Document:

Exhibit 4.1

 

 

2003
OFFICEMAX INCENTIVE AND PERFORMANCE PLAN 

(Amended and restated effective as of April 23, 2008)

 

 

Table
of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Purpose and Establishment

  	
  A-1

  
	
  2.

  	
  Definitions

  	
  A-1

  
	
  3.

  	
  Stock Subject to the Plan

  	
  A-5

  
	
  4.

  	
  Administration of the Plan

  	
  A-6

  
	
  5.

  	
  Eligibility

  	
  A-8

  
	
  6.

  	
  Awards under the Plan; Agreement

  	
  A-8

  
	
  7.

  	
  Options

  	
  A-8

  
	
  8.

  	
  Stock Appreciation Rights

  	
  A-9

  
	
  9.

  	
  Restricted Stock

  	
  A-11

  
	
  10.

  	
  Restricted Stock Units

  	
  A-12

  
	
  11.

  	
  Performance Units

  	
  A-13

  
	
  12.

  	
  Performance Shares

  	
  A-14

  
	
  13.

  	
  Annual Incentive Awards

  	
  A-14

  
	
  14.

  	
  Stock Bonuses

  	
  A-15

  
	
  15.

  	
  Rights as a Shareholder

  	
  A-15

  
	
  16.

  	
  Employment Not Guaranteed

  	
  A-15

  
	
  17.

  	
  Securities Matters

  	
  A-15

  
	
  18.

  	
  Withholding Taxes

  	
  A-15

  
	
  19.

  	
  Amendment and Termination

  	
  A-16

  
	
  20.

  	
  Transfers Upon Death; Nonassignability

  	
  A-16

  
	
  21.

  	
  Expenses and Receipts

  	
  A-16

  
	
  22.

  	
  Deferral of Awards

  	
  A-16

  
	
  23.

  	
  Short-Term Deferral; Deferred Compensation

  	
  A-16

  
	
  24.

  	
  Change in Control Provisions

  	
  A-17

  
	
  25.

  	
  Claims Procedure

  	
  A-18

  
	
  26.

  	
  Claims Review Procedure

  	
  A-19

  
	
  27.

  	
  Lawsuits; Venue; Applicable Law

  	
  A-19

  
	
  28.

  	
  Participant Rights

  	
  A-19

  
	
  29.

  	
  Leave of Absence or Transfer

  	
  A-19

  
	
  30.

  	
  Unsecured General Creditor

  	
  A-19

  
	
  31.

  	
  No Fractional Shares

  	
  A-19

  
	
  32.

  	
  Beneficiary

  	
  A-19

  
	
  33.

  	
  Section 162(m)

  	
  A-20

  
	
  34.

  	
  Form of Communication

  	
  A-20

  
	
  35.

  	
  Severability

  	
  A-20

  

 

 

2003
OFFICEMAX INCENTIVE AND PERFORMANCE PLAN

 

        1.
    Purpose and
Establishment.

 

        1.1
    Purpose .    The
2003 OfficeMax Incentive and Performance Plan (the “Plan”) is intended to
promote the interests of the Company and its shareholders by (a) attracting,
motivating, rewarding, and retaining the broad-based management talent critical
to achieving the Company’s business goals; (b) linking a portion of each
Participant’s compensation to the performance of both the Company and the
individual Participant; and (c) encouraging ownership of Company common
stock by Participants. The Plan has been adopted and approved by the Board of
Directors (defined below).

 

        1.2
    Successor Plan.     This
Plan shall be the successor plan to the 1984 Key Executive Stock Option Plan
(the “1984 KESOP”). No further grants shall be made under the 1984 KESOP on or
after January 1, 2003. All awards outstanding under the 1984 KESOP on December 31,
2002 (“Prior Awards”), are incorporated into this Plan and shall be treated as
awards under this Plan; however, the Prior Awards shall continue to be governed
solely by the terms and conditions of the written instrument evidencing the
grant or issuance. Except as expressly provided, no provision of this Plan
shall affect or otherwise modify the rights or obligations of holders of Prior
Awards. Shares of Stock reserved for issuance under the 1984 KESOP in excess of
the number of shares as to which awards have been made as of December 31,
2002, shall no longer be available for issuance on or after January 1,
2003.

 

        1.3
    Original Effective
Date and Term of Plan.     The Plan’s original
effective date was January 1, 2003, as approved by the shareholders of the
Company. The Plan shall be amended and restated effective as of April 23,
2008, subject to approval by the shareholders of the Company. The Plan will
expire on April 23, 2018. The Board of Directors or the Committee may
terminate the Plan at any time prior to April 23, 2018. Awards outstanding
at the expiration or termination of the Plan shall remain in effect according
to their terms and the provisions of the Plan.

 

        2.
    Definitions.     As
used in the Plan, the following definitions apply to the terms indicated below:

 

        2.1     “Agreement”
means either the written agreement between the Company and a Participant
evidencing an Award and setting forth the terms and conditions applicable to
the Award or a statement issued by the Company to a Participant describing the
terms and conditions of an Award.

 

        2.2     “Affiliate”
means any corporation or other entity (including, but not limited to, a
partnership or limited liability company) that is affiliated with the Company
through stock or equity ownership such that it controls or is controlled by, or
is under common control with, the Company.

 

        2.3     “Annual
Incentive Award” means an Award granted under Section 13.

 

        2.4     “Award”
means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Performance Unit, Performance Share, Annual Incentive Award, or Stock
Bonus granted pursuant to the terms of the Plan.

 

        2.5     “Board
of Directors” means the Board of Directors of the Company.

 

        2.6     A
“Change in Control” means (i) the same definition for “Change in Control”
as set forth in any employment agreement, Award Agreement or change in control
agreement between the Participant and the Company, Subsidiary and/or Affiliate
in effect when the

 

A-1

 

event(s) occur, or, (ii) in
the absence of such agreements, a “Change in Control” shall be deemed to have
occurred if:

 

        (a)   Any
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 25% or more of either the then
outstanding shares of common stock of the Company or the combined voting power
of the Company’s then outstanding securities; provided, however, if such Person
acquires securities directly from the Company, such securities shall not be
included unless such Person acquires additional securities which, when added to
the securities acquired directly from the Company, exceed 25% of the Company’s
then outstanding shares of common stock or the combined voting power of the
Company’s then outstanding securities, and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Section 2.5(c)(i) shall not be deemed to be a Change in
Control of the Company; or

 

        (b)   The
following individuals cease for any reason to constitute at least a majority of
the number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the
Board or nomination for election by the Company’s stockholders was approved by
a vote of at least 2/3rds of the directors then still in office who either were
directors on the date hereof or whose appointment, election, or nomination for
election was previously so approved (the “Continuing Directors”); or

 

        (c)   The
consummation of a merger or consolidation of the Company (or any direct or
indirect subsidiary of the Company) with any other corporation other than (i) a
merger or consolidation which would result in both (a) Continuing
Directors continuing to constitute at least a majority of the number of
directors of the combined entity immediately following consummation of such
merger or consolidation, and (b) the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 25% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the Company’s then
outstanding securities; provided that securities acquired directly from the Company
shall not be included unless the Person acquires additional securities which,
when added to the securities acquired directly from the Company, exceed 25% of
the Company’s then outstanding shares of common stock or the combined voting
power of the Company’s then outstanding securities; and provided further that
any acquisition of securities by any Person in connection with a transaction
described in Section 2.6(c)(i) shall not be deemed to be a Change in
Control of the Company; or

 

        (d)   The
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or the consummation of an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, more than 50% of the combined voting power
of the voting securities of which are owned by Persons in substantially the
same proportions as their ownership of the Company immediately prior to such
sale.

 

A-2

 

        A
transaction described in Section 2.6(c) which is not a Change in
Control of the Company solely due to the operation of Subsection 2.6(c)(i)(a) will
nevertheless constitute a Change in Control of the Company if the Board
determines, prior to the consummation of the transaction, that there is not a
reasonable assurance that, for at least two years following the consummation of
the transaction, at least a majority of the members of the board of directors
of the surviving entity or any parent will continue to consist of Continuing
Directors and individuals whose election or nomination for election by the
shareholders of the surviving entity or any parent would be approved by a vote
of at least two-thirds of the Continuing Directors and individuals whose
election or nomination for election has previously been so approved.

 

        For
purposes of Sections 2.6 and 2.21, “Beneficial Owner” shall have the
meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).

 

        For
purposes of Sections 2.6 and 2.21, “Person” shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that “Person” shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company, or (v) an individual, entity or group that is permitted to and
does report its beneficial ownership of securities of the Company on
Schedule 13G under the Exchange Act (or any successor schedule), provided
that if the individual, entity or group later becomes required to or does
report its ownership of Company securities on Schedule 13D under the
Exchange Act (or any successor schedule), then the individual, person or group
shall be deemed to be a Person as of the first date on which the individual,
person or group becomes required to or does report its ownership on
Schedule 13D.

 

        2.7     “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any
regulations promulgated thereunder.

 

        2.8     “Committee”
means the Executive Compensation Committee of the Board of Directors or any
successor to the Committee, which shall consist of three or more persons, each
of whom, unless otherwise determined by the Board of Directors, is (i) an “outside
director” within the meaning of Code Section 162(m), (ii) a “nonemployee
director” within the meaning of Rule 16b-3 and (iii) satisfies the
requirements of the New York Stock Exchange for independent directors.

 

        2.9     “Company”
means OfficeMax Incorporated (formerly Boise Cascade Corporation), a Delaware
corporation.

 

        2.10  “Director”
means any individual who is a member of the Board of Directors of the Company
and who is not an employee of the Company.

 

        2.11  “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

        2.12  “Fair
Market Value” of a share of Stock means the closing price of the Stock as
reported by the consolidated tape of the New York Stock Exchange on the date in
question. Notwithstanding the foregoing, the Committee may, in its sole
discretion, specify that Fair Market Value of a share of Stock shall be defined
as the average of the high and low selling prices of the Stock on the New York
Stock Exchange on the date in question. If there are no

 

A-3

 

Stock transactions on a
particular date, the Fair Market Value shall be determined as of the
immediately preceding date on which there were Stock transactions.

 

        2.13  “Full
Value Award” means a grant of Restricted Stock, Restricted Stock Units,
Performance Shares, Performance Units, an Annual Incentive Award or Stock Bonus
that provides for a Participant to receive shares of Stock without payment of
an amount at least equal to the Fair Market Value of the Stock at the time of grant.

 

        2.14  “Incentive
Stock Option” means an Option that is an “incentive stock option” within the
meaning of Code Section 422, or any successor provision, and that is
designated by the Committee as an Incentive Stock Option.

 

        2.15  “Nonqualified
Stock Option” means an Option other than an Incentive Stock Option.

 

        2.16  “Option”
means the right to purchase a stated number of shares of Stock at a stated
price for a stated period of time, granted pursuant to Section 7.

 

        2.17  “Participant”
means an employee or Director of the Company or a Subsidiary to whom an Award
is granted pursuant to the Plan, or upon the death of the Participant, his or
her successors, heirs, executors, and administrators, as the case may be.

 

        2.18  “Performance
Goals” means the objectives established by the Committee in its sole discretion
with respect to any performance-based Awards that relate to one or more
business criteria within the meaning of Code Section 162(m). Performance
Goals may include or be based upon, without limitation: sales; gross revenue;
gross margins; internal rate of return; cost; ratio of debt to debt plus
equity; profit before tax; earnings before interest and taxes; earnings before
interest, taxes, depreciation, and amortization; earnings per share; operating
earnings; economic value added; ratio of operating earnings to capital
spending; cash flow; free cash flow; net operating profit; net income; net
earnings; net sales or net sales growth; price of Stock; return on capital, net
assets, equity, or shareholders’ equity; segment income; market share;
productivity ratios; expense targets; working capital targets; or total return
to shareholders. Performance Goals may (a) be used to measure the
performance of the Company as a whole or any Subsidiary, business unit or
segment of the Company, (b) include or exclude (or be adjusted to include
or exclude) extraordinary items, the impact of charges for restructurings,
discontinued operations and other unusual and non-recurring items, and the
cumulative effects of tax or accounting changes, each as defined by generally
accepted accounting principles and as identified in the financial statements,
notes to the financial statements, management’s discussion and analysis or
other Securities and Exchange Commission filings, and/or (c) reflect
absolute entity performance or a relative comparison of entity performance to
the performance of a peer group, index, or other external measure, in each case
as determined by the Committee in its sole discretion.

 

        2.19  “Performance
Share” means an Award of a number of shares granted to a Participant pursuant
to Section 12 which is initially valued according to Fair Market Value and
is paid out based on the achievement of stated Performance Goals during a
stated period of time.

 

        2.20  “Performance
Unit” means an Award granted to a Participant pursuant to Section 11,
denominated in units, the value of which at the time it is payable is
determined as a function of the extent to which corresponding performance
criteria or Performance Goals, as applicable, have been achieved.

 

        2.21  A
“Potential Change in Control” shall be deemed to have occurred if (a) the
Company enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control of the Company; (b) the Company or any
Person publicly announces

 

A-4

 

an intention to take or
to consider taking actions which if consummated would constitute a Change in
Control of the Company; (c) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 9.5% or more
of either the then outstanding shares of common stock of the Company or the
combined voting power of the Company’s then outstanding securities, provided
that securities acquired directly from the Company shall not be included unless
the Person acquires additional securities which, when added to the securities
acquired directly from the Company, exceed 9.5% of the Company’s then
outstanding shares of common stock or the combined voting power of the Company’s
then outstanding securities; or (d) the Board adopts a resolution to the
effect that a Potential Change in Control has occurred.

 

        2.22  “Restricted
Stock” means an Award of Stock granted in accordance with the terms of Section 9
and the other provisions of the Plan, and which is nontransferable and subject
to a substantial risk of forfeiture. Stock shall cease to be Restricted Stock
when, in accordance with the terms hereof and the applicable Agreement, they
become transferable and free of a substantial risk of forfeiture.

 

        2.23  “Restricted
Stock Units” means an Award granted to a Participant pursuant to Section 10,
denominated in units, providing a Participant the right to receive payment at a
future date after the lapse of restrictions or achievement of performance
criteria or Performance Goals, as applicable.

 

        2.24  “Rule 16b-3”
means Rule 16b-3 promulgated under the Exchange Act, as amended from time
to time.

 

        2.25  “Securities
Act” means the Securities Act of 1933, as amended from time to time.

 

        2.26  “Stock”
means the common stock of the Company, par value $2.50 per share.

 

        2.27  “Stock
Appreciation Right” or “SAR” means the right to receive an amount calculated as
provided in and granted pursuant to Section 8.

 

        2.28  “Stock
Bonus” means a bonus payable in shares of Stock granted pursuant to Section 14.

 

        2.29  “Subsidiary”
means (i) in the case of an Incentive Stock Option, any company during any
period in which it is a “subsidiary corporation” (as that term is defined in
Code Section 424(f)), and (ii) in the case of all other Awards, in
addition to a “subsidiary corporation” as defined above, a partnership, limited
liability company, joint venture or other entity in which the Company has fifty
percent (50%) or more of the voting power or equity interests.

 

        3.
    Stock Subject to the
Plan.

 

        3.1
    Shares Available for
Awards.     On and after the effective date of
this amendment and restatement of the Plan, the maximum number of shares of
Stock available for grant of Awards under the Plan shall be 12,800,000 shares
(subject to adjustment as provided herein). Shares may be authorized but
unissued Stock or authorized and issued Stock held in the Company’s treasury.
All shares of Stock reserved with respect to Awards granted under the Plan
shall be available for any Awards, including Options and Stock Appreciation
Rights. The maximum number of shares of Stock under the Plan that may be issued
as Incentive Stock Options shall be 12,800,000. Shares subject to an Award
(including a Prior Award, as that term is defined in Section 1.2 or Full
Value Award, as that term is defined in Section 2.13) which is cancelled,
expired, terminated, forfeited, surrendered, or otherwise settled without the
issuance of any Stock shall again be available for Awards under the Plan. If
shares covered by a Full Value Award are again available for grants pursuant to
this subsection 3.1, the number of Shares that again becomes eligible for
grants shall also be multiplied by 2.25. Shares under substitute

 

A-5

 

awards for grants made
under a plan of an acquired business entity shall not reduce the maximum number
of shares that may be issued under the Plan.

 

        3.2
    Accounting for
Awards; Fungible Shares.     For purposes of
this Section 3, on and after the effective date of this amendment and
restatement of the Plan, an Award, other than a Full Value Award, shall reduce
the aggregate number of shares of Stock available for grant under the Plan by
the total number of shares covered by the Award. A Full Value Award shall
reduce the aggregate number of shares available for grants under the Plan by
the number of shares covered by the Full Value Award multiplied by 2.25.  Notwithstanding any Plan provision to the
contrary, shares withheld for payment of the exercise price of an Award and/or
shares withheld to satisfy withholding taxes shall not be added back to the
number of shares available for the future grant of Awards.

