Ratio.


 


“TM Long-Term Incentive Plan” means
the long-term incentive plan or program to be established by TM, effective
prior to the Effective Time.


 


“TM Participants” has the meaning set
forth in Section 5.5(a).


 


“TM Rabbi Trust” has the meaning set
forth in Section 5.5(a).


 


“TM Ratio” means the quotient obtained
by dividing (a) the IAC Stock Value by (b) the TM Stock Value.


 


“TM Retirement Savings Plan” means the
401(k) and profit sharing plan to be established by TM pursuant to Section 3.2
of this Agreement, as in effect as of the time relevant to the applicable
provision of this Agreement.


 


“TM Retirement Savings Plan Trust”
means a trust relating to the TM Retirement Savings Plan intended to qualify
under Section 401(a) and be exempt under Section 501(a) of
the Code.


 


“TM Stock Value” means the closing
per-share price of TM Common Stock in the “when issued market” as listed on the
NASDAQ as of 4:00 P.M. New York City time on August 20, 2008.


 


“Tree” has the meaning set forth in
the Preamble of this Agreement.


 


“Tree Common Stock” means common
stock, par value $0.01 per share, of Tree.


 


“Tree Deferred Compensation Plan” has
the meaning set forth in Section 5.5(d).


 


“Tree Employee” means any individual
who, immediately prior to the Effective Time, is either actively employed by,
or then on Approved Leave of Absence from, a Tree Entity.


 


9

















 


“Tree Entities” has the meaning given
that term in the Separation Agreement.


 


“Tree Executive Benefit Plans” means
the executive benefit and nonqualified plans, programs, and arrangements
established, sponsored, maintained, or agreed upon, by any Tree Entity for the
benefit of employees and former employees of any Tree Entity before the Close
of the Distribution Date.


 


“Tree Factor” means the product
obtained by multiplying (a) 0.03333 and (b) the Adjustment Ratio.


 


“Tree Long-Term Incentive Plan” means
the long-term incentive plan or program to be established by Tree, effective
prior to the Effective Time.


 


“Tree Participants” has the meaning
set forth in Section 5.5(d).


 


“Tree Rabbi Trust” has the meaning set
forth in Section 5.5(d).


 


“Tree Ratio” means the quotient
obtained by dividing (a) the IAC Stock Value by (b) the Tree Stock
Value.


 


“Tree Retirement Savings Plan” means
the 401(k) and profit sharing plan to be established by Tree pursuant to Section 3.2
of this Agreement, as in effect as of the time relevant to the applicable
provision of this Agreement.


 


“Tree Retirement Savings Plan Trust”
means a trust relating to the Tree Retirement Savings Plan intended to qualify
under Section 401(a) and be exempt under Section 501(a) of
the Code.


 


“Tree Stock Value” means the closing
per-share price of Tree Common Stock in the “when issued market” as listed on
the NASDAQ as of 4:00 P.M. New York City time on August 20, 2008.


 


“U.S.” means the 50 United States of
America and the District of Columbia.


 


“Withheld Shares” has the meaning set
forth in Section 5.3(g).


 


ARTICLE II

GENERAL PRINCIPLES


 


2.1           Employment.


 


(a)           All TM Employees shall continue to be employees of
TM or another TM Entity, as the case may be, immediately after the Effective
Time.


 


(b)           All Interval Employees shall continue to be
employees of Interval or another Interval Entity, as the case may be, immediately
after the Effective Time.


 


(c)           All HSN Employees shall continue to be employees of
HSN or another HSN Entity, as the case may be, immediately after the Effective
Time.


 


(d)           All Tree Employees shall continue to be employees
of Tree or another Tree Entity, as the case may be, immediately after the
Effective Time.


 


10

















 


2.2           Assumption
and Retention of Liabilities; Related Assets.


 


(a)           As of the Distribution Date, except as expressly
provided in this Agreement, the IAC Entities shall assume or retain and IAC
hereby agrees to pay, perform,
fulfill and discharge, in due course in full (i) all Liabilities under all
IAC Benefit Plans with respect to all IAC Employees, Former IAC Employees and
their dependents and beneficiaries, (ii) all Liabilities with respect to
the employment or termination of employment of all IAC Employees, Former IAC
Employees and their dependents and beneficiaries, and other service providers
(including any individual who is, or was, an independent contractor, temporary
employee, temporary service worker, consultant, freelancer, agency employee,
leased employee, on-call worker, incidental worker, or nonpayroll worker of any
IAC Entity or in any other employment, non-employment, or retainer arrangement,
or relationship with any IAC Entity), in each case to the extent arising in
connection with or as a result of employment with or the performance of
services to any IAC Entity, and (iii) any other Liabilities
expressly assigned to IAC under this Agreement.  All assets held in trust to fund the IAC
Benefit Plans and all insurance policies funding the IAC Benefit Plans shall be
IAC Assets (as defined in the Separation Agreement), except to the extent
specifically provided otherwise in this Agreement.


 


(b)           From and after the Distribution Date, except as
expressly provided in this Agreement, TM and the TM Entities shall assume or retain, as applicable, and TM hereby agrees to
pay, perform, fulfill and discharge, in due course in full, (i) all Liabilities
under all TM Benefit Plans, (ii) all Liabilities with respect to the
employment or termination of employment of all TM Employees, Former TM
Employees and their dependents and beneficiaries, and other service providers
(including any individual who is, or was, an independent contractor, temporary
employee, temporary service worker, consultant, freelancer, agency employee,
leased employee, on-call worker, incidental worker, or nonpayroll worker of TM
or any TM Entity or in any other employment, non-employment, or retainer
arrangement, or relationship with TM or a TM Entity), in each case to the
extent arising in connection with or as a result of employment with or the
performance of services to any TM Entity and (iii) any other Liabilities
expressly assigned to TM or any TM Entity under this Agreement.


 


(c)           From and after the Distribution Date, except as
expressly provided in this Agreement, Interval and the Interval Entities shall
assume or retain, as applicable,
and Interval hereby agrees to pay, perform, fulfill and discharge, in due
course in full, (i) all Liabilities under all Interval Benefit Plans, (ii) all
Liabilities with respect to the employment or termination of employment of all
Interval Employees, Former Interval Employees and their dependents and
beneficiaries, and other service providers (including any individual who is, or
was, an independent contractor, temporary employee, temporary service worker,
consultant, freelancer, agency employee, leased employee, on-call worker,
incidental worker, or nonpayroll worker of Interval or any Interval Entity or
in any other employment, non-employment, or retainer arrangement, or
relationship with Interval or an Interval Entity), in each case to the extent
arising in connection with or as a result of employment with or the performance
of services to any Interval Entity and (iii) any other Liabilities
expressly assigned to Interval or any Interval Entity under this Agreement.


 


(d)           From and after the Distribution Date, except as
expressly provided in this Agreement, HSN and the HSN Entities shall assume or retain, as applicable, and HSN hereby agrees
to pay, perform, fulfill and discharge, in due course in full, (i) all
Liabilities under all HSN Benefit Plans, (ii) all Liabilities with respect
to the employment or termination of employment of all HSN Employees, Former HSN
Employees and their dependents and beneficiaries, and other service providers
(including any individual who is, or was, an


 


11

















 


independent
contractor, temporary employee, temporary service worker, consultant,
freelancer, agency employee, leased employee, on-call worker, incidental
worker, or nonpayroll worker of HSN or any HSN Entity or in any other
employment, non-employment, or retainer arrangement, or relationship with HSN
or an HSN Entity), in each case to the extent arising in connection with or as
a result of employment with or the performance of services to any HSN Entity
and (iii) any other Liabilities expressly assigned to HSN or any HSN
Entity under this Agreement.


 


(e)           From and after the Distribution Date, except as
expressly provided in this Agreement, Tree and the Tree Entities shall assume
or retain, as applicable, and Tree hereby agrees to pay, perform, fulfill and
discharge, in due course in full, (i) all Liabilities under all Tree
Benefit Plans, (ii) all Liabilities with respect to the employment or
termination of employment of all Tree Employees, Former Tree Employees and
their dependents and beneficiaries, and other service providers (including any
individual who is, or was, an independent contractor, temporary employee,
temporary service worker, consultant, freelancer, agency employee, leased
employee, on-call worker, incidental worker, or nonpayroll worker of Tree or
any Tree Entity or in any other employment, non-employment, or retainer
arrangement, or relationship with Tree or a Tree Entity), in each case to the
extent arising in connection with or as a result of employment with or the
performance of services to any Tree Entity and (iii) any other Liabilities
expressly assigned to Tree or any Tree Entity under this Agreement.


 


2.3           SpinCo
Participation in IAC Benefit Plans.


 


(a)           Except as expressly provided in this Agreement,
effective as of the Close of the Distribution Date, TM and each other TM Entity
shall cease to be a Participating Company in any IAC Benefit Plan, and IAC and
TM shall take all necessary action before the Distribution Date to effectuate
such cessation as a Participating Company.


 


(b)           Except as expressly provided in this Agreement,
effective as of the Close of the Distribution Date, Interval and each other
Interval Entity shall cease to be a Participating Company in any IAC Benefit
Plan, and IAC and Interval shall take all necessary action before the Distribution
Date to effectuate such cessation as a Participating Company.


 


(c)           Except as expressly provided in this Agreement,
effective as of the Close of the Distribution Date, HSN and each other HSN
Entity shall cease to be a Participating Company in any IAC Benefit Plan, and
IAC and HSN shall take all necessary action before the Distribution Date to
effectuate such cessation as a Participating Company.


 


(d)           Except as expressly provided in this Agreement,
effective as of the Close of the Distribution Date, Tree and each other Tree
Entity shall cease to be a Participating Company in any IAC Benefit Plan, and
IAC and Tree shall take all necessary action before the Distribution Date to
effectuate such cessation as a Participating Company.


 


2.4           Terms
of Participation by SpinCo Employees in SpinCo Benefit Plans.


 


(a)           IAC and TM shall agree on methods and procedures,
including, without limitation, amending the respective Benefit Plan documents,
to prevent TM Employees from receiving duplicative benefits from the IAC Benefit
Plans and the TM Benefit Plans.  With
respect to TM Employees, each TM Benefit Plan shall provide that all service,
all compensation and all other benefit-affecting determinations that, as of December 31,
2008 were recognized under the corresponding IAC Benefit Plan shall, as of January 1,
2009 receive full recognition, credit and validity and be taken into account
under such TM Benefit


 


12

















 


Plan to the same extent as if such items occurred under such TM Benefit
Plan, except to the extent that duplication of benefits would result or for
benefit accrual to the extent that TM adopts a final average pay defined
benefit pension plan.


 


(b)           IAC and Interval shall agree on methods and
procedures, including, without limitation, amending the respective Benefit Plan
documents, to prevent Interval Employees from receiving duplicative benefits
from the IAC Benefit Plans and the Interval Benefit Plans.  With respect to Interval Employees, each
Interval Benefit Plan shall provide that all service, all compensation and all
other benefit-affecting determinations that, as of December 31, 2008 were
recognized under the corresponding IAC Benefit Plan shall, as of January 1,
2009 receive full recognition, credit and validity and be taken into account
under such Interval Benefit Plan to the same extent as if such items occurred
under such Interval Benefit Plan, except to the extent that duplication of
benefits would result or for benefit accrual to the extent that Interval adopts
a final average pay defined benefit pension plan.


 


(c)           IAC and HSN shall agree on methods and procedures,
including, without limitation, amending the respective Benefit Plan documents,
to prevent HSN Employees from receiving duplicative benefits from the IAC
Benefit Plans and the HSN Benefit Plans. 
With respect to HSN Employees, each HSN Benefit Plan shall provide that
all service, all compensation and all other benefit-affecting determinations
that, as of December 31, 2008 were recognized under the corresponding IAC
Benefit Plan shall, as of January 1, 2009 receive full recognition, credit
and validity and be taken into account under such HSN Benefit Plan to the same
extent as if such items occurred under such HSN Benefit Plan, except to the
extent that duplication of benefits would result or for benefit accrual to the
extent that HSN adopts a final average pay defined benefit pension plan.


 


(d)           IAC and Tree shall agree on methods and procedures,
including, without limitation, amending the respective Benefit Plan documents,
to prevent Tree Employees from receiving duplicative benefits from the IAC
Benefit Plans and the Tree Benefit Plans. 
With respect to Tree Employees, each Tree Benefit Plan shall provide
that all service, all compensation and all other benefit-affecting
determinations that, as of December 31, 2008 were recognized under the
corresponding IAC Benefit Plan shall, as of January 1, 2009 receive full
recognition, credit and validity and be taken into account under such Tree
Benefit Plan to the same extent as if such items occurred under such Tree
Benefit Plan, except to the extent that duplication of benefits would result or
for benefit accrual to the extent that Tree adopts a final average pay defined
benefit pension plan.


 


2.5           Commercially
Reasonable Efforts.  IAC, TM,
Interval, HSN and Tree shall use commercially reasonable efforts to (a) enter
into any necessary agreements to accomplish the assumptions and transfers
contemplated by this Agreement; and (b) provide for the maintenance of the
necessary participant records,
the appointment of the trustees and the engagement of recordkeepers, investment
managers, providers, insurers, etc.


 


2.6           Regulatory
Compliance.  IAC, TM, Interval, HSN
and Tree shall, in connection with the actions taken pursuant to this
Agreement, cooperate in making any and all appropriate filings required under
the Code, ERISA and any applicable securities laws, implementing all
appropriate communications with participants, transferring appropriate records
and taking all such other actions as may be necessary and appropriate to
implement the provisions of this Agreement in a timely manner.


 


2.7           Approval
by IAC as Sole Stockholder.  Prior to
the Effective Time, IAC shall cause (a) TM to adopt the TM 2008 Long-Term
Incentive Plan, (b) Interval to adopt the


 


13

















 


Interval 2008 Long-Term Incentive Plan, (c) HSN to adopt the HSN
2008 Long-Term Incentive Plan and (d) Tree to adopt the Tree 2008
Long-Term Incentive Plan.


