exv4w1






Exhibit 4.1




EXPEDIA, INC.

2005 STOCK AND ANNUAL INCENTIVE PLAN




SECTION 1. PURPOSE; DEFINITIONS




     The purpose of this Plan is (a) to give the Company a competitive advantage in attracting,
retaining and motivating officers, employees, directors and/or consultants and to provide the
Company and its Subsidiaries and Affiliates with a stock and incentive plan granting new Awards to
provide incentives directly linked to shareholder value and (b) to assume and govern other awards
pursuant to the adjustment of awards granted under any IAC Long Term Incentive Plan (as defined in
the Employee Matters Agreement) in accordance with the terms of the Employee Matters Agreement
(“Adjusted Awards”). Certain terms used herein have definitions given to them in the first place in
which they are used. In addition, for purposes of this Plan, the following terms are defined as set
forth below:




     (a) “AFFILIATE” means a corporation or other entity controlled by, controlling or under
common control with, the Company.




     (b) “APPLICABLE EXCHANGE” means Nasdaq or such other securities exchange as may at the
applicable time be the principal market for the Common Stock.




     (c) “AWARD” means an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, or other stock-based award granted or assumed pursuant to the terms of this Plan including
Adjusted Awards.




     (d) “AWARD AGREEMENT” means a written or electronic document or agreement setting forth the
terms and conditions of a specific Award.




     (e) “BOARD” means the Board of Directors of the Company.




     (f) “BONUS AWARD” means a bonus award made pursuant to Section 9.




     (g) “CAUSE” means, unless otherwise provided in an Award Agreement, (i) “Cause” as defined
in any Individual Agreement to which the applicable Participant is a party, or (ii) if there is
no such Individual Agreement or if it does not define Cause: (A) the willful or gross neglect by
a Participant of his employment duties; (B) the plea of guilty or NOLO CONTENDERE to, or
conviction for, the commission of a felony offense by a Participant; (C) a material breach by a
Participant of a fiduciary duty owed to the Company or any of its subsidiaries; (D) a material
breach by a Participant of any nondisclosure, non-solicitation or non-competition obligation owed
to the Company or any of its Affiliates; or (E) before a Change in Control, such other events as
shall be determined by the Committee and set forth in a Participant’s Award Agreement.
Notwithstanding the general rule of Section 2(c), following a Change in Control, any
determination by the Committee as to whether “Cause” exists shall be subject to DE NOVO review.




     (h) “CHANGE IN CONTROL” has the meaning set forth in Section 10(b).




     (i) “CODE” means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto.




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




     (k) “COMMITTEE” has the meaning set forth in Section 2(a).




     (l) “COMMON STOCK” means common stock, par value $.001 per share, of the Company.




     (m) “COMPANY” means Expedia, Inc., a Delaware corporation or its successor.




     (n) “DISABILITY” means (i) “Disability” as defined in any Individual Agreement to which the
Participant is a party, (ii) if there is no such Individual Agreement or it does not define
“Disability,” (A) permanent and total disability as determined under the Company’s long-term
disability plan applicable to the Participant, or (B) if there is no such plan applicable to the
Participant or the Committee determines otherwise in an applicable Award Agreement, “Disability”
as determined by the Committee.













 






     (o) “DISAFFILIATION” means a Subsidiary’s or Affiliate’s ceasing to be a Subsidiary or
Affiliate for any reason (including, without limitation, as a result of a public offering, or a
spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of a
division of the Company and its Affiliates.




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




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




     (r) “ELIGIBLE INDIVIDUALS” means directors, officers, employees and consultants of the
Company or any of its Subsidiaries or Affiliates.




     (s) “EMPLOYEE MATTERS AGREEMENT” means the Employee Matters Agreement by and between IAC and
the Company dated as of August 9, 2005.




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




     (u) “FAIR MARKET VALUE” means, unless otherwise defined in an Award Agreement, if the Common
Stock is listed on a national securities exchange, as of any given date, the closing price for
the Common Stock on such date on the Applicable Exchange, or if Shares were not traded on the
Applicable Exchange on such measurement date, then on the next preceding date on which Shares
were traded, all as reported by such source as the Committee may select. If the Common Stock is
not listed on a national securities exchange, Fair Market Value shall be determined by the
Committee in its good faith discretion.




     (v) “FREE-STANDING SAR” has the meaning set forth in Section 5(b).




     (w) “GRANT DATE” means (i) the date on which the Committee by resolution selects an Eligible
Individual to receive a grant of an Award and determines the number of Shares to be subject to
such Award or the formula for earning a number of shares or cash amount, (ii) such later date as
the Committee shall provide in such resolution or (iii) the initial date on which an Adjusted
Award was granted under the IAC Long Term Incentive Plan.




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




     (y) “INCENTIVE STOCK OPTION” means any Option that is designated in the applicable Award
Agreement as an “incentive stock option” within the meaning of Section 422 of the Code, and that
in fact so qualifies.




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




     (aa) “NONQUALIFIED OPTION” means any Option that is not an Incentive Stock Option.




     (bb) “OPTION” means an Award described under Section 5.




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




     (dd) “PERFORMANCE GOALS” means the performance goals established by the Committee in
connection with the grant of Restricted Stock, Restricted Stock Units or Bonus Awards or other
stock-based awards. In the case of Qualified-Performance Based Awards that are intended to
qualify under Section 162(m)(4), (i) such goals shall be based on the attainment of one or any
combination of the following: specified levels of earnings per share from continuing operations,
net profit after tax, EBITDA, EBITA, gross profit, cash generation, unit volume, market share,
sales, asset quality, earnings per share, operating income, revenues, return on assets, return on
operating assets, return on equity, profits, total shareholder return (measured in terms of stock



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price appreciation and/or dividend growth), cost saving levels, marketing-spending
efficiency, core non-interest income, change in working capital, return on capital, and/or stock
price, with respect to the Company or any subsidiary, division or department of the Company that
are intended to qualify under Section 162(m)(4)(c) of the Code and (ii) such Performance Goals
shall be set by the Committee within the time period prescribed by Section 162(m) of the Code and
related regulations. Such Performance Goals also may be based upon the attaining of specified
levels of Company, Subsidiary, Affiliate or divisional performance under one or more of the
measures described above relative to the performance of other entities, divisions or
subsidiaries.




