EXHIBIT 10.1
EXECUTION COPY
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AMENDED AND RESTATED
GOVERNANCE AGREEMENT
AMONG
IAC/INTERACTIVECORP,
LIBERTY MEDIA CORPORATION,
AND
XXXXX XXXXXX
DATED AS OF AUGUST 9, 2005
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TABLE OF CONTENTS
Page
ARTICLE I
TRANSFEREES
ARTICLE II
BOARD OF DIRECTORS AND RELATED MATTERS
Section 2.01. Board of Directors............................................1
Section 2.02. Management of the Business....................................2
Section 2.03. Contingent Matters............................................2
Section 2.04. Notice of Events..............................................4
ARTICLE III
PREEMPTIVE RIGHTS
Section 3.01. Liberty Preemptive Rights.....................................4
Section 3.02. Investment Agreement..........................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Company.................5
Section 4.02. Representations and Warranties of the Stockholders............5
ARTICLE V
DEFINITIONS
Section 5.01. "2001 Governance Agreement"...................................6
Section 5.02. "Affiliate"...................................................6
Section 5.03. "Amended and Restated Stockholders Agreement".................6
Section 5.04. "BDTV Entities"...............................................6
Section 5.05. "Beneficial Ownership"........................................6
Section 5.06. "CEO".........................................................7
Section 5.07. "CEO Termination Date"........................................7
Section 5.08. "Commission"..................................................7
Section 5.09. "Company".....................................................7
Section 5.10. "Company Common Shares".......................................7
Section 5.11. "Company Class B Stock".......................................7
Section 5.12. "Company Common Stock"........................................7
Section 5.13. "Consenting Party"............................................7
Section 5.14. "Demand Registration".........................................7
Section 5.15. "Disabled"....................................................7
Section 5.16. "EBITDA"......................................................7
Section 5.17. "Equity Securities"...........................................8
Section 5.18. "Exchange Act"................................................8
Section 5.19. "Excluded Issuance"...........................................8
Section 5.20. "Fair Market Value"...........................................8
Section 5.21. "IAC".........................................................8
Section 5.22. "Issue Price".................................................8
Section 5.23. "Liberty Director"............................................9
Section 5.24. "Liberty Holdco"..............................................9
Section 5.25. "Ownership Percentage"........................................9
Section 5.26. "Permitted Transferee"........................................9
Section 5.27. "Person"......................................................9
Section 5.28. "Sale Transaction"............................................9
Section 5.29. "Securities Act"..............................................9
Section 5.30. "Stockholders"................................................9
Section 5.31. "Stockholders Group"..........................................9
Section 5.32. "Subsidiary".................................................10
Section 5.33. "Third Party Transferee".....................................10
Section 5.34. "Total Debt".................................................10
Section 5.35. "Total Debt Ratio"...........................................10
Section 5.36. "Total Equity Securities"....................................10
Section 5.37. "Transfer"...................................................10
Section 5.38. "Voting Securities"..........................................11
ARTICLE VI
MISCELLANEOUS
Section 6.01. Notices......................................................11
Section 6.02. Amendments; No Waivers.......................................12
Section 6.03. Successors And Assigns.......................................13
Section 6.04. Governing Law; Consent To Jurisdiction.......................13
Section 6.05. Counterparts.................................................13
Section 6.06. Specific Performance.........................................13
Section 6.07. Registration Rights..........................................13
Section 6.08. Termination..................................................14
Section 6.09. Severability.................................................14
Section 6.10. Cooperation..................................................15
Section 6.11. Adjustment Of Share Numbers..................................15
Section 6.12. Effective Time...............................................15
Section 6.13. Entire Agreement.............................................15
Section 6.14. Interpretation...............................................15
Section 6.15. Headings.....................................................15
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EXECUTION COPY
AMENDED AND RESTATED GOVERNANCE AGREEMENT
Amended and Restated Governance Agreement, dated as of August 9, 2005,
among IAC/InterActiveCorp, a Delaware corporation ("IAC," or the "COMPANY"),
Liberty Media Corporation, for itself and on behalf of the members of its
Stockholder Group ("LIBERTY") and Mr. Xxxxx Xxxxxx ("XX. XXXXXX") for himself
and on behalf of the members of his Stockholder Group.
WHEREAS, the parties hereto have agreed that the Company, Liberty and Xx.
Xxxxxx shall enter into this Agreement in order to amend and restate in its
entirety the respective rights and obligations of the parties set forth in the
Amended and Restated Governance Agreement, dated as of December 16, 2001 (the
"2001 GOVERNANCE AGREEMENT").