 

        3.3
    Performance-Based
Award Limitation.     Awards that are designed
to comply with the performance-based exception from the tax deductibility
limitation of Code Section 162(m) shall be subject to the following
rules:

 

        (a)   The
number of shares of Stock that may be granted in the form of Options in a
single fiscal year to a Participant may not exceed 1,500,000, as adjusted
pursuant to Section 3.4.

 

        (b)   The
number of shares of Stock that may be granted in the form of SARs in a single
fiscal year to a Participant may not exceed 1,500,000, as adjusted pursuant to Section 3.4.

 

        (c)   The
number of shares of stock that may be granted in the form of Restricted Stock
in a single fiscal year to a Participant may not exceed 1,500,000, as adjusted
pursuant to Section 3.4.

 

        (d)   The
number of Restricted Stock Units that may be granted in a single fiscal year to
a Participant may not exceed 1,500,000, as adjusted pursuant to Section 3.4.

 

        (e)   The
number of shares of Stock that may be granted in the form of Performance Shares
in a single fiscal year to a Participant may not exceed 1,500,000, as adjusted
pursuant to Section 3.4.

 

        (f)    The
maximum amount that may be paid to a Participant for Performance Units granted
in a single fiscal year to the Participant may not exceed $4,000,000.

 

        3.4
    Adjustment for
Change in Capitalization.     In the event of
any recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, spin-off, combination, share repurchase, share exchange,
reclassification, or other similar corporate transaction or event (a) the
number and kind of shares of stock which may thereafter be issued in connection
with Awards; (b) the number and kind of shares of stock or other property
issued or issuable in respect of outstanding Awards; (c) the exercise
price, grant price, or purchase price relating to any Award; and (d) the
maximum number of shares subject to Awards which may be awarded to any employee
during any fiscal year of the Company shall be equitably adjusted as necessary
to prevent the dilution or enlargement of the rights of Participants; provided that,
with respect to Incentive Stock Options, adjustments shall be made in
accordance with Code Section 424.

 

        4.
    Administration of
the Plan.

 

        4.1
    Authority and
Delegation.     The Committee shall have final
discretion, responsibility, and authority to administer and interpret the Plan.
This includes the discretion and authority to determine all questions of fact,
eligibility, or benefits relating to the Plan. The Committee may also adopt any
rules it deems necessary to administer the Plan. Any interpretation,
determination, decision, or other action made or taken by the Committee shall
be final and

 

A-6

 

binding on Participants.
The Committee’s responsibilities for administration and interpretation of the
Plan shall be exercised by Company employees who have been assigned those
responsibilities by the Company’s management. Unless limited by the Committee
in writing, any Company employee exercising responsibilities relating to the
Plan in accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, subject to the requirements of Rule 16b-3, Code Section 162(m) and
the New York Stock Exchange. Executive officers designated by the Committee
shall have the authority to grant Awards to non-executive officers and
non-Directors. Subject to Section 19, the Committee shall have the
authority to adopt modifications and amendments to this Plan or any Agreement
necessary to comply with the law of the countries in which the Company, its
Affiliates and/or Subsidiaries operate.

 

        4.2
    Employees in Foreign
Countries.     The Committee shall have the
authority to adopt such modifications, procedures, appendices and sub-plans as
may be necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or any Subsidiary may operate to assure the
viability of the benefits from Awards granted to Employees employed in such
countries and to meet the objectives of the Plan.

 

        4.3
    Terms and Conditions
of Awards.     The Committee shall have final
discretion, responsibility, and authority to:

 

        (a)   grant
Awards;

 

        (b)   determine
the Participants to whom and the times at which Awards shall be granted;

 

        (c)   determine
the type and number of Awards to be granted, the number of shares of Stock to
which an Award may relate, and the applicable terms, conditions, and
restrictions, including the length of time for which any restriction shall
remain in effect;

 

        (d)   establish
and administer Performance Goals relating to any Award;

 

        (e)   establish
the rights of Participants with respect to an Award upon termination of
employment or service as a Director;

 

        (f)    determine
whether, to what extent, and under what circumstances an Award may be settled,
cancelled, forfeited, exchanged, or surrendered;

 

        (g)   make
adjustments in the Performance Goals in recognition of unusual or nonrecurring
events affecting the Company or the financial statements of the Company, or in
response to changes in applicable laws, regulations, or accounting principles;

 

        (h)   determine
the terms and provisions of Agreements;

 

        (i)    provide
for forfeiture of outstanding awards and recapture of realized gains and other
realized value in such events as determined by the Committee, which include,
but are not limited to, a breach of restrictive covenants or an intentional or
negligent misstatement of financial records; and

 

        (j)    make
all other determinations deemed necessary or advisable for the administration
of the Plan.

 

        The
Committee may solicit recommendations from the Company’s management with
respect to any or all of the items listed above.

 

        The
Committee shall determine the terms and conditions of each Award at the time of
grant. The Committee may establish different terms and conditions for different

 

A-7

 

Participants, for
different Awards, and for the same Participant for each Award the Participant
may receive, whether or not granted at different times.

 

        5.
    Eligibility.     The
persons who shall be eligible to receive Awards pursuant to the Plan shall be
employees of the Company and its Subsidiaries and Affiliates (including
officers of the Company, whether or not they are directors of the Company),
selected by the Committee from time to time, and Directors. The grant of an
Award at any time to any person shall not entitle that person to a grant of an
Award at any future time.

 

        6.
    Awards under the
Plan; Agreement.     Awards that may be granted
under the Plan consist of Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Units, Performance Shares, Annual Incentive
Awards, and Stock Bonuses, all as described below.

 

        Each
Award granted under the Plan, except unconditional Stock Bonuses, shall be
evidenced by an Agreement which shall contain such provisions as the Committee
may, in its sole discretion, deem necessary or desirable. On and after the
effective date of this amendment and restatement of the Plan, if there is any
inconsistency between the terms of the Plan and an Agreement, the terms of the
Plan shall control unless the Agreement explicitly states that an exception to
the Plan is being made. By accepting an Award, a Participant agrees that the
Award shall be subject to all of the terms and provisions of the Plan and the
applicable Agreement.

 

        7.
    Options.

 

        7.1
    Terms and Agreement.
    Subject to the terms of the Plan, Options
may be granted to Participants at any time as determined by the Committee. The
Committee shall determine, and the Agreement shall reflect, the following for
each Option granted:

 

        (a)   the
number of shares subject to each Option;

 

        (b)   duration
of the Option (provided that no Option shall have an expiration date later than
the day after the 7th anniversary of the date of grant);

 

        (c)   vesting
requirements which specify a vesting period of no less than one year, except
with respect to substitute awards for grants made under a plan of an acquired
business entity;

 

        (d)   whether
the Option is an Incentive Stock Option or a Nonqualified Stock Option;

 

        (e)   the
amount and duration of related Stock Appreciation Rights, if any, and any
conditions upon their exercise;

 

        (f)    the
exercise price for each Option, which, except with respect to substitute awards
complying with Code Section 424 and regulations thereunder, shall not be
less than the Fair Market Value on the date of the grant (with respect to
Incentive Stock Options, 110% of the Fair Market Value on the date of grant for
any Participant who owns, within the meaning of Code Section 424(d), stock
of the Company possessing more than 10% of the total combined voting power of
all classes of stock of the Company, any Subsidiary, or any Affiliate);

 

        (g)   the
permissible method(s) of payment of the exercise price;

 

        (h)   the
rights of the Participant upon termination of employment or service as a
Director; and

 

        (i)    any
other terms or conditions established by the Committee.

 

A-8

 

        7.2
    Exercise of Options.

 

        (a)   Options
shall be exercisable at such times and subject to such restrictions and
conditions as the Committee, in its sole discretion, deems appropriate, which
need not be the same for all Participants.

 

        (b)   An
Option shall be exercised by delivering written notice as specified in the
Agreement on the form of notice provided by the Company. Options may be
exercised in whole or in part.

 

        For
a Participant who is subject to Section 16 of the Exchange Act, the
Company may require that the method of payment comply with Section 16 and
the rules and regulations thereunder. Any payment in shares of Stock, if
permitted, shall be made by delivering the shares to the secretary of the
Company, duly endorsed in blank or accompanied by stock powers duly executed in
blank, together with any other documents and evidence as the secretary shall
require.

 

        (c)   Certificates
for shares of Stock purchased upon the exercise of an Option shall be issued in
the name of or for the account of the Participant or other person entitled to
receive the shares and delivered to the Participant or other person as soon as
practicable following the effective date on which the Option is exercised.

 

        7.3
    Incentive Stock
Options.     Notwithstanding anything in the
Plan to the contrary, no term of the Plan relating to Incentive Stock Options
shall be interpreted, amended, or altered, nor shall any discretion or
authority granted under the Plan be exercised so as to disqualify the Plan
under Code Section 422, or, without the consent of any affected
Participant, to cause any Incentive Stock Option previously granted to fail to
qualify for the federal income tax treatment afforded under Code Section 421.
Incentive Stock Options shall not be granted to Directors. Incentive Stock
Options shall not be granted under the Plan on or after January 1, 2013.

 

        7.4
    Reduction in Price
or Reissuance.     In no event shall the
Committee cancel any outstanding Option for the purpose of (i) providing a
replacement award under this or another Company plan, or (ii) cashing out
an Option, unless such cash-out occurs in conjunction with a Change in Control.
Additionally, in no event shall the Committee, without first receiving
shareholder approval, (a) cancel any outstanding Option for the purpose of
reissuing the Option to the Participant at a lower exercise price or (b) reduce
the exercise price of a previously issued Option.

 

        7.5
    Notification of
Disqualifying Disposition.     If any
Participant shall make any disposition of Shares issued pursuant to the
exercise of an Incentive Stock Option under the circumstances described in Code
Section 421(b) (relating to certain disqualifying dispositions), such
Participant shall notify the Company of such disposition within ten (10) calendar
days thereof.

 

        8.
    Stock Appreciation
Rights.

 

        8.1
    Terms and Agreement.
    Subject to the terms of the Plan, Stock
Appreciation Rights may be granted to Participants at any time as determined by
the Committee. The grant price of the SAR shall be at least equal to one
hundred percent (100%) of the Fair Market Value of Stock as determined on the
date of the grant, except with respect to substitute awards complying with Code
Section 424 and regulations thereunder. The Committee shall determine, and
the Agreement shall reflect, the following for each SAR granted:

 

        (a)   the
number of shares subject to each SAR;

 

        (b)   whether
the SAR is a Related SAR or a Freestanding SAR;

 

A-9

 

        (c)   duration
of the SAR (provided that no SAR shall have an expiration date later than the
day after the 7th anniversary of the date of grant);

 

        (d)   vesting
requirements which specify a vesting period of no less than one year, except with
respect to substitute awards for grants made under a plan of an acquired
business entity;

 

        (e)   rights
of the Participant upon termination of employment or service as a Director; and

 

        (f)   any
other terms or conditions established by the Committee.

 

        8.2
    Related and
Freestanding SARs.     A Stock Appreciation
Right may be granted in connection with an Option, either at the time of grant
or at any time thereafter during the term of the Option (a “Related SAR”), or
may be granted unrelated to an Option (a “Freestanding SAR”).

 

        8.3
    Surrender of Option.
    A Related SAR shall require the holder, upon
exercise, to surrender the Option with respect to the number of shares as to
which the SAR is exercised, in order to receive payment. The Option will, to
the extent surrendered, cease to be exercisable.

 

        8.4
    Reduction in Number
of Shares Subject to Related SARs.     For
Related SARs, the number of shares subject to the SAR shall not exceed the
number of shares subject to the Option. For example, if the SAR covers the same
number of shares as the Option, the exercise of a portion of the Option shall
reduce the number of shares subject to the SAR to the number of shares
remaining under the Option. If the Related SAR covers fewer shares than the
Option, the exercise of a portion of the Option shall reduce the number of
shares subject to the SAR to the extent necessary so that the number of
remaining shares subject to the SAR is not more than the remaining shares under
the Option.

 

        8.5
    Exercisability.     Subject
to Section 8.7 and to any rules and restrictions imposed by the
Committee, a Related SAR will be exercisable at the time or times, and only to
the extent, that the Option is exercisable and will not be transferable except
to the extent that the Option is transferable. A Freestanding SAR will be
exercisable as determined by the Committee but in no event after 10 years
from the date of grant.

 

        8.6
    Payment.     Upon
the exercise of a Stock Appreciation Right, the holder will be entitled to
receive payment of an amount determined by multiplying:

 

        (a)   The
excess of the Fair Market Value on the date of exercise over the Fair Market
Value on the date of grant, by

 

        (b)   The
number of shares with respect to which the SAR is being exercised.

 

        The
Committee may limit the amount payable upon exercise of a Stock Appreciation
Right. Any limitation must be determined as of the date of grant and noted on
the Agreement evidencing the grant.

 

        Payment
may be made in cash, Stock, or a combination of cash and Stock, in the
Committee’s sole discretion.

 

        8.7
    Reduction in Price
or Reissuance.     In no event shall the
Committee cancel any outstanding Stock Appreciation Right for the purpose of (i) providing
a replacement award under this or another Company plan, or (ii) cashing
out a Stock Appreciation Right, unless such cash-out occurs in conjunction with
a Change in Control. Additionally, in no event shall the Committee, without
first receiving shareholder approval, (a) cancel any outstanding Stock
Appreciation Right for the purpose of reissuing the Stock Appreciation Right to
the Participant

 

A-10

 

at a lower exercise price
or (b) reduce the exercise price of a previously issued Stock Appreciation
Right.

 

        8.8
    Additional Terms.     The
Committee may impose additional conditions or limitations on the exercise of a
Stock Appreciation Right as it may deem necessary or desirable to secure for
holders the benefits of Rule 16b-3, or any successor provision, or as it
may otherwise deem advisable.

 

        9.
    Restricted Stock.

 

        9.1
    Terms and Agreement.
    Subject to the terms of the Plan, shares of
Restricted Stock may be granted to Participants at any time as determined by
the Committee. The Committee shall determine, and the Agreement shall reflect,
the following for the Restricted Stock granted:

 

        (a)   the
number of shares of Restricted Stock granted;

 

        (b)   the
purchase price, if any, to be paid by the Participant for each share of
Restricted Stock;

 

        (c)   the
restriction period established pursuant to Subsection 9.2 which, except
with respect to substitute awards for grants made under a plan of an acquired
business entity:

 

        (i)    for
time-based Awards in excess of 5% of the number of shares available for Awards
pursuant to Section 3.1, shall not be less than three (3) years, with
restrictions lapsing on a pro rata basis; and

 

        (ii)   for
Performance Goal-based Awards, shall be based upon a performance period of at
least one (1) year;

 

        (d)   any
requirements with respect to elections under Code Section 83(b);

 

        (e)   rights
of the Participant upon termination of employment or service as a Director; and

 

        (f)   any
other terms or conditions established by the Committee.

 

        9.2
    Restriction Period.     At
the time of the grant of Restricted Stock, the Committee shall establish a restriction
period for the shares granted, which may be time-based, based on the
achievement of specified Performance Goals, a combination of time- and
Performance Goal-based, or based on any other criteria the Committee deems
appropriate. The Committee may divide the shares into classes and assign a
different restriction period for each class. The Committee may impose
additional conditions or restrictions upon the vesting of the Restricted Stock
as it deems fit in its sole discretion. If all applicable conditions are
satisfied, then upon the termination of the restriction period with respect to
a share of Restricted Stock, the share shall vest and the restrictions of Section 9.3
shall lapse. To the extent required to ensure that a Performance Goal-based Award
of Restricted Stock to an executive officer is deductible by the Company
pursuant to Code Section 162(m), any such Award shall vest only upon the
Committee’s determination that the Performance Goals applicable to the Award
have been attained.

 

        9.3
    Restrictions on
Transfer Prior to Vesting.     Prior to the
vesting of Restricted Stock, the Participant may not sell, assign, pledge,
hypothecate, transfer, or otherwise encumber the Restricted Stock. Upon any
attempt to transfer rights in a share of Restricted Stock, the share and all
related rights shall immediately be forfeited by the Participant. Upon the
vesting of a share of Restricted Stock, the transfer restrictions of this
section shall lapse with respect to that share.

 

A-11

 

        9.4
    Rights as a
Shareholder.     Except for the restrictions set
forth here and unless otherwise determined by the Committee, the Participant
shall have all the rights of a shareholder with respect to shares of Restricted
Stock, including but not limited to the right to vote and the right to receive
dividends, provided that the Committee, in its sole discretion, may require
that any dividends paid on shares of Restricted Stock be held in escrow until
all restrictions on the shares have lapsed.

