Document:

Employee Matters Agreement

 Exhibit 10.11 
  
 EXECUTION COPY 
  
 EMPLOYEE MATTERS AGREEMENT 
  
 by and between 
  
 IAC/INTERACTIVECORP 
  
 and 
  
 EXPEDIA, INC.

  
 Dated as of August 9, 2005 

  
 TABLE OF CONTENTS

  

					
	 	  	 	  	Page

	 ARTICLE I
	  	DEFINITIONS	  	1
	 1.1
	  	Affiliate	  	1
	 1.2
	  	Agreement	  	1
	 1.3
	  	Ancillary Agreements	  	1
	 1.4
	  	Approved Leave of Absence	  	1
	 1.5
	  	ASO Contract	  	1
	 1.6
	  	Auditing Party	  	1
	 1.7
	  	Award	  	2
	 1.8
	  	Benefit Plan	  	2
	 1.9
	  	Close of the Effective Date	  	2
	 1.10
	  	COBRA	  	2
	 1.11
	  	Code	  	2
	 1.12
	  	Committee	  	2
	 1.13
	  	Covered Employees	  	2
	 1.14
	  	Current Term	  	2
	 1.15
	  	Effective Date	  	2
	 1.16
	  	Effective Time	  	2
	 1.17
	  	Effective Time Year	  	2
	 1.18
	  	ERISA	  	2
	 1.19
	  	Expedia	  	2
	 1.20
	  	Expedia Common Stock	  	3
	 1.21
	  	Expedia Employee	  	3
	 1.22
	  	Expedia Entities	  	3
	 1.23
	  	Expedia Executive Benefit Plans	  	3
	 1.24
	  	Expedia Flexible Benefit Plan	  	3
	 1.25
	  	Expedia Long-Term Incentive Plan	  	3
	 1.26
	  	Expedia Ratio	  	3
	 1.27
	  	Expedia Retirement Savings Plan	  	3
	 1.28
	  	Expedia Retirement Savings Plan Trust	  	3
	 1.29
	  	Expedia Stock Value	  	3
	 1.30
	  	Former Expedia Employee	  	3
	 1.31
	  	Former IAC Employee	  	3
	 1.32
	  	Group Insurance Policies	  	3
	 1.33
	  	Health and Welfare Plans	  	4
	 1.34
	  	HIPAA	  	4
	 1.35
	  	HMO	  	4
	 1.36
	  	HMO Agreements	  	4
	 1.37
	  	IAC	  	4
	 1.38
	  	IAC Common Stock	  	4
	 1.39
	  	IAC Compensation/Benefits Committee	  	4
	 1.40
	  	IAC Employee	  	4
	 1.41
	  	IAC Entities	  	4

  

 -i- 

					
	 1.42
	  	IAC Executive Benefit Plans	  	4
	 1.43
	  	IAC Executive Deferred Compensation Plan	  	4
	 1.44
	  	IAC Flexible Benefit Plans	  	5
	 1.45
	  	IAC Incentive Plans	  	5
	 1.46
	  	IAC Long-Term Incentive Plans	  	5
	 1.47
	  	IAC Post-Separation Stock Value	  	5
	 1.48
	  	IAC Ratio	  	5
	 1.49
	  	IAC Retirement Savings Plan	  	5
	 1.50
	  	IAC Severance Pay Program	  	5
	 1.51
	  	IAC Stock Value	  	5
	 1.52
	  	Immediately after the Effective Date	  	5
	 1.53
	  	Liabilities	  	5
	 1.54
	  	Medical Plan	  	5
	 1.55
	  	NASDAQ	  	6
	 1.56
	  	Non-parties	  	6
	 1.57
	  	Option	  	6
	 1.58
	  	Participating Company	  	6
	 1.59
	  	Person	  	6
	 1.60
	  	Restricted Stock	  	6
	 1.61
	  	Restricted Stock Unit	  	6
	 1.62
	  	Reverse Stock Split	  	6
	 1.63
	  	Separated Businesses	  	6
	 1.64
	  	Separation	  	6
	 1.65
	  	Separation Agreement	  	6
	 1.66
	  	Subsidiaries	  	6
	 1.67
	  	Tax Sharing Agreement	  	7
	 1.68
	  	Transferred Account Balances	  	7
	 1.69
	  	U.S.	  	7
	 1.70
	  	VEBA	  	7
			
	 ARTICLE II
	  	GENERAL PRINCIPLES	  	7
	 2.1
	  	Employment of Expedia Employees	  	7
	 2.2
	  	Assumption and Retention of Liabilities; Related Assets	  	7
	 2.3
	  	Expedia Participation in IAC Benefit Plans	  	8
	 2.4
	  	Terms of Participation by Expedia Employees in Expedia Benefit Plans	  	8
	 2.5
	  	Commercially Reasonable Efforts	  	8
	 2.6
	  	Regulatory Compliance	  	8
	 2.7
	  	Approval by IAC as Sole Stockholder	  	8
			
	 ARTICLE III
	  	SAVINGS PLANS	  	8
	 3.1
	  	Savings Plan	  	8
	 3.2
	  	Stock Considerations	  	9
			
	 ARTICLE IV
	  	HEALTH AND WELFARE PLANS	  	9
	 4.1
	  	General	  	9
	 	  	 (a)    Establishment of Expedia Health and Welfare Plans
	  	9
	 	  	 (b)    Retention of Sponsorship and Liabilities
	  	10

  

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	 4.2
	  	Vendor Contracts	  	10
	 	  	 (a)    Third-Party ASO Contracts, Group Insurance Policies and HMOs
	  	10
	 	  	 (b)    Effect of Change in Rates
	  	10
	 4.3
	  	Flexible Benefit Plan	  	11
	 4.4
	  	Workers’ Compensation Liabilities	  	11
	 4.5
	  	Payroll Taxes and Reporting of Compensation	  	12
	 4.6
	  	COBRA and HIPAA Compliance	  	12
	 4.7
	  	VEBA	  	12
			
	 ARTICLE V
	  	EXECUTIVE BENEFITS AND OTHER BENEFITS	  	13
	 5.1
	  	Assumption of Obligations	  	13
	 5.2
	  	IAC Incentive Plans	  	13
	 	  	 (a)    Expedia Bonus Awards
	  	13
	 	  	 (b)    IAC Bonus Awards
	  	13
	 5.3
	  	IAC Long-Term Incentive Plans	  	13
	 	  	 (a)    Vested Old IAC Options
	  	13
	 	  	 (b)    Unvested Old IAC Options Held by IAC Employees and Former IAC Employees other than Barry Diller
	  	14
	 	  	 (c)    Unvested Old IAC Options Held by Expedia Employees and Former Expedia Employees other than Barry
Diller
	  	14
	 	  	 (d)    Unvested Old IAC Options Held by Mr. Diller
	  	15
	 	  	 (e)    IAC Restricted Stock Units Held by IAC Employees and Former IAC Employees
	  	15
	 	  	 (f)     IAC Restricted Stock Units Held by Expedia Employees and Former Expedia Employees
	  	16
	 	  	 (g)    IAC Restricted Stock
	  	16
	 	  	 (h)    Foreign Grants/Awards
	  	16
	 	  	 (i)     Miscellaneous Option and Other Award Terms
	  	16
	 	  	 (j)     Waiting Period for Exercisability of Options and Grant of Options and Awards
	  	17
	 	  	 (k)    Restrictive Covenants
	  	17
	 5.4
	  	Registration Requirements	  	18
	 5.5
	  	IAC Executive Deferred Compensation Plans	  	18
	 5.6
	  	Severance	  	18
			
	 ARTICLE VI
	  	GENERAL AND ADMINISTRATIVE	  	18
	 6.1
	  	Sharing of Participant Information	  	18
	 6.2
	  	Reasonable Efforts/Cooperation	  	19
	 6.3
	  	No Third-Party Beneficiaries	  	19
	 6.4
	  	Audit Rights With Respect to Information Provided	  	19
	 6.5
	  	Fiduciary Matters	  	20
	 6.6
	  	Consent of Third Parties	  	20
			
	 ARTICLE VII
	  	MISCELLANEOUS	  	20
	 7.1
	  	Effect If Effective Time Does Not Occur	  	20
	 7.2
	  	Relationship of Parties	  	20
	 7.3
	  	Affiliates	  	20
	 7.4
	  	Notices	  	21
	 7.5
	  	Incorporation of Separation Agreement Provisions	  	21

  

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 EMPLOYEE MATTERS AGREEMENT 
  
 This Employee Matters Agreement (this “Agreement”), dated as of August 9, 2005, with effect as of the
Effective Time, is entered into by and between IAC/InterActiveCorp, a Delaware corporation (“IAC”), and Expedia, Inc., a Delaware corporation (“Expedia”). 
  
 RECITALS: 
  
 WHEREAS, IAC and Expedia have entered into a Separation Agreement pursuant to
which the Parties (as defined below) have set out the terms on which, and the conditions subject to which, they wish to implement the Separation (as defined in the Separation Agreement) (such agreement, as amended, restated or modified from time to
time, the “Separation Agreement”). 
  
 WHEREAS,
in connection therewith, IAC and Expedia have agreed to enter into this Agreement to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, pension and benefit plans, programs and arrangements
and certain employment matters. 
  
 NOW THEREFORE, in
consideration of the mutual agreements, covenants and other provisions set forth in this Agreement, the Parties hereby agree as follows: 
  
 ARTICLE I 
 DEFINITIONS

  
 Unless otherwise defined in this Agreement, capitalized
words and expressions and variations thereof used in this Agreement or in its Appendices have the meanings set forth below. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Separation Agreement.

  
 1.1 “Affiliate” has the meaning given that
term in the Separation Agreement. 
  
 1.2
“Agreement” means this Employee Matters Agreement, including all the Schedules hereto. 
  
 1.3 “Ancillary Agreements” has the meaning given that term in the Separation Agreement. 
  
 1.4 “Approved Leave of Absence” means an absence from active
service (i) due to an individual’s inability to perform his or her regular job duties by reason of illness or injury and resulting in eligibility to receive benefits pursuant to the terms of the IAC Short-Term Disability Plan or the IAC
Long-Term Disability Plan, or (ii) pursuant to an approved leave policy with a guaranteed right of reinstatement. 
  
 1.5 “ASO Contract” has the meaning set forth in Section 4.2(a). 
  
