Document:

Exhibit 10.10

 

INTERVAL LEISURE GROUP, INC.

2008 STOCK AND ANNUAL INCENTIVE PLAN

AS AMENDED

 

Section 1.  Purpose; Definition

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Control, any determination by the Committee
as to whether “Cause” exists shall be subject to de novo review.

 

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

 

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

 

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

 

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

 

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

 

(n)           “Company”
means Interval Leisure Group, Inc., a Delaware corporation, or its
successor.

 

(o)           “Disability”
means (i) “Disability” as defined in any Individual Agreement to which the
Participant is a party, or (ii) if there is no such Individual Agreement
or it does not define “Disability,” (A) permanent and total disability as
determined under the Company’s long-term disability plan applicable to the
Participant, or (B) if there is no such plan applicable to the Participant
or the Committee determines otherwise in an applicable Award Agreement, “Disability”
as determined by the Committee. 
Notwithstanding the above, with respect to an Incentive Stock Option,
Disability shall mean Permanent and Total Disability as defined in Section 22(e)(3) of
the Code and, with respect to each Award that constitutes a “nonqualified
deferred compensation plan” within the meaning of Section 409A of the
Code, the foregoing definition shall apply for purposes of vesting of such
Award, provided that such Award shall not be settled until the earliest of: (i) the
Participant’s “disability” within the meaning of Section 409A of the Code,
(ii) the Participant’s “separation from service” within the meaning of Section 409A
of the Code and (iii) the date such Award would otherwise be settled
pursuant to the terms of the Award Agreement.

 

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

 

(q)           “EBITA”
means for any period, operating profit (loss) plus (i) amortization, including
goodwill impairment, (ii) amortization of non-cash distribution and
marketing expense and non-cash compensation expense,

 

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(iii) restructuring charges, (iv) non-cash
write-downs of assets or goodwill, (v) charges relating to disposal of
lines of business, (vi) litigation settlement amounts and (vii) costs
incurred for proposed and completed acquisitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(rr)           “Specified
Employee” shall mean any individual who is a “key employee” (as defined in Section 416(i) of
the Code without regard to paragraph (5) thereof) with respect to the
Company and its Affiliates, as determined by the Company  (or the Affiliate, in the event that the
Affiliate and the Company are not considered a single employer under Sections
414(b) or 414(c) of the Code) in accordance with its uniform policy
with respect to all arrangements subject to Section 409A of the Code,
based upon the twelve (12) month period ending on each December 31st.  All individuals who are determined to be key
employees under Section 416(i)(1)(A)(i), (ii) or (iii) of the
Code (without regard to paragraph (5) thereof) on December 31st shall
be treated as Specified Employees for purposes of the Plan during the twelve
(12) month period that begins on the following April 1st.

 

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

 

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

 

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

 

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

 

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

 

Section 2.  Administration

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(xii)                             to
otherwise administer the Plan.

 

(b)           Procedures.

 

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

 

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

 

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

 

(d)           Award Agreements.  The terms and conditions of each Award, as
determined by the Committee, shall be set forth in an Award Agreement, which
shall be

 

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delivered to the Participant receiving such Award upon, or as promptly
as is reasonably practicable following, the grant of such Award.  The effectiveness of an Award shall not be
subject to the Award Agreement’s being signed by the Company and/or the
Participant receiving the Award unless specifically so provided in the Award
Agreement.  Award Agreements may be
amended only in accordance with Section 12 hereof.  Notwithstanding any provision of the Plan or
an Award Agreement to the contrary, in the event that any term of an Award
Agreement conflicts with any provision of the Plan that specifically pertains
to Section 409A of the Code, the provision of the Plan shall govern.

 

Section 3. 
Common Stock Subject to Plan

 

(a)           Plan Maximums.  The maximum number of Shares that may be
delivered pursuant to Awards under the Plan shall be the sum of (a) the
number of Shares that may be issuable upon exercise or vesting of the Adjusted
Awards and (b) 5,000,000.  The
maximum number of Shares that may be granted pursuant to Options intended to be
Incentive Stock Options shall be 3,333,333 Shares.  Shares subject to an Award under the Plan may
be authorized and unissued Shares or may be treasury Shares.