WHEREAS, the Company, Liberty and Xx. Xxxxxx desire to establish in this
Agreement certain provisions concerning Liberty's and Xx. Xxxxxx'x relationships
with the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
Company, Liberty and Xx. Xxxxxx hereby agree as follows:
ARTICLE I
TRANSFEREES
No Third Party Transferee shall have any rights or obligations under this
Agreement, except as specifically provided for in this Agreement and except that
if such Third Party Transferee shall acquire Beneficial Ownership of more than
5% of the outstanding Total Equity Securities upon consummation of any Transfer
or series of related Transfers from a Stockholder, to the extent such
Stockholder has the right to Transfer a Demand Registration and assigns such
right in connection with a Transfer, such Third Party Transferee shall have the
right to initiate one or more Demand Registrations pursuant to Section 6.07 or
any registration rights agreement that replaces or supersedes Section 6.07 (and
shall be entitled to such other rights that a Stockholder would have applicable
to such Demand Registration), subject to the obligations of such Stockholder
applicable to such demand (and the number of Demand Registrations to which such
Stockholder is entitled under Section 6.07 hereof shall be correspondingly
decreased).
ARTICLE II
BOARD OF DIRECTORS AND RELATED MATTERS
Section 2.01. BOARD OF DIRECTORS.
(a) Liberty shall have the right to nominate up to two Liberty
Directors so long as Liberty Beneficially Owns at least 33,651,963 Equity
Securities (so long as the Ownership Percentage of Liberty is at least equal to
15% of the Total Equity Securities. Liberty shall have the right to nominate one
Liberty Director so long as Liberty Beneficially Owns at least 22,434,642 Equity
Securities (so long as Liberty's Ownership Percentage is at least equal to 5% of
the Total Equity Securities).
(b) The Company shall cause each Liberty Director to be included in
the slate of nominees recommended by the Board of Directors to the Company's
stockholders for election as directors at each annual meeting of the
stockholders of the Company and shall use all reasonable efforts to cause the
election of each Liberty Director, including soliciting proxies in favor of the
election of such persons.
(c) Within a reasonable time prior to the filing with the Commission
of its proxy statement or information statement with respect to each meeting of
stockholders at which directors are to be elected, the Company shall, to the
extent Liberty is entitled to representation on the Company's Board of Directors
in accordance with this Agreement, provide Liberty with the opportunity to
review and comment on the information contained in such proxy or information
statement applicable to the director nominees designated by Liberty.
(d) In the event that a vacancy is created at any time by the death,
disability, retirement, resignation or removal (with or without cause) of any
Liberty Director, Liberty shall have the right to designate a replacement
Liberty Director to fill such vacancy, and the Company agrees to use its best
efforts to cause such vacancy to be filled with the replacement Liberty Director
so designated. Upon the written request of Liberty, each Stockholder shall vote
(and cause each of the members of its Stockholder Group to vote, if applicable),
or act by written consent with respect to, all Equity Securities Beneficially
Owned by it and otherwise take or cause to be taken all actions necessary to
remove the director designated by Liberty and to elect any replacement director
designated by Liberty as provided in the first sentence of this Section 2.01(d).
The parties hereto hereby acknowledge that as of the date of this Agreement
there exist two vacancies with respect to which Liberty has the right to
designate Liberty Directors in accordance with the terms of this Agreement and
that, upon Liberty's designation of Liberty Directors to fill such vacancies,
the Company will use its best efforts to cause such vacancies to be filled
within a reasonable period of time by such Liberty Directors so designated.
Section 2.02. MANAGEMENT OF THE BUSINESS. Except as indicated in Section
2.03 below or as required by Delaware law or the Certificate of Incorporation of
the Company and the By-Laws and the agreements contemplated thereby, Xx. Xxxxxx,
so long as he is CEO and has not become Disabled, will continue to have full
authority to operate the day-to-day business affairs of the Company to the same
extent as prior to the date hereof. The Company shall use its reasonable best
efforts to cause one Liberty Director designated by Liberty for such purpose to
be appointed as a member of a committee of the Board of Directors and, to the
extent such person qualifies under applicable law (including stock exchange or
NASDAQ requirements, as applicable, and tax laws) and Section 16(b) under the
Exchange Act or other similar requirements, all committees and subcommittees of
the Board of Directors that make determinations relating to the compensation of
executives of the Company.
