LINTA_Exhibit 10.16 12.31.2012






Exhibit  10.16
LIBERTY INTERACTIVE CORPORATION
Election Form 
with respect to
Option Exchange Proposal


Dated:  November 27, 2012


The following is a summary of the proposal (the “Proposal”)  separately presented to you by Liberty Interactive Corporation (the “Company”) with respect to the outstanding options, whether vested or unvested, to purchase (i) shares of Series A Liberty Interactive common stock (“LINTA”) or (ii) shares of Series A Liberty Ventures common stock (“LVNTA”), in each case, held by you and granted under either the Liberty Interactive Corporation 2000 Incentive Plan (As Amended and Restated Effective November 7, 2011), the Liberty Interactive Corporation 2007 Incentive Plan (As Amended and Restated Effective November 7, 2011), or the Liberty Interactive Corporation 2010 Incentive Plan (As Amended and Restated Effective November 7, 2011, the “2010 Plan”) (each such option, an “Eligible Option”).  For purposes of the Proposal,  Eligible  Options do  not include any options to acquire LINTA or LVNTA shares that expire on February 28, 2013 or March 2, 2013, or any such options with an exercise price that is greater than the closing price per LINTA or LVNTA share, as applicable, on The Nasdaq Global Select Market on the New Option Grant Date (as defined below).  For your convenience, attached is a schedule showing, as of November 27, 2012, all of your outstanding Eligible Options, including the exercise price, vesting schedule and expiration date thereof.
If you accept the Proposal, you must do so with respect to all of your Eligible Options.  Notwithstanding any acceptance by you of the Proposal as contemplated hereby,  you  or the Company may elect not to complete the transactions contemplated by the Proposal for any reason at anytime prior to the New Option Grant Date (as defined below) by delivering written notice (including by electronic mail) to the other.  
If you accept the Proposal, and the Proposal is completed as currently contemplated, then: 
		
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	you will exercise, effective as of December 4, 2012 (or such other date as determined by the Company, the “New Option Grant Date”), each outstanding vested Eligible Option (which, for purposes of the Proposal, includes any Eligible Options that will vest between the New Option Grant Date and December 31, 2012)  and receive a number of LINTA or LVNTA  shares,  as applicable, equal to (x) an amount (less any applicable withholding taxes) determined by the product of (1) the number of LINTA or LVNTA shares,  as applicable, subject to such vested Eligible Option multiplied by (2) the difference between the closing price per share of the LINTA or LVNTA shares, as applicable, on The Nasdaq Global Select Market on the New Option Grant Date and the exercise price of the vested Eligible Option, divided by (y) the closing price per share of the LINTA or LVNTA shares, as applicable, on The Nasdaq Global Select Market on the New Option Grant Date;


		
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	for each vested Eligible Option so exercised the Company will grant you a new option (the “Vested New Option”) on the New Option Grant Date that will be fully vested when granted with substantially the same terms and conditions (including, without limitation, the number of LINTA or LVNTA shares, as applicable, subject thereto and the expiration date thereof) as the  vested  Eligible  Option  exchanged  therefor,  except that the exercise price for the new 





This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. 
In addition, this document and any offer by the Company to exchange outstanding options constitute a private transaction between you and the Company and are not part of, or subject to, any other offer the Company may make to any officer, director or employee with respect to outstanding incentive awards.  You should consult your personal outside advisor(s) if you have questions about your financial or tax situation as it relates to the Proposal.






option will be the closing price per share of the LINTA or LVNTA shares, as applicable, on The Nasdaq Global Select Market on the New Option Grant Date;
		
	•
	for each unvested Eligible Option (other than any Eligible Option that will vest between the New Option Grant Date and December 31, 2012), the Company will accelerate the vesting of such Eligible Option and:


		
	▪
	you will exercise, effective as of the New Option Grant Date, each outstanding unvested Eligible Option and receive from the Company a number of LINTA or LVNTA shares (the “Net  Settled  Shares”)  equal  to  (x)  an  amount  (less  any  applicable  withholding  taxes) determined by the product of (1) the number of LINTA or LVNTA shares, as applicable, subject to such unvested Eligible Option multiplied by (2) the difference between  the  closing price per share of the LINTA or LVNTA shares, as applicable, on The Nasdaq Global Select Market on the New Option Grant Date and the exercise price of the unvested Eligible Option, divided by  (y) the closing price per share of the LINTA or LVNTA shares, as applicable,  on The Nasdaq  Global  Select  Market  on the New Option Grant Date;