 

(b)           Individual Limits.  No Participant may be granted Awards covering
in excess of 3,333,333 Shares during the term of the Plan; provided that
Adjusted Awards shall not be subject to this limitation.

 

(c)           Rules for Calculating
Shares Delivered.

 

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

 

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

 

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

 

8

 

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

 

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

 

9

 

would
cause an Award that is not intended to be subject to Section 409A of the
Code at the Grant Date to be subject thereto as of the Grant Date.

 

Section 4. 
Eligibility

 

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

 

Section 5. 
Options and Stock Appreciation Rights

 

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

 

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

 

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

 

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

 

(d)           Exercise
Price.  The exercise price per Share subject to an
Option or Free-Standing SAR shall be determined by the Committee and set forth
in the applicable Award Agreement, and shall not be less than the Fair Market
Value of a share of the Common Stock on the applicable Grant Date.  In no event may any

 

10

 

Option or Free-Standing SAR granted under
this Plan be amended, other than pursuant to Section 3(d), to decrease the
exercise price thereof, be cancelled in conjunction with the grant of any new
Option or Free-Standing SAR with a lower exercise price or otherwise be
subject to any action that would be treated, for accounting purposes, as a “repricing”
of such Option or Free-Standing SAR, unless such amendment, cancellation, or action
is approved by the Company’s stockholders.

 

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

 

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

 

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

 

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

 

(ii)           To
the extent permitted by applicable law, payment may be made by delivering a
properly executed exercise notice to the Company, together with a copy of
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay the purchase price, and, if
requested, the amount of any federal, state, local or foreign withholding
taxes.  To facilitate the foregoing, the

 

11

 

Company may, to the extent permitted by applicable law, enter into
agreements for coordinated procedures with one or more brokerage firms.  To the extent permitted by applicable law,
the Committee may also provide for Company loans to be made for purposes of the
exercise of Options.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

Section 6. 
Restricted Stock

 

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

 

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

 

13

 

conditions, and restrictions applicable to
such Award, substantially in the following form:

 

“The transferability of this
certificate and the shares of stock represented hereby are subject to the terms
and conditions (including forfeiture) of the Interval Leisure Group, Inc.
2008 Stock and Annual Incentive Plan and an Award Agreement.  Copies of such Plan and Agreement are on file
at the offices of Interval Leisure Group, Inc., 6262 Sunset Drive, Miami
FL, 33143.”

 

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

 

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

 

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

 

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

 

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

 

14

 

paid in the form of Restricted Stock of the same class as the Common Stock
with which such dividend was paid, held subject to the vesting of the
underlying Restricted Stock.

 

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

 

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

 

Section 7. 
Restricted Stock Units

 

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

 

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

 

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

 

(i)            The
Committee shall, prior to or at the time of grant, condition the grant,
vesting, or transferability of Restricted Stock Units upon the continued
service of the applicable Participant or the attainment of Performance Goals,
or the attainment of Performance Goals and the continued service of the
applicable Participant.  In the event
that the Committee conditions the grant or vesting of Restricted Stock Units
upon the attainment of Performance Goals or the attainment of Performance Goals
and the continued service of the applicable Participant, the Committee may,
prior to or at the time of grant, designate such Awards as Qualified Performance-Based
Awards.  The conditions for grant,
vesting or transferability and the other provisions of Restricted Stock Units
(including without limitation any Performance Goals) need not be the same with
respect to each Participant.  Except as
otherwise provided in Section 7(b)(iv) or in the applicable Award
Agreement, an Award of Restricted Stock Units shall be settled if and when the
Restricted Stock Units vest (but in no event later than two and a half months
after the end of the fiscal year in which the Restricted Stock Units vest).

 

(ii)           Subject
to the provisions of the Plan and the applicable Award Agreement, during the
period, if any, set by the Committee, commencing with the date of such
Restricted Stock Units for which such vesting restrictions apply and until the
expiration

 

15

 

of such vesting restrictions (the “Restriction Period”), the
Participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber Restricted Stock Units.