Section 2.03. CONTINGENT MATTERS. So long as Liberty or Xx. Xxxxxx
Beneficially Owns, in the case of Liberty, at least 29,912,856 Equity Securities
(including all Equity Securities held by the BDTV Entities) (so long as such
Ownership Percentage equals at least 5% of the Total Equity Securities), or, in
the case of Xx. Xxxxxx, at least five million Company Common Shares with respect
to which he has a pecuniary interest and the CEO Termination Date (as defined in
the Amended and Restated Stockholders Agreement and not as defined in this
Agreement) has not occurred and Xx. Xxxxxx has not become Disabled, neither the
Company nor any Subsidiary
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shall take any of the following actions (any such action, a "CONTINGENT MATTER")
without the prior approval of Xx. Xxxxxx and/or Liberty, whichever (or both)
satisfy the foregoing Beneficial Ownership requirements:
(a) any transaction not in the ordinary course of business,
launching new or additional channels or engaging in any new field of business,
in any case, that will result in, or will have a reasonable likelihood of
resulting in, Liberty or Xx. Xxxxxx or any Affiliate thereof being required
under law to divest itself of all or any part of its Beneficial Ownership of
Company Common Shares, or interests therein, or any other material assets of
such Person, or that will render such Person's continued ownership of such
securities, shares, interests or assets illegal or subject to the imposition of
a fine or penalty or that will impose material additional restrictions or
limitations on such Person's full rights of ownership (including, without
limitation, voting) thereof or therein. This Contingent Matter will be applied
based only on the Beneficial Ownership of Company Common Shares, interests
therein or other material assets of Liberty or Xx. Xxxxxx or any Affiliate
thereof as of the date hereof; or
(b) if the Total Debt Ratio continuously equals or exceeds 4:1 over
a twelve-month period, then, for so long as the Total Debt Ratio continues to
equal or exceed 4:1:
(i) any acquisition or disposition (including pledges),
directly or indirectly, by the Company or any of its Subsidiaries of
any assets (including debt and/or equity securities) or business (by
merger, consolidation or otherwise), the grant or issuance of any
debt or equity securities of the Company or any of its Subsidiaries
(other than, in the case of any of the foregoing, as contemplated by
Section 3.01 of this Agreement), the redemption, repurchase or
reacquisition of any debt or equity securities of the Company or any
of its Subsidiaries, by the Company or any such Subsidiary, or the
incurrence of any indebtedness, or any combination of the foregoing,
in any such case, in one transaction or a series of transactions in
a six-month period, with a value of 10% or more of the market value
of the Total Equity Securities at the time of such transaction,
provided that the prepayment, redemption, repurchase or conversion
of prepayable, callable, redeemable or convertible securities in
accordance with the terms thereof shall not be a transaction subject
to this paragraph;
(ii) voluntarily commencing any liquidation, dissolution
or winding up of the Company or any material Subsidiary;
(iii) any material amendments to the Certificate of
Incorporation or Bylaws of the Company (including the issuance of
preferred stock pursuant to the "blank check" authorization in the
Certificate of Incorporation, having super voting rights (more than
1 vote per share) or entitled to vote as a class on any matter
(except to the extent such class vote is required by Delaware law or
to the extent the holder of such preferred stock may have the right
to elect directors upon the occurrence of a default in payment of
dividends or redemption price));
(iv) engagement by the Company in any line of business
other than media, communications and entertainment products,
services and programming,
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and electronic retailing and commerce, or other businesses
engaged in by the Company as of the date of determination of the
Total Debt Ratio;
(v) adopting any stockholder rights plan (or any other
plan or arrangement that could reasonably be expected to
disadvantage any stockholder on the basis of the size or voting
power of its shareholding) that would adversely affect Liberty or
Xx. Xxxxxx; and
(vi) entering into any agreement with any holder of
Equity Securities in such stockholder's capacity as such, which
grants such stockholder approval rights similar in type and
magnitude to those set forth in this Section 2.03.
Section 2.04. NOTICE OF EVENTS. In the event that (a) the Company intends
to engage in a transaction of a type that is described in Section 2.03, and (b)
the Company does not intend to seek consent from Liberty and/or Xx. Xxxxxx,
whichever (or both) are required to consent to a Contingent Matter (a
"CONSENTING PARTY") due to the Company's good faith belief that the specific
provisions of Section 2.03 do not require such consent but that reasonable
people acting in good faith could differ as to whether consent is required
pursuant to such Section, the Company shall notify the Consenting Parties as to
the material terms of the transaction (including the Company's estimate of the
timing thereof) by written notice (including a statement of the Total Debt
Ratio) delivered as far in advance of engaging in such transaction as is
reasonably practicable unless such transaction was previously publicly
disclosed.
ARTICLE III
PREEMPTIVE RIGHTS
Section 3.01. LIBERTY PREEMPTIVE RIGHTS. (a) In the event that after the
date hereof, the Company issues or proposes to issue (other than to the Company
and its Affiliates or Liberty and its Affiliates, and other than pursuant to an
Excluded Issuance) any Company Common Shares (including Company Common Shares
issued upon exercise, conversion or exchange of options, warrants and
convertible securities (other than shares of Company Common Stock issued upon
conversion of shares of Company Class B Stock) and such issuance, together with
any prior issuances aggregating less than 1% with respect to which Liberty's
preemptive right has not become exercisable (including issuances prior to the
date hereof which would be included for purposes of calculating the 1% threshold
that have not previously been taken into account in connection with the
preemptive right last preceding the date of this Agreement pursuant to the 2001
Governance Agreement), shall be in excess of 1% of the total number of Company
Common Shares outstanding after giving effect to such issuance (an "ADDITIONAL
ISSUANCE"), the Company shall give written notice to Liberty not later than five
business days after the issuance, specifying the number of Company Common Shares
issued or to be issued and the Issue Price (if known) per share. Liberty shall
have the right (but not the obligation) to purchase or cause one or more of the
Liberty Holdcos to purchase for cash a number (but not less than such number) of
Company Common Shares (allocated between Company Common Stock and Company Class
B Stock in the same proportion as the issuance or issuances giving rise to the
preemptive right hereunder, except to the extent that Liberty opts to receive
Company Common Stock in lieu of
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Company Class B Common Stock), so that Liberty and the Liberty Holdcos shall
collectively maintain the identical percentage equity Beneficial Ownership
interest in the Company that Liberty and the Liberty Holdcos collectively owned
immediately prior to the notice from the Company to Liberty described in the
first sentence of this paragraph (but not in excess of 21% of the outstanding
Total Equity Securities) after giving effect to such Additional Issuance and to
shares of Company Common Stock that are to be issued to Liberty and the Liberty
Holdcos pursuant to this Section 3.01 by sending an irrevocable written notice
to the Company not later than fifteen business days after receipt of such notice
(or, if later, two business days following the determination of the Issue Price)
from the Company that it elects to purchase or to cause one or more of the
Liberty Holdcos to purchase all of such Company Common Shares (the "ADDITIONAL
SHARES"). The closing of the purchase of Additional Shares shall be the later of
ten business days after the delivery of the notice of election by Liberty and
five business days after receipt of any necessary regulatory approvals.