     (ee) “PLAN” means this Expedia, Inc. 2005 Stock and Annual Incentive Plan, as set forth
herein and as hereafter amended from time to time.




     (ff) “PLAN YEAR” means the calendar year or, with respect to Bonus Awards, the Company’s
fiscal year if different.




     (gg) “QUALIFIED PERFORMANCE-BASED AWARD” means an Award intended to qualify for the Section
162(m) Exemption, as provided in Section 11.




     (hh) “RESTRICTED STOCK” means an Award described under Section 6.




     (ii) “RESTRICTED STOCK UNITS” means an Award described under Section 7.




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




     (kk) “SECTION 162(M) EXEMPTION” means the exemption from the limitation on deductibility
imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.




     (ll) “SEPARATION” has the meaning set forth in the Employee Matters Agreement.




     (mm) “SHARE” means a share of Common Stock.




     (nn) “STOCK APPRECIATION RIGHT” has the meaning set forth in Section 5(b).




     (oo) “SUBSIDIARY” means any corporation, partnership, joint venture or other entity during
any period in which at least a 50% voting or profits interest is owned, directly or indirectly,
by the Company or any successor to the Company.




     (pp) “TANDEM SAR” has the meaning set forth in Section 5(b).




     (qq) “TERM” means the maximum period during which an Option or Stock Appreciation Right may
remain outstanding, subject to earlier termination upon Termination of Employment or otherwise,
as specified in the applicable Award Agreement.




     (rr) “TERMINATION OF EMPLOYMENT” means the termination of the applicable Participant’s
employment with, or performance of services for, the Company and any of its Subsidiaries or
Affiliates. Unless otherwise determined by the Committee, if a Participant’s employment with, or
membership on a board of directors of, the Company and its Affiliates terminates but such
Participant continues to provide services to the Company and its Affiliates in a non-employee
director capacity or as an employee, as applicable, such change in status shall not be deemed a
Termination of Employment. A Participant employed by, or performing services for, a Subsidiary or
an Affiliate or a division of the Company and its Affiliates shall be deemed to incur a
Termination of Employment if, as a result of a Disaffiliation, such Subsidiary, Affiliate, or
division ceases to be a Subsidiary, Affiliate or division, as the case may be, and the
Participant does not immediately thereafter become an employee of, or member of the board of
directors of, the Company or another Subsidiary or Affiliate. Temporary absences from employment
because of illness, vacation or leave of absence and transfers among the Company and its
Subsidiaries and Affiliates shall not be considered Terminations of Employment. For the avoidance
of doubt, the Separation shall not constitute a Termination of Employment for purposes of any
Adjusted Award.



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SECTION 2. ADMINISTRATION




     (a) COMMITTEE. The Plan shall be administered by the Compensation/Benefits Committee of the
Board or such other committee of the Board as the Board may from time to time designate (the
“Committee”), which shall be composed of not less than two directors, and shall be appointed by and
serve at the pleasure of the Board. The Committee shall, subject to Section 11, have plenary
authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals. Among other
things, the Committee shall have the authority, subject to the terms of the Plan and the Employee
Matters Agreement (including the original terms of the grant of the Adjusted Award):




     (i) to select the Eligible Individuals to whom Awards may from time to time be granted;




     (ii) to determine whether and to what extent Incentive Stock Options, Nonqualified Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, other stock-based awards, or
any combination thereof, are to be granted hereunder;




     (iii) to determine the number of Shares to be covered by each Award granted hereunder;




     (iv) to determine the terms and conditions of each Award granted hereunder, based on such
factors as the Committee shall determine;




     (v) subject to Section 12, to modify, amend or adjust the terms and conditions of any Award,
at any time or from time to time;




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




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




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




     (ix) to otherwise administer the Plan.



     (b) PROCEDURES.




     (i) The Committee may act only by a majority of its members then in office, except that the
Committee may, except to the extent prohibited by applicable law or the listing standards of the
Applicable Exchange and subject to Section 11, allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate all or any part of
its responsibilities and powers to any person or persons selected by it.




     (ii) Subject to Section 11(c), any authority granted to the Committee may also be exercised
by the full Board. To the extent that any permitted action taken by the Board conflicts with
action taken by the Committee, the Board action shall control.



     (c) DISCRETION OF COMMITTEE. Subject to Section 1(g), any determination made by the Committee
or by an appropriately delegated officer pursuant to delegated authority under the provisions of
the Plan with respect to any Award shall be made in the sole discretion of the Committee or such
delegate at the time of the grant of the Award or, unless in contravention of any express term of
the Plan, at any time thereafter. All decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons,
including the Company, Participants, and Eligible Individuals.



     (d) AWARD AGREEMENTS. The terms and conditions of each Award, as determined by the Committee,
shall be set forth in an Award Agreement, which shall be delivered to the Participant receiving
such Award upon, or as promptly as is reasonably practicable following, the grant of such Award.
The effectiveness of an Award shall not be subject to the Award Agreement’s being signed by the
Company and/or the Participant receiving the Award unless specifically so provided in the Award
Agreement. Award Agreements may be amended only in accordance with Section 12 hereof.



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SECTION 3. COMMON STOCK SUBJECT TO PLAN




     (a) PLAN MAXIMUMS. The maximum number of Shares that may be delivered pursuant to Awards
under the Plan shall be the sum of (a) the number of Shares that may be issuable upon exercise or
vesting of the Adjusted Awards and (b) 19,500,000. Shares subject to an Award under the Plan may be
authorized and unissued Shares or may be treasury Shares.



     (b) INDIVIDUAL LIMITS. No Participant may be granted Awards covering in excess of 8,000,000
Shares during the term of the Plan; PROVIDED, that Adjusted Awards shall not be subject to this
limitation.



     (c) RULES FOR CALCULATING SHARES DELIVERED.




     (i) With respect to Awards other than Adjusted Awards, to the extent that any Award is
forfeited, or any Option and the related Tandem SAR (if any) or Free-Standing SAR terminates,
expires or lapses without being exercised, or any Award is settled for cash, the Shares subject
to such Awards not delivered as a result thereof shall again be available for Awards under the
Plan.