 


ARTICLE III

SAVINGS PLANS


 


3.1           Savings
Plan Transition Period.  From the
Distribution Date and continuing until December 31, 2008, each of TM,
Interval, HSN and Tree adopts, and shall participate in as Adopting Employers
(as defined in the IAC Retirement Savings Plan), the IAC Retirement Savings
Plan for the benefit of TM Employees and Former TM Employees, Interval
Employees and Former Interval Employees, HSN Employees and Former HSN Employees
and Tree Employees and Former Tree Employees, respectively, and IAC consents to
such adoption and maintenance, in accordance with the terms of the IAC
Retirement Savings Plan.  Each of the
Parties agrees and acknowledges that until December 31, 2008, TM,
Interval, HSN and Tree shall make timely direct contributions (including
matching contributions) to the IAC Retirement Savings Plan on behalf of such
SpinCo’s participating employees in accordance with the terms of the IAC
Retirement Savings Plan and in accordance with (and no less promptly than) the
timing of contributions made by IAC prior to the Distribution Date.  Each of the Parties agrees that, following
the Distribution Date and prior to January 1, 2008, the trustee of the IAC
Retirement Savings Plan shall sell all shares of IAC Common Stock, TM Common
Stock, Interval Common Stock, HSN Common Stock and Tree Common Stock held in
the accounts of IAC Employees and Former IAC Employees, TM Employees and Former
TM Employees, Interval Employees and Former Interval Employees, HSN Employees
and Former HSN Employees and Tree Employees and Former Tree Employees (provided
that IAC may in its sole discretion instruct the trustee of the IAC Retirement
Savings Plan not to sell the shares of IAC Common Stock held by IAC Employees
and Former IAC Employees).  On and after
the Distribution Date and until the completion of the sales contemplated by the
immediately preceding sentence, shares of IAC Common Stock shall be held in an
IAC Common Stock Fund, shares of TM Common Stock shall be held in a TM Common
Stock Fund, shares of Interval Common Stock shall be held in an Interval Common
Stock Fund, shares of HSN Common Stock shall be held in an HSN Common Stock
Fund and shares of Tree Common Stock shall be held in a Tree Common Stock Fund,
in each case, under the IAC Retirement Savings Plan.  Following the Distribution Date, IAC
Employees and Former IAC Employees, TM Employees and Former TM Employees,
Interval Employees and Former Interval Employees, HSN Employees and Former HSN
Employees and Tree Employees and Former Tree Employees shall not be permitted
to acquire shares of IAC Common Stock, TM Common Stock, Interval Common Stock,
HSN Common Stock or Tree Common Stock in the IAC Common Stock Fund, the TM
Common Stock Fund, the Interval Common Stock Fund, the HSN Common Stock Fund or
the Tree Common Stock Fund, as applicable, under the IAC Retirement Savings
Plan (provided that IAC may in its sole discretion instruct the trustee of the
IAC Retirement Savings Plan to permit IAC Employees and Former IAC Employees to
acquire additional shares of IAC Common Stock in the IAC Common Stock Fund).


 


3.2           SpinCo
Savings Plans.


 


(a)           Effective as of January 1, 2009, TM shall
establish the TM Retirement Savings Plan and the TM Retirement Savings Plan
Trust.  As soon as practical following
the establishment of the TM Retirement Savings Plan and the TM Retirement
Savings Plan Trust, IAC shall cause the accounts of the TM Employees and Former
TM Employees in the IAC Retirement Savings Plan to be transferred to the TM
Retirement Savings Plan and the TM Retirement Savings Plan Trust in cash or
such other assets as mutually agreed by IAC and TM, and TM shall cause the TM
Retirement Savings Plan to assume and be solely responsible


 


14

















 


for all Liabilities under the TM Retirement Savings Plan to or relating
to TM Employees and Former TM Employees whose accounts are transferred from the
IAC Retirement Savings Plan.  IAC and TM
agree to cooperate in making all appropriate filings and taking all reasonable
actions required to implement the provisions of this Section 3.2; provided
that TM acknowledges that it will be responsible for complying with any
requirements and applying for any determination letters with respect to the TM
Retirement Savings Plan.


 


(b)           Effective as of January 1, 2009, Interval
shall establish the Interval Retirement Savings Plan and the Interval
Retirement Savings Plan Trust.  As soon
as practical following the establishment of the Interval Retirement Savings
Plan and the Interval Retirement Savings Plan Trust, IAC shall cause the
accounts of the Interval Employees and Former Interval Employees in the IAC
Retirement Savings Plan to be transferred to the Interval Retirement Savings
Plan and the Interval Retirement Savings Plan Trust in cash or such other
assets as mutually agreed by IAC and Interval, and Interval shall cause the
Interval Retirement Savings Plan to assume and be solely responsible for all
Liabilities under the Interval Retirement Savings Plan to or relating to
Interval Employees and Former Interval Employees whose accounts are transferred
from the IAC Retirement Savings Plan. 
IAC and Interval agree to cooperate in making all appropriate filings
and taking all reasonable actions required to implement the provisions of this Section 3.2;
provided that Interval acknowledges that it will be responsible for
complying with any requirements and applying for any determination letters with
respect to the Interval Retirement Savings Plan.


 


(c)           Effective as of January 1, 2009, HSN shall
establish the HSN Retirement Savings Plan and the HSN Retirement Savings Plan
Trust.  As soon as practical following
the establishment of the HSN Retirement Savings Plan and the HSN Retirement
Savings Plan Trust, IAC shall cause the accounts of the HSN Employees and
Former HSN Employees in the IAC Retirement Savings Plan to be transferred to
the HSN Retirement Savings Plan and the HSN Retirement Savings Plan Trust in
cash or such other assets as mutually agreed by IAC and HSN, and HSN shall
cause the HSN Retirement Savings Plan to assume and be solely responsible for
all Liabilities under the HSN Retirement Savings Plan to or relating to HSN
Employees and Former HSN Employees whose accounts are transferred from the IAC
Retirement Savings Plan.  IAC and HSN
agree to cooperate in making all appropriate filings and taking all reasonable
actions required to implement the provisions of this Section 3.2; provided
that HSN acknowledges that it will be responsible for complying with any
requirements and applying for any determination letters with respect to the HSN
Retirement Savings Plan.


 


(d)           Effective as of January 1, 2009, Tree shall
establish the Tree Retirement Savings Plan and the Tree Retirement Savings Plan
Trust.  As soon as practical following
the establishment of the Tree Retirement Savings Plan and the Tree Retirement
Savings Plan Trust, IAC shall cause the accounts of the Tree Employees and
Former Tree Employees in the IAC Retirement Savings Plan to be transferred to
the Tree Retirement Savings Plan and the Tree Retirement Savings Plan Trust in
cash or such other assets as mutually agreed by IAC and Tree, and Tree shall
cause the Tree Retirement Savings Plan to assume and be solely responsible for
all Liabilities under the Tree Retirement Savings Plan to or relating to Tree
Employees and Former Tree Employees whose accounts are transferred from the IAC
Retirement Savings Plan.  IAC and Tree
agree to cooperate in making all appropriate filings and taking all reasonable
actions required to implement the provisions of this Section 3.2; provided
that Tree acknowledges that it will be responsible for complying with any
requirements and applying for any determination letters with respect to the
Tree Retirement Savings Plan.


 


15

















 


ARTICLE IV

HEALTH AND WELFARE PLANS


 


4.1           Transition
Period.


 


(a)           IAC will cause the IAC Health and Welfare Plans in
effect on the Distribution Date to provide coverage to TM Employees and Former
TM Employees, Interval Employees and Former Interval Employees, HSN Employees and
Former HSN Employees and Tree Employees and Former Tree Employees (and, in each
case, their beneficiaries and dependents) from and after the Distribution Date
until December 31, 2008 (such period, the “H&W Transition Period”)
on the same basis as immediately prior to the Distribution Date and in
accordance with the terms of IAC’s Health and Welfare Plans.  Following the Distribution Date, each SpinCo
shall pay to IAC fees in respect of IAC covering such SpinCo’s SpinCo Employees
and SpinCo Former Employees under the IAC Health and Welfare Plans, such fees
to be based on the per-employee budgeted rates set forth on Schedule A to this
Agreement.  The fees contemplated by this
Section 4.1(a) shall be payable in advance each month (i.e., not later than the first day of any month during which
coverage applies) during the H&W Transition Period and shall be based on
the prior month’s enrollment, with appropriate, subsequent adjustments in each
succeeding month to reflect actual enrollment; provided, however,
that the fees relating to the period from and including the first day of the
month during which the Distribution Date occurs through the end of the month
during which the Distribution Date occurs shall be payable no later than the
fifth business day following the Distribution Date.  In the event that any SpinCo fails to pay in
a timely manner the fees contemplated by this Section 4.1(a), IAC shall
have no obligation to provide the coverage contemplated by this Section 4.1(a) to
such SpinCo’s SpinCo Employees and SpinCo Former Employees.


 


(b)           Following the H&W Transition Period, but not
later than May 31, 2009, IAC shall calculate in good faith the total costs
and expenses of the IAC Health and Welfare Plans for 2008 (including without
limitation claims paid and administration fees and IAC’s good faith estimate of
claims incurred in 2008 but not reported (such estimate to be prepared based on
historical claims reporting patterns and history)) (the “2008 H&W
Expenses”), and IAC promptly shall provide to each of the SpinCos the 2008
H&W Expenses following such calculation. 
To the extent 2008 H&W Expenses (i) exceed the aggregate fees
paid by IAC and the SpinCos in respect of coverage during 2008 of IAC Employees
and Former Employees and SpinCo Employees and Former SpinCo Employees (the “2008
H&W Fees”), each of the SpinCos shall be required to pay to IAC by wire
transfer such SpinCo’s ratable portion (calculated on the basis of the number
of such SpinCo’s SpinCo Employees relative to the total number of IAC Employees
and SpinCo Employees taken together) of the fees deficit, and (ii) is less
than the 2008 H&W Fees, IAC shall pay to each of the SpinCos such SpinCo’s
ratable portion (calculated on the basis of the number of such SpinCo’s SpinCo
Employees relative to the total number of IAC Employees and SpinCo Employees
taken together) of the excess fees collected, any such payments pursuant to
clause (i) or clause (ii) to be made no later than July 15, 2009.  Any calculations made by IAC pursuant to this
Section 4.1(b) shall be final and binding upon the SpinCos.


 


4.2           Establishment
of Health and Welfare Plans.


 


(a)           Effective as of January 1, 2009, TM shall
adopt Health and Welfare Plans for the benefit of TM Employees and Former TM
Employees, and TM shall be responsible for all Liabilities relating to, arising
out of or resulting from health and welfare coverage or claims incurred by or on behalf of TM Employees and
Former TM Employees or


 


16

















 


their
covered dependents under the TM Health and Welfare Plans on or after January 1,
2009.


 


(b)           Effective as of January 1, 2009, Interval
shall adopt Health and Welfare Plans for the benefit of Interval Employees and
Former Interval Employees, and Interval shall be responsible for all Liabilities
relating to, arising out of or resulting from health and welfare coverage or claims incurred by or on
behalf of Interval Employees and Former Interval Employees or their covered
dependents under the Interval Health and Welfare Plans on or after January 1,
2009.


 


(c)           Effective as of January 1, 2009, HSN shall
adopt Health and Welfare Plans for the benefit of HSN Employees and Former HSN
Employees, and HSN shall be responsible for all Liabilities relating to,
arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of HSN Employees and
Former HSN Employees or their covered dependents under the HSN Health and
Welfare Plans on or after January 1, 2009.


 


(d)           Effective as of January 1, 2009, Tree shall
adopt Health and Welfare Plans for the benefit of Tree Employees and Former
Tree Employees, and Tree shall be responsible for all Liabilities relating to,
arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of Tree Employees
and Former Tree Employees or their covered dependents under the Tree Health and
Welfare Plans on or after January 1, 2009.


 


(e)           Notwithstanding anything to the contrary in this Section 4.2,
with respect to any TM Employee, Interval Employee, HSN Employee or Tree
Employee who becomes disabled under the terms of the IAC Health and Welfare
Plans and becomes entitled to receive long-term or short-term disability
benefits prior to January 1, 2009, such TM Employee, Interval Employee,
HSN Employee or Tree Employee shall continue to receive long-term or short-term
disability benefits under the IAC Health and Welfare Plans on and after January 1,
2009 in accordance with the terms of the IAC Health and Welfare Plans.


 


4.3           Retention
of Sponsorship and Liabilities.  Following
the Distribution Date, IAC shall retain:


 


(a)           sponsorship of all IAC Health and Welfare Plans and
any trust or other funding arrangement established or maintained with respect
to such plans, including any “voluntary employee’s beneficiary association,” or
any assets held as of the Distribution Date with respect to such plans; and


 


(b)           all Liabilities relating to, arising out of, or
resulting from health and welfare coverage or claims incurred by or on behalf
of IAC Employees or Former IAC
Employees or their covered dependents under the IAC Health and Welfare Plans prior to, on or after the
Distribution Date.


 


Other than as contemplated by Section 4.1 with respect to the
H&W Transition Period, IAC shall not assume any Liability relating to
health and welfare claims incurred by or on behalf of SpinCo Employees or
Former SpinCo Employees or their respective covered dependents prior to, on or
after the Distribution Date, and such claims shall be satisfied pursuant to Section 4.2.  For purposes of Sections 4.2 and 4.3 of this
Agreement, a claim or Liability (1) for medical, dental, vision and/or
prescription drug benefits shall be deemed to be incurred upon the rendering of
health services giving rise to the obligation to pay such benefits; (2) for
life insurance and accidental death and dismemberment and business travel
accident


 


17

















 


insurance benefits shall be deemed to be incurred upon the occurrence
of the event giving rise to the entitlement to such benefits; (3) for
salary continuation or other disability benefits shall be deemed to be incurred
upon the effective date of an individual’s disability giving rise to the
entitlement to such benefits under the applicable disability policy; and (4) for
a period of continuous hospitalization shall be deemed to be incurred on the
date of admission to the hospital.


 


4.4           Vendor
Contracts.


 


(a)           IAC and TM shall use commercially reasonable
efforts to obligate the third party administrator of each
administrative-services-only contract with a third-party administrator that
relates to any of the IAC Health and Welfare Plans (an “ASO Contract”),
each group insurance policy that relates to any of the IAC Health and Welfare
Plans (“Group Insurance Policies”) and each agreement with a Health
Maintenance Organization that provides medical services under the IAC Health
and Welfare Plans (“HMO Agreements”), in each case, in existence as of
the date of this Agreement that is applicable to TM Employees, to enter into a
separate ASO Contract, Group Insurance Policy and HMO Agreement, as applicable,
with TM providing for similar terms and conditions as are contained in the ASO
Contracts, Group Insurance Policies and HMO Agreements, as applicable, to which
IAC is a party.  Such terms and
conditions shall include the financial and termination provisions, performance
standards, methodology, auditing policies, quality measures and reporting
requirements.


 


(b)           IAC and Interval shall use commercially reasonable
efforts to obligate the third party administrator of each ASO Contract, each
Group Insurance Policy and each HMO Agreement, in each case, in existence as of
the date of this Agreement that is applicable to Interval Employees, to enter
into a separate ASO Contract, Group Insurance Policy and HMO Agreement, as
applicable, with Interval providing for similar terms and conditions as are
contained in the ASO Contracts, Group Insurance Policies and HMO Agreements, as
applicable, to which IAC is a party. 
Such terms and conditions shall include the financial and termination
provisions, performance standards, methodology, auditing policies, quality
measures and reporting requirements.