(b) The purchase or redemption of any Company Common Shares by the
Company or any of its Affiliates shall not result in an increase in the
percentage of Company equity that Liberty may be entitled to acquire pursuant to
the preemptive right in paragraph 3.01(a) above.
Section 3.02. INVESTMENT AGREEMENT. Section 1.7 and Section 1.8 of the
Investment Agreement shall be of no further force or effect and Liberty shall
cease to have any preemptive rights with respect to Equity Securities, except as
otherwise provided with respect to Liberty in Section 3.01 of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Xx. Xxxxxx and Liberty that (a) the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder, (b) the execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or any of
the transactions contemplated hereby, (c) this Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, and, assuming this Agreement constitutes a valid and binding
obligation of each Stockholder, is enforceable against the Company in accordance
with its terms, (d) neither the execution, delivery or performance of this
Agreement by the Company constitutes a breach or violation of or conflicts with
the Company's Certificate of Incorporation or By-laws or any material agreement
to which the Company is a party and (e) none of such material agreements would
impair in any material respect the ability of the Company to perform its
obligations hereunder.
Section 4.02. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder, severally as to itself (and, in the case of Xx. Xxxxxx, as
applicable), represents and warrants to the
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Company and the other Stockholder that (a) it is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and he or it, as the case may be, has the power and authority
(corporate or otherwise) to enter into this Agreement and to carry out his or
its obligations hereunder, (b) the execution and delivery of this Agreement by
such Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of such Stockholder and no other proceedings on the part of such
Stockholder are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
such Stockholder and constitutes a valid and binding obligation of such
Stockholder, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, is enforceable against such Stockholder in accordance
with its terms, (d) neither the execution, delivery or performance of this
Agreement by such Stockholder constitutes a breach or violation of or conflicts
with its certificate of incorporation or by-laws (or similar governing
documents) or any material agreement to which such Stockholder is a party and
(e) none of such material agreements would impair in any material respect the
ability of such Stockholder to perform its obligations hereunder.
ARTICLE V
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
Section 5.01. "2001 GOVERNANCE AGREEMENT" shall have the meaning set forth
in the Recitals to this Agreement.
Section 5.02. "AFFILIATE" shall have the meaning set forth in Rule 12b-2
under the Exchange Act (as in effect on the date of this Agreement). For
purposes of this definition, (i) natural persons shall not be deemed to be
Affiliates of each other, (ii) none of Xx. Xxxxxx, Liberty or any of their
respective Affiliates shall be deemed to be an Affiliate of the Company or its
Affiliates, (iii) none of the Company, Liberty or any of their respective
Affiliates shall be deemed to be an Affiliate of Xx. Xxxxxx or his Affiliates,
(iv) none of the Company, Xx. Xxxxxx or any of their respective Affiliates shall
be deemed to be an Affiliate of Liberty or its Affiliates, and (v) the Company
shall not be deemed to be an Affiliate of Expedia, Inc. based upon the common
control of the Company and Expedia, Inc. by the Stockholders.
Section 5.03. "AMENDED AND RESTATED STOCKHOLDERS AGREEMENT" shall mean the
stockholders agreement dated as of the date hereof between Liberty and Xx.
Xxxxxx.
Section 5.04. "BDTV ENTITIES" shall have the meaning specified in the
Amended and Restated Stockholders Agreement.