 1.6 “Auditing Party” has the meaning set forth in Section 6.4(a). 

 1.7 “Award” when immediately preceded by “IAC,” means IAC Restricted Stock and
IAC Restricted Stock Units and, when immediately preceded by “Expedia,” means Expedia Restricted Stock and Restricted Stock Units. 
  
 1.8 “Benefit Plan” means, with respect to an entity or any of its Subsidiaries, (a) each “employee welfare benefit plan”
(as defined in Section 3(1) of ERISA) and all other employee benefits arrangements, policies or payroll practices (including, without limitation, severance pay, sick leave, vacation pay, salary continuation, disability, retirement, deferred
compensation, bonus, stock option or other equity-based compensation, hospitalization, medical insurance or life insurance) sponsored or maintained by such entity or by any of its Subsidiaries (or to which such entity or any of its Subsidiaries
contributes or is required to contribute) and (b) all “employee pension benefit plans” (as defined in Section 3(2) of ERISA), occupational pension plan or arrangement or other pension arrangements sponsored, maintained or
contributed to by such entity or any of its Subsidiaries (or to which such entity or any of its Subsidiaries contributes or is required to contribute). When immediately preceded by “IAC,” Benefit Plan means any Benefit Plan sponsored,
maintained or contributed to by IAC or an IAC Entity. When immediately preceded by “Expedia,” Benefit Plan means any Benefit Plan sponsored, maintained or contributed to by Expedia or any Expedia Entity. 
  
 1.9 “Close of the Effective Date” means 11:59:59 P.M.,
Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the Effective Date. 
  
 1.10 “COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and as codified in Code § 4980B and ERISA §§ 601 through 608. 
  
 1.11 “Code” means the Internal Revenue Code of 1986, as amended, or any successor federal income tax law. Reference to a specific Code
provision also includes any proposed, temporary or final regulation in force under that provision. 
  
 1.12 “Committee” has the meaning set forth in Section 5.3(a). 
  
 1.13 “Covered Employees” has the meaning set forth in Section 4.3. 
  
 1.14 “Current Term” has the meaning set forth in
Section 4.4(b). 
  
 1.15 “Effective Date”
has the meaning given that term in the Separation Agreement. 
  
 1.16 “Effective Time” has the meaning given that term in the Separation Agreement. 
  
 1.17 “Effective Time Year” means the calendar year during which the Effective Time occurs. 
  
 1.18 “ERISA” means the Employee Retirement Income Security
Act of 1974, as amended. Reference to a specific provision of ERISA also includes any proposed, temporary or final regulation in force under that provision. 
  
 1.19 “Expedia” has the meaning set forth in the preamble to this Agreement. 
  

 -2- 

 1.20 “Expedia Common Stock” has the meaning given that term in the Separation Agreement.

  
 1.21 “Expedia Employee” means any individual
who, immediately prior to the Effective Time, is either actively employed by, or then on Approved Leave of Absence from, an Expedia Entity. 
  
 1.22 “Expedia Entities” means the Expedia Group as defined in the Separation Agreement and any business or operations (whether current or
historical regardless of whether discontinued or sold) included in the Separated Businesses. 
  
 1.23 “Expedia Executive Benefit Plans” means the executive benefit and nonqualified plans, programs, and arrangements established, sponsored, maintained, or agreed upon, by any Expedia Entity for the
benefit of employees and former employees of any Expedia Entity before the Close of the Effective Date. 
  
 1.24 “Expedia Flexible Benefit Plan” means the flexible benefit plan to be established by Expedia pursuant to Section 4.3 of this
Agreement as in effect as of the time relevant to the applicable provision of this Agreement. 
  
 1.25 “Expedia Long-Term Incentive Plan” means the long-term incentive plan or program to be established by Expedia, effective immediately prior to the Effective Date, in connection with the treatment
of Awards as described in Article V. 
  
 1.26 “Expedia
Ratio” means 1.12444, the quotient obtained by dividing the IAC Stock Value by the Expedia Stock Value. 
  
 1.27 “Expedia Retirement Savings Plan” means the 401(k) and profit sharing plan to be established by Expedia pursuant to Section 3.1
of this Agreement, as in effect as of the time relevant to the applicable provision of this agreement. 
  
 1.28 “Expedia Retirement Savings Plan Trust” means a trust relating to the Expedia Retirement Savings Plan intended to qualify under
Section 401(a) and be exempt under Section 501(a) of the Code. 
  
 1.29 “Expedia Stock Value” means $22.50, the closing per-share price of Expedia Common Stock trading in the “when issued market” on August 8, 2005, as listed on the NASDAQ as of 4:00
P.M., Eastern Daylight Time. 
  
 1.30 “Former Expedia
Employee” means any individual who as of the Effective Time is a former employee of the Expedia Group or the IAC Group, and whose last employment with the Expedia Group or IAC Group, was with an Expedia Entity. 
  
 1.31 “Former IAC Employee” means any individual who as of
the Effective Time is a former employee of the IAC Group or the Expedia Group, and whose last employment with the IAC Group or Expedia Group, was with an IAC Entity. 
  
 1.32 “Group Insurance Policies” has the meaning set forth in Section 4.2(a). 
  

 -3- 

 1.33 “Health and Welfare Plans” means any plan, fund or program which was established or
is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, medical, dental, surgical or hospital care or benefits, or benefits in the event of sickness, accident,
disability, death or unemployment, or vacation benefits, apprenticeship or other training programs or day care centers, scholarship funds, or prepaid legal services, including any such plan, fund or program as defined in Section 3(1) of ERISA.
When immediately preceded by “IAC,” Health and Welfare Plans means each Health and Welfare Plan that is an IAC Benefit Plan. When immediately preceded by “Expedia,” Health and Welfare Plans means each Health and Welfare Plan that
is an Expedia Benefit Plan. 
  
 1.34 “HIPAA”
means the health insurance portability and accountability requirements for “group health plans” under the Health Insurance Portability and Accountability Act of 1996, as amended. 
  
 1.35 “HMO” means a health maintenance organization that
provides benefits under the IAC Medical Plans or the Expedia Medical Plans. 
  
 1.36 “HMO Agreements” has the meaning set forth in Section 4.2(a). 
  
 1.37 “IAC” has the meaning set forth in the preamble to this Agreement. 
  
 1.38 “IAC Common Stock” means, with respect to periods prior to the Separation, shares of common stock,
$0.01 par value per share, of IAC, and with respect to periods following the Separation, shares of common stock, $0.001 par value per share, of IAC. 
  
 1.39 “IAC Compensation/Benefits Committee“ means the Compensation/Benefits Committee of the IAC Board of Directors, or any subcommittee
thereof. 
  
 1.40 “IAC Employee” means any
individual who, immediately prior to the Close of the Effective Date, is either actively employed by, or then on Approved Leave of Absence from, any IAC Entity. 
  

1.41 “IAC Entities” means the members of the IAC Group, as defined in the Separation Agreement, and their respective Subsidiaries and
Affiliates, excluding any business or operations (whether current or historical, regardless of whether discontinued or sold) that are included in the Separated Businesses. 
  
 1.42 “IAC Executive Benefit Plans” means the executive benefit and nonqualified plans, programs, and
arrangements established, sponsored, maintained, or agreed upon, by any IAC Entity for the benefit of employees and former employees of any IAC Entity before the Close of the Effective Date. 
  
 1.43 “IAC Executive Deferred Compensation Plan” means the
IAC Executive Deferred Compensation Plan in effect as of the time relevant to the applicable provision of this Agreement. 
  

 -4- 

 1.44 “IAC Flexible Benefit Plans” means the IAC Healthcare FSA and the IAC Dependent
Care FSA, as in effect as of the time relevant to the applicable provision of this Agreement. 
  
 1.45 “IAC Incentive Plans” means any of the annual or short term incentive plans of IAC, all as in effect as of the time relevant to the applicable provisions of this Agreement. 
  
 1.46 “IAC Long-Term Incentive Plans” means any of the Silver
King Communications, Inc. 1995 Stock Incentive Plan, HSN, Inc. 1997 Stock and Annual Incentive Plan, USA Interactive Amended and Restated 2000 Annual Stock and Incentive Plan, IAC/InterActiveCorp 2005 Stock and Annual Incentive Plan, Home Shopping
Network, Inc. 1996 Stock Option Plan for Employees, Equity and Bonus Compensation Agreement with Barry Diller, Expedia, Inc. 1999 Amended and Restated Stock Option Plan, the Hotels Reservations Network, Inc. 2000 Stock Plan, Ticketmaster
Online-Citysearch, Inc. 1996 Stock Option Plan, Ticketmaster Online-Citysearch, Inc. 1998 Stock Option Plan, Ticketmaster 1999 Stock Plan, and Ticketweb, Inc. 2000 Stock Plan, Styleclick, Inc. 1995 Stock Option Plan, Servicemagic, Inc. Amended and
Restated 1999 Stock Option Plan and Precision Response Corporation Amended and Restated 1996 Incentive Stock Plan, Expedia, Inc. Amended and Restated 2001 Stock Plan, 1998 Stock Option Plan of LendingTree, Inc., Amended and Restated Stock Incentive
Plan of LendingTree, Inc., the Silver King Communications, Inc. Directors Stock Option Plan, Hotwire, Inc. 2000 Equity Incentive Plan and any other stock incentive plan of IAC, all as in effect as of the time relevant to the applicable provisions of
this Agreement. 
  
 1.47 “IAC Post-Separation Stock
Value” means $28.10, the closing per-share price of IAC Common Stock in the “when issued market” on August 8, 2005, as listed on the NASDAQ as of 4:00 P.M. Eastern Daylight time. 
  
 1.48 “IAC Ratio” means 0.90036, the quotient obtained by
dividing the IAC Stock Value by the IAC Post-Separation Stock Value. 
  
 1.49 “IAC Retirement Savings Plan” means the InterActiveCorp Retirement Savings Plan as in effect as of the time relevant to the applicable provision of this Agreement. 
  
 1.50 “IAC Severance Pay Program” means any severance plan,
policy, program or other arrangement as in effect as of the time relevant to the applicable provision of this Agreement. 
  
 1.51 “IAC Stock Value” means $25.30, the closing per-share price of the IAC Common Stock trading “regular way with due bills”
on August 8, 2005, as listed on the NASDAQ as of 4:00 P.M., Eastern Daylight Time. 
  