 


(c)           IAC and HSN shall use commercially reasonable
efforts to obligate the third party administrator of each ASO Contract, each
Group Insurance Policy and each HMO Agreement, in each case, in existence as of
the date of this Agreement that is applicable to HSN Employees, to enter into a
separate ASO Contract, Group Insurance Policy and HMO Agreement, as applicable,
with HSN providing for similar terms and conditions as are contained in the ASO
Contracts, Group Insurance Policies and HMO Agreements, as applicable, to which
IAC is a party.  Such terms and
conditions shall include the financial and termination provisions, performance
standards, methodology, auditing policies, quality measures and reporting
requirements.


 


(d)           IAC and Tree shall use commercially reasonable
efforts to obligate the third party administrator of each ASO Contract, each
Group Insurance Policy and each HMO Agreement, in each case, in existence as of
the date of this Agreement that is applicable to Tree Employees, to enter into
a separate ASO Contract, Group Insurance Policy and HMO Agreement, as
applicable, with Tree providing for similar terms and conditions as are
contained in the ASO Contracts, Group Insurance Policies and HMO Agreements, as
applicable, to which IAC is a party. 
Such terms and conditions shall include the financial and termination
provisions, performance standards, methodology, auditing policies, quality
measures and reporting requirements.


 


18
















 


4.5           Flexible Benefit
Plan.  IAC will continue to maintain
on behalf of TM Employees, Interval Employees, HSN Employees and Tree Employees
the health care reimbursement program, the transit and parking reimbursement
program and the dependent care reimbursement program of the IAC Flexible
Benefit Plan (all of such accounts, “IAC Flexible Benefit Plan”) for
claims incurred with respect to 2008 elections under the IAC Flexible Benefit
Plan (all such claims must be submitted no later than April 15, 2009) on
the same basis as immediately prior to the Distribution Date and in accordance
with the terms of the IAC Flexible Benefit Plan.  Following the Distribution Date, each SpinCo
shall pay to IAC the amounts claimed by such SpinCo’s SpinCo Employees under
the IAC Flexible Benefit Plan in addition to such SpinCo’s share of the
administrative cost of the IAC Flexible Benefit Plan (based on IAC historical
allocations), such amounts to be paid by each SpinCo on a one-month lagging
basis (i.e., claims made and
administrative costs incurred during a particular month shall be billed in the
immediately succeeding month); provided, that each SpinCo shall remit
payment to IAC no later than the fifth business day following delivery by IAC
of an invoice to such SpinCo.  SpinCo Employees
shall not participate in the IAC Flexible Benefit Plan with respect to any plan
year after the 2008 plan year.


 


4.6           Workers’ Compensation Liabilities.


 


(a)           Except as provided
below, all workers’ compensation Liabilities relating to, arising out of, or
resulting from any claim by an IAC Employee, Former IAC Employee, SpinCo
Employee or Former SpinCo Employee that results from an accident occurring, or
from an occupational disease which
becomes manifest, before the Distribution Date shall be retained by IAC.


 


(b)           All workers’ compensation Liabilities relating to, arising out of, or
resulting from any claim by an IAC Employee or Former IAC Employee that results
from an accident occurring, or from an occupational disease which becomes
manifest, on or after the Distribution Date shall be retained by IAC.


 


(c)           All workers’ compensation Liabilities relating to, arising out of, or
resulting from any claim by a TM Employee or Former TM Employee that results
from an accident occurring, or from an occupational disease which becomes
manifest, on or after the Distribution Date shall be retained by TM.


 


(d)           All workers’ compensation Liabilities relating to, arising out of, or
resulting from any claim by an Interval Employee or Former Interval Employee
that results from an accident occurring, or from an occupational disease which
becomes manifest, on or after the Distribution Date shall be retained by
Interval.


 


(e)           All workers’ compensation Liabilities relating to, arising out of, or
resulting from any claim by an HSN Employee or Former HSN Employee that results
from an accident occurring, or from an occupational disease which becomes
manifest, on or after the Distribution Date shall be retained by HSN.


 


(f)            All workers’ compensation Liabilities relating
to, arising out of, or resulting from any claim by a Tree Employee or Former
Tree Employee that results from an accident occurring, or from an occupational
disease which becomes manifest, on or after the Distribution Date shall be
retained by Tree.


 


For purposes of this Agreement, a compensable injury shall be deemed to
be sustained upon the occurrence of the event giving rise to eligibility for
workers’ compensation benefits 


 


19

















 


or at the time that an occupational disease becomes manifest, as the
case may be.  The Parties shall cooperate
with respect to any notification to appropriate governmental agencies of the
effective time and the issuance of new, or the transfer of existing, workers’
compensation insurance policies and claims handling contracts.


 


4.7           Payroll Taxes and Reporting of
Compensation.  Each of IAC, TM,
Interval, HSN and Tree shall, and shall cause each of its respective
Subsidiaries to, take such action as may be reasonably necessary or appropriate
in order to minimize Liabilities related to payroll taxes after the
Distribution Date.  Subject to the terms
of the Transition Services Agreement (as defined in the Separation Agreement),
each of IAC, TM, Interval, HSN and Tree shall, and shall cause each of its
respective Subsidiaries to, respectively, bear its responsibility for payroll
tax obligations and for the proper reporting to the appropriate governmental
authorities of compensation earned by their respective employees after the
Close of the Distribution Date, including compensation related to the exercise
of Options and the vesting and/or settlement of Restricted Stock Units and
Deferred Common Stock.


 


4.8           COBRA and HIPAA Compliance.


 


(a)           IAC shall be
responsible for administering compliance with the health care continuation
requirements of COBRA, the certificate of creditable coverage requirements of
HIPAA, and the corresponding provisions of the IAC Health and Welfare Plans
with respect to IAC Employees and Former IAC Employees and their covered dependents
who incur a COBRA qualifying event or loss of coverage under the IAC Health and
Welfare Plans at any time before, on or after the Effective Time.


 


(b)           Until December 31,
2008, IAC shall be responsible for administering compliance with the health care
continuation requirements of COBRA, the certificate of creditable coverage
requirements of HIPAA, and the corresponding provisions of the IAC Health and
Welfare Plans with respect to SpinCo Employees and Former SpinCo Employees and
their covered dependents who incur a COBRA qualifying event or loss of coverage
under the IAC Health and Welfare Plans at any time through December 31,
2008.


 


(c)           On and after January 1,
2009, TM or another TM Entity shall be responsible for administering compliance
with the health care continuation requirements of COBRA, the certificate of
creditable coverage requirements of HIPAA, and the corresponding provisions of
the TM Health and Welfare Plans and/or the IAC Health and Welfare Plans with
respect to TM Employees and Former TM Employees and their covered dependents
who incur a COBRA qualifying event or loss of coverage under the TM Health and
Welfare Plans and/or the IAC Health and Welfare Plans at any time before, on or
after the Effective Time.


 


(d)           On and after January 1,
2009, Interval or another Interval Entity shall be responsible for
administering compliance with the health care continuation requirements of
COBRA, the certificate of creditable coverage requirements of HIPAA, and the
corresponding provisions of the Interval Health and Welfare Plans and/or the
IAC Health and Welfare Plans with respect to Interval Employees and Former
Interval Employees and their covered dependents who incur a COBRA qualifying
event or loss of coverage under the Interval Health and Welfare Plans and/or
the IAC Health and Welfare Plans at any time before, on or after the Effective
Time.


 


(e)           On and after January 1,
2009, HSN or another HSN Entity shall be responsible for administering
compliance with the health care continuation requirements of COBRA, the
certificate of creditable coverage requirements of HIPAA, and the corresponding
provisions of the HSN Health and Welfare Plans and/or the IAC Health and
Welfare Plans 


 


20

















 


with respect to HSN Employees and Former HSN
Employees and their covered dependents who incur a COBRA qualifying event or
loss of coverage under the HSN Health and Welfare Plans and/or the IAC Health
and Welfare Plans at any time before, on or after the Effective Time.


 


(f)            On and after January 1,
2009, Tree or another Tree Entity shall be responsible for administering
compliance with the health care continuation requirements of COBRA, the
certificate of creditable coverage requirements of HIPAA, and the corresponding
provisions of the Tree Health and Welfare Plans and/or the IAC Health and
Welfare Plans with respect to Tree Employees and Former Tree Employees and
their covered dependents who incur a COBRA qualifying event or loss of coverage
under the Tree Health and Welfare Plans and/or the IAC Health and Welfare Plans
at any time before, on or after the Effective Time.


 


The Parties hereto agree that the consummation of the transactions
contemplated by this Agreement and the Separation Agreement shall not
constitute a COBRA qualifying event for any purpose of COBRA.


 


ARTICLE V

EXECUTIVE BENEFITS AND OTHER BENEFITS


 


5.1           Assumption of Obligations.


 


(a)           Except as provided in
this Agreement, effective as of the Effective Time, TM shall assume and be
solely responsible for all Liabilities to or relating to TM Employees and
Former TM Employees under all IAC Executive Benefit Plans and TM Executive
Benefit Plans.


 


(b)           Except as provided in
this Agreement, effective as of the Effective Time, Interval shall assume and
be solely responsible for all Liabilities to or relating to Interval Employees
and Former Interval Employees under all IAC Executive Benefit Plans and
Interval Executive Benefit Plans.


 


(c)           Except as provided in
this Agreement, effective as of the Effective Time, HSN shall assume and be
solely responsible for all Liabilities to or relating to HSN Employees and
Former HSN Employees under all IAC Executive Benefit Plans and HSN Executive
Benefit Plans.


 


(d)           Except as provided in
this Agreement, effective as of the Effective Time, Tree shall assume and be
solely responsible for all Liabilities to or relating to Tree Employees and
Former Tree Employees under all IAC Executive Benefit Plans and Tree Executive
Benefit Plans.


 


The Parties hereto agree that
none of the transactions contemplated by the Separation Agreement or any of the
Ancillary Agreements, including, without limitation, this Agreement,
constitutes a “change in control,” “change of control” or similar term, as
applicable, within the meaning of any Benefit Plan, any IAC Long-Term Incentive
Plan or any of the SpinCo Long-Term Incentive Plans.


 


21

















 


5.2           IAC
Incentive Plans.


 


(a)           SpinCo Bonus Awards.


 


(i)            TM shall be responsible for determining all
bonus awards that would otherwise be payable under the IAC Incentive Plans to
TM Employees for the Effective Time Year. 
TM shall also determine for TM Employees (A) the extent to which
established performance criteria (as interpreted by TM, in its sole discretion)
have been met, and (B) the payment level for each TM Employee.  TM shall assume all Liabilities with respect
to any such bonus awards payable to TM Employees for the Effective Time Year
and thereafter.


 


(ii)           Interval shall be responsible for
determining all bonus awards that would otherwise be payable under the IAC
Incentive Plans to Interval Employees for the Effective Time Year.  Interval shall also determine for Interval
Employees (A) the extent to which established performance criteria (as
interpreted by Interval, in its sole discretion) have been met, and (B) the
payment level for each Interval Employee. 
Interval shall assume all Liabilities with respect to any such bonus
awards payable to Interval Employees for the Effective Time Year and
thereafter.


 


(iii)          HSN shall be responsible for determining all
bonus awards that would otherwise be payable under the IAC Incentive Plans to
HSN Employees for the Effective Time Year. 
HSN shall also determine for HSN Employees (A) the extent to which
established performance criteria (as interpreted by HSN, in its sole
discretion) have been met, and (B) the payment level for each HSN
Employee.  HSN shall assume all
Liabilities with respect to any such bonus awards payable to HSN Employees for
the Effective Time Year and thereafter.


 


(iv)          Tree shall be responsible for determining all
bonus awards that would otherwise be payable under the IAC Incentive Plans to
Tree Employees for the Effective Time Year. 
Tree shall also determine for Tree Employees (A) the extent to
which established performance criteria (as interpreted by Tree, in its sole
discretion) have been met, and (B) the payment level for each Tree
Employee.  Tree shall assume all
Liabilities with respect to any such bonus awards payable to Tree Employees for
the Effective Time Year and thereafter.


 


(b)           IAC Bonus Awards.  IAC shall retain all Liabilities with respect
to any bonus awards payable under the IAC Incentive Plans to IAC Employees for the Effective Time Year and
thereafter.


 


5.3           IAC Long-Term Incentive Plans.  IAC and each of the SpinCos shall use
commercially reasonable efforts to take all actions necessary or appropriate so
that each outstanding Option and Award granted under any IAC Long-Term
Incentive Plan held by any individual shall be adjusted as set forth in this Article V.  Following the Separation, for any award
adjusted under this Section 5.3, any reference to a “change in control,” “change
of control” or similar definition in an award agreement, employment agreement
or IAC Long-Term Incentive Plan applicable to such award (1) with respect
to post-Separation equity awards denominated in shares of IAC Common Stock,
such reference shall be deemed to refer to a “change in control,” “change of
control” or similar definition as set forth in the applicable award agreement,
employment agreement or IAC Long-Term Incentive Plan, (2) with respect to
post-Separation equity awards denominated in shares of TM Common Stock, such
reference shall be deemed to refer to a “Change in Control” as defined in the
TM Long-Term Incentive Plan, (3) with respect to post-Separation equity
awards denominated in 


 


22

















 


shares of Interval Common Stock, such
reference shall be deemed to refer to a “Change in Control” as defined in the
Interval Long-Term Incentive Plan, (4) with respect to post-Separation
equity awards denominated in shares of HSN Common Stock, such reference shall
be deemed to refer to a “Change in Control” as defined in the HSN Long-Term
Incentive Plan, and (5) with respect to post-Separation equity awards
denominated in shares of Tree Common Stock, such reference shall be deemed to
refer to a “Change in Control” as defined in the Tree Long-Term Incentive Plan.