 

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

 

(iv)          Except
as otherwise set forth in the applicable Award Agreement, upon a Participant’s
Termination of Employment for any reason during the Restriction Period, all Restricted
Stock Units still subject to restriction shall be forfeited by such
Participant; provided, however, that subject to Section 11(b),
the Committee shall have the discretion to waive, in whole or in part, any or
all remaining restrictions with respect to any or all of such Participant’s
Restricted Stock Units, provided, however, if any of such Participant’s
Restricted Stock Units constitute a “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Code, settlement of such
Restricted Stock Units shall not occur until the earliest of (1) the date
such Restricted Stock Units would otherwise be settled pursuant to the terms of
the Award Agreement or (2) the Participant’s “separation of service”
within the meaning of Section 409A of the Code.

 

Section 8. 
Other Stock-Based Awards

 

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

 

Section 9. 
Bonus Awards

 

(a)           Determination of Awards.  The Committee shall determine the total
amount of Bonus Awards for each Plan Year or such shorter performance period as
the Committee may establish in its sole discretion.  Prior to the beginning of the Plan Year or
such shorter performance period as the Committee may establish in its sole
discretion (or such later date as may be prescribed by the Internal Revenue
Service under Section 162(m) of the Code), the Committee shall
establish Performance Goals for Bonus Awards for the Plan Year or such shorter
period; provided, that such Performance Goals may be established at a
later date for Participants who are not “covered employees” (within the meaning
of Section 162(m)(3) of the Code). 
Bonus amounts payable to any individual Participant with respect to a
Plan Year will be limited to a maximum of $10 million.  For performance periods that are shorter than
a Plan Year, such $10 million maximum may be pro-rated if so determined by the
Committee.

 

(b)           Payment of Awards.  Bonus Awards under the Plan shall be paid in
cash or in shares of Common Stock (valued at Fair Market Value as of the date
of payment) as determined by the Committee, as soon as practicable following
the close of the Plan Year or such shorter performance period as the Committee
may establish.  It is intended that a
Bonus Award will be paid no later than the fifteenth (15th) day of the third month
following the later of: (i) the

 

16

 

end of the Participant’s taxable year in which the requirements for
such Bonus Award have been satisfied by the Participant or (ii) the end of
the Company’s fiscal year in which the requirements for such Bonus Award have
been satisfied by the Participant.  To
the extent provided by the Committee, a Participant may elect to defer receipt
of amounts payable under a Bonus Award for a specified period, or until a
specified event, subject in each case to the Committee’s approval and the terms
of any applicable deferred compensation plan that complies with Section 409A
of the Code.  The Bonus Award for any
Plan Year or such shorter performance period to any Participant may be reduced
or eliminated by the Committee in its discretion.

 

Section 10. 
Change in Control Provisions

 

(a)           Adjusted Awards.  With respect to all Adjusted Awards, subject
to Sections 3(d), 3(e), 10(e) and 14(k), unless otherwise provided in the
applicable Award Agreement, notwithstanding any other provision of this Plan to
the contrary, upon a Participant’s Termination of Employment, during the
two-year period following a Change in Control, by the Company other than for
Cause or Disability or by the Participant for Good Reason (as defined below):

 

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

 

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

 

(iii)          all
Restricted Stock Units outstanding as of such Termination of Employment which
were outstanding as of the date of such Change in Control shall be considered
to be earned and payable in full, and any restrictions shall lapse and such
Restricted Stock Units shall be settled as promptly as is practicable in
(subject to Section 3(d)) the form set forth in the applicable Award Agreement,
provided, however,
that with respect to any Restricted Stock Unit that constitutes “nonqualified
deferred compensation” within the meaning of Section 409A of the Code, the
settlement of such Restricted Stock Units pursuant to this Section 10(a)(iii) shall
only occur upon  the Change in Control if
such Change in Control constitutes a “change in the ownership of the
corporation,” a “change in effective control of the corporation” or a “change
in the ownership of a substantial portion of the assets of the corporation,”
within the meaning of Section 409A(a)(2)(v) of the Code.

