Exhibit 10.11


 


TREE.COM, INC.

2008 STOCK AND ANNUAL INCENTIVE PLAN


 


SECTION 1.  Purpose; Definition


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(j) 
“Code” means the Internal Revenue
Code of 1986, as amended from time to time, and any successor thereto, the
Treasury Regulations thereunder and other relevant interpretive guidance issued
by the Internal Revenue Service or the Treasury Department.  Reference to any specific section of the Code
shall be deemed to include such regulations and guidance, as well as any
successor provision of the Code.


 


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


 


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


 


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


 


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


 


(o) 
“Disability” means (i) “Disability”
as defined in any Individual Agreement to which the Participant is a party, or (ii) if
there is no such Individual Agreement or it does not define “Disability,” (A) permanent
and total disability as determined under the Company’s long-term disability
plan applicable to the Participant, or (B) if there is no such plan
applicable to the Participant or the Committee determines otherwise in an
applicable Award Agreement, “Disability” as determined by the Committee.  Notwithstanding the above, with respect to an
Incentive Stock Option, Disability shall mean Permanent and Total Disability as
defined in Section 22(e)(3) of the Code and, with respect to all
Awards, to the extent required by Section 409A of the Code, “disability”
within the meaning of Section 409A of the Code.


 


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


 


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


 


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


 


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


 


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


 


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


 


(v) 
“Fair Market Value” means, unless
otherwise determined by the Committee, the closing price of a share of Common
Stock on the Applicable Exchange on the date of measurement, or if Shares were
not traded on the Applicable Exchange on such measurement date, then on the
next preceding date on which Shares were traded, all as reported by such source
as the Committee may select. If the Common Stock is not listed on a national
securities exchange, Fair Market Value shall be determined by the Committee in
its good faith discretion, taking into account, to the extent appropriate, the
requirements of Section 409A of the Code.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(gg)  “Performance
Goals” means the performance goals established by the Committee in
connection with the grant of Restricted Stock, Restricted Stock Units or Bonus
Awards or other stock-based awards. In the case of Qualified-Performance Based
Awards, (i) such goals shall be based on the attainment of one or any
combination of the following: specified levels of


 


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earnings per share from
continuing operations, net profit after tax, EBITDA, EBITA, gross profit, cash
generation, unit volume, market share, sales, asset quality, earnings per
share, operating income, revenues, return on assets, return on operating
assets, return on equity, profits, total stockholder return (measured in terms
of stock price appreciation and/or dividend growth), cost saving levels,
marketing-spending efficiency, core non-interest income, change in working
capital, return on capital, and/or stock price, with respect to the Company or
any Subsidiary, Affiliate, division or department of the Company and (ii) such
Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m) of the Code and related regulations.
Such Performance Goals also may be based upon the attaining of specified levels
of Company, Subsidiary, Affiliate or divisional performance under one or more
of the measures described above relative to the performance of other entities,
divisions or subsidiaries.


 


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


 


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


 


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


 


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


 


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


 


(mm)  “Resulting
Voting Power” shall mean the outstanding combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors (or equivalent governing body, if applicable) of the
entity resulting from a Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries).


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(vv)  “Termination
of Employment” means the termination of the applicable Participant’s
employment with, or performance of services for, the Company and any of its
Subsidiaries or Affiliates. Unless otherwise determined by the Committee, if a
Participant’s employment with, or membership on a board of directors of the
Company and its Affiliates terminates but such Participant continues to provide
services to the Company and its Affiliates in a non-employee director capacity
or as an employee, as applicable, such change in status shall not be deemed a
Termination of Employment. A Participant employed by, or performing services for,
a Subsidiary or an Affiliate or a division of the Company and its Affiliates
shall be deemed to incur a Termination of Employment if, as a result of a
Disaffiliation, such Subsidiary, Affiliate, or division ceases to be a
Subsidiary, Affiliate or division, as the case may be, and the Participant does
not immediately thereafter become an employee of (or service provider for), or
member of the board of directors of, the Company or another Subsidiary or
Affiliate. Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and its Subsidiaries and
Affiliates shall not be considered Terminations of Employment.  Notwithstanding the foregoing, with respect
to any Award that constitutes “nonqualified deferred compensation” within the
meaning of Section 409A of the Code, “Termination of Employment” shall
mean a “separation from service” as defined under Section 409A of the
Code.  For the avoidance of doubt, the
Separation shall not constitute a Termination of Employment for purposes of any
Adjusted Award.