 1.52 “Immediately after the Effective Date” means on the first moment of the day after the Effective Date. 
  
 1.53 “Liabilities” has the meaning given that term in the Separation Agreement. 
  
 1.54 “Medical Plan” when immediately preceded by
“IAC,” means the Benefit Plan under which medical benefits are provided to IAC Employees established and maintained by 

  

 -5- 

 
IAC. When immediately preceded by Expedia, Medical Plan means the Benefit Plan under which medical benefits are provided to Expedia Employees to be
established by Expedia pursuant to Article IV. 
  
 1.55
“NASDAQ” means the National Association of Securities Dealers Inc. Automated Quotation System. 
  
 1.56 “Non-parties” has the meaning set forth in Section 6.4(b). 
  
 1.57 “Option” when immediately preceded by “Old IAC,” means an option (either nonqualified or
incentive) to purchase shares of IAC Common Stock prior to the Effective Time pursuant to an IAC Long-Term Incentive Plan. When immediately preceded by “New IAC,” Option means an option (either nonqualified or incentive) to purchase shares
of IAC Common Stock following the Effective Time pursuant to an IAC Long-Term Incentive Plan. When immediately preceded by “Expedia,” Option means an option (either nonqualified or incentive) to purchase shares of Expedia Common Stock
following the Effective Time pursuant to the Expedia Long-Term Incentive Plan. 
  
 1.58 “Participating Company” means (a) IAC and (b) any other Person (other than an individual) that participates in a plan sponsored by any IAC Entity. 
  
 1.59 “Person” has the meaning given that term in the
Separation Agreement. 
  
 1.60 “Restricted Stock”
when immediately preceded by “IAC,” means shares of IAC Common Stock that are subject to restrictions on transferability and a risk of forfeiture and are issued under an IAC Benefit Plan and, when immediately preceded by
“Expedia,” means shares of Expedia Common Stock that are subject to restrictions on transferability and a risk of forfeiture and are issued under an Expedia Benefit Plan. 
  
 1.61 “Restricted Stock Unit” when immediately preceded by “IAC,” means units issued under an IAC
Benefit Plan representing a general unsecured promise by IAC to pay the value of shares of IAC Common Stock in cash or shares of IAC Common Stock and, when immediately preceded by “Expedia,” means units issued under the Expedia Long-Term
Incentive Plan representing a general unsecured promise by Expedia to pay the value of shares of Expedia Common Stock in cash or shares of Expedia Common Stock. 
  

1.62 “Reverse Stock Split” means the one-for-two reverse stock split of IAC Common Stock that IAC will complete immediately prior to
the Effective Time. 
  
 1.63 “Separated
Businesses” has the meaning given that term in the Separation Agreement. 
  
 1.64 “Separation” has the meaning given that term in the Separation Agreement. 
  
 1.65 “Separation Agreement” has the meaning set forth in the recitals to this Agreement. 
  
 1.66 “Subsidiaries” has the meaning given that term in the
Separation Agreement. 
  

 -6- 

 1.67 “Tax Sharing Agreement” means the Tax Sharing Agreement entered into as of the date
hereof between IAC and Expedia. 
  
 1.68 “Transferred
Account Balances” has the meaning set forth in Section 4.3. 
  
 1.69 “U.S.” means the 50 United States of America and the District of Columbia. 
  
 1.70 “VEBA” when immediately preceded by IAC, means the IAC Health and Welfare Benefit Trust. When immediately preceded by Expedia, VEBA
means the Expedia Health and Welfare Benefit Trust to be established by Expedia pursuant to Section 4.7 that corresponds to the IAC VEBA. 
  
 ARTICLE II 
 GENERAL PRINCIPLES

  
 2.1 Employment of Expedia Employees. All Expedia
Employees shall continue to be employees of Expedia or another Expedia Entity, as the case may be, immediately after the Effective Time. 
  
 2.2 Assumption and Retention of Liabilities; Related Assets. 
  
 (a) As of the Effective Date, except as expressly provided in this Agreement, the IAC Entities shall assume
or retain and IAC hereby agrees to pay, perform, fulfill and discharge, in due course in full (i) all Liabilities under all IAC Benefit Plans, (ii) all Liabilities with respect to the employment or termination of employment of all IAC
Employees, Former IAC Employees and their dependents and beneficiaries, and other service providers (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency
employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of any IAC Entity or in any other employment, non-employment, or retainer arrangement, or relationship with any IAC Entity), in each case to the extent arising in
connection with or as a result of employment with or the performance of services to any IAC Entity, and (iii) any other Liabilities expressly assigned to IAC under this Agreement. All assets held in trust to fund the IAC Benefit Plans and all
insurance policies funding the IAC Benefit Plans shall be IAC Assets (as defined in the Separation Agreement), except to the extent specifically provided otherwise in this Agreement. 
  
 (b) From and after the Effective Date, except as expressly provided in this Agreement, Expedia and the
Expedia Entities shall assume or retain, as applicable, and Expedia hereby agrees to pay, perform, fulfill and discharge, in due course in full, (i) all Liabilities under all Expedia Benefit Plans, (ii) all Liabilities with respect to the
employment or termination of employment of all Expedia Employees, Former Expedia Employees and their dependents and beneficiaries, and other service providers (including any individual who is, or was, an independent contractor, temporary employee,
temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker of Expedia or any Expedia Entity or in any other employment, non-employment, or retainer arrangement, or
relationship with Expedia or an Expedia Entity), in each case to the extent arising in connection with or as a result of employment with or the performance of services to 

  

 -7- 

 
any Expedia Entity and (iii) any other Liabilities expressly assigned to Expedia or any Expedia Entity under this Agreement. 
  
 2.3 Expedia Participation in IAC Benefit Plans. Except as expressly
provided in this Agreement, effective as of the Close of the Effective Date, Expedia and each other Expedia Entity shall cease to be a Participating Company in any IAC Benefit Plan, and IAC and Expedia shall take all necessary action before the
Effective Date to effectuate such cessation as a Participating Company. 
  
 2.4 Terms of Participation by Expedia Employees in Expedia Benefit Plans. IAC and Expedia shall agree on methods and procedures, including, without limitation, amending the respective Benefit Plan documents, to prevent Expedia
Employees from receiving duplicative benefits from the IAC Benefit Plans and the Expedia Benefit Plans. With respect to Expedia Employees, each Expedia Benefit Plan shall provide that all service, all compensation and all other benefit-affecting
determinations that, as of the Close of the Effective Date were recognized under the corresponding IAC Benefit Plan shall, as of Immediately after the Effective Date receive full recognition, credit and validity and be taken into account under such
Expedia Benefit Plan to the same extent as if such items occurred under such Expedia Benefit Plan, except to the extent that duplication of benefits would result or for benefit accrual to the extent that Expedia adopts a final average pay defined
benefit pension plan. 
  
 2.5 Commercially Reasonable
Efforts. IAC and Expedia shall use commercially reasonable efforts to (a) enter into any necessary agreements to accomplish the assumptions and transfers contemplated by this Agreement; and (b) provide for the maintenance of the
necessary participant records, the appointment of the trustees and the engagement of recordkeepers, investment managers, providers, insurers, etc. 
  
 2.6 Regulatory Compliance. IAC and Expedia shall, in connection with the actions taken pursuant to this Agreement, cooperate in making any and all
appropriate filings required under the Code, ERISA and any applicable securities laws, implementing all appropriate communications with participants, transferring appropriate records and taking all such other actions as may be necessary and
appropriate to implement the provisions of this Agreement in a timely manner. 
  
 2.7 Approval by IAC as Sole Stockholder. Prior to the Effective Time, IAC shall cause Expedia to adopt the Expedia 2005 Long-Term Incentive Plan. 
  
 ARTICLE III 
 SAVINGS PLANS 
  
 3.1 Savings Plan.
Effective as of the Effective Date, Expedia shall establish the Expedia Retirement Savings Plan and the Expedia Retirement Savings Plan Trust. As soon as practical following the establishment of the Expedia Retirement Savings Plan and the Expedia
Retirement Savings Plan Trust, IAC shall cause the accounts of the Expedia Employees to be transferred to the Expedia Retirement Savings Plan and the Expedia Retirement Savings Plan Trust in cash or such other assets as mutually agreed by IAC and
Expedia, and Expedia shall cause the Expedia Retirement Savings Plan to assume and be solely responsible for all Liabilities 

  

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for plan benefits (but not legal Liabilities, such as penalties for violation of law, if applicable, relating to the administration of plan benefits by IAC
prior to the Effective Time and during such time as IAC owned 100% of an Expedia Entity with respect to which IAC administered plan benefits, it being understood that Expedia shall be responsible for such legal Liabilities incurred during such
periods prior to the Effective Time during which IAC did not own 100% of such Expedia Entities) under the Expedia Retirement Savings Plan to or relating to Expedia Employees whose accounts are transferred from the IAC Retirement Savings Plan.
Notwithstanding the foregoing, IAC Common Stock that is held in the accounts of Expedia Employees and any outstanding participant loans to Expedia Employees whose accounts are transferred under the IAC Retirement Savings Plan shall be transferred to
the Expedia Retirement Savings Plan in kind and shall thereafter be treated in the manner set forth in Section 3.2. IAC and Expedia agree to cooperate in making all appropriate filings and taking all reasonable actions required to implement the
provisions of this Section 3.1; provided that Expedia acknowledges that it will be responsible for complying with any requirements and applying for any determination letters with respect to the Expedia Retirement Savings Plan.

  
 3.2 Stock Considerations. To the extent that IAC
Employees and Former IAC Employees receive shares of Expedia Common Stock in connection with the Separation with respect to IAC Common Stock held under the IAC Retirement Savings Plan, such shares will be deposited in an Expedia Common Stock Fund
under the IAC Retirement Savings Plan. To the extent that Expedia Employees and Former Expedia Employees hold shares of IAC Common Stock in their IAC Common Stock Fund under the Expedia Retirement Savings Plan following the transfer from the IAC
Retirement Savings Plan to the Expedia Retirement Savings Plan set forth in Section 3.1, the Expedia Retirement Savings Plan shall permit such employees to continue to hold such shares in an IAC Common Stock Fund under the Expedia Retirement
Savings Plan following such transfer. Following the Effective Date, Expedia Employees and Former Expedia Employees shall not be permitted to acquire shares of IAC Common Stock in the IAC Common Stock Fund under the Expedia Retirement Savings Plan
and IAC Employees and Former IAC Employees shall not be permitted to acquire shares of Expedia Common Stock in the Expedia Common Stock Fund under the IAC Retirement Savings Plan. IAC and Expedia shall assume sole responsibility for ensuring that
their respective Savings Plans are maintained in compliance with applicable laws with respect to holding shares of common stock of the other entity. 
  