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



     (d) ADJUSTMENT PROVISION. Subject to the provisions of Section 3(e), in the event of (i) a
stock dividend, stock split, reverse stock split, share combination, or recapitalization or similar
event affecting the capital structure of the Company (each, a “Share Change”), or (ii) a merger,
consolidation, acquisition of property or shares, separation, spinoff, reorganization, stock rights
offering, liquidation, Disaffiliation, payment of cash dividends other than an ordinary dividend or
similar event affecting the Company or any of its Subsidiaries (each, a “Corporate Transaction”),
the Committee or the Board may in its discretion make such substitutions or adjustments as it deems
appropriate and equitable to (A) the aggregate number and kind of Shares or other securities
reserved for issuance and delivery under the Plan, (B) the various maximum limitations set forth in
Sections 3(a) and 3(b) upon Awards and upon the grants to individuals of Awards, (C) the number and
kind of Shares or other securities subject to outstanding Awards; and (D) the exercise price of
outstanding Options and Stock Appreciation Rights. In the case of Corporate Transactions, such
adjustments may include, without limitation, (1) the cancellation of outstanding Awards in exchange
for payments of cash, property or a combination thereof having an aggregate value equal to the
value of such Awards, as determined by the Committee or the Board in its sole discretion (it being
understood that in the case of a Corporate Transaction with respect to which shareholders of Common
Stock receive consideration other than publicly traded equity securities of the ultimate surviving
entity, any such determination by the Committee that the value of an Option or Stock Appreciation
Right shall for this purpose be deemed to equal the excess, if any, of the value of the
consideration being paid for each Share pursuant to such Corporate Transaction over the exercise
price of such Option or Stock Appreciation Right shall conclusively be deemed valid); (2) the
substitution of other property (including, without limitation, cash or other securities of the
Company and securities of entities other than the Company) for the Shares subject to outstanding
Awards; and (3) in connection with any Disaffiliation, arranging for the assumption of Awards, or
replacement of Awards with new awards based on other property or other securities (including,
without limitation, other securities of the Company and securities of entities other than the
Company), by the affected Subsidiary, Affiliate, or division or by the entity that controls such
Subsidiary, Affiliate, or division following such Disaffiliation (as well as any corresponding
adjustments to Awards that remain based upon Company securities). Any adjustment under this Section
3(d) need not be the same for all Participants.



     (e) SECTION 409A. Notwithstanding the foregoing: (i) any adjustments made pursuant to Section
3(d) to Awards that are considered “deferred compensation” within the meaning of Section 409A of
the Code shall be made in compliance with the requirements of Section 409A of the Code; (ii) any
adjustments made pursuant to Section 3(d) to Awards that are not considered “deferred compensation”
subject to Section 409A of the Code shall be made in such a manner as to ensure that after such
adjustment, the Awards either (A) continue not to be subject to Section 409A of the Code or (B)
comply with the requirements of Section 409A of the Code; and (iii) in any event, neither the
Committee nor the Board shall have the authority to make any adjustments pursuant to Section 3(d)
to the extent the existence of such authority would cause an Award that is not intended to be
subject to Section 409A of the Code at the Grant Date to be subject thereto.



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SECTION 4. ELIGIBILITY




     Awards may be granted under the Plan to Eligible Individuals and, with respect to Adjusted
Awards, in accordance with the terms of the Employee Matters Agreement; PROVIDED, HOWEVER, that
Incentive Stock Options may be granted only to employees of the Company and its subsidiaries or
parent corporation (within the meaning of Section 424(f) of the Code) and, with respect to Adjusted
Awards that are intended to qualify as incentive stock options within the meaning of Section 421 of
the Code, in accordance with the terms of the Employee Matters Agreement.



SECTION 5. OPTIONS AND STOCK APPRECIATION RIGHTS




     With respect to Adjusted Awards, the provisions below will be applicable only to the extent
that they are not inconsistent with the Employee Matters Agreement and the terms of the Adjusted
Award assumed under the Employee Matters Agreement:




     (a) TYPES OF OPTIONS. Options may be of two types: Incentive Stock Options and Nonqualified
Options. The Award Agreement for an Option shall indicate whether the Option is intended to be an
Incentive Stock Option or a Nonqualified Option.




     (b) TYPES AND NATURE OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be “Tandem
SARs,” which are granted in conjunction with an Option, or “Free-Standing SARs,” which are not
granted in conjunction with an Option. Upon the exercise of a Stock Appreciation Right, the
Participant shall be entitled to receive an amount in cash, Shares, or both, in value equal to
the product of (i) the excess of the Fair Market Value of one Share over the exercise price of
the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares in respect of
which the Stock Appreciation Right has been exercised. The applicable Award Agreement shall
specify whether such payment is to be made in cash or Common Stock or both, or shall reserve to
the Committee or the Participant the right to make that determination prior to or upon the
exercise of the Stock Appreciation Right.




     (c) TANDEM SARS. A Tandem SAR may be granted at the Grant Date of the related Option or, in
the case of a related Nonqualified Option, at any time after the Grant Date thereof while the
related Nonqualified Option remains outstanding. A Tandem SAR shall be exercisable only at such
time or times and to the extent that the related Option is exercisable in accordance with the
provisions of this Section 5, and shall have the same exercise price as the related Option. A
Tandem SAR shall terminate or be forfeited upon the exercise or forfeiture of the related Option,
and the related Option shall terminate or be forfeited upon the exercise or forfeiture of the
Tandem SAR.




     (d) EXERCISE PRICE. The exercise price per Share subject to an Option or Free-Standing SAR
shall be determined by the Committee and set forth in the applicable Award Agreement, and shall
not be less than the Fair Market Value of a share of the Common Stock on the applicable Grant
Date. In no event may any Option or Free-Standing SAR granted under this Plan be amended, other
than pursuant to Section 3(d), to decrease the exercise price thereof or otherwise be subject to
any action that would be treated, for accounting purposes, as a “repricing” of such Option or
Free-Standing SAR, unless such amendment, cancellation, or action is approved by the Company’s
shareholders.




     (e) TERM. The Term of each Option and each Free-Standing SAR shall be fixed by the
Committee, but shall not exceed ten years from the Grant Date in the case of an Incentive Stock
Option.