 

(b)           Impact of Event on Awards other
than Adjusted Awards.  Subject to Sections 3(d), 3(e),
10(e), 12(d) and 14(k), unless otherwise provided in any applicable Award
Agreement and except as otherwise provided in paragraph (a) of this Section 10,
in connection with a Change of Control, the Committee may make such adjustments
and/or settlements of

 

17

 

outstanding Awards as it deems appropriate and consistent with the Plan’s
purposes, including, without limitation, the acceleration of vesting of Awards
either upon a Change of Control or upon various terminations of employment
following a Change of Control.  The
Committee may provide for such adjustments as a term of the Award or may make
such adjustments following the granting of the Award.

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding
the foregoing, the Separation shall not constitute a Change in Control.  For the avoidance of doubt, with respect to
Adjusted Awards, any reference in an Award Agreement or

 

18

 

the
applicable IAC Long Term Incentive Plan to a “change in control,” “change of
control” or similar definition shall be deemed to refer to a Change of Control
hereunder.

 

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

 

(e)           Notwithstanding the foregoing, if any Award is subject to Section 409A
of the Code, this Section 10 shall be applicable only (A) to the
extent specifically provided in the Award Agreement and as permitted pursuant
to Section 14(k) and (B) if such Change in Control
constitutes a “change in the ownership of the corporation”, a “change in
the effective control of the corporation” or a “change in the ownership of a
substantial portion of the assets of the corporation” within the meaning of Section 409A(a)(2)(v) of
the Code.

 

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

 

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

 

19

 

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

 

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

 

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

 

Section 12. 
Term, Amendment and Termination

 

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

 

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

 

(c)           Amendment of Plan.  The Board may amend, alter, or discontinue
the Plan, but no amendment, alteration or discontinuation shall be made which
would materially impair the rights of the Participant with respect to a
previously granted Award without such Participant’s consent, except such an
amendment made to comply with applicable law, including without limitation Section 409A
of the Code, stock exchange rules or accounting rules.  In

 

20

 

addition, no such amendment shall be made without the approval of the
Company’s stockholders to the extent such approval is required by applicable
law or the listing standards of the Applicable Exchange.

 

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

 

Section 13. 
Unfunded Status of Plan

 

It is presently intended that the Plan
constitute an “unfunded” plan for incentive and deferred compensation.  Solely to the extent permitted under Section 409A,
the Committee may authorize the creation of trusts or other arrangements to
meet the obligations created under the Plan to deliver Common Stock or make
payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of the Plan.
Notwithstanding any other provision of this Plan to the contrary, with respect
to any Award that constitutes a “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Code, no trust shall be funded
with respect to any such Award if such funding would result in taxable income
to the Participant by reason of Section 409A(b) of the Code and in no
event shall any such trust assets at any time be located or transferred outside
of the United States, within the meaning of Section 409A(b) of the
Code

 

Section 14. 
General Provisions

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

(k)           Section 409A of the Code.  It is the intention of the Company that no
Award shall be “deferred compensation” subject to Section 409A of the
Code, unless and to the extent that the Committee specifically determines
otherwise as provided in this Section 14(k), and the Plan and the terms
and conditions of all Awards shall be interpreted accordingly.  The terms and conditions governing any Awards
that the Committee determines will be subject to Section 409A of the Code,
including any rules for elective or mandatory deferral of the delivery of
cash or Shares pursuant thereto and any rules regarding treatment of such
Awards in the event of a Change in Control, shall be set forth in the
applicable Award Agreement, and shall comply in all respects with Section 409A
of the Code.  Notwithstanding any other
provision of the Plan to the contrary, with respect to any Award that
constitutes a “nonqualified deferred compensation plan” subject to Section 409A
of the Code, any payments (whether in cash, Shares or other property) to be
made with respect to the Award upon the Participant’s Termination of Employment
shall be delayed until the earlier of (A) the first day of the seventh
month following the Participant’s Termination of Employment if the Participant
is a “specified employee” within the meaning of Section 409A of the Code
and (B) the Participant’s death.

 

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

 

23Exhibit
10.9

 

AGREEMENT
TO PARTICIPATE IN THE

FACET
BIOTECH CORPORATION

RETENTION
AND SEVERANCE PLAN

Effective December 18, 2008

 

In consideration of the benefits provided by the Facet
Biotech Corporation Retention and Severance Plan (the “Plan”), the undersigned employee of Facet Biotech
Corporation (the “Company”)
and the Company agree that, as of the date written below, the undersigned shall
become a Participant in the Plan and shall be fully bound by and subject to all
of its provisions, subject to the modification of Section 6.1 thereof,
titled “Federal Excise Tax Under Section 4999 of the Code,” set forth in
Appendix A attached hereto.  All
references to a “Participant” in the Plan shall be deemed to refer to the
undersigned.