 ARTICLE IV 
 HEALTH AND WELFARE PLANS

  
 4.1 General. 
  
 (a) Establishment of Expedia Health and Welfare
Plans. Effective as of the Effective Date, Expedia shall adopt Health and Welfare Plans for the benefit of Expedia Employees, and Expedia shall be responsible for all Liabilities relating to, arising out of or resulting from health and welfare
coverage or claims incurred by or on behalf of Expedia Employees or their covered dependents under the Expedia Health and Welfare Plans prior to, on or after the Effective Date. 
  

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 (b) Retention of Sponsorship and Liabilities. Following the Effective Date, IAC
shall retain: 
  
 (i) sponsorship of all IAC
Health and Welfare Plans and any trust or other funding arrangement established or maintained with respect to such plans, including any “voluntary employee’s beneficiary association,” or any assets held as of the Effective Date with
respect to such plans; and 
  
 (ii) all
Liabilities relating to, arising out of, or resulting from health and welfare coverage or claims incurred by or on behalf of IAC Employees or Former IAC Employees or their covered dependents under the IAC Health and Welfare Plans prior to, on or
before the Effective Date. 
  
 IAC shall not assume any Liability relating to
health and welfare claims incurred by or on behalf of Expedia Employees or Former Expedia Employees or their respective covered dependents prior to, on or after the Effective Date, and such claims shall be satisfied pursuant to Section 4.1(a).
A claim or Liability (1) for medical, dental, vision and/or prescription drug benefits shall be deemed to be incurred upon the rendering of health services giving rise to the obligation to pay such benefits; (2) for life insurance and
accidental death and dismemberment and business travel accident insurance benefits and workers’ compensation benefits shall be deemed to be incurred upon the occurrence of the event giving rise to the entitlement to such benefits; (3) for
salary continuation or other disability benefits shall be deemed to be incurred upon the effective date of an individual’s disability giving rise to the entitlement to such benefits under the applicable disability policy; and (4) for a
period of continuous hospitalization shall be deemed to be incurred on the date of admission to the hospital. 
  
 4.2 Vendor Contracts. 
  
 (a) Third-Party ASO Contracts, Group Insurance Policies and HMOs. IAC and Expedia shall use commercially reasonable efforts to
obligate the third party administrator to each administrative-services-only contract with a third-party administrator that relates to any of the IAC Health and Welfare Plans (an “ASO Contract”), each group insurance policy that
relates to any of the IAC Health and Welfare Plans (“Group Insurance Policies”) and each agreement with a Health Maintenance Organization that provides medical services under the IAC Health and Welfare Plans (“HMO
Agreements”), in each case, in existence as of the date of this Agreement that is applicable to Expedia Employees, to enter into a separate ASO Contract, Group Insurance Policy and HMO Agreement, as applicable, with Expedia providing for
substantially similar terms and conditions as are contained in the ASO Contracts, Group Insurance Policies and HMO Agreements, as applicable, to which IAC is a party. Such terms and conditions shall include the financial and termination provisions,
performance standards, methodology, auditing policies, quality measures and reporting requirements. 
  
 (b) Effect of Change in Rates. IAC and Expedia shall use commercially reasonable efforts to cause each of the insurance companies
and third-party administrators providing services and benefits under the IAC Health and Welfare Plans and the Expedia Health and Welfare Plans to maintain the premium and/or administrative rates based on the aggregate number of participants in both
the IAC Health and Welfare Plans and the Expedia Health and 

  

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Welfare Plans as of Immediately Prior to the Effective Date through the end of the year in which the Effective Date occurs. To the extent they are not
successful in such efforts, IAC and Expedia shall each bear the revised premium or administrative rates attributable to the individuals covered by their respective Health and Welfare Plans. 
  
 4.3 Flexible Benefit Plan. Effective as of the Effective Date, Expedia
shall establish the Expedia Flexible Benefit Plan. Prior to the Effective Date, IAC and Expedia shall take all actions necessary or appropriate so that, effective as of the Close of the Effective Date, (a) the account balances (whether positive
or negative) (the “Transferred Account Balances”) under the health care reimbursement program, the transit and parking reimbursement program and the dependent care reimbursement program of the IAC Flexible Benefit Plan (all of such
accounts, “IAC Flexible Benefit Plan”) of the Expedia Employees who are participants in IAC Flexible Benefit Plan (the “Covered Employees”) shall be transferred to the Expedia Flexible Benefit Plan; (b) the
elections, contribution levels and coverage levels of the Covered Employees shall apply under the Expedia Flexible Benefit Plan in the same manner as under the IAC Flexible Benefit Plan; and (c) the Covered Employees shall be reimbursed from
the Expedia Flexible Benefit Plan for claims incurred at any time during the plan year of the IAC Flexible Benefit Plan in which the Effective Time occurs submitted to the Expedia Flexible Benefit Plan from and after the Effective Date on the same
basis and the same terms and conditions as under the IAC Flexible Benefit Plan. 
  
 4.4 Workers’ Compensation Liabilities. 
  
 (a) Except as provided below, all workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by an
IAC Employee, Former IAC Employee, Expedia Employee and Former Expedia Employee that results from an accident occurring, or from an occupational disease which becomes manifest, on or before the Close of the Effective Date shall be retained by IAC.
All workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by an IAC Employee or Former IAC Employee that results from an accident occurring, or from an occupational disease which becomes manifest, on or
after the Effective Date shall be retained by IAC. All workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by an Expedia Employee or Former Expedia Employee that results from an accident occurring, or from
an occupational disease which becomes manifest, on or after the Effective Date shall be retained by Expedia. For purposes of this Agreement, a compensable injury shall be deemed to be sustained upon the occurrence of the event giving rise to
eligibility for workers’ compensation benefits or at the time that an occupational disease becomes manifest, as the case may be. IAC, Expedia and the other Expedia Entities shall cooperate with respect to any notification to appropriate
governmental agencies of the Effective Time and the issuance of new, or the transfer of existing, workers’ compensation insurance policies and claims handling contracts. 
  
 (b) The parties acknowledge that Expedia and the Expedia Entities have been part of IAC’s workers’
compensation insurance program for certain periods prior to the Effective Date. For the program covering the term October 1, 2004 to the Effective Date (the “Current Term”), IAC will continue to administer the program and
absorb all administrative costs associated with this obligation, and Expedia agrees to the following cost adjustments. Expedia will receive a pro-rated return premium covering the period from the Effective Date to 

  

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October 1, 2005. The return premium will be received either on October 31, 2005 after Expedia fulfills its obligation of reimbursement to IAC for
all monthly insurance charges up to October 1, 2005 or through the forgiveness of pre-paid insurance obligations of the Expedia Entities to IAC from the Effective Date to October 1, 2005. In addition, for both the program covering the
Current Term and programs covering periods prior to the start of the Current Term, the Expedia Entities will be eligible for a one-time dividend, valued and payable on October 31, 2008, based on ultimate loss development as advised by IAC
broker/consultants or recognized authority selected by IAC and reasonably acceptable to Expedia. 
  
 4.5 Payroll Taxes and Reporting of Compensation. IAC and Expedia shall, and shall cause the other IAC Entities and the other Expedia Entities to,
respectively, take such action as may be reasonably necessary or appropriate in order to minimize Liabilities related to payroll taxes after the Effective Date. IAC and Expedia shall, and shall cause the other IAC Entities and the other Expedia
Entities to, respectively, each bear its responsibility for payroll tax obligations and for the proper reporting to the appropriate governmental authorities of compensation earned by their respective employees after the Close of the Effective Date,
including compensation related to the exercise of Options. 
  
 4.6
COBRA and HIPAA Compliance. IAC shall be responsible for administering compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the
IAC Health and Welfare Plans with respect to IAC Employees and Former IAC Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the IAC Health and Welfare Plans at any time before, on or after the
Effective Time. Expedia or another Expedia Entity shall be responsible for administering compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding
provisions of the Expedia Health and Welfare Plans and/or the IAC Health and Welfare Plans with respect to Expedia Employees and Former Expedia Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the
Expedia Health and Welfare Plans and/or the IAC Health and Welfare Plans at any time before, on or after the Effective Time. The Parties hereto agree that the consummation of the transactions contemplated by this Agreement and the Separation
Agreement shall not constitute a COBRA qualifying event for any purpose of COBRA. 
  
 4.7 VEBA. Effective as of the Effective Date, Expedia shall establish the Expedia VEBA for the purpose of funding certain Expedia Health and Welfare Plans. As soon as practicable following the Effective Date,
IAC shall contribute a lump sum amount in cash to Expedia equal to the excess, if any, of (a) IAC budget rates for self-insured medical, dental and vision care plans applicable to Expedia Employees and Former Expedia Employees, in each case,
from January 1, 2005 through the Effective Date over (b) the sum of actual claims paid to Expedia Employees and Former Expedia Employees from self-insured medical, dental and vision care plans from January 1, 2005 through the
Effective Date, which amount shall be contributed by Expedia to the Expedia VEBA upon receipt by Expedia from IAC. 
  

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 ARTICLE V 
 EXECUTIVE BENEFITS AND OTHER BENEFITS 
  
 5.1 Assumption of Obligations. Except as provided in this Agreement, effective as of the Effective Time, Expedia shall assume and be solely responsible for all Liabilities to or relating to Expedia Employees
and Former Expedia Employees under all IAC Executive Benefit Plans and Expedia Executive Benefit Plans. The Parties hereto agree that none of the transactions contemplated by the Separation Agreement or any of the Ancillary Agreements, including,
without limitation, this Agreement, constitutes a “change in control,” “change of control” or similar term, as applicable, within the meaning of any Employee Benefit Plan. 
  