 


SECTION 2.  Administration


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(xii)  to otherwise administer the Plan.


 


(b)  
Procedures.


 


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


 


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


 


(c)  
Discretion of Committee.  Subject to Section 1(h), any
determination made by the Committee or by an appropriately delegated officer
pursuant to delegated authority under the provisions of the Plan with respect
to any Award shall be made in the sole discretion of the Committee or such
delegate 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.


 


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


 


SECTION 3.  Common Stock Subject to Plan


 


(a) 
Plan Maximums.  The maximum number of Shares that may be
delivered pursuant to Awards under the Plan shall be the sum of (a) the
number of Shares that may be issuable upon exercise or vesting of the Adjusted
Awards and (b) 2,200,000. The maximum number of Shares that may be granted
pursuant to Options intended to be Incentive Stock Options shall be 1,466,666
Shares.  Shares subject to an Award under
the Plan may be authorized and unissued Shares or may be treasury Shares.


 


(b) 
Individual Limits.  No Participant may be granted Awards covering
in excess of 1,466,666 Shares during the term of the Plan; provided that Adjusted Awards shall not be
subject to this limitation.


 


(c) 
Rules for Calculating Shares Delivered.


 


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


 


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


 


(d) 
Adjustment Provision.  In the event of a merger, consolidation,
acquisition of property or shares, stock rights offering, liquidation, Disaffiliation,
or similar event affecting the Company or any of its Subsidiaries (each, a “Corporate
Transaction”), the Committee or the Board may in its discretion make such
substitutions or adjustments as it deems appropriate and equitable to (i) the
aggregate number and kind of Shares or other securities reserved for issuance
and delivery under the Plan, (ii) the various maximum limitations set
forth in Sections 3(a) and 3(b) upon certain types of Awards and upon
the grants to individuals of certain types of Awards, (iii) the number and
kind of Shares or other securities subject to outstanding Awards; and (iv) the
exercise price of outstanding Options and Stock Appreciation Rights. In the
event of a stock


 


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dividend, stock split,
reverse stock split, separation, spinoff, reorganization, extraordinary
dividend of cash or other property, share combination, or recapitalization or
similar event affecting the capital structure of the Company (each, a “Share
Change”), the Committee or the Board shall make such substitutions or
adjustments as it deems appropriate and equitable to (i) the aggregate
number and kind of Shares or other securities reserved for issuance and
delivery under the Plan, (ii) the various maximum limitations set forth in
Sections 3(a) and 3(b) upon certain types of Awards and upon the
grants to individuals of certain types of Awards, (iii) the number and
kind of Shares or other securities subject to outstanding Awards; and (iv) the
exercise price of outstanding Options and Stock Appreciation Rights. In the
case of Corporate Transactions, such adjustments may include, without
limitation, (1) the cancellation of outstanding Awards in exchange for
payments of cash, property or a combination thereof having an aggregate value
equal to the value of such Awards, as determined by the Committee or the Board
in its sole discretion (it being understood that in the case of a Corporate
Transaction with respect to which stockholders of Common Stock receive consideration
other than publicly traded equity securities of the ultimate surviving entity,
any such determination by the Committee that the value of an Option or Stock
Appreciation Right shall for this purpose be deemed to equal the excess, if
any, of the value of the consideration being paid for each Share pursuant to
such Corporate Transaction over the exercise price of such Option or Stock
Appreciation Right shall conclusively be deemed valid); (2) the
substitution of other property (including, without limitation, cash or other
securities of the Company and securities of entities other than the Company)
for the Shares subject to outstanding Awards; and (3) in connection with
any Disaffiliation, arranging for the assumption of Awards, or replacement of
Awards with new awards based on other property or other securities (including,
without limitation, other securities of the Company and securities of entities
other than the Company), by the affected Subsidiary, Affiliate, or division or
by the entity that controls such Subsidiary, Affiliate, or division following
such Disaffiliation (as well as any corresponding adjustments to Awards that
remain based upon Company securities). The Committee may adjust in its sole
discretion the Performance Goals applicable to any Awards to reflect any Share
Change and any Corporate Transaction and any unusual or non-recurring events
and other extraordinary items, impact of charges for restructurings,
discontinued operations, and the cumulative effects of accounting or tax changes,
each as defined by generally accepted accounting principles or as identified in
the Company’s financial statements, notes to the financial statements,
management’s discussion and analysis or the Company’s other SEC filings,  provided
that in the case of Performance Goals applicable to any Qualified
Performance-Based Awards, such adjustment does not violate Section 162(m) of
the Code.  Any adjustment under this Section 3(d) need
not be the same for all Participants.