 


(a)           IAC Options Granted
Prior to January 1, 2008.  As
determined by the Compensation and Human Resources Committee of the IAC Board
of Directors (the “Committee”) pursuant
to its authority under the applicable IAC Long-Term Incentive Plan, each IAC
Option granted prior to January 1, 2008, whether vested or unvested, that
is outstanding as of the Effective Time shall be converted at the Effective
Time into an IAC Option, a TM Option, an Interval Option, an HSN Option and a
Tree Option and shall otherwise be subject to the same terms and conditions
(including with respect to vesting) after the Effective Time as the terms and
conditions applicable to such IAC Option immediately prior to the Effective
Time,  subject to the following adjustments
which shall apply from and after the Effective Time:


 


(i)            (A) the number of shares of IAC Common
Stock subject to such IAC Option, rounded down to the nearest whole share,
shall be equal to the product obtained by multiplying (1) the number of
shares of IAC Common Stock subject to such IAC Option immediately prior to the
Effective Time by (2) the IAC Factor, and (B) the per share exercise
price of such IAC Option, rounded up to the nearest whole cent, shall be equal
to the quotient obtained by dividing (1) the per share exercise price of
such IAC Option immediately prior to the Effective Time by (2) the IAC
Ratio;


 


(ii)           (A) the number of shares of TM Common
Stock subject to such TM Option, rounded down to the nearest whole share, shall
be equal to the product obtained by multiplying (1) the number of shares
of IAC Common Stock subject to such IAC Option immediately prior to the
Effective Time by (2) the TM Factor, and (B) the per share exercise
price of such TM Option, rounded up to the nearest whole cent, shall be equal
to the quotient obtained by dividing (1) the per share exercise price of
such IAC Option immediately prior to the Effective Time by (2) the TM
Ratio (this clause (ii) shall not apply if IAC does not distribute shares
of TM Common Stock on the Distribution Date);


 


(iii)          (A) the number of shares of Interval
Common Stock subject to such Interval Option, rounded down to the nearest whole
share, shall be equal to the product obtained by multiplying (1) the
number of shares of IAC Common Stock subject to such IAC Option immediately
prior to the Effective Time by (2) the Interval Factor, and (B) the
per share exercise price of such Interval Option, rounded up to the 


 


23

















 


nearest whole cent, shall be equal to the quotient obtained by dividing
(1) the per share exercise price of such IAC Option immediately prior to
the Effective Time by (2) the Interval Ratio (this clause (iii) shall
not apply if IAC does not distribute shares of Interval Common Stock on the
Distribution Date);


 


(iv)          (A) the number of shares of HSN Common
Stock subject to such HSN Option, rounded down to the nearest whole share,
shall be equal to the product obtained by multiplying (1) the number of
shares of IAC Common Stock subject to such IAC Option immediately prior to the
Effective Time by (2) the HSN Factor, and (B) the per share exercise
price of such HSN Option, rounded up to the nearest whole cent, shall be equal
to the quotient obtained by dividing (1) the per share exercise price of
such IAC Option immediately prior to the Effective Time by (2) the HSN
Ratio (this clause (iv) shall not apply if IAC does not distribute shares
of HSN Common Stock on the Distribution Date); and


 


(v)           (A) the number of shares of Tree Common
Stock subject to such Tree Option, rounded down to the nearest whole share,
shall be equal to the product obtained by multiplying (1) the number of
shares of IAC Common Stock subject to such IAC Option immediately prior to the
Effective Time by (2) the Tree Factor, and (B) the per share exercise
price of such Tree Option, rounded up to the nearest whole cent, shall be equal
to the quotient obtained by dividing (1) the per share exercise price of
such IAC Option immediately prior to the Effective Time by (2) the Tree
Ratio (this clause (v) shall not apply if IAC does not distribute shares
of Tree Common Stock on the Distribution Date);


 


provided, however, that the exercise price,
the number of shares of IAC Common Stock, TM Common Stock, Interval Common
Stock, HSN Common Stock and Tree Common Stock subject to such options and the
terms and conditions of exercise of such options shall be determined in a
manner consistent with the requirements of Section 409A of the Code; provided,
further, that, in the case of any
IAC Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code as of immediately prior to the
Effective Time, the exercise price, the number of shares of IAC Common Stock,
TM Common Stock, Interval Common Stock, HSN Common Stock and Tree Common Stock
subject to such option and the terms and conditions of exercise of such option
shall be determined in a manner consistent with the requirements of Section 424(a) of
the Code.


 


(b)           IAC Options Held by
IAC Employees and Former IAC Employees Granted on or after January 1, 2008.  As determined by the Committee pursuant to its authority under the applicable
IAC Long-Term Incentive Plan, each IAC Option held by an IAC Employee or a
Former IAC Employee granted on or after January 1, 2008, whether vested or
unvested, that is outstanding as of the Effective Time shall be subject to the
same terms and conditions (including with respect to vesting) after the
Effective Time as the terms and conditions applicable to such IAC Option
immediately prior to the Effective Time, subject to the following adjustments
which shall apply from and after the Effective Time:  (i) the number of shares of IAC Common
Stock subject to such IAC Option, rounded down to the nearest whole share,
shall be equal to the product of (A) the number of shares of IAC Common
Stock subject to such IAC Option immediately prior to the Effective Time and (B) the
IAC Ratio and (ii) the per share exercise price of such IAC Option,
rounded up to the nearest whole cent, shall be equal to the quotient obtained
by dividing (A) the per share exercise price of such IAC Option
immediately prior to the Effective Time by (B) the IAC Ratio; provided, however, that the exercise price, the number of shares of IAC Common Stock
subject to such option and the terms and conditions of exercise of such option
shall be determined in a manner consistent with the requirements of Section 409A
of the Code; provided, further, that, in the case of any IAC Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code as of immediately prior to the Effective Time, the exercise price,
the number of shares of IAC Common Stock subject to such option and the terms
and conditions of exercise of such option shall be determined in a manner
consistent with the requirements of Section 424(a) of the Code.


 


(c)           IAC Options Held by
TM Employees and Former TM Employees Granted on or after January 1, 2008.  As determined by the Committee pursuant to its authority under the applicable
IAC Long-Term Incentive Plan, each IAC Option held by a TM Employee or Former TM
Employee granted on or after January 1, 2008, whether vested or unvested, 


 


24

















 


that is outstanding as of the Effective Time shall be
converted at the Effective Time into a TM Option and shall otherwise be subject
to the same terms and conditions (including with respect to vesting) after the
Effective Time as the terms and conditions applicable to such IAC Option
immediately prior to the Effective Time, subject to the following adjustments
which shall apply from and after the Effective Time:  (i) the number of shares of TM Common
Stock subject to such Option, rounded down to the nearest whole share, shall be
equal to the product of (A) the number of shares of IAC Common Stock
subject to such IAC Option immediately prior to the Effective Time and (B) the
TM Ratio and (ii) the per share exercise price of such TM Option, rounded
up to the nearest whole cent, shall be equal to the quotient obtained by
dividing (A) the per share exercise price of such IAC Option immediately
prior to the Effective Time by (B) the TM Ratio; provided, however, that the exercise price, the number of shares of TM Common Stock
subject to such option and the terms and conditions of exercise of such option
shall be determined in a manner consistent with the requirements of Section 409A
of the Code; provided, further, that, in the case of any IAC Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code as of the Effective Time, the exercise price, the number of shares
of TM Common Stock subject to such option and the terms and conditions of
exercise of such option shall be determined in a manner consistent with the
requirements of Section 424(a) of the Code.  This clause (c) shall not apply if
IAC does not distribute shares of TM Common Stock on the Distribution Date.


 


(d)           IAC Options Held by
Interval Employees and Former Interval Employees Granted on or after January 1,
2008.  As determined by the Committee
pursuant to its authority under the
applicable IAC Long-Term Incentive Plan, each IAC Option held by an Interval
Employee or Former Interval Employee granted on or after January 1, 2008,
whether vested or unvested, that is outstanding as of the Effective Time shall
be converted at the Effective Time into an Interval Option and shall otherwise
be subject to the same terms and conditions (including with respect to vesting)
after the Effective Time as the terms and conditions applicable to such IAC
Option immediately prior to the Effective Time, subject to the following
adjustments which shall apply from and after the Effective Time:  (i) the number of shares of Interval
Common Stock subject to such Option, rounded down to the nearest whole share,
shall be equal to the product of (A) the number of shares of IAC Common
Stock subject to such IAC Option immediately prior to the Effective Time and (B) the
Interval Ratio and (ii) the per share exercise price of such Interval
Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained
by dividing (A) the per share exercise price of such IAC Option
immediately prior to the Effective Time by (B) the Interval Ratio; provided, however, that the exercise price, the number of shares of Interval Common
Stock subject to such option and the terms and conditions of exercise of such
option shall be determined in a manner consistent with the requirements of Section 409A
of the Code; provided, further, that, in the case of any IAC Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code as of the Effective Time, the exercise price, the number of shares
of Interval Common Stock subject to such option and the terms and conditions of
exercise of such option shall be determined in a manner consistent with the
requirements of Section 424(a) of the Code.  This clause (d) shall not apply
if IAC does not distribute shares of Interval Common Stock on the Distribution
Date.


 


(e)           IAC Options Held by
HSN Employees and Former HSN Employees Granted on or after January 1, 2008.  As determined by the Committee pursuant to its authority under the applicable
IAC Long-Term Incentive Plan, each IAC Option held by an HSN Employee or Former
HSN Employee granted on or after January 1, 2008, whether vested or
unvested, that is outstanding as of the Effective Time shall be converted at
the Effective Time into an HSN Option and shall otherwise be subject to the
same terms and 


 


25

















 


conditions (including with respect to vesting) after
the Effective Time as the terms and conditions applicable to such IAC Option
immediately prior to the Effective Time, subject to the following adjustments
which shall apply from and after the Effective Time:  (i) the number of shares of HSN Common
Stock subject to such Option, rounded down to the nearest whole share, shall be
equal to the product of (A) the number of shares of IAC Common Stock
subject to such IAC Option immediately prior to the Effective Time and (B) the
HSN Ratio and (ii) the per share exercise price of such HSN Option,
rounded up to the nearest whole cent, shall be equal to the quotient obtained
by dividing (A) the per share exercise price of such IAC Option
immediately prior to the Effective Time by (B) the HSN Ratio; provided, however, that the exercise price, the number of shares of HSN Common Stock
subject to such option and the terms and conditions of exercise of such option
shall be determined in a manner consistent with the requirements of Section 409A
of the Code; provided, further, that, in the case of any IAC Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code as of the Effective Time, the exercise price, the number of shares
of HSN Common Stock subject to such option and the terms and conditions of
exercise of such option shall be determined in a manner consistent with the
requirements of Section 424(a) of the Code.  This clause (e) shall not apply
if IAC does not distribute shares of HSN Common Stock on the Distribution Date.


 


(f)            IAC Options Held by
Tree Employees and Former Tree Employees Granted on or after January 1,
2008.  As determined by the Committee
pursuant to its authority under the
applicable IAC Long-Term Incentive Plan, each IAC Option held by a Tree
Employee or Former Tree Employee granted on or after January 1, 2008,
whether vested or unvested, that is outstanding as of the Effective Time shall
be converted at the Effective Time into a Tree Option and shall otherwise be
subject to the same terms and conditions (including with respect to vesting)
after the Effective Time as the terms and conditions applicable to such IAC
Option immediately prior to the Effective Time, subject to the following
adjustments which shall apply from and after the Effective Time:  (i) the number of shares of Tree Common
Stock subject to such Option, rounded down to the nearest whole share, shall be
equal to the product of (A) the number of shares of IAC Common Stock
subject to such IAC Option immediately prior to the Effective Time and (B) the
Tree Ratio and (ii) the per share exercise price of such Tree Option,
rounded up to the nearest whole cent, shall be equal to the quotient obtained
by dividing (A) the per share exercise price of such IAC Option
immediately prior to the Effective Time by (B) the Tree Ratio; provided, however, that the exercise price, the number of shares of Tree Common Stock
subject to such option and the terms and conditions of exercise of such option
shall be determined in a manner consistent with the requirements of Section 409A
of the Code; provided, further, that, in the case of any IAC Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code as of the Effective Time, the exercise price, the number of shares
of Tree Common Stock subject to such option and the terms and conditions of
exercise of such option shall be determined in a manner consistent with the
requirements of Section 424(a) of the Code.  This clause (f) shall not apply
if IAC does not distribute shares of Tree Common Stock on the Distribution
Date.


 


(g)           IAC Restricted Stock Units.


 


(i)            Conversion of Growth Share Awards.  IAC has awarded IAC Restricted Stock Units
that may vest from 0% to 200% of the IAC Restricted Stock Units granted depending
upon the performance of IAC (the “Growth Share Awards”).  As determined by the Committee pursuant to
its authority under the applicable IAC Long-Term Incentive Plan, prior to the Effective Time and prior to any other action
contemplated by this Section 5.3(g), the Growth Share Awards shall be
amended such that the number of IAC Restricted Stock Units subject to each
Growth Share 


 


26

















 


Award
shall be fixed at 100% (target) of the IAC Restricted Stock Units subject to
the initial Growth Share Award (there will be no upward or downward variability
and the balance of the IAC Restricted Stock Units subject to the initial Growth
Share Award shall be forfeited), the vesting of such IAC Restricted Stock Units
shall cease to be subject to satisfaction of performance goals (subject to the
last sentence of this Section 5.3(g)(i)), the IAC Restricted Stock Units
subject to each Growth Share Award shall Cliff Vest on the three-year
anniversary of the initial grant date of such Growth Share Award and the IAC
Restricted Stock Units subject to each Growth Share Award shall otherwise
remain subject to the same terms and conditions (including with respect to
vesting) after the Effective Time as the terms and conditions applicable
to such IAC Restricted Stock Units immediately prior to the Effective Time, subject to any further adjustments described
in this Section 5.3(g).  The vesting
of Growth Share Awards intended to satisfy the performance-based compensation
exception under Section 162(m) of the Code will remain subject to
applicable performance goals adopted for purposes of Section 162(m) of
the Code.