Section 5.05. "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the
meaning given such term in Rule 13d-3 under the Exchange Act and a Person's
Beneficial Ownership of Company Common Shares shall be calculated in accordance
with the provisions of such Rule; PROVIDED, HOWEVER, that for purposes of
Beneficial Ownership, (a) a Person shall be deemed to be the Beneficial Owner of
any Equity Securities which may be acquired by such Person
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(disregarding any legal impediments to such Beneficial Ownership), whether
within 60 days or thereafter, upon the conversion, exchange or exercise of any
warrants, options (which options held by Xx. Xxxxxx shall be deemed to be
exercisable), rights or other securities issued by the Company or any Subsidiary
thereof, (b) no Person shall be deemed to Beneficially Own any Equity Securities
solely as a result of such Person's execution of this Agreement (including by
virtue of holding a proxy with respect to any Equity Securities), or the Amended
and Restated Stockholders Agreement, or with respect to which such Person does
not have a pecuniary interest, and (c) Liberty shall be deemed to be the
Beneficial Owner of all of the Company Common Shares held by each BDTV Entity.
Section 5.06. "CEO" shall mean the Chief Executive Officer of the Company
or any successor entity.
Section 5.07. "CEO TERMINATION DATE" shall mean the date that Xx. Xxxxxx
no longer serves as CEO.
Section 5.08. "COMMISSION" shall mean the Securities and Exchange
Commission.
Section 5.09. "COMPANY" shall have the meaning set forth in the Recitals
to this Agreement.
Section 5.10. "COMPANY COMMON SHARES" shall mean shares of Company Common
Stock and Company Class B Stock.
Section 5.11. "COMPANY CLASS B STOCK" shall mean class B common stock,
$0.001 par value per share, of the Company.
Section 5.12. "COMPANY COMMON STOCK" shall mean common stock, $0.001 par
value per share, of the Company.
Section 5.13. "CONSENTING PARTY" shall have the meaning set forth in
Section 2.03 of this Agreement.
Section 5.14. "DEMAND REGISTRATION" shall have the meaning set forth in
Section 6.07(b) of this Agreement.
Section 5.15. "DISABLED" shall mean the disability of Xx. Xxxxxx after the
expiration of more than 180 consecutive days after its commencement which is
determined to be total and permanent by a physician selected by Liberty and
reasonably acceptable to Xx. Xxxxxx, his spouse or a personal representative
designated by Xx. Xxxxxx; PROVIDED that Xx. Xxxxxx shall be deemed to be
disabled only following the expiration of 90 days following receipt of a written
notice from the Company and such physician specifying that a disability has
occurred if within such 90-day period he fails to return to managing the
business affairs of the Company. Total disability shall mean mental or physical
incapacity that prevents Xx. Xxxxxx from managing the business affairs of the
Company.
Section 5.16. "EBITDA" shall mean, for any period, for the Company and its
Subsidiaries, on a combined consolidated basis: net income plus (to the extent
reflected in the
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determination of net income) (i) provision for income taxes, (ii) minority
interest, (iii) interest income and expense, (iv) depreciation and amortization,
(v) amortization of cable distribution fees, and (vi) amortization of non-cash
distribution and marketing expense and non-cash compensation expense.
Section 5.17. "EQUITY SECURITIES" shall mean the equity securities of the
Company calculated on a Company Common Stock equivalent basis, including the
Company Common Shares and those shares issuable upon exercise, conversion or
redemption of other securities of the Company not otherwise included in this
definition.
Section 5.18. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission promulgated
thereunder.
Section 5.19. "EXCLUDED ISSUANCE" shall mean any issuance of Company
Common Shares (i) in a Sale Transaction, or (ii) which is "restricted stock" or
the ownership of which is otherwise subject to forfeiture ("RESTRICTED STOCK"),
provided that for purposes of this definition and Section 3.01 of this Agreement
any stock covered by the provisions of clause (ii) shall be deemed to have been
issued for purposes of Section 3.01 of this Agreement on the date (the "LAPSE
DATE") the restrictions on such stock lapse or on which the stock is no longer
subject to forfeiture.
Section 5.20. "FAIR MARKET VALUE" for a security publicly traded in the
over-the-counter market (on either NASDAQ-NMS or NASDAQ) or on a recognized
exchange shall be the average closing price of such security for the three
trading days ending on the applicable day (or, if such day is not a trading day,
the trading day immediately preceding the applicable day), and for all other
securities or property "Fair Market Value" shall be determined, by a nationally
recognized investment banking firm which has not been engaged by the Company or
Liberty or their respective Affiliates (including, with respect to the Company,
for so long as Xx. Xxxxxx is Chairman of the Board of Expedia, Inc., Expedia,
Inc.) for the prior three years, selected by (i) the Company and (ii) Liberty;
provided that, if the Company and Liberty cannot agree on such an investment
banking firm within 10 business days, such investment banking firm shall be
selected by a panel designated in accordance with the rules of the American
Arbitration Association. The fees, costs and expenses of the American
Arbitration Association and the investment banking firm so selected shall be
borne equally by the Company and Liberty.
Section 5.21. "IAC" shall have the meaning set forth in the Recitals to
this Agreement.