 

The undersigned employee acknowledges that the Plan
confers significant legal rights and may also constitute a waiver of rights
under other agreements with the Company; that the Company has encouraged the
undersigned to consult with the undersigned’s personal legal and financial advisors;
and that the undersigned has had adequate time to consult with the undersigned’s
advisors before executing this agreement.

 

The undersigned employee acknowledges that he or she
has received a copy of the Plan and has read, understands and is familiar with
the terms and provisions of the Plan. 
The undersigned employee further acknowledges that (1) by accepting
the arbitration provision set forth in Section 13 of the Plan, the
undersigned is waiving any right to a jury trial in the event of any dispute
covered by such provision and (2) except as otherwise established in an
employment agreement between a member of the Company Group and the undersigned,
the employment relationship between the undersigned and the Company Group is an
“at-will” relationship.

 

Executed on December 18, 2008.

 

	
  Participant

  	
   

  	
  Facet Biotech Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Faheem Hasnain

  	
   

  	
  By:

  	
  /s/ Francis Sarena

  
	
  Faheem Hasnain

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Name:

  	
  Francis Sarena

  
	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President, General
  Counsel and Secretary

  
	
   

  	
   

  	
   

  

 

1

 

APPENDIX
A

TO

AGREEMENT TO PARTICIPATE IN THE

FACET BIOTECH CORPORATION

RETENTION AND SEVERANCE PLAN

OF

FAHEEM HASNAIN

 

For all purposes of the participation of Faheem
Hasnain in the Facet Biotech Corporation Retention and Severance Plan (the “Plan”), Section 6.1 of
the Plan shall be deemed to read as follows:

 

6.1           Federal
Excise Tax Under Section 4999 of the Code.

 

(a)           Additional Payment. 
In the event that any payment or benefit received or to be received by
the Participant pursuant to this Plan or otherwise payable to the Participant
(collectively, the “Payments”)
would be subject to the excise tax imposed by Section 4999 of the Code, or
any similar or successor provision (the “Excise Tax”),
the Company shall pay to the Participant within ninety (90) days following the
date on which the Participant remits the Excise Tax, an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Participant from
the Payments and the Gross-Up Payment, after deduction of (a) any Excise
Tax on the Payments, (b) any federal, state and local income or employment
tax and Excise Tax on the Gross-Up Payment and (c) any interest, penalties
or additions to tax payable by the Participant with respect thereto, shall be
equal to the Payments.  Notwithstanding
the foregoing, if the Payments that would otherwise be subject to the Excise
Tax do not exceed the greatest amount of Payments that could be paid to the
Participant without giving rise to the Excise Tax (the “Reduced Amount”) by more than an amount equal to
the lesser of $100,000 or five percent of the Payments, then no Gross-Up
Payment shall be payable to the Participant and the Payments, in the aggregate,
shall be reduced to the Reduced Amount.

 

(b)           Determination of Amounts.

 

(1)           Determination by Accountants.  All
computations and determinations called for by this Section 6.1 shall be
promptly determined and reported in writing to the Company and the Participant
by independent public accountants selected by the Company and reasonably
acceptable to the Participant (the “Accountants”).  For the purposes of such determinations, the
Accountants may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make their required determinations.  The Company shall bear all fees and expenses
charged by the Accountants in connection with such services.

 

(2)           Determination of Applicability of Reduced Amount.  For purposes of determining whether the
Payments will be reduced to the Reduced Amount, any payments or benefits
received or to be received by the Participant in connection with transactions
contemplated by a Change in Control event or the Participant’s termination of
employment 

 

2

 

(whether pursuant to the
terms of this Plan or any other plan, arrangement or agreement with the
Company), shall be treated as “parachute payments” within the meaning of Section 280G of the Code or any
similar or successor provision (“Section 280G”),
and all “excess
parachute payments”
within the meaning of Section 280G shall be treated as subject to the
Excise Tax, except to the extent that, in the opinion of the Accountants, such
payments or benefits otherwise constituting excess parachute payments represent
(in whole or in part) reasonable compensation for services actually rendered within
the meaning of Section 280G, or are otherwise not subject to the Excise
Tax.