 


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


 


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is not intended to be
subject to Section 409A of the Code at the Grant Date to be subject
thereto as of the Grant Date.


 


SECTION 4.  Eligibility


 


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


 


SECTION 5. 
Options and Stock Appreciation Rights


 


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


 


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


 


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


 


(c) 
Tandem SARs.  A Tandem SAR may be granted at the Grant Date
of the related Option. A Tandem SAR shall be exercisable only at such time or
times and to the extent that the related Option is exercisable in accordance
with the provisions of this Section 5, and shall have the same exercise
price as the related Option. A Tandem SAR shall terminate or be forfeited upon
the exercise or forfeiture of the related Option, and the related Option shall
terminate or be forfeited upon the exercise or forfeiture of the Tandem SAR.


 


(d) 
Exercise Price.  The exercise price per Share subject to an
Option or Free-Standing SAR shall be determined by the Committee and set forth
in the applicable Award Agreement, and shall not be less than the Fair Market
Value of a share of the Common Stock on the applicable Grant Date. In no event
may any Option or Free-Standing SAR granted under this Plan be amended, other
than pursuant to Section 3(d), to decrease the exercise price thereof, be
cancelled in conjunction with the grant of any new Option or Free-Standing SAR
with a lower exercise price or otherwise be subject to any action that would be
treated, for accounting


 


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purposes, as a “repricing”
of such Option or Free-Standing SAR, unless such amendment, cancellation, or
action is approved by the Company’s stockholders.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(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.


 


11

















 


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


 


SECTION 6.  Restricted Stock


 


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


 


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


 


“The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Tree.com, Inc. 2008 Stock and Annual Incentive Plan and
an Award Agreement. Copies of such Plan and Agreement are on file at the
offices of [Tree.com, Inc., 11115 Rushmore Drive, Charlotte, NC 28277.]”


 


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


 


(b)   Terms and Conditions.  Shares of Restricted Stock shall be subject
to the following terms and conditions:


 


(i)  The Committee shall, prior to or at the time of grant,
condition the vesting or transferability of an Award of Restricted Stock upon
the continued service of the applicable


 


12

















 


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


 


(ii)  Subject to the provisions of the Plan and the applicable
Award Agreement, during the period, if any, set by the Committee, commencing
with the date of such Restricted Stock Award for which such vesting
restrictions apply and until the expiration of such vesting restrictions (the “Restriction
Period”), the Participant shall not be permitted to sell, assign, transfer,
pledge or otherwise encumber Shares of Restricted Stock.


 


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


 


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


 


(v)  If and when any applicable Performance Goals are satisfied
and the Restriction Period expires without a prior forfeiture of the Shares of
Restricted Stock for which legended certificates 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:


 


13

















 


(a)   Nature of Awards.  Restricted Stock Units are Awards denominated
in Shares that will be settled, subject to the terms and conditions of the
Restricted Stock Units, in an amount in cash, Shares or both, based upon the
Fair Market Value of a specified number of Shares.


 


(b)   Terms and Conditions.  Restricted Stock Units shall be subject to
the following terms and conditions:


 


(i)  The Committee shall, prior to or at the time of grant,
condition the grant, vesting, or transferability of Restricted Stock Units upon
the continued service of the applicable Participant or the attainment of
Performance Goals, or the attainment of Performance Goals and the continued
service of the applicable Participant. In the event that the Committee
conditions the grant or vesting of Restricted Stock Units upon the attainment
of Performance Goals or the attainment of Performance Goals and the continued
service of the applicable Participant, the Committee may, prior to or at the
time of grant, designate such Awards as Qualified Performance-Based Awards. The
conditions for grant, vesting or transferability and the other provisions of
Restricted Stock Units (including without limitation any Performance Goals)
need not be the same with respect to each Participant. An Award of Restricted
Stock Units shall be settled as and when the Restricted Stock Units vest or at
a later time specified by the Committee or in accordance with an election of
the Participant, if the Committee so permits.