 

        9.5
    Issuance of
Certificates.

 

        (a)   Following
the date of grant, the Company shall issue a stock certificate, registered in
the name of or for the account of the Participant to whom the shares of Restricted
Stock were granted, evidencing the shares. Each stock certificate shall bear
the following legend:

 

The transferability of
this certificate and the shares of stock represented hereby are subject to the
restrictions, terms, and conditions (including forfeiture provisions and
restrictions against transfer) contained in the 2003 OfficeMax Incentive and
Performance Plan and an Agreement entered into between the registered owner of
the shares and the Company.

 

This legend shall not be
removed until the shares vest pursuant to the terms stated.

 

        (b)   Each
certificate, together with the stock powers relating to the shares of
Restricted Stock evidenced by the certificate, shall be held by the Company
unless the Committee determines otherwise.

 

        (c)   Following
the date on which a share of Restricted Stock vests, the Company shall cause to
be delivered to the Participant to whom the shares were granted, a certificate
evidencing the share free of the legend stated in subsection (a) above.

 

        9.6
    Section 83(b) Election.
    The Committee may provide in the Agreement
that the Award is conditioned upon the Participant making or not making an
election under Code Section 83(b). If the Participant makes an election
pursuant to Code Section 83(b), the Participant shall be required to
file a copy of the election with the Company within ten (10) calendar
days.

 

        10.
    Restricted Stock
Units.

 

        10.1
    Terms and Agreement.
    Subject to the terms of the Plan, Restricted
Stock Units may be granted to Participants at any time as determined by the
Committee. The Committee shall determine, and the Agreement shall reflect, the
following for the Restricted Stock Units granted:

 

        (a)   the
number of Restricted Stock Units awarded:

 

        (b)   the
purchase price, if any, to be paid by the Participant for each Restricted Stock
Unit;

 

        (c)   the
restriction period established pursuant to Subsection 10.2 which, except
with respect to substitute awards for grants made under a plan of an acquired
business entity:

 

        (i)    for
time-based Awards in excess of 5% of the number of shares available for Awards
pursuant to Section 3.1, shall not be less than three (3) years, with
restrictions lapsing on a pro rata basis; and

 

        (ii)   for
Performance Goal-based Awards, shall be based on a performance period of no
less than one (1) year;

 

A-12

 

        (d)   whether
dividend equivalents will be credited with respect to Restricted Stock Units,
and, if so, any accrual, forfeiture or payout restrictions on the dividend
equivalents;

 

        (e)   rights
of the Participant upon termination of employment or service as a Director; and

 

        (f)   any
other terms or conditions established by the Committee.

 

        To
the extent a Restricted Stock Unit Award constitutes “deferred compensation”
within the meaning of Code Section 409A, the Committee shall establish
Agreement terms and provisions that comply with Code Section 409A and regulations
thereunder.

 

        10.2
    Restriction Period.     At
the time of the grant of Restricted Stock Units, the Committee shall establish
a restriction period, which may be time-based, based on the achievement of
specified Performance Goals, a combination of time- and Performance Goal-based,
or based on any other criteria the Committee deems appropriate. The Committee
may divide the awarded units into classes and assign a different restriction
period for each class. The Committee may impose any additional conditions or
restrictions upon the vesting of the Restricted Stock Units as it deems fit in
its sole discretion. If all applicable conditions are satisfied, then upon the
termination of the restriction period with respect to a Restricted Stock Unit,
the Unit shall vest. To the extent required to ensure that a Performance
Goal-based Award of Restricted Stock Units to an executive officer is
deductible by the Company pursuant to Code Section 162(m), any such Award
shall become vested only upon the Committee’s determination that the
Performance Goals applicable to the Award, if any, have been attained.

 

        10.3
    Payment.     Upon
vesting of a Restricted Stock Unit, the Participant shall be entitled to
receive payment of an amount equal to the Fair Market Value of one share of
Stock. Payment may be made in cash, Stock, or a combination of cash and Stock,
in the Committee’s sole discretion.

 

        11.
    Performance Units.

 

        11.1
    Terms and Agreement.
    Subject to the terms of the Plan,
Performance Units may be granted to Participants at any time as determined by
the Committee. The Committee shall determine, and the Agreement shall reflect,
the following for the Performance Units granted:

 

        (a)   the
number of Performance Units awarded;

 

        (b)   the
initial value of a Performance Unit;

 

        (c)   the
rights of the Participant upon termination of employment or service as a
Director (which may be different based on the reason for termination);

 

        (d)   the
performance period, which shall not be less than one (1) year, and
Performance Goals applicable to the Award; and

 

        (e)   any
other terms or conditions established by the Committee.

 

        To
the extent an Award constitutes “deferred compensation” within the meaning of
Code Section 409A, the Committee shall establish Agreement terms and
provisions that comply with Code Section 409A and regulations thereunder.

 

        11.2
    Payment.     After
the applicable performance period has ended, the Committee will review the
Performance Goals and determine the amount payable with respect to the Award,
based upon the extent to which the Performance Goals have been attained within
the performance period and any other applicable terms and conditions. Payment
of earned Performance Units may be made in cash, Stock, or a combination of
cash and Stock, in the Committee’s sole discretion.

 

A-13

 

        12.
    Performance Shares.

 

        12.1
    Terms and Agreement.
    Subject to the terms of the Plan,
Performance Shares may be granted to Participants at any time as determined by
the Committee. The Committee shall determine, and the Agreement shall reflect,
the following for the Performance Shares granted:

 

        (a)   the
number of Performance Shares awarded;

 

        (b)   the
performance period, which shall not be less than one (1) year, and
Performance Goals applicable to the Award;

 

        (c)   whether
dividend equivalents will be credited with respect to Performance Shares, and
if so, any accrual, forfeiture, or payout restrictions on the dividend
equivalents;

 

        (d)   the
rights of the Participant upon termination of employment or service as a
Director (which may be different based on the reason for termination); and

 

        (e)   any
other terms or conditions established by the Committee.

 

        To
the extent an Award constitutes “deferred compensation” within the meaning of
Code Section 409A, the Committee shall establish Agreement terms and
provisions that comply with Code Section 409A and regulations thereunder.

 

        12.2
    Initial Value.     The
initial value of each Performance Share shall be the Fair Market Value on the
date of grant.

 

        12.3
    Payment.     After
the applicable performance period has ended, the Committee will review the
Performance Goals and determine the amount payable with respect to the Award,
based upon the extent to which the Performance Goals have been attained within
the performance period and any other applicable terms and conditions. Payment
of earned Performance Shares may be made in cash, Stock, or a combination of
cash and Stock, as determined by the Committee in its sole discretion.

 

        13.
    Annual Incentive
Awards.

 

        13.1
    Award Period and Performance
Goals.     The award period for Annual Incentive
Awards is a fiscal year, which may be a calendar year. Within 90 days of
the beginning of each award period, the Committee shall establish the specific
Performance Goals to be achieved in order for Participants to earn an Annual
Incentive Award. The Committee shall establish a mathematical formula pursuant
to which an Award equal to a specified percentage of a Participant’s salary
shall be earned upon the attainment of specific levels of the applicable
Performance Goals. This formula may take into account Performance Goals
achieved in prior years. The Performance Goals and formula, once established,
shall continue for subsequent years unless modified by the Committee. The
Performance Goals applicable to an Award Period, and the formula pursuant to
which Award amounts shall be determined, shall be selected and published within
90 days from the beginning of the award period. Notwithstanding the
foregoing, nothing in this Plan shall be construed to mean that an Award that
does not satisfy Code Section 162(m) performance-based compensation
requirements does not constitute performance-based compensation for other
purposes, including Code Section 409A.

 

        To
the extent an Annual Incentive Award constitutes “deferred compensation” within
the meaning of Code Section 409A, the Committee shall establish Award
terms and provisions that comply with Code Section 409A and regulations
thereunder.

 

        13.2
    Payment.     As
soon as practical after the conclusion of each year, the Committee shall review
and evaluate the Performance Goals applicable to that year in light of the
Company’s performance measured in accordance with the goals and shall determine
whether

 

A-14

 

the goals have been
satisfied. If satisfied, the Committee shall so certify in a written statement
and shall apply the criteria to determine the amount of the Award for each
Participant, subject to the Committee’s right to reduce or eliminate the amount
of any Award under Section 33. Payment of earned Annual Incentive Awards
may be made in cash, Stock, or a combination of cash and Stock, in the
Committee’s sole discretion. No Award may be paid to a Participant in excess of
$5,000,000 for any single year.

 

        14.
    Stock Bonuses.     Subject
to the terms of the Plan, a Stock Bonus may be granted to Participants at any
time as determined by the Committee in payment of earned incentive
compensation. If the Committee grants a Stock Bonus, a certificate for the
shares of Stock constituting the Stock Bonus shall be issued in the name of the
Participant to whom the grant was made and delivered as soon as practicable
after the date on which the Stock Bonus is payable.

 

        15.
    Rights as a Shareholder.
    Except as otherwise provided in Section 9.4
with respect to Restricted Stock, no person shall have any rights as a
shareholder with respect to any shares of Stock covered by or relating to an
Award until the date of issuance of a stock certificate with respect to the
shares. Except as otherwise provided in Sections 3.4 and 12.1, no
adjustment to any Award shall be made for dividends or other rights for which
the record date occurs prior to the date the stock certificate is issued.

 

        16.
    Employment Not
Guaranteed.     This Plan is not intended to and
does not create a contract of employment in any manner. Employment with the
Company is at will, which means that either the employee or the Company may end
the employment relationship at any time and for any reason. Nothing in this
Plan changes, or should be construed as changing, that at-will relationship.

 

        17.
    Securities Matters.

 

        17.1
    Delivery of Stock
Certificates.     To the extent that this Plan
provides for issuance of certificates to reflect the transfer of Stock, the
transfer of such Stock may be effected on a non-certificated basis, to the
extent not prohibited by applicable laws. Notwithstanding anything in this Plan
to the contrary, the Company shall not be obligated to issue or deliver any
certificates evidencing shares of Stock unless and until (a) the Company
is advised by its counsel that the issuance and delivery of certificates is in
compliance with all applicable laws, regulations of governmental authority, and
the requirements of any securities exchange on which the Stock is traded; and (b) any
governmental approvals the Company deems necessary or advisable have been
obtained. The Committee may require, as a condition of the issuance and
delivery of certificates, that the recipient make any agreements and
representations and that the certificates bear any legends as the Committee, in
its sole discretion, deems necessary or desirable.

 

        17.2
    When Transfer is
Effective.     The transfer of any shares of
Stock shall be effective only when counsel to the Company has determined that
the issuance and delivery of the shares is in compliance with all applicable
laws, regulations, and the requirements of any securities exchange on which
shares of Stock are traded. The Committee may, in its sole discretion, defer
the effectiveness of any transfer of shares of Stock in order to allow the
issuance of the shares to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal, state, or
foreign securities laws. The Committee shall inform the Participant in writing
of its decision to defer the effectiveness of a transfer. During the period of
deferral in connection with the exercise of an Option, the Participant may, by
written notice, withdraw the exercise and obtain the refund of any amount paid
in connection with the exercise.

 

        18.
    Withholding Taxes.     When
cash is to be paid pursuant to an Award, the Company may deduct an amount
sufficient to satisfy any federal, state or other taxes required by law to be

 

A-15

 

withheld. When shares of
Stock are to be delivered pursuant to an Award, the Company may require the
Participant to remit to the Company in cash an amount sufficient to satisfy any
federal, state, and foreign taxes required by law to be withheld. With the
Committee’s approval, a Participant may satisfy the foregoing requirement by
electing to have the Company withhold from delivery shares of Stock having a
value equal to the minimum amount of required tax to be withheld. The shares
shall be valued at Fair Market Value on the date the amount of tax to be
withheld is determined. To the extent a fractional share is required to satisfy
the minimum amount of required tax to be withheld, the Committee may provide
either that (i) shares withheld shall be rounded up to the next whole
share, or (ii) fractional amounts shall be settled in cash.

 

        19.
    Amendment and
Termination.     The Board of Directors may, at
any time, amend or terminate the Plan. In addition, the Committee shall have
the authority to adopt modifications and amendments to this Plan or any
Agreement necessary to comply with the law of the countries in which the
Company, its Affiliates and/or Subsidiaries operate. Notwithstanding the
foregoing, no amendment shall be made without shareholder approval if approval
is required under applicable law or if the amendment would (a) amend
Sections 7.4 or 8.7 (other than in connection with a Change in Control), (b) increase
the total number of shares of Stock available under the Plan, or (c) materially
increase the cost of the Plan to the Company or the benefits to Participants.
Any amendment or termination shall not adversely affect the vested or accrued
rights or benefits of any Participant without the Participant’s prior consent.

 

        20.
    Transfers Upon
Death; Nonassignability.     Upon the death of a
Participant, outstanding Awards granted to the Participant may be exercised
only by the executor or administrator of the Participant’s estate or by a
person who has acquired the right to exercise by will or the laws of descent
and distribution. No transfer of an Award by will or the laws of descent and
distribution shall be effective to bind the Company unless the Committee has
been furnished with (a) written notice and a copy of the will and/or such
evidence as the Committee may deem necessary to establish the validity of the
transfer, and (b) an agreement by the transferee to comply with all the
terms and conditions of the Award that would have applied to the Participant
and to be bound by the acknowledgments made by the Participant in connection
with the grant of the Award.

 

        Subject
to applicable law, the Committee’s approval, and any conditions that the
Committee may prescribe, a Participant may, upon providing written notice to
the secretary of the Company, elect to transfer an Award to (i) a member
or members of his or her immediate family (including, but not limited to,
children, grandchildren, and spouse, or a trust for the benefit of immediate
family members or a partnership in which immediate family members are the only
partners) or (ii) a qualified tax-exempt charitable organization;
provided, however, that no transfer by any Participant may be made in exchange
for consideration.

 

        21.
    Expenses and
Receipts.     The expenses of the Plan shall be
paid by the Company. Any proceeds received by the Company in connection with
any Award may be used for general corporate purposes.

 

        22.
    Deferral of Awards.     A
Participant may elect to defer or the Committee may require the deferral of
receipt of all or any portion of any Award to a future date as provided in and
subject to the terms of the Company’s 2001 Key Executive Deferred Compensation
Plan or any successor plan, the Agreement, and rules and procedures
established by the Committee regarding Award deferrals. All such deferrals
shall be made in accordance with Code Section 409A and regulations issued
thereunder.

 

        23.
    Short-Term Deferral;
Deferred Compensation.

 

        23.1
    Short-Term Deferral.
    Unless the Participant has made a valid
election to defer receipt of all or any portion of a payment under the Plan in
accordance with the terms of a

 

A-16

 

Company nonqualified
deferred compensation plan, payment of awards hereunder shall be made no later
than the later of (i) the date that is 21⁄2  months from the end of the Participant’s first taxable
year in which the amount is no longer subject to a substantial risk of
forfeiture, or (ii) the date that is 21⁄2  months from the end of the Company’s first taxable
year in which the amount is no longer subject to a substantial risk of forfeiture.

 

        23.2
    Deferred
Compensation.     Notwithstanding any provision
in the Plan or any Agreement to the contrary, to the extent an Award (i) constitutes
“deferred compensation” within the meaning of Code Section 409A, (ii) is
not exempt from the application of Code Section 409A and (iii) is
payable to a specified employee (as determined in accordance with Code Section 409A(a)(2)(B) and
applicable regulations) due to separation from service (as such term is defined
under Code Section 409A), payment shall be delayed for a minimum of six (6) months
from the date of such separation from service.

 

        If
any Award granted under the Plan is considered deferred compensation as defined
under Code Section 409A, and if this Plan or the terms of an Award fail to
meet the requirements of Code Section 409A with respect to such Award,
then such Award shall remain in effect and be subject to taxation in accordance
with Code Section 409A. In this circumstance, the Committee may accelerate
distribution or settlement of an Award in accordance with Code Section 409A.
The Company shall have no liability for any tax imposed on a Participant under
Code Section 409A, and if any tax is imposed on a Participant, the
Participant shall have no recourse against the Company for payment of any such
tax. Notwithstanding the foregoing, if any modification of an Award causes the
Award to be deferred compensation under Code Section 409A, the Committee
may rescind such modification in accordance with Code Section 409A.

