Exhibit 10.8


 


STOCK OPTION AGREEMENT


 


THIS AGREEMENT, dated as
of June 7, 2005, between IAC/InterActiveCorp, a Delaware corporation (“IAC”
or the “Corporation”), and Barry Diller (the “Optionee”).


 


W I T N E S S E T H


 


In consideration of the
mutual promises and covenants made herein and the mutual benefits to be derived
herefrom, the parties hereto agree as follows:


 


1.             Grant of Stock Options.


 


Subject to the provisions
of this Agreement, the provisions of the IAC/InterActiveCorp 2005 Stock and
Annual Incentive Plan (the “Plan”) and approval of the Plan by the Corporation’s
stockholders, the Corporation hereby grants to the Optionee as of June 7,
2005 (the “Grant Date”) (i) an option 
to purchase 4,800,000 shares of common stock of the Corporation, par
value $.01 per share (“Common Stock”), at the exercise price of $32.03 per
share and (ii) an option to purchase 2,800,000 shares of Common Stock at
the exercise price of $43.12 per share (collectively, the “Stock Options”).  The Stock Options shall be Nonqualified Stock
Options.  Unless earlier terminated
pursuant to the terms of this Agreement, the Stock Options shall expire on the
tenth anniversary of the Grant Date. 
Capitalized terms not defined herein shall have the meaning set forth in
the Plan.


 


2.             Exercisability of the Stock Options.


 


The Stock Options shall
become vested and exercisable with respect to 100% of the shares of Common
Stock covered thereby on the fifth anniversary of the Grant Date, subject to
the Optionee’s continued employment through such anniversary and Paragraphs 4
and 6 of this Agreement.  Upon the
Optionee’s Termination of Employment, the portion of the Stock Options that is
not vested as of such date, in accordance with the foregoing provisions of this
Paragraph 2 or the provisions of Paragraphs 4 and 6 of this Agreement, shall
cease vesting and terminate immediately.


 


3.             Method of Exercise of the Stock Options.


 


(a)           The vested portion of the Stock
Options shall be exercisable by delivery to the Corporation of a written notice
stating the number of whole shares to be purchased pursuant to this Agreement
and accompanied by payment of the full purchase price of the shares of Common
Stock to be purchased.  The Stock Options
may not be exercised at any one time as to fewer than 100 shares (or such
number of shares as to which the Stock Options are then exercisable if less
than 100).  Fractional share interests
shall be disregarded except they may be accumulated.


 





















 


(b)           The exercise price of the Stock
Options shall be paid: (i) in cash or by certified check or bank draft
payable to the order of the Corporation; (ii) by exchange (or attestation)
of shares of unrestricted Common Stock already owned by the Optionee and having
an aggregate Fair Market Value equal to the aggregate purchase price, provided,
that the Optionee represents and warrants to the Corporation that the Optionee
holds the shares of Common Stock free and clear of liens and encumbrances; (iii) unless
the Committee determines otherwise, by withholding a number of shares of Common
Stock having a Fair Market Value equal to the aggregate purchase price; or (iv) by
any other procedure approved by the Committee, or by a combination of the
foregoing.


 


4.             Death or Disability of the Optionee or Termination by
Employee for Good Reason or by the Corporation without Cause.


 


In the event of the
Optionee’s Termination of Employment due to death, Disability, by the Optionee
for Good Reason or by the Corporation without Cause (each a “Qualifying
Termination”), the Stock Options shall vest and be exercisable with respect to
a percentage of the shares of Common Stock covered thereby equal to 20% for
each full year of the Optionee’s completed service with the Corporation from
the Grant Date through the Qualifying Termination.  The portion of the Stock Options, if any,
which are exercisable at the time of such Qualifying Termination may be
exercised by the Optionee (or the Optionee’s guardian or legal representative
or beneficiary, in the event of the Optionee’s Disability or death) at any time
prior to the first to occur of (a) one (1) year after such Qualifying
Termination or (b) the expiration date of the Stock Options.


 


For purposes of this
Agreement, “Good Reason” means, any of the following actions taken without the
Optionee’s prior written consent:  (A) a
reduction in the Optionee’s rate of annual base salary from the rate of annual
base salary in effect for the Optionee, (B) a relocation of the Optionee’s
principal place of business more than 35 miles from New York City or (C) a
material and demonstrable adverse change in the nature and scope of the
Optionee’s duties from those in effect on the Grant Date.  Following the effective time of the spin-off
(the “Spin-Off”) of Expedia (“Expedia”) by the Corporation (the “Effective Time”),
the Optionee’s salary for purposes of determinations under clause (A) above,
and duties for purposes of determinations under clause (C) above, will be
based upon the salaries and duties, respectively, of Optionee at the
Corporation and Expedia, as applicable.