 5.2 IAC Incentive Plans. 
  
 (a) Expedia Bonus Awards. Expedia shall be
responsible for determining all bonus awards that would otherwise be payable under the IAC Incentive Plans to Expedia Employees for the Effective Time Year. Expedia shall also determine for Expedia Employees (i) the extent to which established
performance criteria (as interpreted by Expedia, in its sole discretion) have been met, and (ii) the payment level for each Expedia Employee. Expedia shall assume all Liabilities with respect to any such bonus awards payable to Expedia
Employees for the Effective Time Year and thereafter. 
  
 (b) IAC Bonus Awards. IAC shall retain all Liabilities with respect to any bonus awards payable under the IAC Incentive Plans to IAC Employees for the Effective Time Year and thereafter. 
  
 5.3 IAC Long-Term Incentive Plans. IAC and Expedia shall use
commercially reasonable efforts to take all actions necessary or appropriate so that each outstanding Option and Award granted under any IAC Long-Term Incentive Plan held by any individual shall be adjusted as set forth in this Article V. The
adjustments set forth below shall be the sole adjustments made with respect to Old IAC Options, IAC Restricted Stock Units and IAC Restricted Stock in connection with the Reverse Stock Split and the other transactions contemplated by the Separation
Agreement. 
  
 (a) Vested Old IAC Options.
As determined by the Compensation/Benefits Committee of the IAC Board of Directors (the “Committee”) pursuant to its authority under the applicable IAC Long-Term Incentive Plan, each Old IAC Option that is vested as of the Effective
Time shall be converted into both an Expedia Option and a New IAC Option and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Old IAC Option immediately prior to the
Effective Time; provided, however, that from and after the Effective Time (i) the number of shares of IAC Common Stock subject to such New IAC Option, rounded down to the nearest whole share, shall be equal to one half the number
of shares of IAC Common Stock subject to such Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time, (ii) the number of shares of Expedia Common Stock subject to such Expedia Option, rounded down to the nearest
whole share, shall be equal to one half the number of shares of IAC Common Stock subject to the Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time, (iii) the per share exercise price of such New IAC Option,
rounded up to the nearest whole cent, shall be equal to the 

  

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quotient obtained by dividing (x) the per share exercise price of such Old IAC Option immediately prior to the Reverse Stock Split and the Effective
Time by (y) the IAC Ratio and (iv) the per share exercise price of the Expedia Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (x) the per share exercise price of the Old IAC Option
immediately prior to the Reverse Stock Split and the Effective Time by (y) the Expedia Ratio; provided, however, the exercise price, the number of shares of IAC Common Stock and Expedia Common Stock subject to such options and the
terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that, in the case of any Old IAC Option to which Section 421 of
the Code applies by reason of its qualification under Section 422 of the Code as of immediately prior to the Effective Time, the exercise price, the number of shares of IAC Common Stock and Expedia Common Stock subject to such option and the
terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code. 
  
 (b) Unvested Old IAC Options Held by IAC Employees and Former IAC Employees other than Barry Diller. As determined by the Committee
pursuant to its authority under the applicable IAC Long-Term Incentive Plan, each Old IAC Option held by an IAC Employee or a Former IAC Employee (other than Barry Diller) that is unvested as of the Effective Time shall be subject to the same terms
and conditions after the Effective Time as the terms and conditions applicable to such Old IAC Option immediately prior to the Effective Time; provided, however, that from and after the Effective Time (i) the number of shares of
IAC Common Stock subject to such New IAC Option, rounded down to the nearest whole share, shall be equal to the product of (x) the number of shares of IAC Common Stock subject to such Old IAC Option immediately prior to the Reverse Stock Split
and the Effective Time and (y) the IAC Ratio and (ii) the per share exercise price of such New IAC Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (x) the per share exercise price of
such Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time by (y) the IAC Ratio; provided, however, the exercise price, the number of shares of IAC Common Stock subject to such option and the terms and
conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that, in the case of any Old IAC Option to which Section 421 of the Code
applies by reason of its qualification under Section 422 of the Code as of immediately prior to the Effective Time, the exercise price, the number of shares of IAC Common Stock subject to such option and the terms and conditions of exercise of
such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code. 
  
 (c) Unvested Old IAC Options Held by Expedia Employees and Former Expedia Employees other than Barry Diller. As determined by the
Committee pursuant to its authority under the applicable IAC Long-Term Incentive Plan, each Old IAC Option held by an Expedia Employee or Former Expedia Employee (other than Barry Diller) that is unvested as of the Effective Time shall be converted
into an Expedia Option and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Old IAC Option immediately prior to the Effective Time; provided, however,
that from and after the Close of the Effective Time (i) the number of shares of Expedia Common Stock subject to such Option, rounded down to the nearest whole share, shall be equal to the product of (x) the number of shares of IAC Common
Stock subject to such Old IAC Option immediately prior to 

  

 -14- 

 
the Reverse Stock Split and the Effective Time and (y) the Expedia Ratio and (ii) the per share exercise price of such Expedia Option, rounded up
to the nearest whole cent, shall be equal to the quotient obtained by dividing (x) the per share exercise price of such Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time by (y) the Expedia Ratio;
provided, however, the exercise price, the number of shares of Expedia Common Stock subject to such option and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of
Section 409A of the Code; provided, further, that, in the case of any Old IAC Option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code as of the Effective Time, the
exercise price, the number of shares of Expedia Common Stock subject to such option and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code.

  
 (d) Unvested Old IAC Options Held by
Mr. Diller. As determined by the Committee pursuant to its authority under the applicable IAC Long-Term Incentive Plan, each Old IAC Option held by Barry Diller that is unvested as of the Effective Time shall be converted into both an
Expedia Option and a New IAC Option and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Old IAC Option immediately prior to the Effective Time; provided,
however, that from and after the Effective Time (i) the number of shares of IAC Common Stock subject to such New IAC Option, rounded down to the nearest whole share, shall be equal to one half the number of shares of IAC Common Stock
subject to such Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time, (ii) the number of shares of Expedia Common Stock subject to such Expedia Option, rounded down to the nearest whole share, shall be equal to one
half the number of shares of IAC Common Stock subject to the Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time, (iii) the per share exercise price of such New IAC Option, rounded up to the nearest whole cent,
shall be equal to the quotient obtained by dividing (x) the per share exercise price of such Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time by (y) the IAC Ratio and (iv) the per share exercise price
of the Expedia Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (x) the per share exercise price of the Old IAC Option immediately prior to the Reverse Stock Split and the Effective Time by
(y) the Expedia Ratio; provided, however, the exercise price, the number of shares of IAC Common Stock and Expedia Common Stock subject to such options and the terms and conditions of exercise of such options shall be determined
in a manner consistent with the requirements of Section 409A of the Code. Following completion of the Effective Time, the satisfaction of conditions to vesting of Mr. Diller’s New IAC Options governed by this Section 5.3(d) will
be determined based on Mr. Diller’s employment with IAC, and the satisfaction of conditions to vesting of Mr. Diller’s Expedia Options governed by this Section 5.3(d) will be determined based on Mr. Diller’s
employment with Expedia. 
  
 (e) IAC
Restricted Stock Units Held by IAC Employees and Former IAC Employees. As determined by the Committee pursuant to its authority under the applicable IAC Long-Term Incentive Plan, each IAC Restricted Stock Unit held by an IAC Employee or a Former
IAC Employee shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such IAC Restricted Stock Unit immediately prior to the Effective Time; provided, however, that from and
after the Close of the Effective Time, the number of shares of IAC Common Stock covered by each IAC Restricted Stock Unit, rounded to 

  

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the nearest whole share, shall be equal to the product of (x) the number of shares of IAC Common Stock covered by such IAC Restricted Stock Unit
immediately prior to the Reverse Stock Split and the Effective Time and (y) the IAC Ratio. 
  
 (f) IAC Restricted Stock Units Held by Expedia Employees and Former Expedia Employees. As determined by the Committee pursuant to
its authority under the applicable IAC Long-Term Incentive Plan, each IAC Restricted Stock Unit held by an Expedia Employee or a Former Expedia Employee as of the Effective Time shall be converted into an Expedia Restricted Stock Unit, and shall
otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such IAC Restricted Stock Unit immediately prior to the Effective Time; provided, however, that from and after the
Close of the Effective Time, the number of shares of Expedia Common Stock covered by such Expedia Restricted Stock Unit held by the participant, as applicable, rounded to the nearest whole share, shall be equal to the product of (x) the number
of shares of IAC Common Stock covered by such IAC Restricted Stock Unit immediately prior to the Reverse Stock Split and the Effective Time and (y) the Expedia Ratio. 
  
 (g) IAC Restricted Stock. Shares of IAC Restricted Stock that are outstanding immediately prior to
the Reverse Stock Split and the Effective Time shall be treated in the Reverse Stock Split and the Reclassification (as defined in the Separation Agreement) in the same manner as other outstanding shares of IAC common stock are treated in the
Reverse Stock Split and the Reclassification and will otherwise be subject to the same terms and conditions (including vesting conditions) applicable to such shares of IAC Restricted Stock immediately prior to the Reverse Stock Split and the
Effective Time. 
  
 (h) Foreign
Grants/Awards. To the extent that the IAC Awards or any of the Old IAC Options are granted to non-U.S. employees under any domestic or foreign equity-based incentive program sponsored by an IAC Entity, IAC and Expedia shall use their
commercially reasonable efforts to preserve, at and after the Effective Time, the value and tax treatment accorded to such Old IAC Options and such IAC Awards granted to non-U.S. employees under any domestic or foreign equity-based incentive program
sponsored by an IAC Entity. 
  
 (i)
Miscellaneous Option and Other Award Terms. After the Effective Date, New IAC Options and IAC Awards adjusted pursuant to Section 5.3, regardless of by whom held, shall be settled by IAC pursuant to the terms of the applicable IAC
Long-Term Incentive Plan, and Expedia Options and Expedia Awards, regardless of by whom held, shall be settled by Expedia pursuant to the terms of the Expedia Long-Term Incentive Plan. Accordingly, it is intended that, to the extent of the issuance
of such Expedia Options and Expedia Awards in connection with the adjustment provisions of this Section 5.3, the Expedia Long-Term Incentive Plan shall be considered a successor to each of the IAC Long-Term Incentive Plans and to have assumed
the obligations of the applicable IAC Long-Term Incentive Plan to make the adjustment of the IAC Options and IAC Awards as set forth in this Section 5.3. The Effective Time shall not constitute a termination of employment for any Expedia
Employees for purposes of any New IAC Option or IAC Award and, except as otherwise provided in this Agreement, with respect to grants adjusted pursuant to this Section 5.3, employment with Expedia shall be treated as employment with IAC with
respect to New IAC Options or IAC Awards held by Expedia Employees and employment with IAC shall be treated as employment with Expedia with respect 

  

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to Expedia Options and Expedia Awards held by IAC Employees. Mr. Diller shall be treated as an IAC Employee with respect to continued exercisability of
vested New IAC Options and Mr. Diller shall be treated as an Expedia Employee with respect to continued exercisability of vested Expedia Options. 
  