     (f) VESTING AND EXERCISABILITY. Except as otherwise provided herein, Options and
Free-Standing SARs shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides that any Option or
Free-Standing SAR will become exercisable only in installments, the Committee may at any time
waive such installment exercise provisions, in whole or in part, based on such factors as the
Committee may determine. In addition, the Committee may at any time accelerate the exercisability
of any Option or Free-Standing SAR.




     (g) METHOD OF EXERCISE. Subject to the provisions of this Section 5, Options and
Free-Standing SARs may be exercised, in whole or in part, at any time during the applicable Term
by giving written notice of exercise to the Company or through the procedures established with
the Company’s appointed third-party Option administrator specifying the number of Shares as to
which the Option or Free-Standing SAR is being exercised; PROVIDED, HOWEVER, that, unless
otherwise permitted by the Committee, any such exercise must be with respect to a portion of the
applicable Option or Free-Standing SAR relating to no less than the lesser of the number of
Shares then subject to such Option or Free-Standing SAR or 100 Shares. In the case of the
exercise of an Option, such notice shall be accompanied by payment in full of the purchase price
(which shall equal the product of such number of Shares multiplied by the applicable exercise
price) by certified or bank check or such other instrument as the Company may accept. If approved
by the Committee, payment, in full or in part, may also be made as follows:



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     (i) Payments may be made in the form of unrestricted Shares (by delivery of such Shares or
by attestation) of the same class as the Common Stock subject to the Option already owned by
the Participant (based on the Fair Market Value of the Common Stock on the date the Option is
exercised); PROVIDED, HOWEVER, that, in the case of an Incentive Stock Option, the right to
make a payment in the form of already owned Shares of the same class as the Common Stock
subject to the Option may be authorized only at the time the Option is granted.




     (ii) To the extent permitted by applicable law, payment may be made by delivering a
properly executed exercise notice to the Company, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the purchase price, and, if requested, the amount of any federal, state, local
or foreign withholding taxes. To facilitate the foregoing, the Company may, to the extent
permitted by applicable law, enter into agreements for coordinated procedures with one or more
brokerage firms. To the extent permitted by applicable law, the Committee may also provide for
Company loans to be made for purposes of the exercise of Options.




     (iii) Payment may be made by instructing the Committee to withhold a number of Shares
having a Fair Market Value (based on the Fair Market Value of the Common Stock on the date the
applicable Option is exercised) equal to the product of (A) the exercise price multiplied by
(B) the number of Shares in respect of which the Option shall have been exercised.




     (h) DELIVERY; RIGHTS OF SHAREHOLDERS. No Shares shall be delivered pursuant to the exercise
of an Option until the exercise price therefor has been fully paid and applicable taxes have been
withheld. Except as otherwise provided in Section 5(k) below, the applicable Participant shall
have all of the rights of a shareholder of the Company holding the class or series of Common
Stock that is subject to the Option or Stock Appreciation Right (including, if applicable, the
right to vote the applicable Shares and the right to receive dividends), when the Participant (i)
has given written notice of exercise, (ii) if requested, has given the representation described
in Section 14(a), and (iii) in the case of an Option, has paid in full for such Shares.




     (i) TERMINATIONS OF EMPLOYMENT. Subject to Section 10(c), a Participant’s Options and Stock
Appreciation Rights shall be forfeited upon such Participant’s Termination of Employment, except
as set forth below:




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




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




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




     (iv) Upon a Participant’s Termination of Employment for any reason other than death,
Disability, Retirement or for Cause, any Option or Stock Appreciation Right held by the
Participant that was exercisable immediately before the Termination of Employment may be
exercised at any time until the earlier of (A) the 90th day following such Termination of
Employment and (B) expiration of the Term thereof; and




     (v) Notwithstanding the above provisions of this Section 5(i), if a Participant dies after
such Participant’s Termination of Employment but while any Option or Stock Appreciation Right
remains exercisable as set forth above, such Option or Stock Appreciation Right may be
exercised at any time until the later of (A) the earlier of (1) the first anniversary of the
date of such death and (2) expiration of the Term thereof and (B) the last date on which such
Option or Stock Appreciation Right would have been exercisable, absent this Section 5(i)(v).




Notwithstanding the foregoing, the Committee shall have the power, in its discretion, to apply
different rules concerning the consequences of a Termination of Employment; PROVIDED, HOWEVER,
that if such rules are less favorable to the Participant than those set forth above, such rules
are set forth in the applicable Award Agreement. If an Incentive Stock Option is exercised after
the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such
Option will thereafter be treated as a Nonqualified Option.



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     (j) NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS. No Option or Free-Standing
SAR shall be transferable by a Participant other than (i) by will or by the laws of descent and
distribution, or (ii) in the case of a Nonqualified Option or Free-Standing SAR, pursuant to a
qualified domestic relations order or as otherwise expressly permitted by the Committee
including, if so permitted, pursuant to a transfer to the Participant’s family members or to a
charitable organization, whether directly or indirectly or by means of a trust or partnership or
otherwise. For purposes of this Plan, unless otherwise determined by the Committee, “family
member” shall have the meaning given to such term in General Instructions A.1(a)(5) to Form S-8
under the Securities Act of 1933, as amended, and any successor thereto. A Tandem SAR shall be
transferable only with the related Option as permitted by the preceding sentence. Any Option or
Stock Appreciation Right shall be exercisable, subject to the terms of this Plan, only by the
applicable Participant, the guardian or legal representative of such Participant, or any person
to whom such Option or Stock Appreciation Right is permissibly transferred pursuant to this
Section 5(j), it being understood that the term “Participant” includes such guardian, legal
representative and other transferee; PROVIDED, HOWEVER, that the term “Termination of Employment”
shall continue to refer to the Termination of Employment of the original Participant.




     (k) DEFERRAL OF OPTION SHARES. The Committee may from time to time establish procedures
pursuant to which a Participant may elect to defer, until a time or times later than the exercise
of an Option, receipt of all or a portion of the Shares subject to such Option and/or to receive
cash at such later time or times in lieu of such deferred shares, all on such terms and
conditions as the Committee shall determine. If any such deferrals are permitted, then
notwithstanding Section 5(g), a Participant who elects such deferral shall not have any rights as
a stockholder with respect to such deferred shares unless and until shares are actually delivered
to such Participant with respect thereto, except to the extent otherwise determined by the
Committee.