 


(ii)           Accelerated Vesting and Settlement of
Certain IAC Restricted Stock Units. 
As determined by the Committee pursuant to its authority under the
applicable IAC Long-Term Incentive Plan, other than any IAC Restricted Stock
Units set forth on Schedule
B, for (I) all IAC Restricted Stock Units (x) awarded
prior to August 8, 2005 or (y) awarded on or after August 8,
2005, but prior to January 1, 2008, and scheduled to vest on or before February 28,
2009, and (II) all Five Way IAC RSUs (as defined below) held by award
holders with respect to whom the Committee determines to provide for
accelerated vesting on the Distribution Date (clauses (I) and (II) together,
“Accelerated RSUs”):


 


(A)          subject to the proviso below, with respect to
the Accelerated RSUs identified by IAC,  such
Accelerated RSUs will vest on the Distribution Date and be settled on January 2,
2009, such that on January 2, 2009, for each share of IAC Common Stock
underlying any such award immediately prior to the Effective Time (less any
shares that are settled in accordance with the proviso below), the holder of
such award shall be entitled to receive (subject to application of Section 5.3(g)(ix) below):  (1) a number of shares of IAC Common
Stock, rounded up to the nearest whole share, equal to the number of shares of
IAC Common Stock to which the holder would be entitled if the holder held the
shares of IAC Common Stock (less any shares that are settled in accordance with
the proviso below) underlying such IAC Restricted Stock Units immediately prior
to the Effective Time (“Delayed IAC Common Stock”) (i.e., 0.5 shares of IAC Common Stock for
each share of IAC Common Stock); (2) a number of shares of TM Common
Stock, rounded up to the nearest whole share, equal to the number of shares of
TM Common Stock to which the holder would be entitled if the holder held the
shares of IAC Common Stock (less any shares that are settled in accordance with
the proviso below) underlying such IAC Restricted Stock Units immediately prior
to the Effective Time (i.e., 0.2
shares of TM Common Stock for each share of IAC Common Stock) (“Delayed TM
Common Stock”) (this clause (2) shall not apply if IAC does not
distribute shares of TM Common Stock on the Distribution Date); (3) a
number of shares of Interval Common Stock, rounded up to the nearest whole
share, equal to the number of shares of Interval Common Stock to which the
holder would be entitled if the holder held the shares of IAC Common Stock
(less any shares that are settled in accordance with the proviso below)
underlying such IAC Restricted Stock Units immediately prior to the Effective
Time (i.e., 0.2 shares of
Interval Common Stock for each share of IAC Common Stock) (“Delayed Interval
Common Stock”) (this clause (3) shall not apply if IAC does not
distribute shares of Interval Common 


 


27

















 


Stock on the Distribution Date); (4) a number of shares of HSN
Common Stock, rounded up to the nearest whole share, equal to the number of
shares of HSN Common Stock to which the holder would be entitled if the holder
held the shares of IAC Common Stock (less any shares that are settled in
accordance with the proviso below) underlying such IAC Restricted Stock Units
immediately prior to the Effective Time (i.e.,
0.2 shares of HSN Common Stock for each share of IAC Common Stock) (“Delayed
HSN Common Stock”) (this clause (4) shall not apply if IAC does not
distribute shares of HSN Common Stock on the Distribution Date); and (5) a
number of shares of Tree Common Stock, rounded up to the nearest whole share,
equal to the number of shares of Tree Common Stock to which the holder would be
entitled if the holder held the shares of IAC Common Stock (less any shares
that are settled in accordance with the proviso below) underlying such IAC
Restricted Stock Units immediately prior to the Effective Time (i.e., 0.03333 shares of Tree Common Stock
for each share of IAC Common Stock) (“Delayed Tree Common Stock,” and
together with Delayed IAC Common Stock, Delayed TM Common Stock, Delayed
Interval Common Stock and Delayed HSN Common Stock, “Delayed Common Stock”)
(this clause (5) shall not apply if IAC does not distribute shares of Tree
Common Stock on the Distribution Date); provided, however, that
immediately prior to the Effective Time, with respect to each individual
holding IAC Restricted Stock Units subject to this Section 5.3(g)(ii)(A),
IAC shall settle a number of IAC Restricted Stock Units (and withhold the
corresponding number of shares of IAC Common Stock underlying such IAC
Restricted Stock Units) sufficient to satisfy (x) any tax payable by such
holder under the Federal Insurance Contributions Act (“FICA”) by virtue
of the operation of this Section 5.3(b)(ii)(A) (the “FICA Amount”),
and (y) applicable income tax on wages imposed under Section 3401 of
the Code or the corresponding withholding provisions of applicable state, local
or foreign tax laws as a result of the payment of the FICA Amount, and to pay
the additional income tax at source on wages attributable to the pyramiding
Code Section 3401 wages and taxes (such withholding based on the value of
a share of IAC Common Stock trading “regular way with due bills”); provided,
further, however, that any fractional amounts remaining after payment
of the foregoing shall be converted into cash and shall accrue interest at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the
Code and shall be payable by IAC on January 2, 2009; and


 


(B)           with respect to any holder whose Accelerated
RSUs are not subject to Tax in the United States and are not subject to Section 409A
of the Code, such holder’s Accelerated RSUs will vest immediately prior to the
Effective Time and be settled in cash in accordance with IAC’s customary
practices applicable to such holder; and


 


(C)           with respect to all other Accelerated RSUs
not addressed in clause (A) or clause (B) above, such Accelerated
RSUs will vest immediately prior to the Effective Time and be settled as soon
as reasonably practicable following the Effective Time, such that for each
share of IAC Common Stock underlying any such award immediately prior to the
Effective Time (less a number of shares of IAC Common Stock withheld to satisfy
any tax withholding obligations with respect to the vesting and settlement of
such IAC Restricted Stock Units, such withholding based on the value of a share
of IAC Common Stock trading “regular way with due bills,” the “Withheld
Shares”)), IAC will deliver or cause to be delivered:  (1) a number of shares of IAC Common
Stock, rounded up to the nearest whole share, equal to the number of shares of
IAC Common Stock to which the holder would be entitled if the holder held the
shares of IAC Common Stock (less Withheld Shares) underlying such IAC
Restricted Stock Units immediately prior to the Effective Time (i.e., 0.5 shares of


 


28
















 


IAC Common Stock for each share of IAC Common Stock); (2) a number
of shares of TM Common Stock, rounded up to the nearest whole share, equal to
the number of shares of TM Common Stock to which the holder would be entitled
if the holder held the shares of IAC Common Stock (less Withheld Shares)
underlying such IAC Restricted Stock Units immediately prior to the Effective
Time (i.e., 0.2 shares of TM
Common Stock for each share of IAC Common Stock) (this clause (2) shall
not apply if IAC does not distribute shares of TM Common Stock on the
Distribution Date); (3) a number of shares of Interval Common Stock,
rounded up to the nearest whole share, equal to the number of shares of
Interval Common Stock to which the holder would be entitled if the holder held
the shares of IAC Common Stock (less Withheld Shares) underlying such IAC
Restricted Stock Units immediately prior to the Effective Time (i.e., 0.2 shares of Interval Common Stock
for each share of IAC Common Stock) (this clause (3) shall not apply if
IAC does not distribute shares of Interval Common Stock on the Distribution
Date); (4) a number of shares of HSN Common Stock, rounded up to the
nearest whole share, equal to the number of shares of HSN Common Stock to which
the holder would be entitled if the holder held the shares of IAC Common Stock
(less Withheld Shares) underlying such IAC Restricted Stock Units immediately
prior to the Effective Time (i.e.,
0.2 shares of HSN Common Stock for each share of IAC Common Stock) (this clause
(4) shall not apply if IAC does not distribute shares of HSN Common Stock
on the Distribution Date); and (5) a number of shares of Tree Common
Stock, rounded up to the nearest whole share, equal to the number of shares of
Tree Common Stock to which the holder would be entitled if the holder held the
shares of IAC Common Stock (less Withheld Shares) underlying such IAC
Restricted Stock Units immediately prior to the Effective Time (i.e., 0.03333 shares of Tree Common Stock
for each share of IAC Common Stock) (this clause (5) shall not apply if
IAC does not distribute shares of Tree Common Stock on the Distribution Date).


 


Each SpinCo shall be responsible for all applicable Taxes (including,
but not limited to, withholding and excise taxes) with respect to the
settlement prior to the Effective Time and pursuant to this Section 5.3(g)(ii) of
Accelerated RSUs held by such SpinCo’s SpinCo Employees and Former SpinCo
Employees.


 


(iii)          Treatment of Certain Cliff Vesting IAC
Restricted Stock Unit Awards Scheduled to Vest After February 28, 2009.  As determined by the Committee pursuant to
its authority under the applicable IAC Long-Term Incentive Plan, for each Cliff
Vesting IAC Restricted Stock Unit Award granted prior to January 1, 2008
and scheduled to vest after February 28, 2009 (including the Growth Share
Awards, but excluding any IAC Restricted Stock Units set forth on Schedule B), with respect to
such number of IAC Restricted Stock Units (rounded up to the nearest whole
share) that would have vested on or before February 28, 2009 if the award
had been an annual installment vesting award (e.g.,
60% of a 5-year Cliff Vesting award granted on February 1 of 2006) (the “Five
Way IAC RSUs”), for all award holders (other than award holders with
respect to whom the Committee determines to provide for accelerated vesting as
contemplated by clause (ii) above), the Five Way IAC RSUs held as of
immediately prior to the Effective Time shall be converted at the Effective
Time into:


 


(A)          IAC Restricted Stock Units, and shall
otherwise be subject to the same terms and conditions (including with respect
to vesting) after the Effective Time as the terms and conditions applicable to
such Five Way IAC RSUs immediately prior to the Effective Time, subject to the
following adjustment which shall apply from and after the Effective Time:  the number of shares of IAC Common 


 


29

















 


Stock covered by such IAC Restricted Stock Units, rounded up to the
nearest whole share, shall be equal to the number of shares of IAC Common Stock
to which the holder of the Five Way IAC RSUs would be entitled had the Five Way
IAC RSUs represented actual shares of IAC Common Stock immediately prior to the
Effective Time (i.e., 0.5 shares
of IAC Common Stock for each share of IAC Common Stock);


 


(B)           TM Restricted Stock Units, and shall
otherwise be subject to the same terms and conditions (including with respect
to vesting) after the Effective Time as the terms and conditions applicable to
such Five Way IAC RSUs immediately prior to the Effective Time, subject to the
following adjustment which shall apply from and after the Effective Time:  the number of shares of TM Common Stock
covered by such TM Restricted Stock Units, rounded up to the nearest whole
share, shall be equal to the number of shares of TM Common Stock to which the
holder of the Five Way IAC RSUs would be entitled had the Five Way IAC RSUs
represented actual shares of IAC Common Stock immediately prior to the
Effective Time (i.e., 0.2 shares
of TM Common Stock for each share of IAC Common Stock) (this clause (B) shall
not apply if IAC does not distribute shares of TM Common Stock on the
Distribution Date);


 


(C)           Interval Restricted Stock Units, and shall
otherwise be subject to the same terms and conditions (including with respect
to vesting) after the Effective Time as the terms and conditions applicable to
such Five Way IAC RSUs immediately prior to the Effective Time, subject to the
following adjustment which shall apply from and after the Effective Time:  the number of shares of Interval Common Stock
covered by such Interval Restricted Stock Units, rounded up to the nearest
whole share, shall be equal to the number of shares of Interval Common Stock to
which the holder of the Five Way IAC RSUs would be entitled had the Five Way
IAC RSUs represented actual shares of IAC Common Stock immediately prior to the
Effective Time (i.e., 0.2 shares
of Interval Common Stock for each share of IAC Common Stock) (this clause (C) shall
not apply if IAC does not distribute shares of Interval Common Stock on the
Distribution Date);


 


(D)          HSN Restricted Stock Units, and shall
otherwise be subject to the same terms and conditions (including with respect
to vesting) after the Effective Time as the terms and conditions applicable to
such Five Way IAC RSUs immediately prior to the Effective Time, subject to the
following adjustment which shall apply from and after the Effective Time:  the number of shares of HSN Common Stock
covered by such HSN Restricted Stock Units, rounded up to the nearest whole
share, shall be equal to the number of shares of HSN Common Stock to which the
holder of the Five Way IAC RSUs would be entitled had the Five Way IAC RSUs
represented actual shares of IAC Common Stock immediately prior to the
Effective Time (i.e., 0.2 shares
of HSN Common Stock for each share of IAC Common Stock) (this clause (D) shall
not apply if IAC does not distribute shares of HSN Common Stock on the
Distribution Date); and


 


(E)           Tree Restricted Stock Units, and shall
otherwise be subject to the same terms and conditions (including with respect
to vesting) after the Effective Time as the terms and conditions applicable to
such Five Way IAC RSUs immediately prior to the Effective Time, subject to the
following adjustment which shall apply from and after the Effective Time:  the number of shares of Tree Common Stock
covered by such Tree Restricted Stock Units, rounded up to the nearest whole
share, shall be equal to the number of shares of Tree Common Stock to which the
holder of the Five Way IAC RSUs would be entitled had the Five Way IAC RSUs 


 


30

















 


represented actual shares of IAC Common Stock immediately prior to the
Effective Time (i.e., 0.03333
shares of Tree Common Stock for each share of IAC Common Stock) (this clause (E) shall
not apply if IAC does not distribute shares of Tree Common Stock on the
Distribution Date).


 


(iv)          Other IAC Restricted Stock Units Held by
IAC Employees and Former IAC Employees. 
As determined by the Committee pursuant
to its authority under the applicable IAC Long-Term Incentive Plan, the IAC
Restricted Stock Units held by an IAC Employee or a Former IAC Employee (other
than those IAC Restricted Stock Units converted pursuant to Section 5.3(g)(ii) or
Section 5.3(g)(iii)) shall be subject to the same terms and conditions
(including with respect to vesting) after the Effective Time as the terms and
conditions applicable to such IAC Restricted Stock Units immediately prior to
the Effective Time, subject to the following adjustment which shall
apply from and after the Effective Time:  the number of shares of IAC Common Stock
covered by such IAC Restricted Stock Units, rounded up to the nearest whole
share, shall be equal to the product of (A) the number of shares of IAC
Common Stock covered by such IAC Restricted Stock Units immediately prior to
the Effective Time and (B) the IAC Ratio.


 


(v)           Other IAC Restricted Stock Units Held by
TM Employees and Former TM Employees. 
As determined by the Committee pursuant to its authority under the
applicable IAC Long-Term Incentive Plan,
the IAC Restricted Stock Units held by a TM Employee or a Former TM Employee as
of the Effective Time (other than those IAC Restricted Stock Units converted
pursuant to Section 5.3(g)(ii) or Section 5.3(g)(iii)) shall be
converted at the Effective Time into TM Restricted Stock Units, and shall
otherwise be subject to the same terms and conditions (including with respect
to vesting) after the Effective Time as the terms and conditions applicable to
such IAC Restricted Stock Units immediately prior to the Effective Time,
subject to the following adjustment which shall apply from and after the
Effective Time:  the number of shares of TM Common Stock
covered by such TM Restricted Stock Units, rounded up to the nearest whole
share, shall be equal to the product of (A) the number of shares of IAC
Common Stock covered by such IAC Restricted Stock Units immediately prior to
the Effective Time and (B) the TM Ratio. 
This clause (v) shall not apply if IAC does not distribute
shares of TM Common Stock on the Distribution Date.


 


(vi)          Other IAC Restricted Stock Units Held by
Interval Employees and Former Interval Employees.  As determined by the Committee pursuant to
its authority under the applicable IAC Long-Term Incentive Plan, the IAC Restricted Stock Units held by an
Interval Employee or a Former Interval Employee as of the Effective Time (other
than those IAC Restricted Stock Units converted pursuant to Section 5.3(g)(ii) or
Section 5.3(g)(iii)) shall be converted at the Effective Time into
Interval Restricted Stock Units, and shall otherwise be subject to the same
terms and conditions (including with respect to vesting) after the Effective
Time as the terms and conditions applicable to such IAC Restricted Stock Units
immediately prior to the Effective Time, subject to the following
adjustment which shall apply from and after the Effective Time:  the
number of shares of Interval Common Stock covered by such Interval Restricted
Stock Units, rounded up to the nearest whole share, shall be equal to the
product of (A) the number of shares of IAC Common Stock covered by such
IAC Restricted Stock Units immediately prior to the Effective Time and (B) the
Interval Ratio.  This clause (vi) shall
not apply if IAC does not distribute shares of Interval Common Stock on the
Distribution Date.