 

        24.
    Change in Control
Provisions.

 

        24.1
    Vesting and
Exercisability.     Except as otherwise provided
in any employment agreement, Award Agreement or change in control agreement
between the Participant and the Company, Subsidiary and/or Affiliate in effect
when a Change in Control occurs (i) upon a “qualifying termination” in
connection with a Change in Control, or (ii) in the event an acquiring
company does not assume Plan Awards:

 

        (a)   all
outstanding Option and Stock Appreciation Rights shall become fully vested and
exercisable;

 

        (b)   all
Performance Goals shall be deemed achieved at target levels and all other terms
and conditions met, with Award payout prorated for the portion of the
performance period completed as of the “qualifying termination” or Change in
Control, as applicable;

 

        (c)   all
restrictions and conditions applicable to any Restricted Stock shall lapse;

 

        (d)   all
restrictions and conditions applicable to any Restricted Stock Units shall
lapse and the Restricted Stock Units shall be paid out as promptly as
practicable;

 

        (e)   all
Performance Shares shall be prorated for the portion of the performance period
completed as of the date of the “qualifying termination” or Change in Control,
as applicable, and delivered;

 

        (f)   all
Performance Units shall be prorated for the portion of the performance period
completed as of the date of the “qualifying termination” or Change in Control,
as applicable and paid out as promptly as practicable; and

 

        (g)   all
other Awards shall be delivered or paid.

 

A-17

 

        Notwithstanding
any Plan provision to the contrary, in the event of a Change in Control, (i) all
Annual Incentive Awards for calendar years ended prior to the Change in Control
which have not yet been paid out shall be paid out immediately in cash upon a
Change in Control, and (ii) for Annual Incentive Awards for the calendar
year during which the Change in Control occurs, all Participants shall be
deemed to have achieved a pro rata Award equal to either (a) the
Participant’s target Annual Incentive Award or (b) the actual Annual
Incentive Award as determined by year-to-date performance through the last day
of the month prior to the month in which the Change in Control occurs, in
either case multiplied by a fraction, the numerator of which is the number of
days which have elapsed from the beginning of the year to the date on which the
Change of Control occurs, and the denominator of which is 365, and the Awards
shall be paid in cash within 10 days after the Change in Control.

 

        For
purposes of this Section 24.1, “qualifying termination” means (i) the
same definition for “qualifying termination” as set forth in any employment
agreement, Award Agreement or change in control agreement between the
Participant and the Company, Subsidiary and/or Affiliate in effect when the
Change in Control occurs, or, (ii) in the absence of such agreement, a “qualifying
termination” shall be any involuntary termination by the Company, Subsidiary
and/or Affiliate for any reason, other than disciplinary reasons, within
24 months of the date of the Change in Control.

 

        24.2
    Termination Prior to
Change in Control.     Any Participant, whose
employment is involuntarily terminated for any reason other than disciplinary
reasons within three months prior to the date of the Change in Control, shall
be treated, solely for purposes of this Plan, as continuing in the Company’s
employment until the occurrence of the Change in Control, and to have been
terminated immediately thereafter.

 

        24.3
    No Amendment.     Notwithstanding
Section 19, upon a Potential Change in Control, the provisions of this
Plan may not be amended in any manner that would reduce or alter the rights of
Participants to any benefit under this Plan without the consent of each
affected Participant. Furthermore, notwithstanding Section 19, upon a
Change in Control, the provisions of this Section 24 may not be amended in
any respect for three years following a Change in Control but may be amended
thereafter.

 

        25.
    Claims Procedure.     Claims
for benefits under the Plan shall be filed in writing, within 90 days
after the event giving rise to a claim, with the Company’s compensation
manager, who shall have absolute discretion to interpret and apply the Plan,
evaluate the facts and circumstances, and make a determination with respect to
the claim in the name and on behalf of the Company. The claim shall include a statement
of all facts the Participant believes relevant to the claim and copies of all
documents, materials, or other evidence that the Participant believes relevant
to the claim. Written notice of the disposition of a claim shall be furnished
to the Participant within 90 days after the application is filed. This
90-day period may be extended an additional 90 days for special
circumstances by the compensation manager, in his or her sole discretion, by
providing written notice of the extension to the claimant prior to the
expiration of the original 90-day period. If the claim is denied, the
compensation manager shall notify the claimant in writing. This written notice
shall:

 

        (a)   state
the specific reasons for the denial;

 

        (b)   refer
to Plan provisions on which the determination is based;

 

        (c)   describe
any additional material or information necessary for the claimant to perfect
the claim and explain why the information is necessary; and

 

A-18

 

        (d)   explain
how the claimant may submit the claim for review and state applicable time
limits.

 

        26.
    Claims Review
Procedure.     Any Participant, former
Participant, or beneficiary of either, who has been denied a benefit claim,
shall be entitled, upon written request, to access to or copies of all
documents and records relevant to his or claim and to a review of his or her
denied claim. A request for review, together with a written statement of the
claimant’s position and any other comments, documents, records, or information
that the claimant believes relevant to his or her claim, shall be filed no
later than 60 days after receipt of the written notification provided for
in Section 25 and shall be filed with the Company’s compensation manager.
The manager shall promptly inform the Company’s senior human resources officer.
The senior human resources officer shall make his or her decision, in writing,
within 60 days after receipt of the claimant’s request for review. This
60-day period may be extended an additional 60 days if, in the senior
human resources officer’s sole discretion, special circumstances warrant the
extension and if the senior human resources officer provides written notice of
the extension to the claimant prior to the expiration of the original 60-day
period. The written decision shall be final and binding on all parties and
shall state the facts and specific reasons for the decision and refer to the
Plan provisions upon which the decision is based.

 

        27.
    Lawsuits; Venue;
Applicable Law.     No lawsuit claiming
entitlement to benefits under this Plan may be filed prior to exhausting the
claims and claims review procedures described in Sections 25 and 26. Any
lawsuit must be initiated no later than (a) one year after the event(s) giving
rise to the claim occurred, or (b) 60 days after a final written
decision was provided to the claimant under Section 26, whichever is
sooner. Any legal action involving benefits claimed or legal obligations
relating to or arising under this Plan may be filed only in Federal District
Court in the city of Chicago, Illinois. Federal law shall be applied in the
interpretation and application of this Plan and the resolution of any legal
action. To the extent not preempted by federal law, the laws of the state of
Delaware shall apply.

 

        28.
    Participant Rights.     No
Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation to treat Participants uniformly.

 

        29.
    Leave of Absence or
Transfer.     Transfer between the Company and
any Subsidiary or between Subsidiaries, or a leave of absence duly authorized
by the Company, shall not be deemed a termination of employment.

 

        30.
    Unsecured General
Creditor.     Participants and their
beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, interest, or claims in any property or assets of the Company. The
assets of the Company shall not be held under any trust for the benefit of Participants,
their beneficiaries, heirs, successors, or assigns, or held in any way as
collateral security for the fulfilling of the obligations of the Company under
this Plan. Any and all Company assets shall be, and remain, the general,
unpledged, unrestricted assets of the Company. The Company’s obligation under
the Plan shall be an unfunded and unsecured promise of the Company.

 

        31.
    No Fractional
Shares.     No fractional shares of Stock shall
be issued or delivered pursuant to the Plan. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu
of any fractional shares or whether fractional shares or any rights to
fractional shares shall be forfeited or otherwise eliminated.

 

        32.
    Beneficiary.     A
Participant who is an executive officer or Director may file with the Committee
a written designation of a beneficiary on the form prescribed by the Committee
and may, from time to time, amend or revoke the designation. If no designated
beneficiary survives the

 

A-19

 

Participant, the executor
or administrator of the Participant’s estate shall be deemed to be the
Participant’s beneficiary.

 

        33.
    Section 162(m).
    The Plan is designed and intended, and all
provisions shall be construed in a manner, to comply, to the extent applicable,
with Code Section 162(m) and the regulations thereunder. To the
extent permitted by Code Section 162(m), the Committee shall have sole
discretion to reduce, eliminate or defer payment of the amount of any Award
which might otherwise become payable upon attainment of a Performance Goal.

 

        34.
    Form of
Communication.     Any election, application,
claim, notice, or other communication required or permitted to be made by a
Participant to the Committee or the Company shall be made in writing and in
such form as the Company may prescribe. Any communication shall be effective
upon receipt by the Company’s compensation manager at OfficeMax, 263 Shuman Boulevard,
Naperville, IL 60563, USA.

 

        35.
    Severability.     If
any provision of the Plan is held to be invalid or unenforceable, the other
provisions of the Plan shall not be affected.

 

A-20Exhibit 10.1

 

EXECUTION
COPY

 

SPINCO AGREEMENT

 

This
Spinco Agreement (this “Agreement”),
dated as of May 13, 2008, is by and among IAC/InterActiveCorp, a Delaware
corporation (“IAC”), Barry Diller (for
purposes of Section 4(c) only), Liberty Media Corporation, a Delaware
corporation (“Liberty”), and the other
Liberty Parties (as herein defined).

 

WHEREAS,
on November 5, 2007 IAC publicly announced the Proposed Spinoff
Transactions (as herein defined);

 

WHEREAS,
the Board of Directors of IAC may determine to effect one or more of the
proposed Spinoffs in the form of a Single-Tier Spinoff (as such terms are
herein defined); and

 

WHEREAS,
the parties desire to set forth certain understandings and agreements in
connection with the Proposed Spinoff Transactions.

 

NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:

 

1. 
Definitions

 

“Affiliate” shall have the meaning
given such term in Rule 12b-2 under the Exchange Act.  For purposes of this definition, (i) natural
persons shall not be deemed to be Affiliates of each other, (ii) none of
IAC, Mr. Diller or any of their respective Affiliates shall be deemed to
be Affiliates of Liberty or its Affiliates and (iii) none of the Spincos
shall be deemed to be Affiliates of Liberty or its Affiliates.

 

“Applicable Percentage” with respect
to any Spinco means the sum of Liberty’s Ownership Percentage with respect to
such Spinco upon the consummation of the Spinoff of such Spinco plus 5%, but in
no event more than 35%; provided that (i) if after the Spinoff Date
with respect to any Spinco, Liberty Transfers Beneficial Ownership of any
Equity Securities of such Spinco to a third party (other than in (1) a
Transfer to an Affiliate of Liberty that agrees to be bound hereby pursuant to Section 9(c) or
(2) a Transfer pursuant to Section 5(d)(i)(7)(i)), (x) if such
Transfer is not a Permitted Restricted Transfer or a Transfer under Section 5(d)(i)(7)(ii),
the then-applicable Applicable Percentage with respect to such Spinco shall be
reduced by the Ownership Percentage so Transferred and (y) in the case of
a Permitted Restricted Transfer or a Transfer under Section 5(d)(i)(7)(ii),
(a) the Applicable Percentage applicable to the Restricted Transferee or
the Distributed Company, as the case may be, shall be the Applicable Percentage
with respect to such Spinco applicable to Liberty or the transferring
Restricted Transferee or Distributed Company, as applicable, immediately prior
to such Transfer and (b) from and after such Permitted Restricted Transfer
or a Transfer under Section 5(d)(i)(7)(ii), the Applicable Percentage
applicable to Liberty or the transferring Restricted Transferee or Distributed
Company, as applicable, shall be 0%, and (ii) with respect to a Spinco the
Spinoff of which shall be a Sponsored Spinoff, “Applicable Percentage” means
the greatest of (x) the sum of Liberty’s

 

 

 

 

Ownership Percentage with respect to such Spinco
giving effect to the consummation of the Sponsor’s initial investment pursuant
to the applicable Sponsorship Agreement plus 5%, but in no event greater than
35%, (y) the Ownership Percentage of the applicable Sponsor with respect
to such Spinco after giving effect to the consummation of its initial
investment pursuant to the applicable Sponsorship Agreement or (z) in the
event the applicable Sponsorship Agreement permits or provides for (through the
exercise of warrants or other rights or conversion of securities) the Sponsor
to have an Ownership Percentage with respect to such Spinco in excess of that
specified in clause (y), such higher percentage so permitted or provided for
(in the case of subclause (i)(y) and this clause (ii), subject to
reduction pursuant to subclause (i)(x) in respect of a Transfer of
Beneficial Ownership of Equity Securities by Liberty, a Restricted Transferee
or a Distributed Company, as applicable).

 

“Assignment and Assumption Agreement”
means any of a New Holder Assignment and Assumption Agreement, an Affiliate
Assignment and Assumption Agreement or a Spinco Assignment and Assumption
Agreement.

 

“Beneficial Ownership” or “Beneficially Own” shall have the
meaning given such term in Rule 13d-3 under the Exchange Act and a Person’s
Beneficial Ownership of securities shall be calculated in accordance with the
provisions of such Rule; provided, however, that for purposes of determining any
Person’s Beneficial Ownership, such Person shall be deemed to be the Beneficial
Owner of any Equity Securities of a Spinco which may be acquired by such Person
(disregarding any legal impediments to such Beneficial Ownership), whether
within 60 days or thereafter, upon the conversion, exchange, redemption or
exercise of any warrants, options, rights or other securities issued by such
Spinco or any subsidiary thereof. 
Notwithstanding anything to the contrary set forth herein, (x) (i) prior
to the delivery to any counterparty of Equity Securities in final settlement of
a Hedging Transaction and (ii) with respect to any Stock Lending
Transactions effected in accordance with this Agreement until such time as the
lending Liberty Party no longer has a right to the return of the securities
lent thereunder, Liberty will be deemed to Beneficially Own all Equity
Securities subject to such Hedging Transaction or Stock Lending Transaction and
(y) prior to the pledgee commencing action to foreclose upon any Equity
Securities pledged in accordance with Section 5(d)(v) of this
Agreement, any such pledged Equity Securities will be deemed Beneficially Owned
by the pledging party.

 

“Business Day” means any day other
than a Saturday, Sunday or a day on which the banks in New York, New York are
authorized or required by law to remain closed.

 

“Code”  means the Internal Revenue Code of 1986, as amended.

 

“Covered Transaction” involving any
Spinco shall mean (i) a tender or exchange offer by a third party for
shares of capital stock of such Spinco, resulting in such third party (or any “group”
of which such third party is a member (as such term is used in Sections 13(d) and
14(d) of the Exchange Act)) becoming the Beneficial Owner of securities
representing greater than 35% of the outstanding shares of Spinco Common Stock
and other Equity Securities of such Spinco that are, at the time of commencement
of such offer, convertible into or exchangeable for Spinco Common Stock
(calculated on a Spinco Common Stock equivalent basis) or Voting Securities of
such Spinco representing greater than 35% of the voting power of the
outstanding Voting Securities of such Spinco, (ii) a merger,
consolidation, business combination or similar

 

 

 

 

2

 

 

extraordinary transaction involving such Spinco and a
third party upon which the holders of the outstanding Spinco Common Stock and
other Equity Securities of such Spinco that are then convertible into or
exchangeable for Spinco Common Stock (calculated on a Spinco Common Stock
equivalent basis) immediately prior to such transaction would cease to own
securities representing greater than a majority of the outstanding shares of
Spinco Common Stock and other Equity Securities of such Spinco that are then
convertible into or exchangeable for Spinco Common Stock (calculated on a
Spinco Common Stock equivalent basis) or Voting Securities of such Spinco
representing greater than a majority of the voting power of the outstanding
Voting Securities of such Spinco (or upon any merger or consolidation in which
such Spinco does not survive, the surviving or successor entity) or (iii) the
sale of assets of such Spinco that generated 30% or more of the consolidated
total revenues or EBITDA (determined in accordance with GAAP) of such Spinco
and its subsidiaries for the twelve months ending on the last day of the last
completed fiscal quarter of such Spinco (which, for the avoidance of doubt,
shall not include merger, consolidation, business combination or similar
transactions described in clause (ii) above), to any third party.  For the avoidance of doubt, with respect to
any Spinco the Spinoff of which is a Sponsored Spinoff, the applicable Sponsor
shall be considered a third party for purposes of the foregoing definition and
for all purposes of Section 6 of this Agreement.

 

“Distribution Transaction” involving
any Person which Beneficially Owns Equity Securities means any transaction
pursuant to which the equity interests of (i) such Person or (ii) any
Person that directly or indirectly owns a majority of the equity interests of
such Person are distributed (whether by redemption, dividend, share
distribution, merger or otherwise) to all the holders of one or more classes or
series of the common stock of Parent Company that are registered under Section 12(b) or
12(g) of the Exchange Act (all the holders of one or more such classes or
series, “Parent Company Holders”), on
a pro rata basis with respect to each such class or series, or such equity
interests of such Person are available to be acquired by Parent Company Holders
(including through any rights offering, exchange offer, exercise of subscription
rights or other offer made available to Parent Company Holders), on a pro rata
basis with respect to each such class or series, whether voluntary or
involuntary.

 

“End Date” means December 31,
2009.

 

                “Equity Securities” of any Spinco
means the equity securities of such Spinco, including shares of such Spinco’s
Spinco Common Stock and shares of Spinco Common Stock or other equity
securities of such Spinco issuable upon exercise, conversion, exchange or
redemption of any warrants, options, rights or other securities issued by such
Spinco or any subsidiary thereof.