Section 5.22. "ISSUE PRICE" shall mean the price per share equal to (i) in
connection with an underwritten offering of Company Common Shares, the initial
price at which the stock is offered to the public or other investors, (ii) in
connection with other sales of Company Common Shares for cash, the cash price
paid for such stock, (iii) in connection with the deemed issuances of Restricted
Stock, the Fair Market Value of the stock on the Lapse Date (as defined in the
definition of "Excluded Issuance" above), (iv) in connection with the issuance
of Company Common Shares as consideration in an acquisition by the Company, the
average of the Fair Market Value of the stock for the five trading days ending
on the third trading day immediately preceding (a) the date upon which
definitive agreements with respect to such acquisition were entered into if the
number of Company Common Shares issuable in such transaction is fixed on
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that date, or (b) such later date on which the consideration, or remaining
portion thereof, issuable in such transaction becomes fixed, (v) in connection
with a compensatory issuance of shares of Company Common Stock, the Fair Market
Value of the Company Common Stock, and (vi) in all other cases, including,
without limitation, in connection with the issuance of Company Common Shares
pursuant to an option, warrant or convertible security (other than in connection
with issuances described in clause (v) above), the Fair Market Value of the
Company Common Shares on the date of issuance.
Section 5.23. "LIBERTY DIRECTOR" shall mean (a) any executive officer or
director of Liberty designated by Liberty to serve on the Company's Board of
Directors, provided that the Company's Board of Directors is not unable, in the
exercise of its fiduciary responsibilities, to recommend that the Company's
stockholders elect such individual to serve on the Company's Board of Directors,
or (b) any other Person designated by Liberty who is reasonably acceptable to
the Company.
Section 5.24. "LIBERTY HOLDCO" shall mean any holding company wholly owned
by Liberty and reasonably acceptable to the Company, formed solely for the
purpose of acquiring and holding an equity interest in the Company.
Section 5.25. "OWNERSHIP PERCENTAGE" means, with respect to any
Stockholder, at any time, the ratio, expressed as a percentage, of (i) the
Equity Securities Beneficially Owned by such Stockholder (disregarding any legal
impediments to such Beneficial Ownership) and its Affiliates to (ii) the sum of
(x) the Total Equity Securities and (y) with respect to such Stockholder, any
Company Common Shares included in clause (i) that are issuable upon conversion,
exchange or exercise of Equity Securities that are not included in clause (x).
Section 5.26. "PERMITTED TRANSFEREE" shall mean Liberty or Xx. Xxxxxx and
the members of their respective Stockholder Groups.
Section 5.27. "PERSON" shall mean any individual, partnership, joint
venture, corporation, limited liability company, trust, unincorporated
organization, government or department or agency of a government.
Section 5.28. "SALE TRANSACTION" shall mean the consummation of a merger,
consolidation or amalgamation between the Company and another entity (other than
an Affiliate of the Company) in which the Company is acquired by such other
entity or a Person who controls such entity, or a sale of all or substantially
all of the assets of the Company to another entity, other than a Subsidiary of
the Company.
Section 5.29. "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
Section 5.30. "STOCKHOLDERS" shall mean Liberty and Xx. Xxxxxx.
Section 5.31. "STOCKHOLDER GROUP" shall mean (a) in respect of Liberty,
the Liberty Stockholder Group (as defined in the Amended and Restated
Stockholders Agreement) and (b) in respect of Xx. Xxxxxx, the Xxxxxx Stockholder
Group (as defined in the Amended and Restated Stockholders Agreement).
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Section 5.32. "SUBSIDIARY" shall mean, as to any Person, any corporation
or other Person at least a majority of the shares of stock or other ownership
interests of which having general voting power under ordinary circumstances to
elect a majority of the Board of Directors or similar governing body of such
corporation or other entity (irrespective of whether or not at the time stock of
any other class or classes shall have or might have voting power by reason of
the happening of any contingency) is, at the time as of which the determination
is being made, owned by such Person, or one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries.
Section 5.33. "THIRD PARTY TRANSFEREE" shall have the meaning ascribed to
such term in the Amended and Restated Stockholders Agreement.
Section 5.34. "TOTAL DEBT" shall mean all obligations of the Company and
its Subsidiaries for money borrowed, at such time (including all long-term
senior and subordinated indebtedness, all short-term indebtedness, the stated
amount of all letters of credit issued for the account of the Company or any of
its Subsidiaries and (without duplication) all unreimbursed draws thereunder
(but excluding trade letters of credit)), net of cash (other than working
capital) or cash equivalent securities, as shown on the consolidated quarterly
or annual financial statements, including the notes thereto, of the Company and
its Subsidiaries included in the Company's filings under the Exchange Act for
such period, determined in accordance with GAAP, provided, however, that Total
Debt shall not include hedging, pledging, securitization or similar transactions
involving securities owned by the Company or its Subsidiaries to monetize the
underlying securities, to the extent such securities are the sole means of
satisfying such obligations and otherwise the fair value thereof.
Section 5.35. "TOTAL DEBT RATIO" shall mean, at any time, the ratio of (i)
Total Debt of the Company and its Subsidiaries on a combined consolidated basis
as of such time to (ii) EBITDA for the four fiscal quarter period ending as of
the last day of the most recently ended fiscal quarter as of such time.