SECTION 6. RESTRICTED STOCK




     With respect to Adjusted Awards, the provisions below will be applicable only to the extent
that they are not inconsistent with the Employee Matters Agreement and the terms of the Adjusted
Award assumed under the Employee Matters Agreement:




     (a) NATURE OF AWARDS AND CERTIFICATES. Shares of Restricted Stock are actual Shares issued
to a Participant, and shall be evidenced in such manner as the Committee may deem appropriate,
including book-entry registration or issuance of one or more stock certificates. Any certificate
issued in respect of Shares of Restricted Stock shall be registered in the name of the applicable
Participant and shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:




“The transferability of this certificate and the shares of stock represented hereby are
subject to the terms and conditions (including forfeiture) of the Expedia, Inc. 2005 Stock
and Annual Incentive Plan and an Award Agreement. Copies of such Plan and Agreement are on
file at the offices of Expedia, Inc.”


The Committee may require that the certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of
Restricted Stock, the applicable Participant shall have delivered a stock power, endorsed in
blank, relating to the Common Stock covered by such Award.





     (b) TERMS AND CONDITIONS. Shares of Restricted Stock shall be subject to the following
terms and conditions:




     (i) The Committee may, prior to or at the time of grant, designate an Award of Restricted
Stock as a Qualified Performance-Based Award, in which event it shall condition the grant or
vesting, as applicable, of such Restricted Stock upon the attainment of Performance Goals. If
the Committee does not designate an Award of Restricted Stock as a Qualified Performance-Based
Award, it may also condition the grant or vesting thereof upon the attainment of Performance
Goals. Regardless of whether an Award of Restricted Stock is a Qualified Performance-Based
Award, the Committee may also condition the grant or vesting thereof upon the continued service
of the Participant. The conditions for grant or vesting and the other provisions of Restricted
Stock Awards (including without limitation any applicable Performance Goals) need not be the
same with respect to each recipient. Subject to Section 11(b), the Committee may at any time,
in its sole discretion, accelerate or waive, in whole or in part, any of the foregoing
restrictions.




     (ii) Subject to the provisions of the Plan and the applicable Award Agreement, during the
period, if any, set by the Committee, commencing with the date of such Restricted Stock Award
for which such Participant’s continued service is required (the “Restriction Period”), and
until the later of (A) the expiration of the Restriction Period and (B) the date the applicable
Performance Goals (if any) are satisfied, the Participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber Shares of Restricted Stock.



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     (iii) Except as provided in this Section 6 and in the applicable Award Agreement, the
applicable Participant shall have, with respect to the Shares of Restricted Stock, all of the
rights of a stockholder of the Company holding the class or series of Common Stock that is the
subject of the Restricted Stock, including, if applicable, the right to vote the Shares and the
right to receive any cash dividends. If so determined by the Committee in the applicable Award
Agreement and subject to Section 14(e), (A) cash dividends on the class or series of Common
Stock that is the subject of the Restricted Stock Award shall be automatically deferred and
reinvested in additional Restricted Stock, held subject to the vesting of the underlying
Restricted Stock, and (B) subject to any adjustment pursuant to Section 3(d), dividends payable
in Common Stock shall be paid in the form of Restricted Stock of the same class as the Common
Stock with which such dividend was paid, held subject to the vesting of the underlying
Restricted Stock.




     (iv) Except as otherwise set forth in the applicable Award Agreement, upon a Participant’s
Termination of Employment for any reason during the Restriction Period or before the applicable
Performance Goals are satisfied, all Shares of Restricted Stock still subject to restriction
shall be forfeited by such Participant; PROVIDED, HOWEVER, that subject to Section 11(b), the
Committee shall have the discretion to waive, in whole or in part, any or all remaining
restrictions with respect to any or all of such Participant’s Shares of Restricted Stock.




     (v) If and when any applicable Performance Goals are satisfied and the Restriction Period
expires without a prior forfeiture of the Shares of Restricted Stock for which legended
certificates have been issued, unlegended certificates for such Shares shall be delivered to
the Participant upon surrender of the legended certificates.



SECTION 7. RESTRICTED STOCK UNITS




     With respect to Adjusted Awards, the provisions below will be applicable only to the extent
that they are not inconsistent with the Employee Matters Agreement and the terms of the Adjusted
Award assumed under the Employee Matters Agreement:




     (a) NATURE OF AWARD. Restricted Stock Units are Awards denominated in Shares that will be
settled, subject to the terms and conditions of the Restricted Stock Units, either by delivery
of Shares to the Participant or by the payment of cash based upon the Fair Market Value of a
specified number of Shares.




     (b) TERMS AND CONDITIONS. Restricted Stock Units shall be subject to the following terms
and conditions:




     (i) The Committee may, in connection with the grant of Restricted Stock Units, designate
them as Qualified Performance-Based Awards, in which event it shall condition the grant or
vesting thereof upon the attainment of Performance Goals. If the Committee does not designate
Restricted Stock Units as Qualified Performance-Based Awards, it may also condition the grant
or vesting thereof upon the attainment of Performance Goals. Regardless of whether Restricted
Stock Units are Qualified Performance-Based Awards, the Committee may also condition the
vesting thereof upon the continued service of the Participant. The conditions for grant or
vesting and the other provisions of Restricted Stock Awards (including without limitation any
applicable Performance Goals) need not be the same with respect to each recipient. Subject to
Section 11(b), the Committee may at any time, in its sole discretion, accelerate or waive, in
whole or in part, any of the foregoing restrictions. An Award of Restricted Stock Units shall
be settled as and when the Restricted Stock Units vest or at a later time specified by the
Committee or in accordance with an election of the Participant, if the Committee so permits.




     (ii) Subject to the provisions of the Plan and the applicable Award Agreement, during
the period, if any, set by the Committee, commencing with the date of such Restricted Stock
Units Award for which such Participant’s continued service is required (the “Restriction
Period”), and until the later of (A) the expiration of the Restriction Period and (B) the
date the applicable Performance Goals (if any) are satisfied, the Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units.