 

(c)           Notice and Contest of Claim.

 

(1)           The
Participant shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company
of a Gross-Up Payment.  Such notification
shall be given as soon as practicable but no later than sixty (60) calendar
days after the Participant is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid.  The
Participant shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which the Participant gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due).  If the Company notifies the Participant in
writing prior to the expiration of such period that it desires to contest such
claim, the Participant shall:

 

(i)            give the
Company any information reasonably requested by the Company relating to such
claim;

 

(ii)           take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company and reasonably satisfactory to the Participant;

 

(iii)          cooperate
with the Company in good faith in order to effectively contest such claim; and

 

(iv)          permit the
Company to participate in any proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited to, additional
interest and penalties and related legal, consulting or other similar fees)
incurred in connection with such contest and shall indemnify and hold the
Participant harmless, on an after-tax basis, for any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.

 

(2)           The
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Participant to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Participant 

 

3

 

agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Participant to
pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Participant on an interest-free basis, and shall indemnify
and hold the Participant harmless, on an after-tax basis, from any Excise Tax or
other tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and provided, further, that if the Participant is required to
extend the statute of limitations to enable the Company to contest such claim,
the Participant may limit this extension solely to such contested amount.  The Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable hereunder
and the Participant shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.  In addition, no position may
be taken nor any final resolution be agreed to by the Company without the
Participant’s consent if such position or resolution could reasonably be
expected to adversely affect the Participant (including any other tax position
of the Participant unrelated to the matters covered hereby).

 

(3)           Except
for amounts to be advanced by the Company in accordance with this Section 6.1(c),
all payments required to be made by the Company to the Participant pursuant to
this Section 6.1(c) shall be made prior to the end of the Participant’s
taxable year following the Participant’s taxable year in which the taxes which
are the subject of the claim are remitted by the Participant to the taxing
authority, or where no taxes are required to be remitted, the end of the
Participant’s taxable year following the Participant’s taxable year in which
the audit is completed or there is a final and nonappealable settlement or
other resolution of the litigation.

 

(d)           Adjustments.

 

(1)           In the
event that the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder, the Participant shall repay to the Company, at
the time that the amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income and employment taxes imposed on the Gross-Up Payment
being repaid by the Participant to the extent that such repayment results in a
reduction in Excise Tax and/or a federal, state or local income or employment
tax deduction) plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code.

 

(2)           In the
event that the Excise Tax is subsequently determined to exceed the amount taken
into account hereunder (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions to tax payable by the Participant
with respect to such excess) within ninety (90) days following the date on
which the Participant remits such additional Excise Tax.

 

4

 

(3)           In the
event that it is subsequently determined that, notwithstanding the Accountants’
good faith determination of the Reduced Amount pursuant to Section 6.1(b),
if applicable, the aggregate “parachute payments” within the meaning of Section 280G
paid to the Participant are in an amount that would result in any portion of
such parachute payments not being deductible by reason of Section 280G,
then the Participant shall pay to the Company an amount equal to the sum of (1) the
excess of the aggregate parachute payments paid to the Participant over the aggregate
parachute payments that could have been paid to the Participant without any
portion of such parachute payments not being deductible by reason of Section 280G;
and (2) interest on the amount determined pursuant to clause (1) of
this sentence at the rate provided in Section 1274(b)(2)(B) of the
Code from the date of the Participant’s receipt of such excess until the date
of such payment.  Notwithstanding the
foregoing, if the aggregate reduction in Payments resulting from the initial
application of Section 6.1(a) and the subsequent application of this Section 6.1(d)(3) would
exceed the lesser of $100,000 or five percent of the Payments, then this Section 6.1(d)(3) shall
not apply, and the Company shall direct the Accountants to compute and shall
pay the Gross-Up Payment in accordance with the provisions of Section 6.1(a).

 

5

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