 


(ii)  Subject to the provisions of the Plan and the applicable
Award Agreement, during the period, if any, set by the Committee, commencing
with the date of such Restricted Stock Units for which such vesting
restrictions apply and until the expiration of such vesting restrictions (the “Restriction
Period”), the Participant shall not be permitted to sell, assign, transfer,
pledge or otherwise encumber Restricted Stock Units.


 


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


 


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


 


SECTION 8.  Other Stock-Based Awards


 


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


 


14

















 


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 if so determined by the Committee.


 


(b)   Payment of Awards.  Bonus Awards under the Plan shall be paid in
cash or in shares of Common Stock (valued at Fair Market Value as of the date
of payment) as determined by the Committee, as soon as practicable following
the close of the Plan Year or such shorter performance period as the Committee
may establish. It is intended that a Bonus Award will be paid no later than the
fifteenth (15th)
day of the third month following the later of: (i) the end of the
Participant’s taxable year in which the requirements for such Bonus Award have
been satisfied by the Participant or (ii) the end of the Company’s fiscal
year in which the requirements for such Bonus Award have been satisfied by the
Participant.  The Committee may at its
option establish procedures pursuant to which Participants are permitted to
defer the receipt of Bonus Awards payable hereunder. The Bonus Award for any
Plan Year or such shorter performance period to any Participant may be reduced
or eliminated by the Committee in its discretion.


 


SECTION 10.  Change in Control Provisions


 


(a)   Adjusted Awards.  With respect to all Adjusted Awards, subject
to paragraph (e) of this Section 10, unless otherwise provided in the
applicable Award Agreement, notwithstanding any other provision of this Plan to
the contrary, upon a Participant’s Termination of Employment, during the
two-year period following a Change in Control, by the Company other than for
Cause or Disability or by the Participant for Good Reason (as defined below):


 


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


 


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


 


(iii)  all Restricted Stock Units outstanding as of such
Termination of Employment which were outstanding as of the date of such Change
in Control shall be considered to be earned and payable in full, and any
restrictions shall lapse and such Restricted Stock Units shall be


 


15

















 


settled as
promptly as is practicable in (subject to Section 3(d)) the form set forth
in the applicable Award Agreement.


 


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


 


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


 


(i)  The acquisition by any individual, entity or Group (a “Person”),
other than the Company, of Beneficial Ownership of equity securities of the
Company representing more than 50% of the voting power of the then outstanding
equity securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that any acquisition that would constitute a Change in Control under this
subsection (i) that is also a Business Combination shall be determined
exclusively under subsection (iii) below; or


 


(ii)  Individuals who, as of the Effective Date, constitute the
Board (the “Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date, whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the Incumbent Directors at such time shall become an Incumbent
Director, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or


 


(iii)  Consummation of a reorganization, merger, consolidation,
sale or other disposition of all or substantially all of the assets of the
Company, the purchase of assets or stock of another entity, or other similar
corporate transaction (a “Business Combination”), in each case, unless
immediately following such Business Combination, (A) more than 50% of the
Resulting Voting Power shall reside in Outstanding Company Voting Securities
retained by the Company’s stockholders in the Business Combination and/or
voting securities received by such stockholders in the Business Combination on
account of Outstanding Company Voting Securities, and (B) at least a
majority of the members of the board of directors (or equivalent governing
body, if applicable) of the entity resulting from such Business Combination
were Incumbent Directors at the time of the initial agreement, or action of the
Board, providing for such Business Combination; or


 


16

















 


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


 


Notwithstanding the foregoing, the Separation shall not constitute a
Change in Control.  For the avoidance of
doubt, with respect to Adjusted Awards, any reference in an Award Agreement or
the applicable IAC Long Term Incentive Plan to a “change in control,” “change
of control” or similar definition shall be deemed to refer to a Change of
Control hereunder.


 


(d)   For purposes of this Section 10, “Good Reason”
means (i) “Good Reason” as defined in any Individual Agreement or Award
Agreement to which the applicable Participant is a party, or (ii) if there
is no such Individual Agreement or if it does not define Good Reason, without
the Participant’s prior written consent: (A) a material reduction in the
Participant’s rate of annual base salary from the rate of annual base salary in
effect for such Participant immediately prior to the Change in Control, (B) a
relocation of the Participant’s principal place of business more than 35 miles
from the city in which such Participant’s principal place of business was
located immediately prior to the Change in Control or (C) a material and
demonstrable adverse change in the nature and scope of the Participant’s duties
from those in effect immediately prior to the Change in Control.  In order to invoke a Termination of
Employment for Good Reason, a Participant shall provide written notice to the
Company of the existence of one or more of the conditions described in clauses (A) through
(C) within 90 days following the Participant’s knowledge of the initial
existence of such condition or conditions, and the Company shall have 30 days
following receipt of such written notice (the “Cure Period”) during which it
may remedy the condition.  In the event
that the Company fails to remedy the condition constituting Good Reason during
the Cure Period, the Participant must terminate employment, if at all, within
90 days following the Cure Period in order for such Termination of Employment
to constitute a Termination of Employment for Good Reason.