		
	▪
	you will sell the Net Settled Shares to the Company on the New Option Grant Date for cash equal to, on a per share basis, the closing price per share of the LINTA or LVNTA shares,  as applicable,  on  the Nasdaq Global Select Market on the New Option Grant Date;


		
	▪
	you will use the proceeds from the sale of the Net Settled Shares to acquire from the Company, under the 2010 Plan, a number of LINTA or LVNTA restricted shares (the “Restricted Shares”) equal to the aggregate proceeds from the sale of the Net Settled Shares divided by the closing price per share of  the  LINTA  or  LVNTA shares,  as applicable, on the Nasdaq Global Select Market on the New Option Grant Date, which Restricted Shares will have a vesting schedule identical to that of the unvested Eligible Option exercised as contemplated above; and 


		
	▪
	the Company  will  grant  to  you  on the New Option Grant Date a new option  (the “Unvested New Option”  and, together  with  the  Vested  New  Option,  the  “New Options”) to acquire the same series of common stock, and with substantially the same terms  and conditions, including,  without limitation,  with  respect  to  vesting and  expiration, as the unvested Eligible Option exercised as contemplated above, except that the number of LINTA or LVNTA shares, as applicable, subject to such Unvested New Option will be equal to the number of shares subject to the unvested Eligible Option exercised as contemplated above minus the number of Restricted Shares purchased in respect of such unvested Eligible Option, and the exercise price of such new option will be  the  closing price per share of the LINTA or LVNTA shares, as applicable, on The Nasdaq Global Select Market on the New Option Grant Date.


Attached hereto is an example of the Proposal with respect to one of your Eligible Options.
If the transactions contemplated by the Proposal are completed, the Eligible Options will be accelerated and exercised, and the New Options and Restricted Shares will be granted,  in each case, at 5:00 p.m., New York City time, on the New Option Grant Date.   Each  of  the  New Options and the Restricted Shares to be granted  as  described  above  will be granted under the 2010 Plan, and will be subject to the terms and conditions of that plan  and a new stock option agreement and restricted stock 

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. In addition, this document and any offer by the Company to exchange outstanding options constitute a private transaction between you and the Company and  are  not part of, or subject to, any other offer the Company may make to any officer, director or employee with respect to outstanding incentive awards.   You  should  consult  your personal outside advisor(s) if you have questions about your financial or tax situation as it relates to the Proposal.


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award agreement, as applicable.  The new stock option agreement will contain terms and conditions substantially similar to the stock option agreement governing the Eligible Options, except as otherwise described herein.   With respect to the Restricted Shares, you must make an election pursuant to Section 83(b)  of the Internal Revenue Code (the “83(b) Election”), a sample form of which is attached hereto.  Such election when made will be irrevocable after the Proposal is completed.   With respect to the Net Settled Shares that you sell to  the  Company,  there is no tax gain or loss on this sale.   However,  you should report this sale on Schedule D of your 2012 individual federal income tax return Form 1040.  You should consult with your tax advisor as to how to report this sale.  A copy of the 2010 Plan has been filed by  the Company  with  the  Securities  and Exchange Commission as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (File No. 001-33982) as filed on November 8, 2011.   In addition, a summary of the material terms of the 2010 Plan can be obtained by contacting the Company or from the Liberty Interactive Corporation Legal Department. 
To accept the Proposal, you must check the box and sign below, and return this Election Form to Kelly King, Director of Financial Reporting (kking@libertymedia.com), (by emailing a scanned or PDF copy or hand delivery) prior to the close of business on Monday, December 3, 2012.   In addition, completed and executed copies of the required 83(b)  Elections  must  be sent to the Internal Revenue Service as indicated on the form within 30 days of the New Option Grant Date.  The Company will send you completed 83(b) Elections for signature by you and your spouse.   Please return the signed 83(b) Elections to Ms. King within five (5) days of receipt.   The Company  will send a copy to the Internal Revenue Service.  A copy of the 83(b) Elections must also be included with your 2012 tax returns.  
Accepting the offer from the Company with respect to your Eligible Options involves a number of potential risks and uncertainties,  including,  the  potential  risks  and uncertainties set forth under the heading entitled “Risk Factors”  in  our Annual Report on Form 10-K for the year ended December 31, 2011 and our Quarterly Reports on Form 10-Q for 2012, each of which has been filed with the SEC and highlights  the  material  risks  of  investing in the Company and the LINTA and LVNTA shares.   You should carefully consider these risks and we encourage you to speak with your financial, legal and/or tax advisors  as  necessary before deciding whether to accept the Proposal.   You acknowledge that you (x) have received all the information you consider necessary or appropriate for deciding whether to accept the Proposal, (y) have had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Proposal and (z) can bear the economic risk of your investment and have such  knowledge and experience in financial or business matters that you are capable of evaluating the merits and risks of such investment. 
By accepting the Proposal with respect to your Eligible Options, effective as of the exercise of the Eligible Options, you are:
		