 (j) Waiting Period for Exercisability of Options and Grant of Options and Awards. The New IAC Options and Expedia Options shall not
be exercisable during a period beginning on a date prior to the Effective Date determined by IAC in its sole discretion, and continuing until the IAC Post-Separation Stock Value and the Expedia Stock Value are determined after the Effective Time, or
such longer period as IAC, with respect to New IAC Options, and Expedia, with respect to Expedia Options, determines necessary to implement the provisions of this Section 5.3. The IAC Restricted Stock Units and Expedia Restricted Stock Units
shall not be settled during a period beginning on a date prior to the Effective Date determined by IAC in its sole discretion, and continuing until the IAC Post-Separation Stock Value and the Expedia Stock Value are determined immediately after the
Effective Time, or such longer period as IAC, with respect to IAC Restricted Stock Units, and Expedia, with respect to Expedia Restricted Stock Units, determines necessary to implement the provisions of this Section 5.3. 
  
 (k) Restrictive Covenants. Following the Effective
Date, Expedia shall use commercially reasonable efforts to monitor the Expedia Employees and Former Expedia Employees to determine whether any such Expedia Employees or Former Expedia Employees have breached any of the restrictive covenants in the
agreements evidencing the terms of their New IAC Options and IAC Awards. As soon as practicable following Expedia’s reasonable belief that an Expedia Employee or Former Expedia Employee has breached any such covenant, Expedia shall provide IAC
in writing with the name and address of such employee or former employee and the name and address of the enterprise in which such employee or former employee is believed to have been engaged. Notwithstanding the foregoing or anything in any
agreement evidencing the terms of any New IAC Options and IAC Awards or otherwise to the contrary, it shall not be a violation of any IAC non-competition or non-solicitation of clients or customers covenant for an Expedia Employee to engage in acts
on behalf of Expedia or an Expedia Entity that are otherwise prohibited by the terms of such non-competition or non-solicitation of clients or customers covenants and it shall not be a violation of any Expedia non-competition or non-solicitation of
clients or customers covenant for an IAC Employee to engage in acts on behalf of IAC or an IAC Entity that are otherwise prohibited by the terms of such non-competition or non-solicitation of clients or customers covenants. In addition, following
the Effective Time, the restrictive covenants (including without limitation any proprietary rights agreements or confidential information covenants) to which any Expedia Employee or Former Expedia Employee are party shall run in favor of Expedia
(and, to the extent relating to IAC, shall run in favor of IAC to the same extent that they ran in favor of IAC immediately prior to the Effective Time; provided, that the Effective Time shall be treated as a termination of employment from
IAC for purposes of the duration of IAC’s ability to enforce the restrictive covenant) and the restrictive covenants to which any IAC Employee or Former IAC Employee are party shall run in favor of IAC. Any employment agreement between IAC and
an Expedia Employee or Former Expedia Employee shall as of the Effective Time be assigned by IAC to Expedia and assumed by Expedia. 
  

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 5.4 Registration Requirements. As soon as possible following the time as of which the Registration
Statement (as defined in the Separation Agreement) is declared effective by the Securities and Exchange Commission but in any case before the Effective Date and before the date of issuance or grant of any Expedia Option and/or shares of Expedia
Common Stock pursuant to this Article V, Expedia agrees that it shall file a Form S-8 Registration Statement with respect to and cause to be registered pursuant to the Securities Act of 1933, as amended, the shares of Expedia Common Stock authorized
for issuance under the Expedia Long-Term Incentive Plan as required pursuant to such Act and any applicable rules or regulations thereunder, with such registration to be effective prior to the Effective Date. IAC agrees that, following the Effective
Date, it shall use reasonable efforts to continue to maintain a Form S-8 Registration Statement with respect to and cause to be registered pursuant to the Securities Act of 1933, as amended, the shares of IAC Common Stock authorized for issuance
under the IAC Long-Term Incentive Plans as required pursuant to such Act and any applicable rules or regulations thereunder. 
  
 5.5 IAC Executive Deferred Compensation Plans. Effective as of the Effective Date, Expedia shall establish a deferred compensation plan that is
substantially identical to the IAC Executive Deferred Compensation Plan to provide benefits to Expedia Employees and Former Expedia Employees from and after the Effective Date who were participants in the IAC Executive Deferred Compensation Plan as
of immediately prior to the Effective Date. 
  
 5.6
Severance. An Expedia Employee shall not be deemed to have terminated employment for purposes of determining eligibility for severance benefits in connection with or in anticipation of the consummation of the transactions contemplated by the
Separation Agreement. Expedia shall be solely responsible for all Liabilities in respect of all costs arising out of payments and benefits relating to the termination or alleged termination of any Expedia Employee or Former Expedia Employee’s
employment that occurs prior to, as a result of, in connection with or following the consummation of the transactions contemplated by the Separation Agreement, including any amounts required to be paid (including any payroll or other taxes), and the
costs of providing benefits, under any applicable severance, separation, redundancy, termination or similar plan, program, practice, contract, agreement, law or regulation (such benefits to include any medical or other welfare benefits, outplacement
benefits, accrued vacation, and taxes). 
  
 ARTICLE VI

 GENERAL AND ADMINISTRATIVE 
  
 6.1 Sharing of Participant Information. IAC and Expedia shall share, and IAC shall cause each other IAC Entity to share, and Expedia shall cause
each other Expedia Entity to share with each other and their respective agents and vendors (without obtaining releases) all participant information necessary for the efficient and accurate administration of each of the Expedia Benefit Plans and the
IAC Benefit Plans. IAC and Expedia and their respective authorized agents shall, subject to applicable laws, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody
of the other Party, to the extent necessary for such administration. Until the Close of the Effective Date, all participant information shall be provided in the manner and medium applicable to Participating Companies in IAC Benefit Plans generally,
and thereafter until December 31, 2006, 

  

 -18- 

 
all participant information shall be provided in a manner and medium as may be mutually agreed to by IAC and Expedia. 
  
 6.2 Reasonable Efforts/Cooperation. Each of the Parties hereto will
use its commercially reasonable efforts to promptly take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated
by this Agreement. Each of the Parties hereto shall cooperate fully on any issue relating to the transactions contemplated by this Agreement for which the other Party seeks a determination letter or private letter ruling from the Internal Revenue
Service, an advisory opinion from the Department of Labor or any other filing (including, but not limited to, securities filings (remedial or otherwise)), consent or approval with respect to or by a governmental agency or authority in any
jurisdiction in the United States or abroad. 
  
 6.3 No
Third-Party Beneficiaries. This Agreement is solely for the benefit of the Parties and is not intended to confer upon any other Persons any rights or remedies hereunder. Except as expressly provided in this Agreement, nothing in this Agreement
shall preclude IAC or any other IAC Entity, at any time after the Close of the Effective Date, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any IAC Benefit Plan, any benefit under any
Benefit Plan or any trust, insurance policy or funding vehicle related to any IAC Benefit Plan. Except as expressly provided in this Agreement, nothing in this Agreement shall preclude Expedia or any other Expedia Entity, at any time after the Close
of the Effective Date, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any Expedia Benefit Plan, any benefit under any Benefit Plan or any trust, insurance policy or funding vehicle related
to any Expedia Benefit Plan. 
  
 6.4 Audit Rights With Respect
to Information Provided. 
  
 (a) Each of IAC
and Expedia, and their duly authorized representatives, shall have the right to conduct reasonable audits with respect to all information required to be provided to it by the other Party under this Agreement. The Party conducting the audit (the
“Auditing Party”) may adopt reasonable procedures and guidelines for conducting audits and the selection of audit representatives under this Section 6.4. The Auditing Party shall have the right to make copies of any records at
its expense, subject to any restrictions imposed by applicable laws and to any confidentiality provisions set forth in the Separation Agreement, which are incorporated by reference herein. The Party being audited shall provide the Auditing
Party’s representatives with reasonable access during normal business hours to its operations, computer systems and paper and electronic files, and provide workspace to its representatives. After any audit is completed, the Party being audited
shall have the right to review a draft of the audit findings and to comment on those findings in writing within thirty business days after receiving such draft. 
  
 (b) The Auditing Party’s audit rights under this Section 6.4 shall include the right to audit, or
participate in an audit facilitated by the Party being audited, of any Subsidiaries and Affiliates of the Party being audited and to require the other Party to request any benefit providers and third parties with whom the Party being audited has a
relationship, or agents of such Party, to agree to such an audit to the extent any such Persons are affected by or addressed 

  

 -19- 

 
in this Agreement (collectively, the “Non-parties”). The Party being audited shall, upon written request from the Auditing Party, provide an
individual (at the Auditing Party’s expense) to supervise any audit of a Non-party. The Auditing Party shall be responsible for supplying, at the Auditing Party’s expense, additional personnel sufficient to complete the audit in a
reasonably timely manner. The responsibility of the Party being audited shall be limited to providing, at the Auditing Party’s expense, a single individual at each audited site for purposes of facilitating the audit. 
  
 6.5 Fiduciary Matters. It is acknowledged that actions required to be
taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based
upon its good faith determination that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and
shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility. 
  
 6.6 Consent of Third Parties. If any provision of this Agreement is dependent on the consent of any third party (such as a vendor) and such consent
is withheld, the Parties hereto shall use commercially reasonable efforts to implement the applicable provisions of this Agreement to the full extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such
third party to consent, the Parties hereto shall negotiate in good faith to implement the provision in a mutually satisfactory manner. The phrase “commercially reasonable efforts” as used herein shall not be construed to require any Party
to incur any non-routine or unreasonable expense or Liability or to waive any right. 
  