Section 5.36. "TOTAL EQUITY SECURITIES" at any time shall mean, subject to
the next sentence, the total number of the Company's outstanding equity
securities calculated on a Company Common Stock equivalent basis. Any Equity
Securities Beneficially Owned by a Person that are not outstanding Voting
Securities but that, upon exercise, conversion or exchange, would become Voting
Securities, shall be deemed to be outstanding for the purpose of computing Total
Equity Securities and the percentage of Equity Securities owned by such Person
but shall not be deemed to be outstanding for the purpose of computing Total
Equity Securities and the percentage of the Equity Securities owned by any other
Person.
Section 5.37. "TRANSFER" shall mean, directly or indirectly, to sell,
transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, assignment,
pledge, encumbrance, hypothecation or similar disposition of, any Company Common
Shares Beneficially Owned by such Stockholder or any interest in any Company
Common Shares Beneficially Owned by such Stockholder, PROVIDED, HOWEVER, that, a
merger or consolidation in which a Stockholder is a constituent corporation
shall not be deemed to be the Transfer of any Company Common Shares Beneficially
Owned by such Stockholder
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(PROVIDED, that a significant purpose of any such transaction is not to avoid
the provisions of this Agreement). For purposes of this Agreement, the
conversion of Company Class B Stock into Company Common Stock shall not be
deemed to be a Transfer.
Section 5.38. "VOTING SECURITIES" shall mean at any particular time the
shares of any class of capital stock of the Company which are then entitled to
vote generally in the election of directors.
ARTICLE VI
MISCELLANEOUS
Section 6.01. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy) and shall be given,
if to Liberty Media Corporation, to:
Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxxxx L.L.P.
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. XxXxxxx
Facsimile: (000) 000-0000
if to Xx. Xxxxxx, to:
Xxxxx Xxxxxx
Chairman and Chief Executive Officer
IAC/InterActiveCorp
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
with a copy to:
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IAC/InterActiveCorp
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
if to the Company, to:
IAC/InterActiveCorp
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
or such address or facsimile number as such party may hereafter specify for the
purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered personally, telegraphed,
or telecopied, or, if mailed, five business days after the date of the mailing.
Section 6.02. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by the party whose rights or
obligations hereunder are affected by such amendment, or in the case of a
waiver, by the party or parties against whom the waiver is to be effective. Any
amendment or waiver by the Company shall be authorized by a majority of the
Board of Directors (excluding for this purpose any director who is a Liberty
Director as provided for in this Agreement).
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(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 6.03. SUCCESSORS AND ASSIGNS. Except as provided in Article I,
neither this Agreement nor any of the rights or obligations under this Agreement
shall be assigned, in whole or in part (except by operation of law pursuant to a
merger of Liberty with another Person a significant purpose of which is not to
avoid the provisions of this Agreement), by any party without the prior written
consent of the other parties hereto. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 6.04. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall
be construed in accordance with and governed by the internal laws of the State
of Delaware, without giving effect to the principles of conflicts of laws. Each
of the parties hereto hereby irrevocably and unconditionally consents to submit
to the non-exclusive jurisdiction of the courts of the State of Delaware, for
any action, proceeding or investigation in any court or before any governmental
authority ("LITIGATION") arising out of or relating to this Agreement and the
transactions contemplated hereby and further agrees that service of any process,
summons, notice or document by U.S. mail to its respective address set forth in
this Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. Each of the parties irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, any and all rights to trial
by jury in connection with any Litigation arising out of or relating to this
Agreement or the transactions contemplated hereby.
Section 6.05. COUNTERPARTS . This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Section 6.06. SPECIFIC PERFORMANCE. The Company, Xx. Xxxxxx and Liberty
each acknowledges and agrees that the parties' respective remedies at law for a
breach or threatened breach of any of the provisions of this Agreement would be
inadequate and, in recognition of that fact, agrees that, in the event of a
breach or threatened breach by the Company or Liberty of the provisions of this
Agreement, in addition to any remedies at law, Xx. Xxxxxx, Liberty and the
Company, respectively, without posting any bond shall be entitled to obtain
equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which
may then be available.
Section 6.07. REGISTRATION RIGHTS. (a) Liberty and Xx. Xxxxxx shall be
entitled to customary registration rights relating to Company Common Stock owned
by them as of the date
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hereof or acquired from the Company (including upon conversion of Company Class
B Stock) in the future (including the ability to transfer registration rights as
set forth in this Agreement in connection with the sale or other disposition of
Company Common Stock).