 

                “Equity Securities Basket” of a
Spinco shall be a number equal to one-third (1/3) of the aggregate number of
shares of Spinco Common Stock or other equity securities issued or distributed
to the Liberty Parties in connection with the Spinoff of such Spinco, as such
number (and the number of Equity Securities thereafter permitted to be acquired
pursuant to Section 5(a) or Transferred pursuant to Section 5(e) without
exceeding the Equity Securities Basket) may be appropriately adjusted to
reflect the effects of any subdivision, split, reverse split, stock dividend,
combination, reclassification or similar event occurring after the Spinoff Date
of such Spinco; provided, that, the Equity Securities Basket of
TM PubCo shall be zero for all purposes under this Agreement.

 

 

 

 

3

 

 

 “Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities Exchange Commission promulgated thereunder (as in
effect on the date of this Agreement).

 

“Fall-Away Date” with respect to any
Spinco, means the first date on which Liberty’s Ownership Percentage with
respect to such Spinco first falls below 20%; provided,  that:

 

                (i) the Fall-Away Date
shall not be deemed to have occurred prior to the second anniversary of the
Spinoff Date if (x) Liberty’s Ownership Percentage immediately after the
Spinoff of such Spinco was less than 20% other than as a result of any sale or
transfer by Liberty or its Affiliates of IAC securities prior to the applicable
Spinoff Date or (y) Liberty’s Ownership Percentage falls below 20% as the
result of an issuance of Equity Securities of such Spinco, except
that, in the case of clause (x) or (y), the Fall-Away Date will occur
prior to such second anniversary immediately upon Liberty Transferring
Beneficial Ownership of any Equity Securities of such Spinco (other than as
permitted by clauses (3), (6) and (7) of Section 5(d)(i)) at a
time that its Ownership Percentage is, or after giving effect to such Transfer
would be, less than 20%;

 

                (ii) if Liberty’s Ownership
Percentage at the second anniversary of the Spinoff Date of such Spinco is less
than 20%, and the Fall-Away Date has not otherwise occurred, then the Fall-Away
Date will be deemed to occur on the earlier of (x) the thirty month
anniversary of the Spinoff Date of such Spinco and (y) the date of any
Transfer by Liberty of Beneficial Ownership of Equity Securities of such Spinco
(other than as permitted by clauses (3), (6) and (7) of Section 5(d)(i));
and

 

                (iii) if Liberty’s
Ownership Percentage is 20% or more following the second anniversary of the
Spinoff Date of such Spinco, the Fall Away Date will be deemed to occur on the
first date thereafter on which Liberty’s Ownership Percentage with respect to
such Spinco falls below 20%.

 

“Governance Agreement” means that
certain Amended and Restated Governance Agreement, dated as of August 9,
2005, among IAC, Liberty and Barry Diller.

 

“Hedging Transaction” means any
transaction involving a Liberty Party or Affiliate thereof whereby the
counterparty engages in a (i) short sale, (ii) purchase, sale or
grant of any right (including any put or call option), or (iii) forward
sale (whether for a fixed or variable number of shares or at a fixed or
variable price) of or with respect to, or any loan secured by, any Spinco’s
Spinco Common Stock or any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its value
from any Spinco’s Spinco Common Stock, and such term includes (a) the
pledge by any Liberty Party or Affiliate thereof of any Spinco’s Spinco Common
Stock in connection with any of the foregoing to secure the obligations of the
pledgor under a Hedging Transaction and (b) the pledge of a Hedging
Transaction itself to secure any extension of credit to a party based, in whole
or part, on the value thereof.

 

 “HSN PubCo”
means a Delaware corporation, currently a direct or indirect wholly owned
subsidiary of IAC or to be formed in connection with the Proposed Spinoff
Transactions,

 

 

 

4

 

 

which shall be the direct or indirect holder of 100%
of the outstanding common stock or other ownership interests of HSN Sub at the
time of the Proposed Spinoff Transaction, and the common stock of which is
distributed (by means of merger, dividend or otherwise) to the holders of IAC
Common Stock in connection therewith to effect the spinoff of IAC’s retailing
business.

 

“HSN Sub” means HSN LP, a Delaware
limited partnership.

 

“IAC Common Stock” means the Common
Stock, par value $.001 per share, of IAC and the Class B Common Stock, par
value $.001 per share, of IAC.

 

“Independent Director” of a Spinco
means  a director that is, as to such Spinco, “independent”
within the meaning of the rules and regulations of NASDAQ, or, if such
Spinco’s Spinco Common Stock (or shares of capital stock of such Spinco issued
in substitution therefor in connection with any combination, reclassification,
recapitalization, merger, consolidation, exchange or other similar
reorganization) is not at the time of determination listed on NASDAQ, the rules and
regulations of such other national securities exchange on which such securities
are primarily traded.

 

“Interval PubCo” means a Delaware
corporation, currently a direct or indirect wholly owned subsidiary of IAC or
to be formed in connection with the Proposed Spinoff Transactions, which shall
be the direct or indirect holder of 100% of the outstanding common stock of
Interval Sub at the time of the Proposed Spinoff Transaction, and the common
stock of which is distributed (by means of merger, dividend or otherwise) to
the holders of IAC Common Stock in connection therewith to effect the spinoff
of IAC’s vacations business.

 

“Interval Sub” means Interval
Acquisition Corp., a Delaware corporation.

 

“Liberty Director” means, with
respect to any Spinco, any person designated by Liberty to serve on such Spinco’s
Board of Directors who is reasonably acceptable to the Board of Directors of
IAC (in the case of persons designated by Liberty to so serve at or prior to
the time of the Spinoff of such Spinco) or reasonably acceptable to a majority
of those directors of such Spinco that are not Liberty Directors of such Spinco
(in all other cases).

 

“Liberty Parties” means (w) Liberty,
(x) each of the parties whose names are set forth on the signature pages hereto
other than IAC and Barry Diller, (y) each Affiliate of Liberty that
acquires record ownership of any shares of IAC Common Stock prior to the
Spinoff Date of any Spinco (which Affiliate will agree, in a writing
substantially similar to an Affiliate Assignment and Assumption Agreement (with
appropriate modifications), to be bound by this Agreement as a “Liberty Party”
upon such Affiliate’s acquisition of such record ownership), and (z) each
Affiliate of Liberty that acquires record ownership of any Equity Securities of
a Spinco, in the case of a Person described in clause (x), (y) or (z),
until such time as such Person is not an Affiliate of Liberty or ceases to have
record ownership of any IAC Common Stock or Equity Securities of such Spinco,
as the case may be.

 

 “LT PubCo”
means a Delaware corporation, currently a direct or indirect wholly owned subsidiary
of IAC or to be formed in connection with the Proposed Spinoff Transactions,
which shall be the direct or indirect holder of 100% of the outstanding limited
liability company interests in LT Sub at the time of the Proposed Spinoff
Transaction (other than such interests

 

 

 

5

 

 

held by management of LT Sub or any sponsoring
investor), and the common stock of which is distributed (by means of merger,
dividend or otherwise) to the holders of IAC Common Stock in connection
therewith to effect the spinoff of IAC’s Lending Tree and real estate business.

 

“LT Sub” means Lending Tree LLC, a
Delaware limited liability company.

 

                “Ownership
Percentage” of any Person, with respect to any Spinco
means, at any time, the ratio, expressed as a percentage, of (i) the Total
Voting Power of the Equity Securities of such Spinco Beneficially Owned by such
Person and its Affiliates to (ii) the sum of (x) the Total Voting
Power of Total Equity Securities of such Spinco and (y) with respect to
such Person, the Total Voting Power of the shares of Spinco Common Stock
included in clause (i) that are issuable upon conversion, exchange,
redemption or exercise of Equity Securities of such Spinco that are not
included in clause (x).

 

                “Parent Company”
means the publicly traded Person which Beneficially Owns, through an unbroken
chain of majority-owned subsidiaries, the Person having record ownership of the
Equity Securities of the applicable Spinco. 
For purposes of this definition, the term “publicly traded” means that
the Person in question (x) has a class or series of equity securities
registered under Section 12(b) or 12(g) of the Exchange Act or (y) is
required to file reports pursuant to Section 15(d) of the Exchange
Act.

 

                “Permitted
Restricted Transfer” has the meaning specified in Section 5(d)(i) hereof.

 

                “Person”
means any individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization, government or department
or agency of a government.

 

                “Prohibited Transferee”
means, with respect to any Spinco, any Person on the Prohibited Transferee List
applicable to such Spinco (and any Person bearing a relationship specified in Section 267(b) or
707(b)(1) of the Code to such listed Person); provided, that none
of Liberty, any Liberty Party or any direct or indirect wholly owned subsidiary
of Liberty shall be a Prohibited Transferee.

 

“Prohibited
Transferee Lists” has the meaning specified in Section 5(d).

 

“Proposed Spinoff Transactions” means
the Spinoffs described in the fourth paragraph of Item 1. (Business) of IAC’s
Annual Report on Form 10-K for the Year Ended December 31, 2007,
filed on February 29, 2008 (or consummation of those transactions as they
may be altered or amended, or abandoned in whole or in part, by resolution of
the Board of Directors of IAC).

 

“Qualified Director” of any Spinco
means any member of the Board of Directors of such Spinco other than a director
who (i) is a Liberty Director of such Spinco, (ii) is an officer or
employee of such Spinco or (iii) with respect to any person becoming a
director following the Spinoff Date, was not nominated by the Nominating and/or
Governance Committee of the Board of Directors of such Spinco in his or her
initial election to such Board of Directors and for whose election any Liberty
Party voted shares.  In the event that no
person who would otherwise be a Qualified Director of a Spinco is serving on
the Board of Directors of such Spinco (unless the

 

 

 

6

 

 

failure to have a Qualified Director is a result of
action taken by directors who are not Qualified Directors), the Spinco’s Board
of Directors shall appoint a new director who qualifies as an Independent
Director and such person shall be considered a Qualified Director for all
purposes under this Agreement.  For the
avoidance of doubt, wherever this Agreement requires the approval or consent
of, or other action by, a majority of the Qualified Directors of a Spinco with
respect to any matter, no such approval, consent or other action may be
obtained or taken at any such time as there are no Qualified Directors of such
Spinco.

 

 “Qualified Stock Lending
Transaction” means any Stock Lending Transaction that meets the
requirements of Section 1058(b) of the Code.

 

“Related Hedging Transactions” means
a series of Hedging Transactions between one or more of the Liberty Parties and
their respective Affiliates, on the one hand, and the same counterparty or its
Affiliates, on the other hand, which Hedging Transactions each have specified
maturity or expiration dates occurring within a period of ninety days.

 

“Related Stock Lending Transactions”
means a series of Stock Lending Transactions between one or more of the Liberty
Parties and their respective Affiliates, on the one hand, and the same
counterparty or its Affiliates, on the other hand, which Stock Lending
Transactions each have specified maturity or expiration dates occurring within
a period of ninety days.

 

“Restricted Transferee” has the meaning
specified in Section 5(d)(i) hereof.

 

“Rights Offering” means the issuance
by a Spinco to existing holders of such Spinco’s Spinco Common Stock of
rights to buy, within a fixed time period, a proportional number of newly
issued shares of such Spinco Common Stock or other Equity Securities.

 

“Single-Tier Spinoff” means a Spinoff
of a Spinco which shall be effected by means of a pro-rata distribution
(whether by means of merger, dividend or otherwise) of a single class or series
of common stock of such Spinco to the holders of IAC Common Stock such that,
immediately following such Spinoff, the Spinco Common Stock of such Spinco will
be the only capital stock of such Spinco that is outstanding, or that is
issuable upon the conversion, exercise, redemption or exchange of any
outstanding securities of such Spinco or that is subject to issue or sale by
such Spinco pursuant to any agreement, arrangement or understanding in effect
at or prior to the applicable Spinoff Date, other than any shares of preferred stock
of such Spinco issued pursuant to the terms of preferred stock of IAC
outstanding on the date hereof.

 

 “Spinco Common Stock”
means, with respect to any Spinco, the shares of common stock of such Spinco
authorized at the time of the Spinoff of such Spinco under such Spinco’s
certificate of incorporation.

 

“Spinco”
means each of HSN PubCo, Interval PubCo, LT PubCo and TM PubCo.

 

“Spinoff” of any Spinco means the
distribution by IAC, effected in a manner intended to be tax-free generally to
the stockholders of IAC for federal income tax purposes, whether by merger, dividend or
otherwise, of all of the outstanding shares of common stock of such Spinco
pursuant to the Proposed Spinoff Transactions.

 

 

 

7

 

 

“Spinoff Date” with respect to any
Spinco means the date and time of effectiveness of the Spinoff of such Spinco.

 

“Sponsored Spinoff Transaction” means
a Spinoff in connection with which one or more third party investors
(collectively, the “Sponsor”) shall make an
investment, pursuant to an agreement entered into prior to the Spinoff Date of
a Spinco (a “Sponsorship Agreement”), with
IAC or the applicable Spinco in the shares of such Spinco; provided,
that to the extent any Sponsor acquires shares of preferred stock of any Spinco
in connection with a Sponsored Spinoff Transaction, such preferred stock will
be convertible into Spinco Common Stock and, prior to its conversion, will not
be entitled to exercise voting power, when voting with the Spinco Common Stock,
which exceeds, on a per share basis, the voting power attributable to a share
of Spinco Common Stock.

 

“Stock Lending Transaction” shall
mean a transaction whereby the Liberty Parties and their Affiliates lend shares
of Spinco Common Stock to a third party or permit a third party to sell,
pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of,
or otherwise use in its business, such shares of Spinco Common Stock.

 

“Stockholders Agreement” means that
certain Amended and Restated Stockholders Agreement, dated as of August 9,
2005, between Liberty and Barry Diller with respect to IAC.

 

“Tax-Free” means, with respect to any
Spinoff, that it is intended that such Spinoff (i) qualifies to IAC and
the IAC stockholders for non-recognition of income, gain and loss (except to
the extent that cash is received in lieu of fractional shares) under Sections
355 and/or 361 of the Code, and (ii) does not result in recognition of
income or gain to IAC or any IAC stockholders by reason of Sections 355(d),
(e), (f) or (g) of the Code; provided that, for purposes of
this Agreement, the Spinoff of LT PubCo shall not be treated as Tax-Free.

 

“TM PubCo” means a Delaware
corporation, currently a direct or indirect wholly owned subsidiary of IAC or
to be formed in connection with the Proposed Spinoff Transactions, and which,
if TM PubCo is not TM Sub, shall be the direct or indirect holder of 100% of
the outstanding common stock of TM Sub at the time of the Proposed Spinoff
Transaction, and the common stock of which is distributed (by means of merger,
dividend or otherwise) to the holders of IAC Common Stock to effect the spinoff
of IAC’s ticketing business.

 

“TM Sub” means Ticketmaster, a
Delaware corporation.

 

“Total Equity Securities” of a Spinco
at any time shall mean, subject to the next sentence, the total number of such
Spinco’s outstanding equity securities. 
Any Equity Securities Beneficially Owned by a Person that are not
outstanding Voting Securities but that, upon exercise, conversion or exchange,
would become Voting Securities, shall be deemed to be outstanding for the
purpose of computing Total Equity Securities and the percentage of Equity
Securities owned by such Person but shall not be deemed to be outstanding for
the purpose of computing Total Equity Securities and the percentage of the
Equity Securities owned by any other Person.

 

“Total Voting Power” of any Equity
Securities at any time shall mean, subject to the next sentence, the aggregate
number of votes entitled to be cast generally in the election of directors

 

 

 

8

 

 

by the holders of such securities.  Any Equity Securities Beneficially Owned by a
Person that are not outstanding Voting Securities but that, upon exercise,
conversion or exchange, would become Voting Securities, shall be deemed to be
outstanding and to have full voting power for the purpose of computing Total
Voting Power of the Equity Securities Beneficially Owned by such Person but
shall not be deemed to be outstanding or have such voting power for the purpose
of computing Total Voting Power of the Equity Securities Beneficially Owned by
any other Person or (except in calculating the Total Voting Power of a Person
who Beneficially Owns Voting Securities that are not outstanding) Total Voting
Power of the Total Equity Securities of a Spinco.

 

“Transfer” by any Person means
directly or indirectly, to sell, transfer, assign, pledge, encumber,
hypothecate or similarly dispose of, either voluntarily or involuntarily, or to
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation
or similar disposition of, any Equity Securities Beneficially Owned by such
Person or of any interest (including any voting interest) in any Equity
Securities Beneficially Owned by such Person; provided, however, that no
Transfer of Equity Securities shall be deemed to have occurred as a result of
the entry into, modification of or existence of any Hedging Transaction pursuant
to which (and so long as) Spinco Common Stock cannot be delivered upon
settlement or termination of such Hedging Transaction. For the avoidance of
doubt, a transfer of control of the direct or indirect Beneficial Owner of
Equity Securities of a Spinco is a Transfer of such Equity Securities for
purposes of this Agreement.