 ARTICLE VII 
 MISCELLANEOUS 
  
 7.1 Effect If Effective Time Does Not Occur. If the Separation Agreement is terminated prior to the Effective Date,
then this Agreement shall terminate and all actions and events that are, under this Agreement, to be taken or occur effective immediately prior to or as of the Close of the Effective Date, or Immediately after the Effective Date, or otherwise in
connection with the Separation Transactions, shall not be taken or occur except to the extent specifically agreed by IAC and Expedia. 
  
 7.2 Relationship of Parties. Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship
of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the
relationship set forth herein. 
  
 7.3 Affiliates. Each of
IAC and Expedia shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by another IAC Entity or an Expedia Entity, respectively. 
  

 -20- 

 7.4 Notices. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given to a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile with confirmation of transmission by the
transmitting equipment; or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses and facsimile numbers and marked to the attention of the person (by name or
title) designated below (or to such other address, facsimile number or person as a Party may designate by notice to the other Parties): 
  

	 	(a)	if to IAC: 

  
 IAC/InterActiveCorp 
 152 West 57th Street 
 New York, NY 10019 
 Attention: General
Counsel 
 Facsimile No.: (212) 632-9642 
  
 with copies to: 
  
 Wachtell, Lipton, Rosen & Katz 
 51
West 52nd Street 
 New York, NY 10019 
 Attention: Michael S. Katzke, Esq. 
 Facsimile No.: (212) 403-2345 
  

	 	(b)	if to Expedia: 

  
 Expedia, Inc. 
 3150 139th Ave SE

 Bellevue, WA 98005 
 Attention: General Counsel 
 Fax: (425) 679-7251 
  
 7.5 Incorporation of Separation Agreement Provisions. The following provisions of the Separation Agreement are hereby
incorporated herein by reference, and unless otherwise expressly specified herein, such provisions shall apply as if fully set forth herein mutatis mutandis (references in this Section 7.5 to an “Article” or “Section” shall
mean Articles or Sections of the Separation Agreement, and references in the material incorporated herein by reference shall be references to the Separation Agreement): Article VII (relating to Survival and Indemnification); Article XI (relating to
Further Assurances); Article IX (relating to Exchange of Information; Confidentiality); Article X (relating to Dispute Resolution); Article XIII (relating to Sole Discretion of IAC; Termination); Article XIV (relating to Miscellaneous). 

 

 -21- 

 IN WITNESS WHEREOF, the Parties have caused this Employee Matters Agreement to be duly executed as of the
day and year first above written. 
  

			
	 IAC/INTERACTIVECORP

		
	By:	 	 /s/ GREGORY R. BLATT

	 	 	 Name: Gregory R. Blatt

	 	 	 Title:   Executive Vice President

	
	 EXPEDIA, INC.

		
	By:	 	 /s/ KEENAN M. CONDER

	 	 	 Name: Keenan M. Conder

	 	 	 Title:   Senior Vice President

  

 -22-Transition Services Agreement

 Exhibit 10.12 
  
 TRANSITION SERVICES AGREEMENT 
  

by and between 
  
 IAC/INTERACTIVECORP 
  
 and 
  
 EXPEDIA, INC. 
  
 DATED AS OF August 9, 2005 

 TRANSITION SERVICES AGREEMENT 
  
 This TRANSITION SERVICES AGREEMENT, dated as of August 9, 2005 (this “Services Agreement”), is entered
into by and between IAC/InterActiveCorp, a Delaware corporation (“IAC”), and Expedia, Inc., a Delaware corporation and wholly owned Subsidiary of IAC (“Expedia”). Capitalized terms used herein but not defined herein
shall have the meaning set for the in that certain Separation Agreement, dated as of the date hereof, by and between IAC and Expedia (the “Separation Agreement”). 
  
 WHEREAS, the Board of Directors of IAC has determined it is appropriate and desirable to separate IAC and Expedia into two
publicly-traded companies by separating IAC’s principal travel and travel-related businesses, and related assets and liabilities, and contributing them to Expedia and effecting a reclassification of the capital stock of IAC; 
  
 WHEREAS, IAC and Expedia expect to enter into the Separation Agreement on the
date hereof, which sets forth, among other things, the assets, liabilities, rights and obligations of each of the Parties for purposes of effecting the separation of IAC and Expedia; and 
  
 WHEREAS, in connection therewith, (a) Expedia desires to procure certain services from IAC, and IAC is willing to
provide such services to Expedia, during a transition period commencing on the Effective Date, on the terms and conditions set forth in this Services Agreement; and (b) IAC desires to procure certain services from Expedia, and Expedia is
willing to provide such services to IAC, during a transition period commencing on the Effective Date, on the terms and conditions set forth in this Services Agreement. 
  
 NOW THEREFORE, in consideration of the mutual agreements, covenants and other provisions set forth in this Services
Agreement, the Parties hereby agree as follows: 
  
 ARTICLE I

  
 Definitions 
  
 1.01. All terms used herein and not defined herein shall have the
meanings assigned to them in the Separation Agreement. 
  
 ARTICLE II 
  
 Agreement To Provide and Accept
Services 
  
 2.01. Provision of Services.

  
 (a) On the terms and subject to the
conditions contained herein, IAC shall provide, or shall cause its Subsidiaries and Affiliates and their respective employees designated by IAC (such designated Subsidiaries, Affiliates and employees, together with IAC, being herein collectively
referred to as the “IAC Service Providers”) to provide, to Expedia the services (“IAC Services”) listed on the attached Schedules (the “Schedules”) as being performed by the IAC. Subject to
Section 3.01, any decisions as to which of the IAC Service Providers (including the decisions to use third parties) shall provide the IAC Services shall be made by IAC in its sole 

 
discretion, except to the extent specified in the applicable Schedule. Each IAC Service shall be provided in exchange for the consideration set forth with
respect to such IAC Service on the applicable Schedule or as the Parties may otherwise agree in writing. Each IAC Service shall be provided and accepted in accordance with the terms, limitations and conditions set forth herein and on the applicable
Schedule. 
  
 (b) On the terms and subject to the
conditions contained herein, Expedia shall provide, or shall cause its Subsidiaries and Affiliates and their respective employees designated by it (such designated Subsidiaries, Affiliates and employees, together with Expedia, being herein
collectively referred to as the “Expedia Service Providers” and together with the IAC Service Providers, the “Service Providers”) to provide, to IAC the services (“Expedia Services” and together
with the IAC Services, the “Services”) listed on the attached Schedules as being performed by Expedia. Subject to Section 3.01, any decisions as to which of the Expedia Service Providers (including the decisions to use
third parties) shall provide the Expedia Services shall be made by Expedia in its sole discretion, except to the extent specified in the applicable Schedule. Each Expedia Service shall be provided in exchange for the consideration set forth with
respect to such Service on the applicable Schedule or as the Parties may otherwise agree in writing. Each Expedia Service shall be provided and accepted in accordance with the terms, limitations and conditions set forth herein and on the applicable
Schedule. 
  
 (c) As used in this Services
Agreement, the term “Receiving Party” shall mean the Party receiving Services. 
  
 2.02. Books and Records; Availability of Information. Each Party shall create and maintain accurate books in connection with the provision
of the Services performed by it and, upon reasonable notice from the other Party, shall make available for inspection and copy by such other Party’s agents such records during reasonable business hours. Each Party shall make available on a
timely basis to the Service Providers all information and materials reasonably requested by such Service Providers to enable them to provide the Services. Each Party shall provide to the Service Providers reasonable access to such Party’s
premises to the extent necessary for the purpose of providing the Services. 
  
 ARTICLE III 
  
 Services;
Payment; Independent Contractors 
  
 3.01. Services
To Be Provided. (a) Unless otherwise agreed by the Parties (including to the extent specified in the applicable Schedule), (i) the Service Providers shall be required to perform the Services only in a manner, scope, nature and quality
as provided by or within IAC that is similar in all material respects to the manner in which such Services were performed immediately prior to the Effective Date, and (ii) the Services shall be used for substantially the same purposes and in
substantially the same manner (including as to volume, amount, level or frequency, as applicable) as the Services have been used immediately prior to the Effective Date; provided, however, that the applicable Schedule shall control the
scope of the Service to be performed (to the extent provided therein), unless otherwise agreed in writing. Each Party and the Service Providers shall act under this Services Agreement solely as an independent contractor and not as an agent or
employee of any other Party or any of such Party’s Affiliates. 

 (b) The provision of Services by Service Providers shall be subject to
Article V hereof. 
  
 (c) Each Party
agrees to use its reasonable efforts to reduce or eliminate its dependency on the Services as soon as is reasonably practicable; provided that a breach of this Section 3.01(c) shall not affect a Service Provider’s obligation
to provide any Service through the term applicable to such Service. 
  
 3.02. The Parties will use good-faith efforts to reasonably cooperate with each other in all matters relating to the provision and receipt of Services. Such cooperation shall include obtaining all consents, licenses or approvals
necessary to permit each Party to perform its obligations hereunder; provided, however, under no circumstances shall any Service Provider be required to make any payments to any third party in respect of any such consents, licenses or
approvals nor shall any Service Provider be required to make any alternative arrangements in the event that any such consents, licenses or approvals are not obtained. 
  
 3.03. Additional Services. 
  
 (a) From time to time during the term, each of IAC and Expedia may request the other Party (i) to
provide additional (including as to volume, amount, level or frequency, as applicable) or different services which the other Party is not expressly obligated to provide under this Agreement if such services are of the type and scope provided within
IAC during fiscal year 2005 or (ii) expand the scope of any Service (such additional or expanded services, the “Additional Services”). The Party receiving such request shall consider such request in good faith and shall use
commercially reasonable efforts to provide such Additional Service; provided, no Party shall be obligated to provide any Additional Services if it does not, in its reasonable judgment, have adequate resources to provide such Additional
Services or if the provision of such Additional Services would interfere with the operation of its business. The Party receiving the request for Additional Services shall notify the requesting Party within fifteen (15) days as to whether it
will or will not provide the Additional Services. 
  
 (b) If a Party agrees to provide Additional Services pursuant to Section 3.03(a), then a representative of each party shall in good faith negotiate the terms of a supplemental Schedule to this Agreement which will describe in detail
the service, project scope, term, price and payment terms to be charged for the Additional Service. Once agreed to in writing, the supplemental Schedule shall be deemed part of this Agreement as of such date and the Additional Services shall be
deemed “Services” provided hereunder, in each case subject to the terms and conditions of this Agreement. 
  