 


31

















 


(vii)         Other IAC Restricted Stock Units Held by
HSN Employees and Former HSN Employees. 
As determined by the Committee pursuant to its authority under the
applicable IAC Long-Term Incentive Plan,
the IAC Restricted Stock Units held by an HSN Employee or a Former HSN Employee
as of the Effective Time (other than those IAC Restricted Stock Units converted
pursuant to Section 5.3(g)(ii) or Section 5.3(g)(iii)) shall be
converted at the Effective Time into HSN Restricted Stock Units, and shall
otherwise be subject to the same terms and conditions (including with respect
to vesting) after the Effective Time as the terms and conditions applicable to
such IAC Restricted Stock Units immediately prior to the Effective Time,
subject to the following adjustment which shall apply from and after the
Effective Time:  the number of shares of HSN Common Stock
covered by such HSN Restricted Stock Units, rounded up to the nearest whole
share, shall be equal to the product of (A) the number of shares of IAC
Common Stock covered by such IAC Restricted Stock Units immediately prior to
the Effective Time and (B) the HSN Ratio. 
This clause (vii) shall not apply if IAC does not distribute
shares of HSN Common Stock at the Effective Time.


 


(viii)        Other IAC Restricted Stock Units Held by
Tree Employees and Former Tree Employees. 
As determined by the Committee pursuant to its authority under the
applicable IAC Long-Term Incentive Plan,
the IAC Restricted Stock Units held by a Tree Employee or a Former Tree
Employee as of the Effective Time (other than those IAC Restricted Stock Units
converted pursuant to Section 5.3(g)(ii) or Section 5.3(g)(iii))
shall be converted at the Effective Time into Tree Restricted Stock Units, and
shall otherwise be subject to the same terms and conditions (including with
respect to vesting) after the Effective Time as the terms and conditions
applicable to such IAC Restricted Stock Units immediately prior to the
Effective Time, subject to the following adjustment which shall apply
from and after the Effective Time:  the number of shares of Tree Common Stock
covered by such Tree Restricted Stock Units, rounded up to the nearest whole
share, shall be equal to the product of (A) the number of shares of IAC
Common Stock covered by such IAC Restricted Stock Units immediately prior to
the Effective Time and (B) the Tree Ratio. 
This clause (viii) shall not apply if IAC does not
distribute shares of Tree Common Stock at the Effective Time.


 


(ix)           Delayed Common Stock Diversification
Arrangement; Settlement of Delayed Common Stock.  Each holder’s Delayed Common Stock will be
recorded in a book entry account administered by IAC or its designee and each
such book entry account will be subdivided among each Party’s Delayed Common
Stock and further subdivided between stock settled accounts and cash settled
accounts.  Each holder of Delayed Common
Stock will have the ability to elect to convert any of such holder’s Delayed Common
Stock to a cash settled account on not more than five “occasions” based on (1) the
closing trading price of the applicable Delayed Common Stock on the date of the
holder’s election if the holder makes an election during trading hours or (2) the
closing trading price of the applicable Delayed Common Stock during the next
trading session immediately following the holder’s election if the holder makes
an election outside of trading hours.  An
“occasion” shall mean an email notice from a holder to the administrator,
containing an election with respect to one or more Party’s Delayed Common Stock
(but not more than one election with respect to any particular Delayed Common
Stock).  Elections with respect to this
diversification arrangement shall be irrevocable and shall be made solely with
respect to whole shares of Delayed Common Stock.  Cash settled accounts will accrue interest at
2.5% per annum, with amounts accruing interest from the first day following the
date of conversion into a cash account through and 


 


32

















 


until January 2, 2009.  Individuals will not be entitled
to move amounts from cash settled accounts into stock settled accounts.  Accounts will be frozen during the ten (10) Business
Days immediately following the Separation and from November 30, 2008
through January 2, 2009.  On January 2,
2009, each Party will settle all cash and stock denominated accounts relating
to such Party’s Delayed Common Stock (subject to applicable Tax withholdings)
using shares of such Party’s common stock with respect to stock denominated
accounts and U.S. dollars with respect to cash denominated accounts and such
settlement obligation shall be a Liability solely of such Party and no other
Party to this Agreement.  IAC shall have
sole discretion to modify the diversification arrangement.


 


(h)           IAC Restricted Stock.  Shares of IAC Restricted Stock that are
outstanding immediately prior to the Effective
Time shall be treated in the Separation in the same manner as other outstanding
shares of IAC Common Stock are treated in the Separation and will otherwise be
subject to the same terms and conditions (including vesting conditions)
applicable to such shares of IAC Restricted Stock immediately prior to the
Separation.


 


(i)            Foreign
Grants/Awards.  To the extent that
the IAC Awards or any of the IAC Options are granted to non-U.S. employees
under any domestic or foreign
equity-based incentive program sponsored by an IAC Entity, IAC, TM, Interval,
HSN and Tree shall use their commercially reasonable efforts to preserve, at
and after the Effective Time, the value and tax treatment accorded to such IAC
Options and such IAC Awards granted to non-U.S. employees under any domestic or
foreign equity-based incentive program sponsored by an IAC Entity.


 


(j)            Miscellaneous
Option and Other Award Terms.


 


(i)            After the Distribution Date, (A) IAC
Options and IAC Awards adjusted pursuant to Section 5.3, regardless of by
whom held, shall be settled by IAC pursuant to the terms of the applicable IAC Long-Term
Incentive Plan, (B) TM Options and TM Awards, regardless of by whom held,
shall be settled by TM pursuant to the terms of the TM Long-Term Incentive
Plan, (C) Interval Options and Interval Awards, regardless of by whom
held, shall be settled by Interval pursuant to the terms of the Interval
Long-Term Incentive Plan, (D) HSN Options and HSN Awards, regardless of by
whom held, shall be settled by HSN pursuant to the terms of the HSN Long-Term
Incentive Plan, and (E) Tree Options and Tree Awards, regardless of by
whom held, shall be settled by Tree pursuant to the terms of the Tree Long-Term
Incentive Plan.


 


(ii)           Accordingly, it is intended that, (A) to
the extent of the issuance of such TM Options and TM Awards in connection with
the adjustment provisions of this Section 5.3, the TM Long-Term Incentive
Plan shall be considered a successor to each of the IAC Long-Term Incentive
Plans and TM shall be considered to have assumed the obligations of the
applicable IAC Long-Term Incentive Plan to make the adjustment of the IAC
Options and IAC Awards as set forth in this Section 5.3, (B) to the
extent of the issuance of such Interval Options and Interval Awards in
connection with the adjustment provisions of this Section 5.3, the
Interval Long-Term Incentive Plan shall be considered a successor to each of
the IAC Long-Term Incentive Plans and Interval shall be considered to have
assumed the obligations of the applicable IAC Long-Term Incentive Plan to make
the adjustment of the IAC Options and IAC Awards as set forth in this Section 5.3,
(C) to the extent of the issuance of such HSN Options and HSN Awards in
connection with the adjustment 


 


33

















 


provisions of this Section 5.3, the HSN Long-Term Incentive Plan
shall be considered a successor to each of the IAC Long-Term Incentive Plans
and HSN shall be considered to have assumed the obligations of the applicable
IAC Long-Term Incentive Plan to make the adjustment of the IAC Options and IAC
Awards as set forth in this Section 5.3 and (D) to the extent of the
issuance of such Tree Options and Tree Awards in connection with the adjustment
provisions of this Section 5.3, the Tree Long-Term Incentive Plan shall be
considered a successor to each of the IAC Long-Term Incentive Plans and Tree
shall be considered to have assumed the obligations of the applicable IAC
Long-Term Incentive Plan to make the adjustment of the IAC Options and IAC
Awards as set forth in this Section 5.3.


 


(iii)          (A) The Effective Time shall not
constitute a termination of employment for any TM Employees for purposes of any
IAC Option or IAC Award, any Interval Option or Interval Award, any HSN Option
or HSN Award or any Tree Option or Tree Award and, except as otherwise provided
in this Agreement, with respect to grants adjusted pursuant to this Section 5.3,
(1) employment with TM shall be treated as employment with IAC with
respect to IAC Options or IAC Awards held by TM Employees, (2) employment
with TM shall be treated as employment with Interval with respect to Interval
Options or Interval Awards held by TM Employees, (3) employment with TM
shall be treated as employment with HSN with respect to HSN Options and HSN
Awards held by TM Employees and (4) employment with TM shall be treated as
employment with Tree with respect to Tree Options and Tree Awards held by TM
Employees.


 


(B)           The Effective Time shall not constitute a
termination of employment for any Interval Employees for purposes of any IAC
Option or IAC Award, any TM Option or TM Award, any HSN Option or HSN Award or
any Tree Option or Tree Award and, except as otherwise provided in this
Agreement, with respect to grants adjusted pursuant to this Section 5.3, (1) employment
with Interval shall be treated as employment with IAC with respect to IAC Options
or IAC Awards held by Interval Employees, (2) employment with Interval
shall be treated as employment with TM with respect to TM Options or TM Awards
held by Interval Employees, (3) employment with Interval shall be treated
as employment with HSN with respect to HSN Options and HSN Awards held by
Interval Employees and (4) employment with Interval shall be treated as
employment with Tree with respect to Tree Options and Tree Awards held by
Interval Employees.


 


(C)           The Effective Time shall not constitute a
termination of employment for any HSN Employees for purposes of any IAC Option
or IAC Award, any TM Option or TM Award, any Interval Option or Interval Award
or any Tree Option or Tree Award and, except as otherwise provided in this
Agreement, with respect to grants adjusted pursuant to this Section 5.3, (1) employment
with HSN shall be treated as employment with IAC with respect to IAC Options or
IAC Awards held by HSN Employees, (2) employment with HSN shall be treated
as employment with TM with respect to TM Options or TM Awards held by HSN
Employees, (3) employment with HSN shall be treated as employment with
Interval with respect to Interval Options and Interval Awards held by HSN
Employees and (4) employment with HSN shall be treated as employment with
Tree with respect to Tree Options and Tree Awards held by HSN Employees.


 


(D)          The Effective Time shall not constitute a
termination of employment for any Tree Employees for purposes of any IAC Option
or IAC Award, any TM Option or TM Award, any Interval Option or Interval Award
or any HSN 


 


34

















 


Option or HSN Award and, except as otherwise provided in this Agreement,
with respect to grants adjusted pursuant to this Section 5.3, (1) employment
with Tree shall be treated as employment with IAC with respect to IAC Options
or IAC Awards held by Tree Employees, (2) employment with Tree shall be
treated as employment with TM with respect to TM Options or TM Awards held by
Tree Employees, (3) employment with Tree shall be treated as employment
with Interval with respect to Interval Options and Interval Awards held by Tree
Employees and (4) employment with Tree shall be treated as employment with
HSN with respect to HSN Options and HSN Awards held by Tree Employees.


 


(E)           Except as otherwise provided in this
Agreement, with respect to grants adjusted pursuant to this Section 5.3, (1) employment
with IAC shall be treated as employment with TM with respect to TM Options or
TM Awards held by IAC Employees, (2) employment with IAC shall be treated
as employment with Interval with respect to Interval Options and Interval
Awards held by IAC Employees, (3) employment with IAC shall be treated as
employment with HSN with respect to HSN Options and HSN Awards held by IAC Employees
and (4) employment with IAC shall be treated as employment with Tree with
respect to Tree Options and Tree Awards held by IAC Employees.


 


(k)           Waiting Period for
Exercisability of Options and Grant of Options and Awards.  The IAC Options, TM Options, Interval
Options, HSN Options and Tree Options shall not be exercisable during a period beginning on a date prior to the
Distribution Date determined by IAC in its sole discretion, and continuing
until the IAC Post-Separation Stock Value, the TM Stock Value, the Interval
Stock Value, the HSN Stock Value and the Tree Stock Value are determined after
the Effective Time, or such longer period as IAC, with respect to IAC Options,
TM, with respect to TM Options, Interval, with respect to Interval Options,
HSN, with respect to HSN Options and Tree, with respect to Tree Options,
determines necessary to implement the provisions of this Section 5.3.  The IAC Restricted Stock Units, TM Restricted
Stock Units, Interval Restricted Stock Units, HSN Restricted Stock Units and
Tree Restricted Stock Units shall not be settled during a period beginning on a
date prior to the Distribution Date determined by IAC in its sole discretion,
and continuing until the IAC Post-Separation Stock Value, the TM Stock Value,
the Interval Stock Value, the HSN Stock Value and the Tree Stock Value are
determined immediately after the Effective Time, or such longer period as IAC,
with respect to IAC Restricted Stock Units, TM, with respect to TM Restricted
Stock Units, Interval, with respect to Interval Restricted Stock Units, HSN,
with respect to HSN Stock Units and Tree, with respect to Tree Stock Units,
determines necessary to implement the provisions of this Section 5.3.


 


(l)            Exercise of IAC Options after Distribution
Record Date and prior to Distribution Date; IAC Restricted Stock Units that
Vest after Distribution Record Date and prior to Distribution Date.


 


(i)            In the event that any holder exercises an
IAC Option after the first Distribution Record Date (as defined in the
Separation Agreement) and on or prior to August 15, 2008 (option exercises
will not be permitted during the three Business Days immediately preceding the
Distribution Date), IAC will coordinate with Smith Barney and Bank of New York
to ensure that such holder exercises such IAC Option with respect to shares of
IAC Common Stock trading “regular way with due bills.”


 


(ii)           With respect to any individual that holds
IAC Restricted Stock Units that vest after the first Distribution Record Date
(as defined in the Separation 


 


35

















 


Agreement) and prior to the Distribution Date, (A) IAC will
deliver (or cause to be delivered) to such holder shares of IAC Common Stock in
settlement of such IAC Restricted Stock Units due to such holder upon vesting,
giving effect to the withholding of shares of IAC Common Stock to satisfy any
tax withholding obligations with respect to the settlement of such IAC
Restricted Stock Units, such withholding based on the value of a share of IAC
Common Stock trading “regular way with due bills” (the number of shares, net of
shares withheld to satisfy the tax withholding obligations, the “Net RSU
Shares”) and (B) as soon as reasonably practicable following the
Distribution Date, IAC will be obligated to deliver (or cause to be delivered)
to such holder or such holder’s transferee(s) the number of shares of
SpinCo Common Stock with respect to each SpinCo (and any cash in lieu of
fractional shares) that such holder would be entitled to receive if the holder
owned the number of Net RSU Shares on the first Distribution Record Date (as
defined in the Separation Agreement) and such Net RSU Shares shall be subject
to the one-for-two reverse stock split.


 


(m)          Obligation to Deliver
Shares.  Except as provided in Section 5.3(g)(ii)(C) and
Section 5.3(l):


 


(i)            The obligation to deliver shares of IAC
Common Stock upon the exercise of IAC Stock Options or the settlement of IAC
Restricted Stock Units shall be a Liability of IAC.


 


(ii)           The obligation to deliver shares of TM
Common Stock upon the exercise of TM Stock Options or the settlement of TM
Restricted Stock Units shall be a Liability of TM.


 


(iii)          The obligation to deliver shares of HSN
Common Stock upon the exercise of HSN Stock Options or the settlement of HSN
Restricted Stock Units shall be a Liability of HSN.


 


(iv)          The obligation to deliver shares of Interval
Common Stock upon the exercise of Interval Stock Options or the settlement of
Interval Restricted Stock Units shall be a Liability of Interval.