 

“Voting Securities” of a Spinco  shall mean at any particular time (i) the Spinco
Common Stock of such Spinco, (ii) shares of any other class of capital
stock of such Spinco or a subsidiary thereof then entitled to vote in the
election of any directors of such Spinco generally and (iii) any
securities of such Spinco or any subsidiary thereof then convertible or
exchangeable into shares of any class of capital stock of such Spinco then
entitled to vote in the election of any directors of such Spinco generally; provided,
that with respect to clauses (ii) and (iii), any securities which would
become Voting Securities upon the occurrence or non-occurrence of any event,
receipt of any governmental approval or passage of time will be deemed Voting
Securities for purposes of this Agreement as of the date of original issuance
of such securities..

 

2.  Certain
Disputed Matters

 

The
parties desire to put to rest disputes concerning the validity and compliance
with contractual obligations and law of the Proposed Spinoff Transactions.  The Liberty Parties have previously asserted
claims against IAC and other parties that the effectuation of spin-off
transactions by IAC which involved the issuance of a single class of shares in
the spun-off companies would be a breach of fiduciary duty by IAC’s directors
(including Mr. Diller in his capacity both as an IAC director and as
holder of a proxy with respect to the IAC shares owned by the Liberty Parties),
a violation of IAC’s charter and a breach of certain contractual obligations
contained in the Governance Agreement and the Stockholders Agreement.  The Liberty Parties now agree that such a single-tier
spin off transaction will not be challenged by them as in breach of contract,
charter or fiduciary duty, or otherwise, in so far as it is effectuated consistently
with this Agreement.  In order to resolve
existing claims and put to rest future disputes, the parties hereto agree as follows:

 

 

 

 

9

 

 

(a)           The Liberty Parties agree to withdraw,
promptly following the execution of this Agreement, any appeal they have filed
from the Order of the Court entered April 7, 2008, by the Court of
Chancery, New Castle County, State of Delaware, in the actions consolidated
under the caption IN RE IAC/INTERACTIVECORP., C.A. No. 3486-VCL (the “Consolidated Action”).

 

(b)           The Liberty Parties agree, promptly
following the execution of this Agreement, to dismiss without prejudice all
pending actions and claims they have filed against IAC and Diller and members
of the IAC Board of Directors in the Court of Chancery, in and for New Castle
County, State of Delaware, and further agree, promptly following the execution
of this Agreement, to take all necessary steps to cause the Order to Maintain
the Status Quo entered February 14, 2008, by the Court in the Consolidated
Action to be vacated.

 

(c)           IAC and Diller agree, promptly
following execution of this Agreement, to dismiss, without prejudice, all
pending actions and claims they have filed against any of the Liberty Parties
in the Court of Chancery, in and for New Castle County, State of Delaware.

 

(d)           From the date hereof, the Liberty
Parties, and each of them, hereby covenants and agrees not to bring suit,
assert claims or otherwise litigate against IAC, Diller or any of IAC’s
directors or officers, with respect to any Spinoff to be effected as part of
the Proposed Spinoff Transactions based upon (i) the development,
structuring, negotiation and approval of such Spinoff, (ii) the fiduciary
duties of members of the IAC Board of Directors or officers of IAC or (iii) the
provisions of IAC’s charter and/or any contract to which Liberty and IAC and/or
Diller are parties, in each case as such matters relate to a Single-Tier
Spinoff of such Spinco which are effected on a basis consistent with
requirements specified in this Agreement (a “Qualified
Spinoff”); provided, however, that, (1) with
respect to each Spinco, upon the earlier to occur of (x) the date of any
announcement of the terms of the Spinoff of such Spinco (including any
conditions to consummation of such Spinoff), or the date of the announcement of
any revision or change to previously announced terms, which, if effected on
such basis would cause such Spinoff to fail to be a Qualified Spinoff, and (y) the
close of business on the End Date with respect to the Spinoff of any Spinco
which has not been consummated by such time, then the agreement not to sue as
set forth in this paragraph (d) shall be null and void with respect to
such Spinco and to IAC, Diller and IAC’s directors and officers on and after
the date specified in clauses (x) and (y) above, as applicable, and (2) with
respect to any Spinco the Spinoff of which was a Qualified Spinoff, then the
covenant not to sue of the Liberty Parties contained in this paragraph (d) shall
be binding thereafter upon the Liberty Parties with respect to the actions of
IAC, its directors and officers related to such Spinoff occurring prior to the
Spinoff Date of such Spinco.  Nothing
herein contained will affect the Liberty Parties’ right to assert claims and to
seek relief against IAC, Diller and IAC’s directors and officers with respect
to any Proposed Spinoff Transaction which is not a Qualified Spinoff or with
respect to any breach of this Agreement by IAC.

 

3.  Spinco
Boards and Other Governance Matters

 

With respect to each Spinco:

 

(a)  (i)  until
the Fall-Away Date, Liberty shall have the right to nominate up to such number
of Liberty Directors as is equal to 20% of the total number of directors
serving

 

 

 

 

 

10

 

 

on the Board of Directors of
such Spinco (rounded up to the next whole number if the total number of
directors serving on such Board of Directors is not an even multiple of 5); provided
that to the extent Liberty is entitled to nominate more than one Liberty
Director of such Spinco, each additional Liberty Director (in excess of such
first Liberty Director) must qualify as an Independent Director of such Spinco;

 

(ii)  prior to the
Spinoff Date of such Spinco, IAC shall cause each such Liberty Director to be
elected to the applicable Spinco Board of Directors and, following such Spinoff
Date, such Spinco shall cause each such Liberty Director to be included in the
slate of nominees recommended by the Board of Directors of such Spinco to such
Spinco’s stockholders for election as directors at each annual meeting of the
stockholders of such Spinco and shall use commercially reasonable efforts to
cause the election of each such Liberty Director, including soliciting proxies
in favor of the election of such persons; and

 

(iii)  until the Fall-Away Date, in the event that a vacancy is
created at any time by the death, disability, retirement, resignation or
removal (with or without cause) of any such Liberty Director, or by any
increase in the number of directors constituting the entire Board (such that
Liberty is entitled to additional representation on such Board to maintain its
right to have Liberty Directors constitute 20% (rounded up) of the total number
of directors on such Board), Liberty shall, subject to the proviso to clause (i) of
this Section 3(a), have the right to designate a replacement or additional
Liberty Director to fill such vacancy, and such Spinco shall use commercially
reasonable efforts to cause such vacancy to be filled with the replacement or
additional Liberty Director so designated; and

 

                (b)  following the Fall-Away Date with respect
to such Spinco, upon the written request of such Spinco, Liberty shall use its
commercially reasonable efforts to cause any Liberty Director then serving on the
Board of Directors of such Spinco to promptly resign from such Board of
Directors;

 

                (c)  only Qualified Directors of a Spinco shall
be eligible to serve on the Nominating and/or Governance Committees of the
Board of Directors of such Spinco (or such other committee of the Board of
Directors of such Spinco as may be charged with recommending persons to serve
on the Board of Directors);

 

(d) 
until the second anniversary of the Spinoff Date of such Spinco, in connection
with any election of directors by the stockholders of such Spinco each of the
Liberty Parties shall vote, or cause to be voted, all of the Equity Securities
Beneficially Owned by it and which it is entitled to vote in favor of the
election of the full slate of director nominees recommended by the Board of
Directors to the stockholders of such Spinco provided that such slate
shall include the individual(s), if any, nominated pursuant to Section 3(a)(i);
provided, however, that such obligation shall not apply to any
Equity Securities that, at the time of any such stockholder vote, have been
lent by a Liberty Party pursuant to Stock Lending Transaction permitted under Section 5(d)(v) to
the extent the nature of such Stock Lending Transaction renders it commercially
unreasonable for such Liberty Party to obtain an agreement from the
counterparty to so vote the

 

 

 

 

11

 

Equity Securities; 

 

(e) 
IAC shall take all action necessary to ensure that, as of the applicable
Spinoff Date, (i) such Spinco shall not have adopted, approved or
implemented, or taken any action to adopt, approve or implement, any
Shareholder Rights Plan (as used herein, as such term is commonly understood in
connection with corporate transactions), (ii) neither the certificate of
incorporation nor the bylaws of such Spinco shall provide for the division of
directors into classes as permitted by Section 141(d) of the Delaware
General Corporation Law and (iii) the certificate of incorporation of such
Spinco will provide that the restrictions contained in Section 203 of the
Delaware General Corporation Law will not apply to such Spinco; and

 

(f) 
in the event Liberty’s Ownership Percentage in respect of a Spinco exceeds the
Applicable Percentage in violation of this Agreement, in addition to any other
remedy at equity or law that may be available, no Equity Securities of such
Spinco Beneficially Owned by Liberty in excess of the Applicable Percentage
shall be voted on any matter submitted to stockholders of such Spinco, and such
Spinco shall not recognize any votes purported to be cast in respect of any
such Equity Securities.

 

4.  IAC
Matters

 

(a) 
Effective on the first date (the “Amendment  Trigger Date”) as of which
the Spinoff Date in respect of two or more Single-Tier Spinoffs (the “Triggering Spinoffs”) shall have
occurred, the Governance Agreement shall automatically be amended by deleting
the second sentence of Section 2.02 thereof; provided, that,
in the event IAC shall effect a Spinoff following the Amendment Trigger Date
and prior to the End Date which Spinoff provides for the treatment of
compensation-related matters (including equity based compensation) on a basis
which is materially different than the treatment of such matters in the
Triggering Spinoffs, then so long as Liberty is entitled to nominate any
directors of IAC pursuant to Section 2.01(a) of the Governance
Agreement, a Liberty Director (within the meaning of the Governance Agreement)
shall be permitted to participate in meetings of the Compensation Committee of
the Board of Directors of IAC at which such compensation-related matters are
considered as though such Liberty Director were a member of such committee.

 

(b) 
During the pendency of the Proposed Spinoff Transactions, the Liberty Parties
shall not, and shall use reasonable efforts to cause their respective
Affiliates, officers and directors not to, publicly disparage the Proposed
Spinoff Transactions.

 

(c) 
Barry Diller hereby acknowledges and agrees to the provisions of Sections 2(c) and
2(d) of this Agreement.

 

5.  Certain
Restrictions

 

With
respect to each Spinco following the applicable Spinoff Date:

 

                (a)  notwithstanding any other provisions of
this Agreement to the contrary, no Liberty Party shall, and Liberty shall cause its
Affiliates not to, directly or indirectly, acquire (other than in an
acquisition from such Spinco made pursuant to a Rights Offering or an offer  that was made generally available
to holders of Equity Securities of such Spinco as a result of their ownership

 

 

 

 

 

12

 

 

of Equity Securities of
such Spinco) by means of a purchase, tender or
exchange offer, business combination or in any other manner, Beneficial
Ownership of any Equity Securities of such Spinco, including rights or options
to acquire such ownership, unless (i) after giving effect to such
acquisition, Liberty’s Ownership Percentage with respect to such Spinco would
not exceed the Applicable Percentage, provided  that, if the
Spinoff of such Spinco was a Tax-Free Spinoff, (x) the number of all
Equity Securities the Beneficial Ownership of which was acquired during the 24
months following the Spinoff of such Spinco (other than Equity Securities the
Beneficial Ownership of which was acquired in an acquisition from such Spinco
during such 24-month period pursuant to a Rights Offering or an offer  that was made generally available
to holders of Equity Securities of such Spinco as a result of their ownership
of Equity Securities of such Spinco) shall not
exceed the Equity Securities Basket for such Spinco, and that no acquisition of
Beneficial Ownership of Equity Securities of such Spinco shall occur during
such 24 months in the event any Liberty Party Transfers Beneficial Ownership of
any Equity Securities of such Spinco pursuant to Section 5(e) prior
to such acquisition, (ii) pursuant to a Qualified Acquisition or (iii) permitted
pursuant to Section 6 hereof. 
Notwithstanding anything to the contrary contained herein, no
acquisition of Beneficial Ownership of Equity Securities by Liberty which
results solely from Liberty holding Equity Securities at a time when Spinco
effects any subdivision, split, reverse split, stock dividend,
combination, reclassification or similar event with respect to such Spinco’s
Spinco Common Stock shall be deemed to be an
acquisition of Beneficial Ownership of Equity Securities for purposes of this Section 5(a);
provided that such Equity Securities actually acquired shall be included
in the calculation of Liberty’s Ownership Percentage (after giving effect to the  Equity Securities actually issued to all
holders of Equity Securities of such Spinco upon expiration of any exercise
period, if applicable).  The term “Qualified Acquisition” means the
acquisition of Beneficial Ownership of Equity Securities of such Spinco in a transaction that has been
approved in advance by a majority of the Qualified Directors of such Spinco;
and

 

(b) until
the second anniversary of the Spinoff Date of such Spinco, unless a majority of the Qualified Directors of such
Spinco shall otherwise specifically request in writing in advance or to the
extent permitted pursuant to Sections 5(a), 5(c) and 6, neither any
Liberty Party nor any of their
respective officers, directors or employees shall, and Liberty shall cause its
Affiliates not to (and no Liberty Party nor any of its officers, directors or
employees shall, and Liberty shall cause its Affiliates not to, assist or form,
join or in any way participate in a group within the meaning of Section 13(d)(3) of
the Exchange Act, act in concert or participate with or encourage other persons
to):

 

(i)  directly or
indirectly, offer to acquire, seek, propose or agree to acquire, by means of a
purchase, tender or exchange offer, merger or other business combination or in
any other manner, Beneficial Ownership of any Equity Securities of such Spinco,
including rights or options to acquire such ownership;

 

(ii)      directly or indirectly, initiate or propose any stockholder proposal or seek or propose to influence, advise, change or control the management,
Board of Directors, governing instruments or policies or affairs of such
Spinco, including by means of a solicitation of proxies (as such terms are
defined in Rule 14a-1 of Regulation 14A promulgated pursuant to Section 14
of the Exchange Act, disregarding clause (iv) of

 

 

 

 

 

13

 

 

Rule 14a-1(l)(2) and
including any otherwise exempt solicitation pursuant to Rule 14a-2(b)),
participating in any election contest, contacting any person relating to any of
the matters set forth in this Section 5(b) or seeking to influence,
advise or direct the vote of any holder of securities of such Spinco; provided that this subsection shall not be deemed to restrict (x) the
Liberty Directors of any Spinco from participating as members of the Board of
Directors of such Spinco in their capacity as such or (y) any Liberty
Party from opposing publicly or privately, voting against and encouraging
others to vote against any proposal of a third party regarding a merger or
other business combination, or opposing publicly or privately any tender or
exchange offer, regardless of whether such proposal or offer is supported by
the Board of Directors of such Spinco;

 

(iii)     directly or indirectly, offer, seek or
propose, collaborate on or encourage any merger, consolidation, business
combination, recapitalization, restructuring or other extraordinary transaction
with respect to such Spinco or any Affiliate thereof or any of their respective
businesses;

 

(iv)     directly or indirectly, deposit any Equity Securities of such
Spinco in a voting trust or subject any such Equity Securities to any proxy,
arrangement or agreement with respect to the voting of such securities or other
agreement having similar effect, other than, if such deposit of Equity Securities
is customary in the market for such transactions at such time, as reasonably
necessary to engage in any Hedging Transactions or any Stock Lending
Transactions permitted by this Agreement;

 

(v)      directly or indirectly, make a request to amend or waive Section 5(a),
this clause 5(b)(v) or any other provision of this Section 5(b) or
Section 6;

 

(vi)     directly or indirectly, make any public disclosure, or take any
action which could reasonably be expected to require such Spinco to make any
public disclosure, with respect to any of the matters set forth in this Section 5(b);
or

 

(vii) directly
or indirectly, enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing.

 

(c)  Nothing in Section 5(a) (other than the proviso to
clause (i) thereof, if applicable) or 5(b) shall prohibit any Liberty
Party or its Affiliates from acquiring any securities of any Spinco if after
giving effect to such acquisition, Liberty’s Ownership Percentage with respect
to such Spinco would not exceed the Applicable Percentage.  In addition, prior to a Permitted Restricted Transfer
by the Liberty Parties or a Transfer pursuant to Section 5(d)(i)(7)(ii),
such Spinco will not adopt (i) a Shareholder Rights Plan or (ii) any
charter or bylaw provision, in the case of each of clause (i) and clause
(ii), that would materially adversely affect the Liberty Parties’ ability in accordance with the terms hereof to
acquire Equity Securities up to the Applicable Percentage or which otherwise
would impose material economic burdens on the Liberty Parties’ ability to do so
(an “Anti-Takeover Provision”).  To the extent that any Spinco or a subsidiary
thereof effects a Rights Offering or an offer  that was made generally available
to holders of Equity Securities of such Spinco as a result of their ownership
of Equity Securities of such Spinco, the Liberty Parties will be entitled to
exercise in full all rights issued or distributed to them or exchange in full;

 

 

 

 

14

 

 

provided, that to the extent such exercise results in the
Liberty Parties’ Beneficial Ownership of Equity Securities of such Spinco
exceeding the Applicable Percentage, it will not constitute a breach of this
Agreement provided that the Liberty Parties will not be entitled to vote any
such Equity Securities representing voting power in excess of the Applicable
Percentage until such time as the Liberty’s Ownership Percentage does not
exceed the Applicable Percentage.