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	acknowledging that your outstanding option agreement(s) relating to the Eligible Options will become null and void;


		
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	releasing all of your rights under such Eligible Options and related option agreements; and


		
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	authorizing the Company to deduct the applicable withholding taxes related to the transactions contemplated hereby.




*    *    *

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. In addition, this document and any offer by the Company to exchange outstanding options constitute a private transaction between you and the Company and  are  not part of, or subject to, any other offer the Company may make to any officer, director or employee with respect to outstanding incentive awards.   You  should  consult  your personal outside advisor(s) if you have questions about your financial or tax situation as it relates to the Proposal.


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o    Yes, I wish to accept the Proposal as to ALL, but not less than all, of my Eligible Options as more fully-described above and in discussions with the Company, and I agree to file the 83(b) Elections as described above.
	
			
	 
	 
	 

	Employee Signature
	 
	Date

	 
	 
	 

	Employee Name (please print)
	 
	E-mail Address

	 
	 
	 

	Legal Name, if different (please print)
	 









This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. In addition, this document and any offer by the Company to exchange outstanding options constitute a private transaction between you and the Company and  are  not part of, or subject to, any other offer the Company may make to any officer, director or employee with respect to outstanding incentive awards.   You  should  consult  your personal outside advisor(s) if you have questions about your financial or tax situation as it relates to the Proposal.


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Schedule of Eligible Options











Example of Proposal

















SECTION 83(B) ELECTION FORM




_______________, 2012


Via Certified Mail, Return Receipt Requested
Internal Revenue Service
____________________ 
____________________


		
	Re:
	Election to Include in Taxable Income in Year of Transfer Pursuant to Section 83(b) of the Internal Revenue Code




The name, address and taxpayer identification number of the undersigned (the “Taxpayer”) are:
Name:        ________________________
Address:        ________________________
________________________
SSN:        ________________________
Description of the property with respect to which the election is being made (the “Property”):  _____ shares of [Series A Liberty Interactive common stock]/[Series A Liberty Ventures common stock] of Liberty Interactive Corporation (the “Company”).
The date on which the Property was transferred is ____________, 2012 (the “Effective Date”). The taxable year to which this election relates is calendar year 2012.
Nature of the restrictions to which the Property is subject:  The Property is subject to transfer restrictions and forfeiture restrictions and vests based on continued service over a period beginning on the Effective Date.
The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) of the Property with respect to which this election is being made is $____________.
The amount paid by the Taxpayer for the Property is $_____________.
A copy of this statement has been furnished to other persons as provided in Treasury Regulation section 1.83- 2(d).
This statement is executed on __________________, 2012.
TAXPAYER:


                                                                            
[Name]
SSN: _____________________


                                                                            
[Name] (Spouse)
SSN: _____________________


    

This statement must be filed with the Internal Revenue Service Center with which you filed your last U.S. federal income tax return within 30 days after the Effective Date. This filing should be made by registered or certified mail, return receipt requested. You are also required to (i) deliver a copy of this statement to the Company and (ii) attach a copy of this statement to your federal income tax return for the taxable year that includes the grant date. You should also retain a copy of this statement for your records.