     (iii) The Award Agreement for Restricted Stock Units shall specify whether, to what
extent and on what terms and conditions the applicable Participant shall be entitled to
receive current or deferred payments of cash, Common Stock or other property corresponding to
the dividends payable on the Common Stock (subject to Section 14(e) below).




     (iv) Except as otherwise set forth in the applicable Award Agreement, upon a
Participant’s Termination of Employment for any reason during the Restriction Period or
before the applicable Performance Goals are satisfied, all Restricted Stock Units still
subject to restriction shall be forfeited by such Participant; PROVIDED, HOWEVER, that
subject to Section 11(b), the Committee shall have the discretion to waive, in whole or in
part, any or all remaining restrictions with respect to any or all of such Participant’s
Restricted Stock Units.



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SECTION 8. OTHER STOCK-BASED AWARDS




     Other Awards of Common Stock and other Awards that are valued in whole or in part by reference
to, or are otherwise based upon or settled in, Common Stock, including (without limitation),
unrestricted stock, performance units, dividend equivalents, and convertible debentures, may be
granted under the Plan.



SECTION 9. BONUS AWARDS




     (a) DETERMINATION OF AWARDS. The Committee shall determine the total amount of Bonus Awards
for each Plan Year or such shorter performance period as the Committee may establish in its sole
discretion. Prior to the beginning of the Plan Year or such shorter performance period as the
Committee may establish in its sole discretion (or such later date as may be prescribed by the
Internal Revenue Service under Section 162(m) of the Code), the Committee shall establish
Performance Goals for Bonus Awards for the Plan Year or such shorter period; PROVIDED, that such
Performance Goals may be established at a later date for Participants who are not “covered
employees” (within the meaning of Section 162(m)(3) of the Code). Bonus amounts payable to any
individual Participant with respect to a Plan Year will be limited to a maximum of $10 million. For
performance periods that are shorter than a Plan Year, such $10 million maximum may be pro-rated to
the extent provided by the Committee. To the extent provided by the Committee, a Participant may
elect to defer receipt of amounts payable under a Bonus Award for a specified period, or until a
specified event, subject in each case to the Committee’s approval and to such terms as are
determined by the Committee.



     (b) PAYMENT OF AWARDS. Bonus Awards under the Plan shall be paid in cash or in shares of
Common Stock (valued at Fair Market Value as of the date of payment) as determined by the
Committee, as soon as practicable following the close of the Plan Year or such shorter performance
period as the Committee may establish. The Bonus Award for any Plan Year or such shorter
performance period to any Participant may be reduced or eliminated by the Committee in its
discretion.



SECTION 10. CHANGE IN CONTROL PROVISIONS




     (a) IMPACT OF EVENT/SINGLE TRIGGER. Unless otherwise provided in the applicable Award
Agreement, and with respect to Adjusted Awards only, to the extent specified in an Award Agreement
or the applicable IAC Long Term Incentive Plan (it being understood that any reference in a “change
in control,” “change of control” or similar definition of an Award Agreement or the applicable IAC
Long Term Incentive Plan for any such Adjusted Award shall be deemed to refer to a “change in
control,” “change of control” or similar transaction with respect to the Company (as successor to
the originally-referenced entity) for such Adjusted Award assumed hereunder), notwithstanding any
other provision of the Plan to the contrary, immediately upon the occurrence of a Change in
Control, with respect to Awards held by officers of the Company (and not the Company’s
Subsidiaries) with a title of Senior Vice President or above as of immediately prior to the Change
in Control, and with respect to all other Participants solely to the extent provided in the
applicable Award Agreement:




     (i) any Options and Stock Appreciation Rights outstanding which are not then exercisable and
vested shall become fully exercisable and vested;




     (ii) the restrictions and deferral limitations applicable to any Restricted Stock shall
lapse, and such Restricted Stock shall become free of all restrictions and become fully vested
and transferable; and




     (iii) all Restricted Stock Units shall be considered to be earned and payable in full, and
any deferral or other restriction shall lapse and such Restricted Stock Units shall be settled as
promptly as is practicable in (subject to Section 3(d)) the form set forth in the applicable
Award Agreement.



     (b) DEFINITION OF CHANGE IN CONTROL. Except as otherwise may be provided in an applicable
Award Agreement, and subject to Section 14(k)(ii), for purposes of the Plan, a “Change in Control”
shall mean any of the following events:




     (i) The acquisition by any individual entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act), other than Barry Diller, Liberty Media Corporation,
and their respective Affiliates (a “PERSON”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of equity securities of the Company representing more
than 50% of the voting power of the then outstanding equity securities of the Company entitled to
vote generally in the election of directors (the “OUTSTANDING COMPANY VOTING SECURITIES”);
PROVIDED, HOWEVER, that for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition by the Company, (B) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (C) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (iii); or



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     (ii) Individuals who, as of the Effective Date, constitute the Board (the “INCUMBENT BOARD”)
cease for any reason to constitute at least a majority of the Board; PROVIDED, HOWEVER, that any
individual becoming a director subsequent to the Effective Date, whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board; or




     (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company or the purchase of assets or stock of
another entity (a “BUSINESS COMBINATION”), in each case, unless immediately following such
Business Combination, (A) all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business
Combination will beneficially own, directly or indirectly, more than 50% of the then outstanding
combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors (or equivalent governing body, if applicable) of the entity resulting from
such Business Combination (including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Voting Securities, (B)
no Person (excluding Barry Diller, Liberty Media Corporation, and their respective Affiliates,
any employee benefit plan (or related trust) of the Company or such entity resulting from such
Business Combination) will beneficially own, directly or indirectly, more than a majority of the
combined voting power of the then outstanding voting securities of such entity except to the
extent that such ownership of the Company existed prior to the Business Combination and (C) at
least a majority of the members of the board of directors (or equivalent governing body, if
applicable) of the entity resulting from such Business Combination will have been members of the
Incumbent Board at the time of the initial agreement, or action of the Board, providing for such
Business Combination; or




     (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.


Notwithstanding the foregoing, the Separation shall not constitute a Change in Control.