(b) If requested by a Stockholder, the Company shall be required
promptly to cause the Company Common Stock owned by such Stockholder or its
Affiliates to be registered under the Securities Act in order to permit such
Stockholder or such Affiliate to sell such shares in one or more (but not more
than (i) in the case of Liberty, four and (ii) in the case of Xx. Xxxxxx, three)
registered public offerings (each, a "DEMAND REGISTRATION"). Each Stockholder
shall also be entitled to customary piggyback registration rights. If the amount
of shares sought to be registered by a Stockholder and its Affiliates pursuant
to any Demand Registration is reduced by more than 25% pursuant to any
underwriters' cutback, then such Stockholder may elect to request the Company to
withdraw such registration, in which case, such registration shall not count as
one of such Stockholder's Demand Registrations. If a Stockholder requests that
any Demand Registration be an underwritten offering, then such Stockholder shall
select the underwriter(s) to administer the offering, provided that such
underwriter(s) shall be reasonably satisfactory to the Company. If a Demand
Registration is an underwritten offering and the managing underwriter advises
the Stockholder initiating the Demand Registration in writing that in its
opinion the total number or dollar amount of securities proposed to be sold in
such offering is such as to materially and adversely affect the success of such
offering, then the Company will include in such registration, first, the
securities of the initiating Stockholder, and, thereafter, any securities to be
sold for the account of others who are participating in such registration (as
determined on a fair and equitable basis by the Company). In connection with any
Demand Registration or inclusion of a Stockholder's or its Affiliate's shares in
a piggyback registration, the Company, such Stockholder and/or its Affiliates
shall enter into an agreement containing terms (including representations,
covenants and indemnities by the Company and such Stockholder), and shall be
subject to limitations, conditions, and blackout periods, customary for a
secondary offering by a selling stockholder. The costs of the registration
(other than underwriting discounts, fees and commissions) shall be paid by the
Company. The Company shall not be required to register such shares if a
Stockholder would be permitted to sell the Company Common Stock in the
quantities proposed to be sold at such time in one transaction under Rule 144 of
the Securities Act or under another comparable exemption therefrom.
(c) If the Company and a Stockholder cannot agree as to what
constitutes customary terms within ten days of such Stockholder's request for
registration (whether in a Demand Registration or a piggyback registration),
then such determination shall be made by a law firm of national reputation
mutually acceptable to the Company and such Stockholder.
Section 6.08. TERMINATION. Except as otherwise provided in this Agreement,
this Agreement shall terminate (a) as to Liberty, at such time that Liberty
Beneficially Owns Equity Securities representing less than 5% of the Total
Equity Securities and (b) as to Xx. Xxxxxx, at such time that the CEO
Termination Date has occurred or at such time as he becomes Disabled. In respect
of "Contingent Matters," such provisions shall terminate as to Xx. Xxxxxx and
Liberty as set forth therein.
Section 6.09. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the
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remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, provided that the parties hereto shall negotiate in good faith
to attempt to place the parties in the same position as they would have been in
had such provision not been held to be invalid, void or unenforceable.
Section 6.10. COOPERATION. Each of Liberty and Xx. Xxxxxx covenants and
agrees with the other to use its reasonable best efforts to cause the Company to
fulfill the Company's obligations under this Agreement.
Section 6.11. ADJUSTMENT OF SHARE NUMBERS AND PRICES. If, after the
effective time of this Agreement, there is a subdivision, split, stock dividend,
combination, reclassification or similar event with respect to any of the shares
of capital stock referred to in this Agreement, then, in any such event, the
numbers and types of shares of such capital stock referred to in this Agreement
and, if applicable, the prices of such shares, shall be adjusted to the number
and types of shares of such capital stock that a holder of such number of shares
of such capital stock would own or be entitled to receive as a result of such
event if such holder had held such number of shares immediately prior to the
record date for, or effectiveness of, such event and the prices for such shares
shall be similarly adjusted.
Section 6.12. EFFECTIVE TIME. This Agreement shall become effective
immediately following the effective time of the Company's spin off of Expedia,
Inc.
Section 6.13. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement, the Amended and Restated Stockholders Agreement, and as
provided in Section 5.1 of the Amended and Restated Stockholders Agreement, the
1997 Stockholders Agreement embody the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and thereof
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way (including, without limitation,
effective upon the date hereof, all stockholders agreements relating to the
Company (other than the Amended and Restated Stockholders Agreement) between
Liberty and Xx. Xxxxxx). Effective upon the effective time of this Agreement,
the 2001 Governance Agreement shall terminate and shall be superseded by this
Agreement.
Section 6.14. INTERPRETATION. References in this Agreement to Articles and
Sections shall be deemed to be references to Articles and Sections of this
Agreement unless the context shall otherwise require. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of such agreement or instrument.
Section 6.15. HEADINGS. The titles of Articles and Sections of this
Agreement are for convenience only and shall not be interpreted to limit or
otherwise affect the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Governance Agreement to be duly executed as of the day and year first
above written.
IAC/INTERACTIVECORP
By /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
LIBERTY MEDIA CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
/s/ Xxxxx Xxxxxx
---------------------------------
XXXXX XXXXXX
[SIGNATURE PAGE TO AMENDED AND RESTATED GOVERNANCE AGREEMENT]