 

(d)  (i)  With respect to each Spinco, from and following the
Spinoff Date of such Spinco, no Liberty Party shall, and each Liberty Party
shall cause its Affiliates not to, without the prior written consent of a
majority of the Qualified Directors of such Spinco, Transfer any Equity
Securities of such Spinco to any Person except for:

 

(1)  Transfers to such Spinco or a subsidiary of such Spinco or
Transfers of any rights received in a Rights Offering;

 

(2)  (i) at such times as Rule 144 under the Securities
Act of 1933, as amended (“Rule 144”),
is applicable, Transfers pursuant to Rule 144 or, (ii) at such times
as Rule 144 is not applicable, Transfers pursuant to “brokers transactions”
within the meaning of Rule 144; provided, that if the Spinoff of such Spinco was a Tax-Free Spinoff,
no such Transfer may be made prior to the second anniversary of the Spinoff
Date of such Spinco;

 

(3)  Transfers (x) to Liberty, (y) between or among the
Liberty Parties or (z) to an Affiliate of Liberty that agrees in writing
in accordance with Section 9(c) hereof to be bound by the terms of
this Agreement; provided, that, if the Spinoff of such Spinco was a
Tax-Free Spinoff, prior to the second anniversary of the Spinoff Date of such
Spinco, a Transfer to a Prohibited Transferee will be prohibited
unless each of IAC and such Spinco has consented in writing to such
Transfer, which consent will be delivered if each of IAC and such Spinco,
acting in good faith, determine that (A) any of the “Safe Harbors” set
forth in Treas. Reg. § 1.355-7(d) applies to such Transfer or (B) there
was no “agreement, understanding, arrangement or substantial negotiations” with
such Prohibited Transferee regarding the Transfer or any “similar acquisition”
(as such terms are defined in Treas. Reg. § 1.355-7(h)) during the two-year
period ending on the date of the Spinoff;

 

(4)  Transfers (i) pursuant to a third party tender or
exchange offer for such Equity Securities or (ii) in connection with any
merger or other business combination involving such Spinco and a third party,
which merger or business combination has been approved by such Spinco;

 

(5)  in a public offering in a manner designed to result in a wide
distribution (other than a Transfer described in subsection (d)(i)(7), which
shall be governed by the terms of such subsection (d)(i)(7) and not this
subsection (d)(i)(5)); provided, that no Transfer under this clause (5) is
made, to the knowledge of the Liberty Parties, to any Person whose Ownership
Percentage in respect of such Spinco, giving effect to such Transfer, would
exceed 15%; and provided, further

 

 

 

 

15

 

 

that if the Spinoff of such Spinco was
a Tax-Free Spinoff, no such Transfer may be made prior to the second
anniversary of the Spinoff Date of such Spinco;

 

(6)  a Transfer, in a single transaction (other than a Transfer
described in subsection (d)(i)(7), which shall be governed by the terms of such
subsection (d)(i)(7) and not this subsection (d)(i)(6)), of all the Equity
Securities of such Spinco Beneficially Owned at such time by the Liberty
Parties and their Affiliates (or by any Person who previously acquired Equity
Securities from any Liberty Party or any Affiliates thereof or another
Restricted Transferee in a Permitted Restricted Transfer) to a Person (a “Restricted Transferee”) (A) whose
Ownership Percentage with respect to such Spinco, after giving effect to such
Transfer, would not exceed the Applicable Percentage and (B) that, prior
to such Transfer, shall have (along with the applicable Transferring Persons)
executed and delivered to such Spinco an agreement (a “New
Holder Assignment and Assumption Agreement”) in the form of Exhibit 1
hereto (a “Permitted Restricted Transfer”);
provided, that, if the Spinoff of such Spinco was a Tax-Free Spinoff,
prior to the second anniversary of the Spinoff Date of such Spinco, a Transfer
to a Prohibited Transferee will be prohibited unless each of IAC and such
Spinco has consented in writing to such Transfer, which consent will be
delivered if each of IAC and such Spinco, acting in good faith, determine that (A) any
of the “Safe Harbors” set forth in Treas. Reg. § 1.355-7(d) applies to
such Transfer or (B) there was no “agreement, understanding, arrangement
or substantial negotiations” with such Prohibited Transferee regarding the
Transfer or any “similar acquisition” (as such terms are defined in Treas. Reg.
§ 1.355-7(h)) during the two-year period ending on the date of the Spinoff. The
Spinco and the applicable Transferring Persons shall (and with respect to any
otherwise Permitted Restricted Transfer prior to the second anniversary of the
applicable Spinoff Date IAC shall) also execute such New Holder Assignment and
Assumption Agreement; and

 

(7) a Transfer of the Equity Securities Beneficially Owned by
Liberty or any Liberty Party solely as a result of (i) a change in the
Beneficial Ownership of Liberty or, if Liberty is not a Parent Company or is
not the Parent Company of such Liberty Party, any Parent Company of Liberty or
any Liberty Party, or (ii) a Distribution Transaction involving such
Person (the Person the equity interests of which are being distributed in the
Distribution Transaction is referred to as the “Distributed
Company”) in which all of the Equity Securities of such Spinco
Beneficially Owned by the Distributed Company or its Affiliates are so
Transferred; provided, however, that, in the case of clause (ii),
such Distributed Company shall (along with the applicable Transferring Persons)
execute and deliver to such Spinco a New Holder Assignment and Assumption
Agreement in the form of Exhibit 1. 
The Spinco and the applicable Transferring Persons shall (and with
respect to any such Transfer prior to the second anniversary of the applicable
Spinoff Date IAC shall) also execute the New Holder Assignment and Assumption
Agreement delivered by the Distributed Company under this subsection (d)(i)(7).
 (It is acknowledged and agreed that
nothing contained elsewhere in this Section 5(d) shall restrict any
Transfer permitted by this clause (7));

 

 

 

 

16

 

 

(ii)  at least one Business Day prior to any
proposed Transfer or series of related Transfers by any Liberty Party to any
Person (other than to Liberty or an Affiliate thereof that agrees in writing in
accordance with Section 9(c) hereof to be bound by the terms of this
Agreement and other than Transfers pursuant to clauses (1), (2), (4), (5) or
(7) of Section 5(d) (i) above) of Equity Securities of a
Spinco representing a 10% or greater Ownership Percentage with respect to such
Spinco, Liberty shall, or shall cause such Liberty Party to, provide written
notice to such Spinco of the proposed Transfer, including a general description
of the proposed Transfer (but which need not include the identity of the counterparty);

 

(iii) [Intentionally Omitted]

 

(iv)  the Board of Directors of the applicable
Spinco shall, as promptly as reasonably practical following receipt of a
written request therefor from Liberty, exempt (i) the Restricted
Transferee in any Permitted Restricted Transfer or (ii) the Distributed
Company in any Transfer under Section 5(d)(i)(7)(ii) from the
operation of any Shareholder Rights Plan or other Anti-Takeover Provision then
in effect with respect to such Spinco, such that an acquisition by it of Equity
Securities up to its Applicable Percentage would not materially adversely
affect such Restricted Transferee or Distributed Company, as the case may be,
under the terms of any Shareholder Rights Plan or other Anti-Takeover Provision
then in effect or which otherwise would impose material economic burdens on
such Restricted Transferee’s or Distributed Company’s ability to do so; and

 

(v)  notwithstanding anything to the contrary
set forth in Section 5(b) or Section 5(d) , Section 5(d) shall
not prohibit any Transfer to the extent relating to the entry into, maintenance
of, performance of obligations under, or early termination and unwinding of
Hedging Transactions or Stock Lending Transactions effected by the Liberty
Parties or their Affiliates, including the Transfer of Equity Securities in
connection therewith through the delivery of Equity Securities to a third party
in connection with the settlement or satisfaction of a Hedging Transaction or
the foreclosure and sale by a secured party of any Equity Securities pledged to
secure the obligations of a party under a Hedging Transaction or in respect of
any extension of credit to a party based, in whole or part, on the value of
such Hedging Transaction; provided that Liberty shall not, and shall
cause its Affiliates not to, engage in any Stock Lending Transaction,
Hedging Transaction, or any pledge of Equity Securities not otherwise within
the definition of “Hedging Transaction” (v) unless the amount of Equity
Securities of a Spinco subject to a Hedging Transaction or Related Hedging
Transactions, any Stock Lending Transaction or Related Stock Lending
Transactions, or any other pledge transaction involving any Liberty Party or
Affiliate thereof, constitutes 10% or less of the Total Equity Securities of such
Spinco (determined as of the date of the Hedging Transaction, Stock Lending
Transaction or other pledge transaction or the date of the initial Hedging
Transaction or Stock Lending Transaction in any series of Related Hedging
Transactions or series of Related Stock Lending Transactions), (w) unless
the counterparty to such transaction is a financial institution in the business
of engaging in such transactions and Liberty does not know or have reason to
know that such counterparty is engaging in such transaction for the purpose of
acquiring Equity

 

 

 

 

17

 

 

Securities or voting rights with respect
thereto for its own account or with an intent to transfer such securities or
such rights to any particular Person or group, (x) unless the total number
of Equity Securities of such Spinco underlying Hedging Transactions and Stock
Lending Transactions, and other pledge transactions involving any Liberty Party or an
Affiliate thereof, entered into during the prior 90 days, together
with the Equity Securities underlying such Hedging Transaction, Stock Lending
Transaction or other pledge transaction, do not exceed 10% of the Total Equity
Securities of such Spinco, (y) unless it is entered into at least 30 days
following the Spinoff Date of the relevant Spinoff, and (z) if the Spinoff
of such Spinco was a Tax-Free Spinoff, prior to the second anniversary of the
Spinoff Date of such Spinco, unless (A) any such Stock Lending Transaction is a
Qualified Stock Lending Transaction, (B) none of the direct
counterparties, or to the knowledge of the Liberty Parties any indirect
counterparty, to such Hedging Transaction, Stock Lending Transaction or other
pledge transaction is a Prohibited Transferee or (C) if the direct
counterparty, or to the knowledge of any Liberty Party any indirect
counterparty, of such Hedging Transaction, Stock Lending Transaction or other
pledge transaction is a Prohibited Transferee, each of IAC and such Spinco
shall have consented in writing to such Hedging Transaction, Stock Lending
Transaction or other pledge transaction, which consent will be delivered if
each of IAC and such Spinco, acting in good faith, determine that (A) any
of the “Safe Harbors” set forth in Treas. Reg. § 1.355-7(d) applies to
such Hedging Transaction, Stock Lending Transaction or other pledge transaction
or (B) there was no “agreement, understanding, arrangement or substantial
negotiations” with such Prohibited Transferee regarding such Hedging
Transaction, Stock Lending Transaction or other pledge transaction or “similar
acquisition” (as such terms are defined in Treas. Reg. § 1.355-7(h)) during the
two-year period ending on the date of the Spinoff;

 

(vi)  Attached hereto as Exhibit 2, is an accurate and
complete list with respect to each Spinco (other than LT PubCo) of all Persons
with whom IAC, such Spinco, their Affiliates, or any of their respective
officers, directors or other authorized agents or representatives have entered
into any “agreement, understanding, or arrangement” or “discussions” (as such
terms are defined in Treas. Reg. § 1.355-7(h)) with respect to any acquisition
of Equity Securities (or substantial assets) of such Spinco or shares of IAC
during the two-year period ending on the date hereof (the “Initial
IAC Lists”).  Attached
hereto as Exhibit 3, is an accurate and complete list with respect to each
Spinco (other than LT PubCo) of all Persons with whom Liberty, its Affiliates,
or any of their respective officers, directors or other authorized agents or
representatives have entered into any “agreement, understanding, or arrangement”
or “discussions” (as such terms are defined in Treas. Reg. § 1.355-7(h)) with
respect to any acquisition of Equity Securities (or substantial assets) of such
Spinco or shares of IAC during the two-year period ending on the date hereof
(the “Initial Liberty Lists”).  The Initial IAC List for any Spinco shall be
updated as of, but not following, the Spinoff Date of such Spinco to add any
additional Persons with whom IAC, such Spinco, their Affiliates, or any of
their respective officers, directors or other authorized agents or
representatives have entered into any “agreement, understanding, or arrangement”
or “discussions” (as such terms are defined in Treas. Reg. § 1.355-7(h)) with
respect to any acquisition of Equity Securities (or substantial assets) of such
Spinco or shares of IAC during the period beginning on the date hereof and
ending on the Spinoff Date for such Spinco, and to

 

 

 

 

18

 

 

delete any Persons that are included on the Initial IAC List with
respect to whom any such “agreement, understanding, or arrangement” or “discussions”
(as such terms are defined in Treas. Reg. § 1.355-7(h)) did not occur during
the two-year period ending on the Spinoff Date. 
The Initial Liberty List for any Spinco shall be updated as of, but not
following, the Spinoff Date of such Spinco to add any additional Persons with
whom Liberty, its Affiliates, or any of their respective officers, directors or
other authorized agents or representatives have entered into any “agreement,
understanding or arrangement” or “discussions” (as such terms are defined in
Treas. Reg. § 1.355-7(h)) with respect to any acquisition of Equity Securities
(or substantial assets) of such Spinco or shares of IAC during the period
beginning on the date hereof and ending on the Spinoff Date for such Spinco,
and to delete any Persons that are included on the Initial Liberty List with
respect to whom any such “agreement, understanding, or arrangement” or “discussions”
(as such terms are defined in Treas. Reg. § 1.355-7(h)) did not occur during
the two-year period ending on the Spinoff Date. 
The Initial IAC Lists and Initial Liberty Lists, as so amended, shall be
referred to as the “Prohibited Transferee Lists”).  The Initial IAC Lists, Initial Liberty Lists
and any amendments thereto will be prepared reasonably and in good faith by
each of IAC and Liberty, respectively, based upon the provisions of Treas. Reg.
§1.355-7(h).

 

 (e)  Notwithstanding
anything to the contrary contained in Section 5(d)(i) or 5(d)(v), any
Transfer of Equity Securities of a Spinco that would be permitted following the
24-month anniversary of the Spinoff of such Spinco but not during such 24-month
period shall be permitted during such 24-month period so long as (i) the number of all Equity Securities of such Spinco
that are Transferred pursuant to this Section 5(e) by all Liberty
Parties or their Affiliates during such 24-month period do not exceed the
Equity Securities Basket for such Spinco, and (ii) that no such Transfer
shall occur following any acquisition of Beneficial Ownership of Equity
Securities of such Spinco under Section 5(a) hereof by any Liberty
Party or any Affiliate thereof during such period; provided, however,
that the acquisition of Beneficial Ownership of any Equity Securities pursuant
to a Rights Offering or an offer  that was
made generally available to holders of Equity Securities of such Spinco as a
result of their ownership of Equity Securities of such Spinco shall not be deemed to be an acquisition of
Beneficial Ownership of any Equity Securities under Section 5(a) for
purposes of this Section 5(e).

 

(f)  With respect to each Spinco, any transaction involving
Liberty or any of its Affiliates that would be required by Item 7(b) of
Schedule 14A under the Exchange Act, insofar as Item 7(b) calls for
information required by Section 404 of Regulation S-K under the Exchange
Act, to be disclosed by such Spinco in a proxy statement furnished to such
Spinco’s stockholders in connection with a meeting at which directors are to be
elected, shall require the approval of a majority of the Qualified Directors of
such Spinco.