     (c) IMPACT OF EVENT/DOUBLE TRIGGER. Unless otherwise provided in the applicable Award
Agreement, and with respect to Adjusted Awards only, to the extent specified in an Award Agreement,
notwithstanding any other provision of this Plan to the contrary, upon a Participant’s Termination
of Employment, during the two-year period following a Change in Control, by the Company other than
for Cause or Disability or by the Participant for Good Reason (as defined below):




     (i) any Options and Stock Appreciation Rights outstanding as of such Termination of
Employment which were outstanding as of the date of such Change in Control (including any Options
and Stock Appreciation Rights that became vested pursuant to Section 10(a)) shall be fully
exercisable and vested and shall remain exercisable until the later of (i) the last date on which
such Option or Stock Appreciation Right would be exercisable in the absence of this Section 10(c)
and (ii) the earlier of (A) the first anniversary of such Change in Control and (B) expiration of
the Term of such Option or Stock Appreciation Right;




     (ii) the restrictions and deferral limitations applicable to any Restricted Stock shall
lapse, and such Restricted Stock outstanding as of such Termination of Employment which were
outstanding as of the date of such Change in Control shall become free of all restrictions and
become fully vested and transferable; and




     (iii) all Restricted Stock Units outstanding as of such Termination of Employment which were
outstanding as of the date of such Change in Control shall be considered to be earned and payable
in full, and any deferral or other restriction shall lapse and such Restricted Stock Units shall
be settled as promptly as is practicable in (subject to Section 3(d)) the form set forth in the
applicable Award Agreement.



     (d) For purposes of this Section 10, “Good Reason” means (i) “Good Reason” as defined in any
Individual Agreement or Award Agreement to which the applicable Participant is a party, or (ii) if
there is no such Individual Agreement or if it does not define Good Reason, without the
Participant’s prior written consent: (A) a reduction in the Participant’s rate of annual base
salary from the rate of annual base salary in effect for such Participant immediately prior to the
Change in Control, (B) a relocation of the Participant’s principal place of business more than 35
miles from the city in which such Participant’s principal place of business was located immediately
prior to the Change in Control or (C) a material and demonstrable adverse change in the nature and
scope of the Participant’s duties from those in effect immediately prior to the Change in Control.



11









 





SECTION 11. QUALIFIED PERFORMANCE-BASED AWARDS; SECTION 16(B)




     (a) The provisions of this Plan are intended to ensure that all Options and Stock Appreciation
Rights granted hereunder to any Participant who is or may be a “covered employee” (within the
meaning of Section 162(m)(3) of the Code) in the tax year in which such Option or Stock
Appreciation Right is expected to be deductible to the Company qualify for the Section 162(m)
Exemption, and all such Awards shall therefore be considered Qualified Performance-Based Awards and
this Plan shall be interpreted and operated consistent with that intention (including, without
limitation, to require that all such Awards be granted by a committee composed solely of members
who satisfy the requirements for being “outside directors” for purposes of the Section 162(m)
Exemption (“Outside Directors”)). When granting any Award other than an Option or Stock
Appreciation Right, the Committee may designate such Award as a Qualified Performance-Based Award,
based upon a determination that (i) the recipient is or may be a “covered employee” (within the
meaning of Section 162(m)(3) of the Code) with respect to such Award, and (ii) the Committee wishes
such Award to qualify for the Section 162(m) Exemption, and the terms of any such Award (and of the
grant thereof) shall be consistent with such designation (including, without limitation, that all
such Awards be granted by a committee composed solely of Outside Directors).



     (b) Each Qualified Performance-Based Award (other than an Option or Stock Appreciation Right)
shall be earned, vested and payable (as applicable) only upon the achievement of one or more
Performance Goals, together with the satisfaction of any other conditions, such as continued
employment, as the Committee may determine to be appropriate, and no Qualified Performance-Based
Award may be amended, nor may the Committee exercise any discretionary authority it may otherwise
have under this Plan with respect to a Qualified Performance-Based Award under this Plan, in any
manner that would cause the Qualified Performance-Based Award to cease to qualify for the Section
162(m) Exemption; PROVIDED, HOWEVER, that (i) the Committee may provide, either in connection with
the grant of the applicable Award or by amendment thereafter, that achievement of such Performance
Goals will be waived upon the death or Disability of the Participant or a Termination of Employment
by the Company without Cause or by the Participant for “good reason” (as such term may be defined
in any applicable Award Agreement) or under any other circumstance with respect to which the
existence of such possible waiver will not cause the Award to fail to qualify for the Section
162(m) Exemption as of the Grant Date, and (ii) the provisions of Section 10 shall apply
notwithstanding this Section 11(b).



     (c) The full Board shall not be permitted to exercise authority granted to the Committee to
the extent that the grant or exercise of such authority would cause an Award designated as a
Qualified Performance-Based Award not to qualify for, or to cease to qualify for, the Section
162(m) Exemption.



     (d) The provisions of this Plan are intended to ensure that no transaction under the Plan is
subject to (and all such transactions will be exempt from) the short-swing recovery rules of
Section 16(b) of the Exchange Act (“Section 16(b)”). Accordingly, the composition of the Committee
shall be subject to such limitations as the Board deems appropriate to permit transactions pursuant
to this Plan to be exempt (pursuant to Rule 16b-3 promulgated under the Exchange Act) from Section
16(b), and no delegation of authority by the Committee shall be permitted if such delegation would
cause any such transaction to be subject to (and not exempt from) Section 16(b).



SECTION 12. TERM, AMENDMENT AND TERMINATION




     (a) EFFECTIVENESS. The Plan shall be effective as of the date (the “Effective Date”) it is
adopted by the Board, subject to the approval by the holders of at least a majority of the voting
power represented by outstanding capital stock of the Company that is entitled generally to vote in
the election of directors.



     (b) TERMINATION. The Plan will terminate on the tenth anniversary of the Effective Date.
Awards outstanding as of such date shall not be affected or impaired by the termination of the
Plan.



     (c) AMENDMENT OF PLAN. The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would materially impair the rights of the
Participant with respect to a previously granted Award without such Participant’s consent, except
such an amendment made to comply with applicable law, stock exchange rules or accounting rules. In
addition, no such amendment shall be made without the approval of the Company’s stockholders to the
extent such approval is required by applicable law or the listing standards of the Applicable
Exchange.