 3.04. Payments. 
  
 (a) Statements will be delivered to the Receiving Party within fifteen days after the end of each month by the Service Providers
designated by each Party for Services provided to the Receiving Party during the preceding month, and each such statement shall set forth a brief description of such Services, the amounts charged therefor, and, except as the Parties may agree, such
amounts shall be due and payable by the Receiving Party within 30 days after the date of such statement. Statements not paid within such 30-day period shall be subject 

 
to late charges, calculated at an interest rate per annum equal to the Prime Rate plus 2% (or the maximum legal rate, whichever is lower), and calculated for
the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment. Payments shall be made by wire transfer to an account designated in writing from time to time by Service
Provider. 
  
 3.05. Disclaimer of Warranty. EXCEPT
AS EXPRESSLY SET FORTH IN THIS SERVICES AGREEMENT, THE SERVICES TO BE PURCHASED UNDER THIS SERVICES AGREEMENT ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. In the event that the provision of any Service for the account of a Receiving Party by a Service Provider conflicts with such Service Provider’s provision of such Service for its own
account, priority for the provision of such Service shall be allocated in a equitable manner on an aggregate basis, and in a manner consistent with the Receiving Party’s level of use of such Service during fiscal year 2005 up to the Effective
Date (or as described in the applicable Schedule). 
  
 3.06. Taxes. In the event that any Tax is properly chargeable on the provision of the Services as indicated on the applicable Schedule, the Receiving Party shall be responsible for and shall pay the amount of any such Tax in
addition to and at the same time as the Service fees. All Service fees and other consideration will be paid free and clear of and without withholding or deduction for or on account of any Tax, except as may be required by law. 
  
 3.07. Use of Services. The Receiving Party shall not, and shall
cause its Affiliates not to, resell any Services to any person whatsoever or permit the use of the Services by any person other than in connection with the conduct of the Receiving Party’s operations as conducted immediately prior to the
Effective Date. 
  
 ARTICLE IV 
  
 Term of Services 
  
 4.01. The provision of Services shall commence on the Effective Date
and shall terminate no later than 18 months after the date hereof or as of the date indicated for each such Service on the applicable Schedule; provided, however, that subject to the applicable Schedule, any Service may be cancelled or
reduced in amount or any portion thereof by the Receiving Party upon 90 days’ written notice thereof (or such other notice period if one is set forth for such Service on the applicable Schedule) subject to the requirement that the Receiving
Party pay to the Service Provider the actual out-of-pocket costs incurred by the Service Provider, as well as the actual incremental internal costs incurred by the Service Providers, in each case directly resulting from such cancellation (including
employee severance and other termination costs), which out-of-pocket and internal costs shall be set forth in a written statement provided by the Service Provider to the Receiving Party; provided, further, that such costs shall not
exceed amounts payable hereunder in respect of the applicable Service for the 90 days prior to such termination. The forgoing notwithstanding and subject to Section 7.02, (1) a Service Provider may immediately terminate any
individual Service provided to a Receiving Party in the event 

 
that the Receiving Party fails to make payments for such Service under Section 3.02 and has not cured such failure within 30 days of written notice of
such failure from the Service Provider, and (2) upon 90 days’ written notice, the Service Provider may terminate any Service provided to the Receiving Party at such time as the Service Provider no longer provides the same Service to itself
for its own account. 
  
 4.02. In the event a Receiving
Party requests an extension of the term of provision of Services, such request shall be considered in good faith by the Service Provider. Any terms, conditions or costs or fees to be paid by the Receiving Party for Services provided during an
extended term will be on mutually acceptable terms. For the avoidance of doubt, under no circumstances shall a Service Provider be required to extend the term of provision of any Service if (i) the Service Provider does not, in its reasonable
judgment, have adequate resources to continue providing such Services, (ii) the extension of the term would interfere with the operation of the Service Provider’s business or (iii) the extension would require capital expenditure on
the part of the Service Provider or otherwise require the Service Provider to renew or extend any Contract with any third party. 
  
 ARTICLE V 
  
 Force Majeure 
  
 5.01. The Service Providers shall not be liable for any expense, loss or damage whatsoever arising out of any interruption of Service or delay or failure to perform under this Services Agreement that is due to
acts of God, acts of a public enemy, acts of terrorism, acts of a nation or any state, territory, province or other political division thereof, changes in applicable law, fires, floods, epidemics, riots, theft, quarantine restrictions, freight
embargoes or other similar causes beyond the reasonable control of the Service Providers. In any such event, the Service Providers’ obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account
thereof. Each Service Provider will promptly notify the recipient of the Service, either orally or in writing, upon learning of the occurrence of such event of force majeure. Upon the cessation of the force majeure event, such Service Provider will
use commercially reasonable efforts to resume, or to cause any other relevant Service Provider to resume, its performance with the least practicable delay (provided that, at the election of the applicable Receiving Party, the applicable term
for such suspended Services shall be extended by the length of the force majeure event). 
  
 ARTICLE VI 
  
 Liabilities 
  
 6.01. Consequential and
Other Damages. Except as otherwise provided in the Separation Agreement, none of the Service Providers shall be liable to the Receiving Party with respect to this Services Agreement, whether in contract, tort (including negligence and strict
liability) or otherwise, for any special, indirect, incidental or consequential damages whatsoever (except, in each case, to the extent any such amount is paid to third parties by a Receiving Party or its Affiliates) which in any way arise out of,
relate to or are a consequence of, the performance 

 
or nonperformance by it hereunder or the provision of, or failure to provide, any Service hereunder, including with respect to loss of profits, business
interruptions or claims of customers. 
  
 6.02.
Limitation of Liability. Subject to Section 6.03 hereof, the liability of any Service Provider with respect to this Services Agreement or any act or failure to act in connection herewith (including, but not limited to, the
performance or breach hereof), or from the sale, delivery, provision or use of any Service provided under or covered by this Services Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, shall be limited to
actions or omissions resulting from intentional breach of this Services Agreement or gross negligence, and, in any event, such liability shall not exceed the fees previously paid to such Service Provider under this Services Agreement. 
  
 6.03. Obligation To Re-perform. In the event of any breach of
this Services Agreement by any Service Provider resulting from any error or defect in the performance of any Service (which breach Service Provider can reasonably be expected to cure by re-performance in a commercially reasonable manner), the
Service Provider shall use its reasonable commercial efforts to correct in all material respects such error, defect or breach or reperform in all material respects such Service at the request of the Receiving Party. 
  
 6.04. Indemnity. Except as otherwise provided in this Service
Agreement (including the limitation of liability provisions in this Article VI), each Party shall indemnify, defend and hold harmless the other Party from and against any Liability arising out of the intentional breach or gross negligence of
the indemnifying Party or its Affiliates, employees, agents, or contractors (including with respect to the performance or nonperformance of any Service hereunder). 
  
 ARTICLE VII 
  
 Termination 
  
 7.01. Termination. Notwithstanding anything herein to the contrary, this Services Agreement shall terminate, and the obligation of the
Service Providers to provide or cause to be provided any Service shall cease, on the earliest to occur of (i) the last date indicated for the termination of any Service on the Schedules, as the case may be, (ii) the date on which the
provision of all Services has been terminated or canceled pursuant to Article IV hereof, or (iii) the date on which this Services Agreement is terminated by Expedia or IAC, as the case may be, in accordance with the terms of
Section 7.02 hereof; provided that, in each case, no such termination shall relieve any Party of any liability for any breach of any provision of this Services Agreement prior to the date of such termination. 
  
 7.02. Breach of Services Agreement; Dispute Resolution. Subject
to Article VI hereof, and without limiting a Party’s obligations under Section 4.01, if a Party shall cause or suffer to exist any material breach of any of its obligations under this Services Agreement, including any failure
to make a payment within 30 days after receipt of the statement describing the Services provided for pursuant to Section 3.04 with respect to more than one Service provided hereunder, and that Party does not cure such default in all material
respects within 30 days after receiving written notice thereof from the non-breaching Party, the non-breaching 

 
Party shall have the right to terminate this Services Agreement immediately thereafter. In the event a dispute arises between the Parties regarding the terms
of this Services Agreement, such dispute shall be governed by Article X of the Separation Agreement. 
  
 7.03. Sums Due. In addition to any other payments required pursuant to this Service Agreement, in the event of a termination of this
Services Agreement, the Service Providers shall be entitled to the immediate payment of, and the Receiving Party shall within three Business Days, pay to the Service Providers, all accrued amounts for Services, Taxes and other amounts due under this
Services Agreement as of the date of termination. 
  
 7.04.
Effect of Termination. Section 2.02 hereof and Articles V, VI, VII and VIII hereof shall survive any termination of this Services Agreement. 
  
 ARTICLE VIII 
  
 Miscellaneous 
  
 8.01. Incorporation of Separation Agreement Provisions. The following provisions of the Separation Agreement are hereby incorporated herein
by reference, and unless otherwise expressly specified herein, such provisions shall apply as if fully set forth herein (references in this Section 8.01 to an “Article” or “Section” shall mean Articles or Sections of
the Separation Agreement, and references in the material incorporated herein by reference shall be references to the Separation Agreement): Sections 14.02, 14.03, 14.06, 14.07, 14.09, 14.10, 14.11,
14.14 and 14.15. 
  
 8.02. Ownership of
Work Product. Subject to the terms of the Separation Agreement, (i) each Service Provider acknowledges and agrees that it will acquire no right, title or interest (including any license rights or rights of use) to any work product resulting
from the provision of Services hereunder for the Receiving Party’s exclusive use and such work product shall remain the exclusive property of the Receiving Party and (ii) each Receiving Party acknowledges and agrees that it will acquire no
right, title or interest (other than a non-exclusive, worldwide right of use) to any work product resulting from the provision of Services hereunder that is not for the Receiving Party’s exclusive use and such work product shall remain the
exclusive property, subject to license, of the Service Provider. 

 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized
representatives. 
  

			
	 IAC/INTERACTIVECORP

		
	 By:
	 	 /s/    GREGORY R. BLATT

	 	 	 Name: Gregory R. Blatt

	 	 	 Title:   Executive Vice President

  

			
	 EXPEDIA, INC.

		
	 By:
	 	 /s/    KEENAN M. CONDER

	 	 	 Name: Keenan M. Conder

	 	 	 Title:   Senior Vice President

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