 

6.  Certain
Offers

 

With respect to each Spinco, until the Fall-Away Date:

 

(a) (i) in the event the Board of
Directors of a Spinco determines to pursue a Covered Transaction with respect
to such Spinco on a negotiated basis and in connection therewith (x) conducts
or publicly announces an intention to conduct an “auction” or

 

 

 

 

19

 

 

similar process with respect thereto, Liberty
shall be invited to participate in such process on a comparable basis with
other potential bidders or (y) if no such process shall be conducted, (A) promptly
following the first date on which a draft agreement that, upon execution, would
bind (subject to conditions) the Spinco to enter into a Covered Transaction is
provided by or on behalf of such Spinco to the counterparty or written comments
on such counterparty’s draft definitive transaction agreement are provided by
or on behalf of such Spinco to such counterparty (but in no event less than 5
Business Days prior to the Board of Directors of a Spinco authorizing such
Spinco to enter into an agreement providing for a Taxable Covered Transaction
or less than 72 hours prior to the Board of Directors of a Spinco authorizing
such Spinco to enter into an agreement providing for a Covered Transaction that
is not a Taxable Covered Transaction), such Spinco shall give notice to Liberty
of the possibility of the pending Covered Transaction, which notice shall
include a general description of the Covered Transaction (but which need not
include the identity of the counterparty) and shall indicate whether the Spinco
expects the Covered Transaction will be a Taxable Covered Transaction (the “Tax Status”), and (B) so
long as the Spinco is pursuing such Covered Transaction, such Spinco shall
advise Liberty in the event it becomes substantially likely that such Covered
Transaction, if previously characterized as not being a Taxable Covered
Transaction, now will be a Taxable Covered Transaction, or upon a material
change in the nature of the Covered Transaction as described in the notice
previously provided;

 

(ii)  in the case of a potential Covered Transaction as to which
clause (a)(i) of this Section 6 applies, (x) Liberty shall, and
Liberty shall cause its Affiliates to, keep confidential the fact of its or
their receipt of any invitation to participate or other notice in respect of
such potential Covered Transaction and the contents of any such invitation or
notice (subject to customary exceptions, including disclosure to
representatives who acknowledge such confidentiality obligation) and (y) promptly
following receipt of any such invitation or notice, but in any event within
five Business Days of such receipt, Liberty shall inform the applicable Spinco
whether Liberty intends to in good faith participate in the auction or similar
process (in the case of subclause (a)(i)(x) of this Section 6) or in
good faith pursue the Covered Transaction (in the case of subclause (a)(i)(y) of
this Section 6).  If Liberty shall
so inform the Spinco of its good faith intention to participate in the process
or to pursue the transaction, it shall actively so participate or pursue, and
shall promptly provide notice to the applicable Spinco in the event its
intention changes.  In the event Liberty
provides notice to the Spinco that it does not intend to participate in the
process or pursue the Covered Transaction (whether such notice is given
initially or following a prior indication of interest), or if Liberty ceases to
actively so participate or pursue, then such Spinco shall be relieved of any
further obligation under this Section 6(a) with respect to such
Covered Transaction; provided, that if thereafter the expected Tax
Status of the Covered Transaction changes from not being a Taxable Covered
Transaction to being a Taxable Covered Transaction, or upon a material change in the nature of the Covered Transaction as
described in the notice previously provided, the Spinco will promptly
notify Liberty of such changed status or nature and Liberty shall again be
permitted to inform the Spinco of its good faith intention to participate in
the

 

 

 

 

 

20

 

process or pursue the transaction, all in accordance with the
provisions of this Section 6; and

 

(iii)  in connection with any potential Covered Transaction as to
which clause (a)(i)(y) of this Section 6 applies, (x) if so
requested by Liberty, the applicable Spinco will furnish Liberty with
information regarding such Spinco reasonably comparable to the information
provided to the prospective counterparty to such Covered Transaction provided
that Liberty shall have executed and delivered to such Spinco a nondisclosure
(or similar) agreement substantially equivalent to any nondisclosure (or
similar) agreement entered into with such prospective counterparty (other than
any “standstill” obligations therein on the part of such prospective
counterparty and provided that such confidentiality agreement will contain
customary exceptions to such obligations) and (y) the Board of Directors
of such Spinco shall consider any offer for a Covered Transaction made in good
faith by Liberty but shall have no obligation hereunder to accept any such
offer or to enter into negotiations with Liberty;

 

 (b)          in
the event a third party shall commence (within the meaning of Rule 14d-2
under the Exchange Act) an offer for a Covered Transaction described in clause (i) of
the definition thereof which offer is not made pursuant to an agreement with
such Spinco (the “Triggering Offer”), and
within 10 Business Days following the commencement of such Triggering Offer the
Board of Directors of such Spinco shall have failed to take action reasonably
calculated to prevent such third party from acquiring Beneficial Ownership of
Equity Securities of such Spinco to the extent such acquisition would result in
such third party’s Ownership Percentage with respect to such Spinco exceeding
the Applicable Percentage (whether through the adoption of a Shareholder Rights
Plan, pursuit of litigation or otherwise) (“Blocking
Action”), the Liberty Parties shall be relieved of their
obligations (x) under Section 5(b) of this Agreement to the
extent reasonably necessary to permit Liberty to commence a Competing Offer and
(y) for so long as the third party has not withdrawn or abandoned its
offer or Liberty receives a notice from the Spinco pursuant to Section 6(a)(i)(y) regarding
a Covered Transaction with such third party, shall be relieved of their
obligations under Section 5(a) to the extent necessary to permit
Liberty to consummate such Competing Offer. 
Notwithstanding the foregoing, this paragraph (b) shall not relieve
any Liberty Party of its obligations in the event that a majority of the
Qualified Directors of such Spinco have supported the taking of Blocking Action
and, notwithstanding such support, the Spinco Board of Directors fails to take
Blocking Action;

 

(c)  in the event Liberty shall consummate a Competing Offer for a
Spinco in the circumstances permitted by Section 6(b) and otherwise
in compliance with the terms of this Agreement, and as a result of which
consummation Liberty’s Ownership Percentage in respect of such Spinco shall
exceed 50%, any consent or approval requirements of the Qualified Directors set
forth in this Agreement will be deemed terminated and will cease to be of any
further force and effect, and, following the later of the second anniversary of
the Spinoff Date of such Spinco and the date Liberty’s Ownership Percentage
exceeds 50%, the provisions of Section 5(a) of this Agreement with
respect to such Spinco will be deemed terminated and will cease to be of any
further force and effect; and

 

 

 

 

21

 

 

(d)  in the event a third party shall publicly disclose that its
Ownership Percentage with respect to a Spinco exceeds 20% and within 10
Business Days following such public announcement the Board of Directors of such
Spinco shall have failed to take Blocking Action, the Liberty Parties shall be
relieved of their obligations under Sections 5(a) and 5(b) of this
Agreement to the extent reasonably necessary to permit Liberty to commence and
consummate an offer to acquire all of the outstanding Equity Securities of such
Spinco.  Notwithstanding the foregoing,
this paragraph (d) shall not relieve any Liberty Party of its obligations
in the event that a majority of the Qualified Directors of such Spinco have
supported the taking of Blocking Action and, notwithstanding such support, the
Spinco Board of Directors fails to take Blocking Action.

 

(e)  For purposes of this Section 6, the terms below shall
have the following meanings:

 

“Taxable Covered Transaction” means the
acquisition of the Spinco by a third party in a Covered Transaction  that is generally taxable to
the stockholders of such Spinco for federal income tax purposes.

 

“Competing Offer” means a
tender or exchange offer for any and all Equity Securities of such Spinco or a
merger proposal to acquire all of the outstanding Equity Securities of such
Spinco not owned by the Liberty Parties; provided, that, if the
Triggering Offer is for less than any and all such Equity Securities, the
Competing Offer may instead be for such Equity Securities of such Spinco as
would, upon consummation of the Competing Offer, result in Liberty’s Ownership
Percentage in respect of such Spinco equaling what the third party offeror’s
Ownership Percentage in respect of such Spinco would be upon consummation of
the Triggering Offer assuming all shares sought in the Triggering Offer were
tendered and accepted.

 

7.  Spinco
Registration Rights

 

With respect to each Spinco the Spinoff of which is effected in the
form of a Single-Tier Spinoff on or prior to the End Date, IAC shall cause such
Spinco to execute and deliver to Liberty, and Liberty shall execute and deliver
to such Spinco, effective as of the Spinoff Date of such Spinco, a Registration
Rights Agreement in the form attached as Exhibit 4 hereto.

 

8.  Certain
Efforts

 

                With respect to
each of HSN PubCo, Interval PubCo and TM PubCo, in the event the Spinoff of
such Spinco is effected in the form of a Single-Tier Spinoff on or prior to the
End Date, IAC shall use commercially reasonable efforts, subject in each case
to the availability of debt financing on terms reasonably satisfactory to IAC
under then current market conditions, to cause the respective debt levels of
such Spincos immediately following the Spinoff to be a minimum of $400 million,
$280 million and $580 million.

 

9.  Third
Party Beneficiaries; Standalone Agreements; Assignment

 

(a)  Nothing in this Agreement, whether express or implied, shall
be construed to give any Person, other than the parties hereto, any legal or
equitable right, remedy or claim under or in respect of this Agreement.

 

 

 

22

 

 

(b)  In connection with each Spinoff which is
effected in the form of a Single-Tier Spinoff on or prior to the End Date, IAC
and the Liberty Parties shall, and IAC shall cause the applicable Spinco to,
execute and deliver an agreement (a “Spinco Assignment and
Assumption Agreement”) in the form attached as Exhibit 5
hereto.  No Spinco shall have any
obligations or liabilities under this Agreement or under the aforementioned
agreements with respect to any other Spinco. 
Nothing in this Section 9(b) shall release IAC from liability
for any breach of this Agreement with respect to any Spinco occurring on or
before the Spinoff Date of such Spinco. 
The Spinco Assignment and Assumption Agreement shall set forth the
address and facsimile for notices to such Spinco for purposes of Section 10(a).

 

(c) If any Liberty Party shall transfer or otherwise dispose of
any Equity Securities of any Spinco to any Affiliate of such Liberty Party,
such transferee and the Transferring Liberty Party shall execute and deliver to
such Spinco an agreement (an “Affiliate Assignment and
Assumption Agreement”) in the form of Exhibit 6. The Spinco
shall (and with respect to any such Transfer prior to the second anniversary of
the applicable Spinoff Date otherwise permitted by this Agreement IAC shall)
also execute such Affiliate Assignment and Assumption Agreement.

 

(d) Except pursuant to any Assignment and Assumption Agreement,
neither this Agreement nor any rights or obligations under this Agreement shall
be assigned, in whole or in part, by any party without the prior written
consent (i) of Liberty, in the case of an assignment by IAC (or from and
after each Spinoff, the applicable Spinco) or (ii) of IAC (or from and
after each Spinoff, the applicable Spinco provided in such case such consent
shall be approved by a majority of the Qualified Directors of such Spinco) in
the case of an assignment by any Liberty Party of its rights and obligations in
respect of IAC (or such Spinco).  Subject
to the foregoing, the provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

10.  General
Provisions

 

(a)  Notices. 
All notices, requests and other communications to any party hereunder
shall be in writing (including telecopy) and shall be given, if to any Liberty
Party, to:

 

Liberty Media Corporation

12300 Liberty Boulevard

Englewood, Colorado 80112

Attention:                 General Counsel

Facsimile:                    (720) 875-5382

 

 

 

23

 

 

with a copy to:

 

Baker Botts L.L.P.

30 Rockefeller Plaza

44th Floor

New York, New York 10112

Attention:                 Frederick H. McGrath

Facsimile:                    (212) 408-2501

 

 

if to IAC, to:

 

IAC/InterActiveCorp

555 West 18th Street

New York, New York 10011

Attention:                 General Counsel

Facsimile:                    (212) 632-9642

 

with a copy to:

 

Wachtell, Lipton, Rosen &
Katz

51 West 52nd Street

New York, New York 10019

Attention:                 Pamela S. Seymon

Facsimile:                    (212) 403-2000

 

if to a Spinco to such address or facsimile number as
such Spinco shall provide to Liberty in connection with assignment contemplated
by Section 9(b) hereof,

 

or such address or facsimile number as such party
may hereafter specify for the purpose by notice to the other parties
hereto.  Each such notice, request or
other communication shall be effective when delivered personally, telegraphed,
or telecopied, or, if mailed, five business days after the date of the mailing.

 

(b)  Amendments; No Waivers.  Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the party whose rights or obligations
hereunder are affected by such amendment, or in the case of a waiver, by the
party or parties against whom the waiver is to be effective.  Any amendment or waiver (i) by IAC shall
require the approval of a majority of the Board of Directors of IAC (excluding
for this purpose any Liberty Director within the meaning of the Governance
Agreement) or (ii) by a Spinco shall require the approval of a majority of
the Qualified Directors of such Spinco.

 

No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

 

 

 

 

24

 

 

(c)  Effectiveness of Certain Provisions.  With respect to each Spinco, notwithstanding
anything to the contrary contained in this Agreement:

 

(i) the provisions of Sections 3, 5, 6 and 9(c) (the “Delayed Effectiveness Provisions”),
to the extent related to the parties’ rights and obligation in respect of such
Spinco, shall become effective only if the Spinoff of such Spinco is effected
in the form of a Single-Tier Spinoff, and in such case, shall become effective
upon the Spinoff Date of such Spinco; and

 

(ii) in the event, and upon the earliest to occur, of (x) the
Spinoff of such Spinco effected in a form other than a Single-Tier Spinoff, (y) the
public announcement by IAC of the abandonment of the Spinoff of such Spinco and
(z) if the Delayed Effectiveness Provisions have not previously become
effective pursuant to Section 10(c)(i), the End Date, the Delayed
Effectiveness Provisions, to the extent related to such Spinco, shall terminate
and shall thereafter not become effective.

 

(d)  Governing Law; Consent To Jurisdiction.  This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Delaware,
without giving effect to the principles of conflicts of laws.  Each of the parties hereto hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of Delaware, for any action, proceeding or investigation in
any court or before any governmental authority (“Litigation”) arising out of or relating to this
Agreement and the transactions contemplated hereby and further agrees that
service of any process, summons, notice or document by U.S. mail to its
respective address set forth in this Agreement shall be effective service of
process for any Litigation brought against it in any such court.  Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any
Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of Delaware, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such Litigation brought in any such court has been brought in an
inconvenient forum.  Each of the parties
irrevocably and unconditionally waives, to the fullest extent permitted by
applicable law, any and all rights to trial by jury in connection with any
Litigation arising out of or relating to this Agreement or the transactions
contemplated hereby.

 

(e)  Counterparts.  This Agreement may be executed in separate
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

 

(f)  Specific Performance; Other Limitations.  IAC and each Liberty Party each acknowledge
and agree that the parties’ respective remedies at law for a breach or
threatened breach of any of the provisions of this Agreement would be
inadequate and, in recognition of that fact, agrees that, in the event of a
breach or threatened breach by IAC, or following each Spinoff Date, the
applicable Spinco, or a Liberty Party of the provisions of this Agreement, in
addition to any remedies at law, the Liberty Party, IAC or such Spinco, respectively,
without posting any bond shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy 

 

 

 

25

 

 

which may then be available.  No breach or threatened breach on the part of
any party hereto shall relieve any other party of any of its obligations under
this Agreement.

 

(g)  Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, provided that
the parties hereto shall negotiate in good faith to attempt to place the
parties in the same position as they would have been in had such provision not
been held to be invalid, void or unenforceable.

 

(h)  Entire Agreement.  This Agreement, together with the agreements
and instruments referenced herein, embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersedes any prior understanding or agreements by or among the
parties, written or oral, with respect to the subject matter hereof.

 

(i)  Interpretation.  References in this Agreement to Sections
shall be deemed to be references to Sections of this Agreement unless the
context shall otherwise require.  The
words “include,” “includes” and “including” shall be deemed to be followed by
the phrase “without limitation.” The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of such agreement or
instrument.  The word “knowledge” when
used in this Agreement shall refer to the actual knowledge of the Person in
question without such Person being under any duty or obligation to make any inquiries.  Each reference to a statute, rule or
regulation (including any section of the Code and any Treasury Regulations)
herein shall be deemed to include any successor statute, rule or
regulation thereto.

 

(j)  Headings. 
The headings contained in this Agreement are for convenience only and
shall not be interpreted to limit or otherwise affect the provisions of this
Agreement.

 

 

 

 

26

 

 

IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first written above.

 

	
  Liberty Media Corporation, 

  	
   

  	
  IAC/InterActiveCorp, a
  Delaware corporation

  
	
  a Delaware corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John C. Malone

  	
   

  	
  /s/ Greg Blatt

  
	
  Name:

  	
  John C. Malone

  	
   

  	
  Name:

  	
  Greg Blatt

  
	
  Title:

  	
  Chairman

  	
   

  	
  Title:

  	
  Executive Vice President

  

 

 

 

	
  LMC Silver
  King, Inc.,

  	
   

  	
  Acknowledged and Agreed
  for purposes of Section 4(c) only:

  
	
  a Delaware corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Craig Troyer

  	
   

  	
   

  
	
  Name:

  	
  Craig Troyer

  	
   

  	
  /s/ Barry Diller

  
	
  Title:

  	
  Vice President

  	
   

  	
  Barry Diller

  

 

 

	
  Liberty HSN
  II, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  LMC USA
  VIII, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  LMC USA IX, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
			

 

 

 

 

 

 

 

	
  LMC USA XI, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  LMC USA XII, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  LMC USA
  XIII, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
  LMC USA XIV, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  LMC USA XV, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  Liberty
  Tweety, Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
			

 

 

 

 

 

 

 

	
  BDTV Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  BDTV II Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  BDTV III Inc.,

  
	
  a Delaware
  corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

  
	
   

  
	
   

  
	
   

  
	
  BDTV IV Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  /s/ Craig Troyer

  	
   

  
	
  Name:

  	
  Craig Troyer

  
	
  Title:

  	
  Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]