     (d) AMENDMENT OF AWARDS. Subject to Section 5(d), the Committee may unilaterally amend the
terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall
(i) cause a Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption
or (ii) without the Participant’s consent, materially impair the rights of any Participant with
respect to an Award, except such an amendment made to cause the Plan or Award to comply with
applicable law, stock exchange rules or accounting rules.



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SECTION 13. UNFUNDED STATUS OF PLAN




     It is presently intended that the Plan constitute an “unfunded” plan for incentive and
deferred compensation. The Committee may authorize the creation of trusts or other arrangements to
meet the obligations created under the Plan to deliver Common Stock or make payments; PROVIDED,
HOWEVER, that unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of the Plan.



SECTION 14. GENERAL PROVISIONS




     (a) CONDITIONS FOR ISSUANCE. The Committee may require each person purchasing or receiving
Shares pursuant to an Award to represent to and agree with the Company in writing that such person
is acquiring the Shares without a view to the distribution thereof. The certificates for such
Shares may include any legend which the Committee deems appropriate to reflect any restrictions on
transfer. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the
Company shall not be required to issue or deliver any certificate or certificates for Shares under
the Plan prior to fulfillment of all of the following conditions: (i) listing or approval for
listing upon notice of issuance, of such Shares on the Applicable Exchange; (ii) any registration
or other qualification of such Shares of the Company under any state or federal law or regulation,
or the maintaining in effect of any such registration or other qualification which the Committee
shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and
(iii) obtaining any other consent, approval, or permit from any state or federal governmental
agency which the Committee shall, in its absolute discretion after receiving the advice of counsel,
determine to be necessary or advisable.



     (b) ADDITIONAL COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the
Company or any Subsidiary or Affiliate from adopting other or additional compensation arrangements
for its employees.



     (c) NO CONTRACT OF EMPLOYMENT. The Plan shall not constitute a contract of employment, and
adoption of the Plan shall not confer upon any employee any right to continued employment, nor
shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate to
terminate the employment of any employee at any time.



     (d) REQUIRED TAXES. No later than the date as of which an amount first becomes includible in
the gross income of a Participant for federal, state, local or foreign income or employment or
other tax purposes with respect to any Award under the Plan, such Participant shall pay to the
Company, or make arrangements satisfactory to the Company regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be withheld with respect to such
amount. If determined by the Company, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Award that gives rise to the withholding requirement.
The obligations of the Company under the Plan shall be conditional on such payment or arrangements,
and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to such Participant. The Committee may establish such
procedures as it deems appropriate, including making irrevocable elections, for the settlement of
withholding obligations with Common Stock.



     (e) LIMITATION ON DIVIDEND REINVESTMENT AND DIVIDEND EQUIVALENTS. Reinvestment of dividends
in additional Restricted Stock at the time of any dividend payment, and the payment of Shares with
respect to dividends to Participants holding Awards of Restricted Stock Units, shall only be
permissible if sufficient Shares are available under Section 3 for such reinvestment or payment
(taking into account then outstanding Awards). In the event that sufficient Shares are not
available for such reinvestment or payment, such reinvestment or payment shall be made in the form
of a grant of Restricted Stock Units equal in number to the Shares that would have been obtained by
such payment or reinvestment, the terms of which Restricted Stock Units shall provide for
settlement in cash and for dividend equivalent reinvestment in further Restricted Stock Units on
the terms contemplated by this Section 14(e).



     (f) DESIGNATION OF DEATH BENEFICIARY. The Committee shall establish such procedures as it
deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the
event of such Participant’s death are to be paid or by whom any rights of such eligible Individual,
after such Participant’s death, may be exercised.



     (g) SUBSIDIARY EMPLOYEES. In the case of a grant of an Award to any employee of a Subsidiary
of the Company, the Company may, if the Committee so directs, issue or transfer the Shares, if any,
covered by the Award to the Subsidiary, for such lawful consideration as the Committee may specify,
upon the condition or understanding that the Subsidiary will transfer the Shares to the employee in
accordance with the terms of the Award specified by the Committee pursuant to the provisions of the
Plan. All Shares underlying Awards that are forfeited or canceled should revert to the Company.



13









 





     (h) GOVERNING LAW AND INTERPRETATION. The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws. The captions of this Plan are not part of the
provisions hereof and shall have no force or effect.



     (i) NON-TRANSFERABILITY. Except as otherwise provided in Section 5(j) or by the Committee,
Awards under the Plan are not transferable except by will or by laws of descent and distribution.



     (j) FOREIGN EMPLOYEES AND FOREIGN LAW CONSIDERATIONS. The Committee may grant Awards to
Eligible Individuals who are foreign nationals, who are located outside the United States or who
are not compensated from a payroll maintained in the United States, or who are otherwise subject to
(or could cause the Company to be subject to) legal or regulatory provisions of countries or
jurisdictions outside the United States, on such terms and conditions different from those
specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster
and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the
Committee may make such modifications, amendments, procedures, or subplans as may be necessary or
advisable to comply with such legal or regulatory provisions.



     (k) SECTION 409A SAVINGS CLAUSE.




     (i) It is the intention of the Company that no Award shall be “deferred compensation”
subject to Section 409A of the Code, unless and to the extent that the Committee specifically
determines otherwise as provided below, and the Plan and the terms and conditions of all Awards
shall be interpreted accordingly.




     (ii) The terms and conditions governing any Awards that the Committee determines will be
subject to Section 409A of the Code, including any rules for elective or mandatory deferral of
the delivery of cash or shares of Common Stock pursuant thereto and any rules regarding treatment
of such Awards in the event of a Change in Control, shall be set forth in the applicable Award
Agreement, and shall comply in all respects with Section 409A of the Code.




     (iii) Following a Change in Control, no action shall be taken under the Plan that will cause
any Award that the Committee has previously determined is subject to Section 409A of the Code to
fail to comply in any respect with Section 409A of the Code without the written consent of the
Participant.



     (l) EMPLOYEE MATTERS AGREEMENT. Notwithstanding anything in this Plan to the contrary, to the
extent that the terms of this Plan are inconsistent with the terms of an Adjusted Award, the terms
of the Adjusted Award shall be governed by the Employee Matters Agreement, the applicable IAC
Long-Term Incentive Plan and the award agreement granted thereunder.




14