 


(v)           The obligation to deliver shares of Tree
Common Stock upon the exercise of Tree Stock Options or the settlement of Tree
Restricted Stock Units shall be a Liability of Tree.


 


(n)           Equity Plan
Administrator.  Each of IAC, TM,
Interval, HSN and Tree agrees that it will use Smith Barney to administer all
employee equity awards that are outstanding immediately following the Effective
Time (including all such equity awards that are adjusted in accordance with
this Section 5.3).


 


(o)           Equity and Bonus
Compensation Agreement with Barry Diller. 
For the avoidance of doubt, Section 5 of the Equity and Bonus
Compensation Agreement with Barry Diller shall be binding on IAC and each
SpinCo to the extent that any payment or distribution by such Party to or for
the benefit of Mr. Diller would be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by Mr. Diller with
respect to such excise tax.


 


(p)           Abandonment.  In the event that on or prior to the
Distribution Date IAC abandons a Distribution (as defined in the Separation
Agreement) with respect to one 


 


36

















 


or more SpinCos, the adjustments set forth in
this Section 5.3 will apply as described above except that there will be
no conversion of IAC equity awards into equity awards of a SpinCo the shares of
common stock of which IAC does not distribute and SpinCo Employees and Former
SpinCo Employees of any such SpinCo will be treated as IAC Employees and Former
IAC Employees, respectively, for purposes of such adjustments.


 


(q)           Restrictive
Covenants.


 


(i)            Following the Distribution Date, TM shall
use commercially reasonable efforts to monitor the TM Employees and Former TM
Employees to determine whether any such TM Employees or Former TM Employees
have breached any of the restrictive covenants
in the agreements evidencing the terms of their IAC Options and IAC
Awards.  As soon as practicable following
TM’s reasonable belief that a TM Employee or Former TM Employee has breached
any such covenant, TM shall provide IAC in writing with the name and address of
such employee or former employee and a description of the breach that such
employee or former employee is believed to have committed.  Notwithstanding the foregoing or anything in
any agreement evidencing the terms of any IAC Options and IAC Awards or
otherwise to the contrary, it shall not be a violation of any IAC
non-competition or non-solicitation of clients or customers covenant for a TM
Employee to engage in acts on behalf of TM or a TM Entity that are otherwise
prohibited by the terms of such non-competition or non-solicitation of clients
or customers covenants and it shall not be a violation of any TM
non-competition or non-solicitation of clients or customers covenant for an IAC
Employee to engage in acts on behalf of IAC or an IAC Entity that are otherwise
prohibited by the terms of such non-competition or non-solicitation of clients
or customers covenants.  In addition,
following the Effective Time, the restrictive covenants (including, without limitation,
any proprietary rights agreements or confidential information covenants) to
which any TM Employee or Former TM Employee are party shall run in favor of TM
(and, to the extent relating to IAC, shall run in favor of IAC to the same
extent that they ran in favor of IAC immediately prior to the Effective Time; provided,
that the Effective Time shall be treated as a termination of employment from
IAC for purposes of the duration of IAC’s ability to enforce the restrictive
covenant) and the restrictive covenants to which any IAC Employee or Former IAC
Employee are party shall run in favor of IAC. 
Any employment agreement between IAC and a TM Employee or Former TM
Employee shall as of the Effective Time be assigned by IAC to TM and assumed by
TM.


 


(ii)           Following the Distribution Date, Interval
shall use commercially reasonable efforts to monitor the Interval Employees and
Former Interval Employees to determine whether any such Interval Employees or
Former Interval Employees have breached any of the restrictive covenants in the agreements evidencing the
terms of their IAC Options and IAC Awards. 
As soon as practicable following Interval’s reasonable belief that an
Interval Employee or Former Interval Employee has breached any such covenant,
Interval shall provide IAC in writing with the name and address of such
employee or former employee and a description of the breach that such employee
or former employee is believed to have committed.  Notwithstanding the foregoing or anything in
any agreement evidencing the terms of any IAC Options and IAC Awards or
otherwise to the contrary, it shall not be a violation of 


 


37

















 


any
IAC non-competition or non-solicitation of clients or customers covenant for an
Interval Employee to engage in acts on behalf of Interval or an Interval Entity
that are otherwise prohibited by the terms of such non-competition or
non-solicitation of clients or customers covenants and it shall not be a
violation of any Interval non-competition or non-solicitation of clients or
customers covenant for an IAC Employee to engage in acts on behalf of IAC or an
IAC Entity that are otherwise prohibited by the terms of such non-competition
or non-solicitation of clients or customers covenants.  In addition, following the Effective Time,
the restrictive covenants (including, without limitation, any proprietary
rights agreements or confidential information covenants) to which any Interval
Employee or Former Interval Employee are party shall run in favor of Interval
(and, to the extent relating to IAC, shall run in favor of IAC to the same
extent that they ran in favor of IAC immediately prior to the Effective Time; provided,
that the Effective Time shall be treated as a termination of employment from
IAC for purposes of the duration of IAC’s ability to enforce the restrictive
covenant) and the restrictive covenants to which any IAC Employee or Former IAC
Employee are party shall run in favor of IAC. 
Any employment agreement between IAC and an Interval Employee or Former
Interval Employee shall as of the Effective Time be assigned by IAC to Interval
and assumed by Interval.


 


(iii)          Following the Distribution Date, HSN shall
use commercially reasonable efforts to monitor the HSN Employees and Former HSN
Employees to determine whether any such HSN Employees or Former HSN Employees
have breached any of the restrictive covenants
in the agreements evidencing the terms of their IAC Options and IAC
Awards.  As soon as practicable following
HSN’s reasonable belief that an HSN Employee or Former HSN Employee has
breached any such covenant, HSN shall provide IAC in writing with the name and
address of such employee or former employee and a description of the breach
that such employee or former employee is believed to have committed.  Notwithstanding the foregoing or anything in
any agreement evidencing the terms of any IAC Options and IAC Awards or
otherwise to the contrary, it shall not be a violation of any IAC
non-competition or non-solicitation of clients or customers covenant for an HSN
Employee to engage in acts on behalf of HSN or an HSN Entity that are otherwise
prohibited by the terms of such non-competition or non-solicitation of clients
or customers covenants and it shall not be a violation of any HSN non-competition
or non-solicitation of clients or customers covenant for an IAC Employee to
engage in acts on behalf of IAC or an IAC Entity that are otherwise prohibited
by the terms of such non-competition or non-solicitation of clients or
customers covenants.  In addition,
following the Effective Time, the restrictive covenants (including, without
limitation, any proprietary rights agreements or confidential information
covenants) to which any HSN Employee or Former HSN Employee are party shall run
in favor of HSN (and, to the extent relating to IAC, shall run in favor of IAC
to the same extent that they ran in favor of IAC immediately prior to the
Effective Time; provided, that the Effective Time shall be treated as a
termination of employment from IAC for purposes of the duration of IAC’s
ability to enforce the restrictive covenant) and the restrictive covenants to
which any IAC Employee or Former IAC Employee are party shall run in favor of
IAC.  Any employment agreement between
IAC and an HSN Employee or Former HSN Employee shall as of the Effective Time
be assigned by IAC to HSN and assumed by HSN.


 


(iv)          Following the Distribution Date, Tree shall
use commercially reasonable efforts to monitor the Tree Employees and Former
Tree Employees to determine whether any such Tree Employees or Former Tree
Employees have breached any of the restrictive covenants in the agreements evidencing the terms of their IAC Options
and IAC Awards.  As soon as practicable
following Tree’s reasonable belief that a Tree Employee or Former Tree Employee
has breached any such covenant, Tree shall provide IAC in writing with the name
and address of such


 


38
















 


employee
or former employee and the name and a description of the breach that such
employee or former employee is believed to have committed.  Notwithstanding the foregoing or anything in
any agreement evidencing the terms of any IAC Options and IAC Awards or
otherwise to the contrary, it shall not be a violation of any IAC
non-competition or non-solicitation of clients or customers covenant for a Tree
Employee to engage in acts on behalf of Tree or a Tree Entity that are
otherwise prohibited by the terms of such non-competition or non-solicitation
of clients or customers covenants and it shall not be a violation of any Tree
non-competition or non-solicitation of clients or customers covenant for an IAC
Employee to engage in acts on behalf of IAC or an IAC Entity that are otherwise
prohibited by the terms of such non-competition or non-solicitation of clients
or customers covenants.  In addition,
following the Effective Time, the restrictive covenants (including, without
limitation, any proprietary rights agreements or confidential information
covenants) to which any Tree Employee or Former Tree Employee are party shall
run in favor of Tree (and, to the extent relating to IAC, shall run in favor of
IAC to the same extent that they ran in favor of IAC immediately prior to the
Effective Time; provided, that the Effective Time shall be treated as a
termination of employment from IAC for purposes of the duration of IAC’s
ability to enforce the restrictive covenant) and the restrictive covenants to
which any IAC Employee or Former IAC Employee are party shall run in favor of
IAC.  Any employment agreement between
IAC and a Tree Employee or Former Tree Employee shall as of the Effective Time
be assigned by IAC to Tree and assumed by Tree.


 


5.4                                 Registration
Requirements.


 


(a)                                  TM
agrees that it shall maintain on a continuous basis an effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”)
(and maintain the prospectus contained therein for its intended use) with
respect to the shares of TM Common Stock authorized for issuance under the TM
Long-Term Incentive Plan.


 


(b)                                 Interval
agrees that it shall maintain on a continuous basis an effective registration
statement under the Securities Act (and maintain the prospectus contained therein
for its intended use) with respect to the shares of Interval Common Stock
authorized for issuance under the Interval Long-Term Incentive Plan.


 


(c)                                  HSN
agrees that it shall maintain on a continuous basis an effective registration
statement under the Securities Act (and maintain the prospectus contained
therein for its intended use) with respect to the shares of HSN Common Stock
authorized for issuance under the HSN Long-Term Incentive Plan.


 


(d)                                 Tree
agrees that it shall maintain on a continuous basis an effective registration
statement under the Securities Act (and maintain the prospectus contained
therein for its intended use) with respect to the shares of Tree Common Stock
authorized for issuance under the Tree Long-Term Incentive Plan.


 


(e)                                  IAC
agrees that, following the Distribution Date, it shall use reasonable efforts
to continue to maintain a Form S-8 Registration Statement with respect to
and cause to be registered pursuant to the Securities Act of 1933, as amended,
the shares of IAC Common Stock authorized for issuance under the IAC Long-Term
Incentive Plans as required pursuant to such Act and any applicable rules or
regulations thereunder.


 


39

















 


5.5                                 Executive
Deferred Compensation Plans.


 


(a)                                  As
soon as reasonably practicable following the Distribution Date, but in no event
later than December 31, 2008, TM shall establish a deferred compensation
plan (the “TM Deferred Compensation Plan”) and a related rabbi trust
(the “TM Rabbi Trust”), each of which is substantially identical to the
IAC/InterActiveCorp Executive Deferred Compensation Plan then in effect (“IAC
Deferred Compensation Plan”) and the related rabbi trust for the IAC
Deferred Compensation Plan then in effect (the “IAC Rabbi Trust”), to
provide benefits to TM Employees and Former TM Employees from and after the
Distribution Date who were participants in the IAC Deferred Compensation Plan
as of immediately prior to the Distribution Date (“TM Participants”).  All benefits under the IAC Deferred
Compensation Plan with respect to TM Participants shall be assumed by TM and
paid under the TM Deferred Compensation Plan. 
As soon as reasonably practicable following the Distribution Date, but
in no event later than December 31, 2008, IAC shall cause the trustee of
the IAC Rabbi Trust to transfer an amount of assets from the IAC Rabbi Trust to
the TM Rabbi Trust equal to the account balances of TM Participants as of the
date of such transfer to fund the benefits of TM Participants under the TM Deferred
Compensation Plan.


 


(b)                                 Effective
as of the Distribution Date, each Interval Employee and Former Interval
Employee shall be deemed to have elected to receive a lump sum distribution of
his or her accrued benefits under the IAC Deferred Compensation Plan in 2009
and shall be paid such benefits by IAC in 2009 in accordance with the terms of
such plans.


 


(c)                                  As
soon as reasonably practicable following the Distribution Date, but in no event
later than December 31, 2008, HSN shall establish a deferred compensation
plan (the “HSN Deferred Compensation Plan”) that is substantially
identical to the IAC Deferred Compensation Plan to provide benefits to HSN
Employees from and after the Distribution Date who were participants in the IAC
Deferred Compensation Plan as of immediately prior to the Distribution Date and
had made effective elections to defer compensation earned in 2008 (“Active
HSN Participants”).  Each Active HSN
Participant and each other HSN Employee and Former HSN Employee shall be deemed
to have elected to receive a lump sum distribution of his or her accrued
benefits under the IAC Deferred Compensation Plan and HSN Deferred Compensation
Plan in 2009 and shall be paid such benefits in 2009 in accordance with the
terms of such plans.  IAC shall be liable
for any benefits accrued under the IAC Deferred Compensation Plan by any Active
HSN Participant, other HSN Employee and Former HSN Employee prior to the
Distribution Date and HSN shall be liable for any benefits accrued by Active
HSN Participants after the Distribution Date. 
No portion of the IAC Rabbi Trust shall be transferred to HSN or any
rabbi trust established by HSN or shall be used to pay the benefits of Active
HSN Participants accrued after the Distribution Date.


 


(d)                                 As
soon as reasonably practicable following the Distribution Date, but in no event
later than December 31, 2008, Tree shall establish a deferred compensation
plan (the “Tree Deferred Compensation Plan”) and a related rabbi trust
(the “Tree Rabbi Trust”) (each of which is substantially identical to
the IAC Deferred Compensation Plan and IAC Rabbi Trust) to provide benefits to
Tree Employees and Former Tree Employees from and after the Distribution Date
who were participants in the IAC  Deferred
Compensation Plan as of immediately prior to the Distribution Date (“Tree
Participants”).  All benefits under
the IAC Deferred Compensation Plan with respect to Tree Participants shall be
assumed by Tree and paid under the Tree Deferred Compensation Plan.  As soon as reasonably practicable following
the Distribution Date, but in no event later than December 31, 2008, IAC
shall cause the trustee of the IAC Rabbi Trust to transfer an amount of assets 


 


40

















 


from the IAC Rabbi Trust to the Tree Rabbi
Trust equal to the account balances of Tree Participants as of the date of such
transfer to fund the benefits of Tree Participants under the Tree Deferred
Compensation Plan.