 


5.             Termination of Employment by the Optionee without
Good Reason or by Corporation for Cause.


 


(a)           In the event of the Optionee’s
Termination of Employment by the Optionee without Good Reason, the portion of
the Stock Options, if any, which is exercisable at the time of such Termination
of Employment (including any portion of the Stock Options that have vested as a
result of a Change in Control in accordance with Paragraph 6 of this Agreement)
may be exercised prior to the first to occur of (a) the first anniversary
of such Termination of Employment or (b) the expiration date of the Stock
Options.


 


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(b)  In the event of
the Optionee’s Termination of Employment for Cause, the entire Stock Options
(whether or not vested) shall be forfeited and canceled in its entirety upon
such Termination of Employment.  In the
event the Optionee exercised the Stock Options within one year prior to the
Optionee’s Termination of Employment for Cause, the Corporation shall be
entitled to recover from the Optionee at any time within two (2) years
following such exercise, and the Optionee shall pay over to the Corporation,
the excess of the aggregate Fair Market Value of the Common Stock subject to
such exercise on the date of exercise over the aggregate exercise price of the
Common Stock subject to such exercise.


 


(c)           Nothing in this Agreement or the Plan
shall confer upon the Optionee any right to continue in the employ of the
Corporation or any of its Subsidiaries or affiliates or interfere in any way
with the right of the Corporation or any such Subsidiaries or affiliates to
terminate the Optionee’s employment at any time.


 


6.             Change in Control.


 


In the event of a Change in Control of the Corporation
(as defined below), each Stock Option shall vest and be exercisable with
respect to a percentage of the shares of Common Stock covered thereby equal to
20% plus an additional 20% for each full year of the Optionee’s completed
service with the Corporation from the Grant Date through the Change in
Control.  For purposes of this Agreement,
“Change in Control” shall have the meaning set forth in the Plan; provided,
that, no Change in Control shall occur under this Agreement so long as
Optionee has sufficient voting power with respect to the Corporation (or
ultimate parent entity of the company resulting from such Change in Control
transaction) such that, taking into account all of the circumstances, he
effectively controls the election of a majority of the Board of the Corporation
or the board of directors of such ultimate parent entity (it being understood
that, depending upon the circumstances, the Optionee may exercise effective
control even if he has the right to vote shares representing significantly less
than a majority of the total voting power of the Corporation in the election of
directors).  Following a Change in
Control, vesting of those portions of the Stock Options, if any, which did not
vest as a result of the Change of Control will continue pursuant to the other
terms of this Agreement.


 


7.             Nontransferability of the Stock Options.


 


Unless the Committee
determines otherwise, the Stock Options are non-transferable by the Optionee
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order or, as set forth in Section 5(j) of the
Plan, to the Optionee’s family members or to a charitable organization, and the
Stock Options may be exercised, during the lifetime of the Optionee, only by
the Optionee or by the Optionee’s guardian or legal representative or any
transferee described above.


 


8.             Rights as a Stockholder.


 


Neither Optionee nor any
transferee of the Stock Options shall have any rights as a stockholder with
respect to any shares covered by such Stock Options until the date of the issuance
of a stock certificate to such individual for such shares.  No adjustment shall be made


 


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for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distribution of other rights for which
the record date is prior to the date a stock certificate is issued, except as
provided in the Plan.


 


9.             Adjustment in the Event of Change in Stock.


 


Immediately following the
Effective Time, the Stock Options will be adjusted and vesting conditions will
be set in the manner set forth in Section 5.3(d) of the Employee
Matters Agreement by and between the Corporation and Expedia, Inc. (the “EMA”).  Following the adjustments in Section 5.3(d) of
the EMA, the term “Stock Options” (when used in this Agreement) shall cover any
securities into which Stock Options are adjusted and the term “Common Stock”
(when used in this Agreement) shall cover any securities into which Common
Stock is adjusted, any adjustments of the Stock Options in the event of future
corporate transactions with respect to the Corporation or changes in the Common
Stock shall be effectuated based upon the adjustment provisions of the Plan or
any successor plan with respect to the Stock Options, and with respect to Stock
Options adjusted into stock options for the common stock of Expedia (“Expedia
Common Stock”) the term “Corporation” (when used in this Agreement) shall refer
to Expedia.  Following the adjustments in
Section 5.3(d) of the EMA, employment with IAC, corporate transactions
with respect to IAC and changes in Common Stock of IAC shall not affect the
Stock Options for Expedia Common Stock, and employment with Expedia, corporate
transactions with respect to Expedia and changes in the Common Stock of Expedia
shall not affect the Stock Options for IAC Common Stock.