 


(e)   Notwithstanding the foregoing, if any Award is subject
to Section 409A of the Code, this Section 10 shall be applicable only
to the extent specifically provided in the Award Agreement and as permitted
pursuant to Section 14(k).


 


SECTION 11.  Qualified Performance-Based Awards; Section 16(b)


 


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


 


17

















 


consistent
with such designation (including, without limitation, that all such Awards be
granted by a committee composed solely of Outside Directors).


 


(b)   Each Qualified Performance-Based Award (other than an
Option or Stock Appreciation Right) shall be earned, vested and payable (as
applicable) only upon the achievement of one or more Performance Goals (as
certified in writing by the Committee, except if compensation is attributable
solely to the increase in the value of the Common Stock), together with the
satisfaction of any other conditions, such as continued employment, as the
Committee may determine to be appropriate, and no Qualified Performance-Based
Award may be amended, nor may the Committee exercise any discretionary
authority it may otherwise have under this Plan with respect to a Qualified
Performance-Based Award under this Plan, in any manner that would cause the
Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption;
provided, however, that (i) the Committee may
provide, either in connection with the grant of the applicable Award or by
amendment thereafter, that achievement of such Performance Goals will be waived
upon the death or Disability of the Participant or under any other circumstance
with respect to which the existence of such possible waiver will not cause the
Award to fail to qualify for the Section 162(m) Exemption as of the
Grant Date, and (ii) the provisions of Section 10 shall apply notwithstanding
this Section 11(b).


 


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


 


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


 


SECTION 12.  Term, Amendment and Termination


 


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


 


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


 


(c)   Amendment of Plan.  The Board may amend, alter, or discontinue
the Plan, but no amendment, alteration or discontinuation shall be made which
would materially impair the rights of the Participant with respect to a
previously granted Award without such Participant’s consent, except such an
amendment made to comply with applicable law, including without limitation


 


18

















 


Section 409A
of the Code, stock exchange rules or accounting rules. In addition, no such
amendment shall be made without the approval of the Company’s stockholders to
the extent such approval is required by applicable law or the listing standards
of the Applicable Exchange.


 


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


 


SECTION 13.  Unfunded Status of Plan


 


It is presently intended that the Plan constitute an “unfunded” plan
for incentive and deferred compensation. 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


 


19

















 


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.


 


(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


 


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otherwise
subject to (or could cause the Company to be subject to) legal or regulatory
provisions of countries or jurisdictions outside the United States, on such
terms and conditions different from those specified in the Plan as may, in the
judgment of the Committee, be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of such purposes,
the Committee may make such modifications, amendments, procedures, or subplans
as may be necessary or advisable to comply with such legal or regulatory
provisions.


 


(k)   Section 409A of
the Code.  It is the intention
of the Company that no Award shall be “deferred compensation” subject to Section 409A
of the Code, unless and to the extent that the Committee specifically
determines otherwise as provided in the immediately following sentence, and the
Plan and the terms and conditions of all Awards shall be interpreted
accordingly. The terms and conditions governing any Awards that the Committee
determines will be subject to Section 409A of the Code, including any rules for
elective or mandatory deferral of the delivery of cash or Shares pursuant
thereto and any rules regarding treatment of such Awards in the event of a
Change in Control, shall be set forth in the applicable Award Agreement, and
shall comply in all respects with Section 409A of the Code.  Notwithstanding any other provision of the
Plan to the contrary, with respect to any Award that constitutes a “nonqualified
deferred compensation plan” subject to Section 409A of the Code, any
payments (whether in cash, Shares or other property) to be made with respect to
the Award upon the Participant’s Termination of Employment shall be delayed
until the first day of the seventh month following the Participant’s Termination
of Employment if the Participant is a “specified employee” within the meaning
of Section 409A of the Code.


 


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


 


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