 


5.6                                 Severance.


 


(a)                                  A
TM Employee shall not be deemed to have terminated employment for purposes of
determining eligibility for severance benefits in connection with or in
anticipation of the consummation of the transactions contemplated by the
Separation Agreement.  TM shall be solely
responsible for all Liabilities in respect of all costs arising out of payments
and benefits relating to the termination or alleged termination of any TM
Employee or Former TM Employee’s employment that occurs prior to, as a result
of, in connection with or following the consummation of the transactions contemplated by the Separation
Agreement, including any amounts required to be paid (including any payroll or
other taxes), and the costs of providing benefits, under any applicable
severance, separation, redundancy, termination or similar plan, program,
practice, contract, agreement, law or regulation (such benefits to include any
medical or other welfare benefits, outplacement benefits, accrued vacation, and
taxes).


 


(b)                                 An
Interval Employee shall not be deemed to have terminated employment for
purposes of determining eligibility for severance benefits in connection with
or in anticipation of the consummation of the transactions contemplated by the
Separation Agreement.  Interval shall be
solely responsible for all Liabilities in respect of all costs arising out of
payments and benefits relating to the termination or alleged termination of any
Interval Employee or Former Interval Employee’s employment that occurs prior
to, as a result of, in connection with or following the consummation of the transactions contemplated by the Separation
Agreement, including any amounts required to be paid (including any payroll or
other taxes), and the costs of providing benefits, under any applicable
severance, separation, redundancy, termination or similar plan, program,
practice, contract, agreement, law or regulation (such benefits to include any
medical or other welfare benefits, outplacement benefits, accrued vacation, and
taxes).


 


(c)                                  An
HSN Employee shall not be deemed to have terminated employment for purposes of
determining eligibility for severance benefits in connection with or in
anticipation of the consummation of the transactions contemplated by the
Separation Agreement.  HSN shall be
solely responsible for all Liabilities in respect of all costs arising out of
payments and benefits relating to the termination or alleged termination of any
HSN Employee or Former HSN Employee’s employment that occurs prior to, as a
result of, in connection with or following the consummation of the transactions contemplated by the Separation
Agreement, including any amounts required to be paid (including any payroll or
other taxes), and the costs of providing benefits, under any applicable
severance, separation, redundancy, termination or similar plan, program,
practice, contract, agreement, law or regulation (such benefits to include any
medical or other welfare benefits, outplacement benefits, accrued vacation, and
taxes).


 


(d)                                 A
Tree Employee shall not be deemed to have terminated employment for purposes of
determining eligibility for severance benefits in connection with or in
anticipation of the consummation of the transactions contemplated by the
Separation Agreement.  Tree shall be
solely responsible for all Liabilities in respect of all costs arising out of
payments and benefits relating to the termination or alleged termination of any
Tree Employee or Former Tree Employee’s employment that occurs prior to, as a
result of, in connection with or following the consummation of the transactions contemplated by the Separation
Agreement, including any amounts required to be paid (including any payroll or 


 


41

















 


other taxes), and the costs
of providing benefits, under any applicable severance, separation, redundancy,
termination or similar plan, program, practice, contract, agreement, law or
regulation (such benefits to include any medical or other welfare benefits,
outplacement benefits, accrued vacation, and taxes).


 


ARTICLE VI

GENERAL AND ADMINISTRATIVE


 


6.1                                 Sharing
of Participant Information.  IAC and
each of the SpinCos shall share with one another, and IAC shall cause each
other IAC Entity to share, TM shall cause each other TM Entity to share,
Interval shall cause each other Interval Entity to share, HSN shall cause each
other HSN Entity to share and Tree shall cause each other Tree Entity to share
with one another and their respective agents and vendors (without obtaining
releases) all participant information necessary for the efficient and accurate
administration of each of the IAC Benefit Plans, the TM Benefit Plans, the
Interval Benefit Plans, the HSN Benefit Plans and the Tree Benefit Plans.  IAC, TM, Interval, HSN, Tree and their
respective authorized agents shall, subject to applicable laws, be given
reasonable and timely access to, and may make copies of, all information
relating to the subjects of this Agreement in the custody of such other Party,
to the extent necessary for such administration.  Until December 31, 2008, all participant
information shall be provided in the manner and medium applicable to
Participating Companies in IAC Benefit Plans generally, and thereafter until December 31,
2009, all participant information shall be provided in a manner and medium as
may be agreed to by IAC, TM, Interval, HSN and/or Tree, as applicable.


 


6.2                                 Reasonable
Efforts/Cooperation.  Each of the
Parties hereto will use its commercially reasonable efforts to promptly take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.  Each of the Parties hereto shall cooperate
fully on any issue relating to the transactions contemplated by this Agreement for
which the other Party seeks a determination letter or private letter ruling
from the Internal Revenue Service, an advisory opinion from the Department of
Labor or any other filing (including, but not limited to, securities filings
(remedial or otherwise)), consent or approval with respect to or by a
governmental agency or authority in any jurisdiction in the United States or
abroad.


 


6.3                                 No
Third-Party Beneficiaries.  This
Agreement is solely for the benefit of the Parties and is not intended to
confer upon any other Persons any rights or remedies hereunder.  Except as expressly provided in this
Agreement, nothing in this Agreement shall preclude IAC or any other IAC
Entity, at any time after the Close of the Distribution Date, from amending,
merging, modifying, terminating, eliminating, reducing, or otherwise altering
in any respect any IAC Benefit Plan, any benefit under any Benefit Plan or any
trust, insurance policy or funding vehicle related to any IAC Benefit
Plan.  Except as expressly provided in this
Agreement, nothing in this Agreement shall preclude TM or any other TM Entity,
at any time after the Close of the 


 


42

















 


Distribution Date, from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any TM Benefit Plan, any benefit under any Benefit Plan or any trust,
insurance policy or funding vehicle related to any TM Benefit Plan.  Except as expressly provided in this
Agreement, nothing in this Agreement shall preclude Interval or any other Interval
Entity, at any time after the Close of the Distribution Date, from amending,
merging, modifying, terminating, eliminating, reducing, or otherwise altering
in any respect any Interval Benefit Plan, any benefit under any Benefit Plan or
any trust, insurance policy or funding vehicle related to any Interval Benefit
Plan.  Except as expressly provided in
this Agreement, nothing in this Agreement shall preclude HSN or any other HSN
Entity, at any time after the Close of the Distribution Date, from amending,
merging, modifying, terminating, eliminating, reducing, or otherwise altering
in any respect any HSN Benefit Plan, any benefit under any Benefit Plan or any
trust, insurance policy or funding vehicle related to any HSN Benefit Plan.  Except as expressly provided in this
Agreement, nothing in this Agreement shall preclude Tree or any other Tree
Entity, at any time after the Close of the Distribution Date, from amending,
merging, modifying, terminating, eliminating, reducing, or otherwise altering
in any respect any Tree Benefit Plan, any benefit under any Benefit Plan or any
trust, insurance policy or funding vehicle related to any Tree Benefit Plan.


 


6.4                                 Audit Rights With
Respect to Information Provided.


 


(a)                                  Each
Party, and its duly authorized representatives, shall have the right to conduct
reasonable audits with respect to all information required to be provided to it
by any other Party under this Agreement.


 


(b)                                 The
Party conducting an audit pursuant to this Section 6.4 (the “Auditing
Party”) may
adopt reasonable procedures and guidelines for conducting audits and the
selection of audit representatives under this Section 6.4.  The Auditing Party shall have the right to
make copies of any records at its expense, subject to any restrictions imposed
by applicable laws and to any confidentiality provisions set forth in the
Separation Agreement, which are incorporated by reference herein.  The Party being audited shall provide the
Auditing Party’s representatives with reasonable access during normal business
hours to its operations, computer systems and paper and electronic files, and
provide workspace to its representatives. 
After any audit is completed, the Party being audited shall have the
right to review a draft of the audit findings and to comment on those findings
in writing within thirty business days after receiving such draft.


 


(c)                                  The
Auditing Party’s audit rights under this Section 6.4 shall include the
right to audit, or participate in an audit facilitated by the Party being audited, of any Subsidiaries and
Affiliates of the Party being audited and to require the other Party to request
any benefit providers and third parties with whom the Party being audited has a
relationship, or agents of such Party, to agree to such an audit to the extent
any such Persons are affected by or addressed in this Agreement (collectively,
the “Non-parties”).  The
Party being audited shall, upon written request from the Auditing Party,
provide an individual (at the Auditing Party’s expense) to supervise any audit
of a Non-party.  The Auditing Party shall
be responsible for supplying, at the Auditing Party’s expense, additional
personnel sufficient to complete the audit in a reasonably timely manner.  The responsibility of the Party being audited
shall be limited to providing, at the Auditing Party’s expense, a single
individual at each audited site for purposes of facilitating the audit.


 


6.5                                 Fiduciary Matters.  It is acknowledged that actions required to
be taken pursuant to this Agreement may be subject to fiduciary duties or
standards of conduct under ERISA or other applicable law, and no Party shall be
deemed to be in violation of this Agreement if it fails to comply with any
provisions hereof based upon its good faith determination that to do so would
violate such a fiduciary duty or standard. 
Each Party shall be responsible for taking such actions as are deemed
necessary and appropriate to comply with its own fiduciary responsibilities and
shall fully release and indemnify the other Party for any Liabilities caused by
the failure to satisfy any such responsibility.


 


6.6                                 Consent of Third
Parties.  If any provision of this
Agreement is dependent on the consent of any third party (such as a vendor) and
such consent is withheld, the Parties hereto shall use commercially reasonable
efforts to implement the applicable provisions of this Agreement to the full
extent practicable.  If any provision of
this Agreement cannot be 


 


43

















 


implemented due to the failure of such third
party to consent, the Parties hereto shall negotiate in good faith to implement
the provision in a mutually satisfactory manner.  The phrase “commercially reasonable efforts”
as used herein shall not be construed to require any Party to incur any
non-routine or unreasonable expense or Liability or to waive any right.


 


ARTICLE VII

MISCELLANEOUS


 


7.1                                 Effect If Effective
Time Does Not Occur.  If the
Separation Agreement is terminated prior to the Distribution Date, then this
Agreement shall terminate and all actions and events that are, under this
Agreement, to be taken or occur effective immediately prior to or as of the
Close of the Distribution Date, or Immediately after the Distribution Date, or
otherwise in connection with the Separation Transactions, shall not be taken or
occur except to the extent specifically agreed by the Parties.


 


7.2                                 Relationship of
Parties.  Nothing in this Agreement
shall be deemed or construed by the Parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
Parties, it being understood and agreed that no provision contained herein, and
no act of the Parties, shall be deemed to create any relationship between the
Parties other than the relationship set forth herein.


 


7.3                                 Affiliates.  Each of IAC, TM, Interval, HSN and Tree shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth in this Agreement to be performed by
another IAC Entity, TM Entity, Interval Entity, HSN Entity or Tree Entity,
respectively.


 


7.4                                 Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given to
a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight
courier service (costs prepaid); (b) sent by facsimile with confirmation
of transmission by the transmitting equipment; or (c) received or rejected
by the addressee, if sent by certified mail, return receipt requested, in each
case to the following addresses and facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
address, facsimile number or person as a Party may designate by notice to the
other Parties):


 


(a)                                  if to IAC:


 


IAC/InterActiveCorp

555 West 18th Street

New York, NY 10011

Attention:  General Counsel

Facsimile No.:  (212) 314-7379


 


(b)                                 if to TM:


 


Ticketmaster

8800 West Sunset Blvd

West Hollywood, CA 90069

Attention:  General Counsel

Facsimile No.:  (310) 360-3373


 


44

















 


(c)                                  if to Interval:


 


Interval Leisure Group, Inc.

6262 Sunset Drive

Miami, FL 33143

Attention:  General Counsel

Facsimile No.:  (305) 667-2072


 


(d)                                 if to HSN:


 


HSN, Inc.

1 HSN Drive

St. Petersburg, FL 33729

Attention:  General Counsel

Facsimile No.:  (727) 872-6866


 


(e)                                  if to Tree:


 


Tree.com, Inc.

11115 Rushmore Drive

Charlotte, NC 28277

Attention:  General Counsel

Facsimile No.:  (949) 255-5139


 


7.5                                 Abandonment.  IAC may in its sole discretion abandon one or
more of the Distributions (as defined in the Separation Agreement) prior to the
Distribution Date, and, by notice to the other SpinCos, shall have the right to
terminate this Agreement to the extent of the rights and obligations provided
between the SpinCo(s) the Distribution of which shall have been abandoned,
on the one hand, and the other SpinCos and IAC, on the other hand.  In the event that one or more of the
Distributions (as defined in the Separation Agreement) shall not be effected on
the Distribution Date, (a) any provisions contained in this Agreement
regarding the rights or obligations of a SpinCo the Distribution of which shall
have been abandoned shall have no effect, (b) such SpinCo shall continue
to be treated as a member of the IAC Group (as defined in the Separation
Agreement) and (c) such SpinCo’s SpinCo Employees and Former SpinCo
Employees shall be treated as IAC Employees and Former IAC Employees,
respectively, for purposes of this Agreement.


 


7.6                                 Incorporation of
Separation Agreement Provisions.  The
following provisions of the Separation Agreement are hereby incorporated herein
by reference, and unless otherwise expressly specified herein, such provisions
shall apply as if fully set forth herein mutatis
mutandis (references in this Section 7.6 to an “Article” or “Section”
shall mean Articles or Sections of the Separation Agreement, and references in
the material incorporated herein by reference shall be references to the
Separation Agreement):  Article VI
(relating to Mutual Releases; Indemnification); Article VIII (relating to
Exchange of Information; Confidentiality); Article IX (relating to Dispute
Resolution); Article X (relating to Further Assurances); Article XII
(relating to Sole Discretion of IAC; Termination) and Article XIII (relating
to Miscellaneous).


 


[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]


 


45

















 


IN WITNESS WHEREOF, the Parties have caused
this Employee Matters Agreement to be duly executed as of the day and year
first above written.


 


	
   

  	
  IAC/INTERACTIVECORP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory Blatt

  
	
   

  	
   

  	
  Name:

  	
   Gregory
  R. Blatt

  
	
   

  	
   

  	
  Title:

  	
   Executive
  Vice President

  



 


 


	
   

  	
  TICKETMASTER

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joanne Hawkins

  
	
   

  	
   

  	
  Name:

  	
   Joanne
  Hawkins

  
	
   

  	
   

  	
  Title:

  	
   Vice
  President and Assistant Secretary

  



 


 


	
   

  	
  INTERVAL LEISURE GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joanne Hawkins

  
	
   

  	
   

  	
  Name:

  	
   Joanne
  Hawkins

  
	
   

  	
   

  	
  Title:

  	
   Vice
  President and Assistant Secretary

  



 


 


	
   

  	
  HSN, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tanya Stanich

  
	
   

  	
   

  	
  Name:

  	
   Tanya
  Stanich

  
	
   

  	
   

  	
  Title:

  	
   Vice
  President and Assistant Secretary

  



 


 


	
   

  	
  TREE.COM, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tanya Stanich

  
	
   

  	
   

  	
  Name:

  	
   Tanya
  Stanich

  
	
   

  	
   

  	
  Title:

  	
   Vice
  President and Assistant Secretary

  



 


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