 


10.           Payment of Transfer Taxes, Fees
and Other Expenses.


 


The Corporation agrees to
pay any and all original issue taxes and stock transfer taxes that may be
imposed on the issuance of shares acquired pursuant to exercise of the Stock
Options, together with any and all other fees and expenses necessarily incurred
by the Corporation in connection therewith. 
Notwithstanding the foregoing, the Optionee shall be solely responsible
for any other taxes (including, without limitation, federal, state, local or
foreign income, social security, withholding, estate or excise taxes) that may
be payable as a result of the Optionee’s participation in the Plan or as a
result of the exercise of the Stock Options and/or the sale, disposition or
transfer of any shares of Common Stock acquired upon the Optionee’s exercise of
the Stock Options.


 


11.           Other Restrictions.


 


The exercise of the Stock
Options shall be subject to the requirement that, if at any time the Committee
shall determine that (i) the listing, registration or qualification of the
shares of Common Stock subject or related thereto upon any securities exchange
or under any state or federal law, or (ii) the consent or approval of any
government regulatory body or (iii) an agreement by the Optionee with
respect to the disposition of shares of Common Stock is necessary or desirable
as a condition of, or in connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then in any such event, such exercise
shall not be effective unless such listing, registration, qualification,
consent, or approval or agreement shall have been effected or obtained free of
any conditions not acceptable to the Committee.


 


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12.           Taxes and Withholdings.


 


No later than the date of
exercise of the Stock Options granted hereunder, the Optionee shall pay to the
Corporation or make arrangements satisfactory to the Committee regarding
payment of any federal, state or local taxes of any kind required by law to be
withheld upon the exercise of such Stock Options and the Corporation shall, to
the extent permitted or required by law, have the right to deduct from any
payment of any kind otherwise due to the Optionee, federal, state and local
taxes of any kind required by law to be withheld upon the exercise of such
Stock Options.  The Optionee may settle
this withholding obligation with Common Stock, including the Common Stock that
is otherwise to be received upon exercise of the Stock Options, unless the
Committee determines otherwise.


 


13.           Notices.


 


All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by facsimile, overnight courier, or registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:


 


If to the Optionee:


 


Barry Diller

c/o IAC/InterActiveCorp

152 W. 57th Street

New York, NY 10019


 


If to the Corporation:


 


IAC/InteractiveCorp

Carnegie Hall Tower

152 West 57th Street

New York, NY  10019

Attention:  General Counsel

Facsimile:  (212) 632-9642


 


or to such other address or facsimile number as any
party shall have furnished to the other in writing in accordance with this
Paragraph 13.  Notice and communications
shall be effective when actually received by the addressee.


 


14.           Effect of Agreement.


 


Except as otherwise
provided hereunder, this Agreement shall be binding upon and shall inure to the
benefit of any successor or successors of the Corporation, and to any
transferee or successor of the Optionee pursuant to Paragraph 7.


 


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15.           Laws Applicable to Construction.


 


The interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Delaware without reference to principles of conflict of laws, as
applied to contracts executed in and performed wholly within the State of
Delaware.


 


16.           Severability.


 


The invalidity or enforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.


 


17.           Conflicts and Interpretation.


 


This Agreement is subject
to all the terms, conditions and provisions of the Plan. In the event of any
conflict between this Agreement and the Plan, this Agreement shall
control.  In the event of any ambiguity
in this Agreement, any term which is not defined in this Agreement, or any
matters as to which this Agreement is silent, the Plan shall govern including, without
limitation, the provisions thereof pursuant to which the Committee has the
power, among others, to (i) interpret the Plan, (ii) prescribe, amend
and rescind rules and regulations relating to the Plan and (iii) make
all other determinations deemed necessary or advisable for the administration
of the Plan.


 


18.           Headings.


 


The headings of
paragraphs herein are included solely for convenience of reference and shall
not affect the meaning or interpretation of any of the provisions of this
Agreement.


 


19.           Amendment.


 


This Agreement may not be
modified, amended or waived except by an instrument in writing signed by both
parties hereto.  The waiver by either
party of compliance with any provision of this Agreement shall not operate or
be construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.


 


20.           Counterparts.


 


This Agreement may be executed in counterparts, which
together shall constitute one and the same original.


 


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IN WITNESS WHEREOF, as of
the date first above written, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set the Optionee’s hand.


 


	
   

  	
  IAC/INTERACTIVECORP

  
	
   

  	
   

  
	
   

  	
  /s/ Gregory R. Blatt

  	
   

  
	
   

  	
  Gregory
  R. Blatt

  
	
   

  	
  Executive
  Vice President, General

  Counsel & Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Barry Diller

  	
   

  
	
   

  	
  Barry
  Diller

  



 


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