EXHIBIT 4.4
EXECUTION VERSION
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of August 9, 2005 (this
"Second Supplemental Indenture"), is by and among ASK JEEVES, INC., a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), IAC/INTERACTIVECORP, a corporation organized and existing under the
laws of the State of Delaware ("IAC"), and The Bank of New York, a New York
banking corporation, as Trustee (the "Trustee").
PRELIMINARY STATEMENT
The Company and the Trustee have entered into an Indenture, dated as of
June 4, 2003 (the "Original Indenture") and the Company, IAC, and the Trustee
have entered into a First Supplemental Indenture, dated as of July 19, 2005
(together with the Original Indenture, the "Indenture"). Capitalized terms used
herein have the meanings assigned to them in the Indenture, unless otherwise
indicated. In Section 11.01 of Article XI of the Indenture it is provided that,
among other things, the Company and the Trustee, subject to the conditions and
restrictions contained in the Indenture, may from time to time and at any time
enter into an indenture or indentures supplemental thereto, and may amend or
supplement the Indenture and/or the Securities, for the following purposes,
among others: (i) to comply with Section 4.10 of the Indenture, (ii) to cure any
ambiguity, defect or inconsistency, or (iii) to make any other change that does
not adversely affect the rights of any Securityholder.
The Company created and issued under and in accordance with the provisions
of the Indenture, certain Zero Coupon Convertible Subordinated Securities Due
June 1, 2008.
On July 19, 2005, the Company merged with a wholly owned subsidiary of IAC,
with the Company surviving the merger and becoming a wholly-owned subsidiary of
IAC.
On August 9, 2005, IAC effected a separation of the majority of its travel
and travel-related businesses, subsidiaries and investments from the remainder
of its businesses by means of a one-for-two split of its Common Stock (the
"Reverse Split") and a subsequent reclassification (the "Rec1assification") of
its Common Stock (the Reverse Split and the Reclassification, together with all
related transactions, the "Transactions"). As a result of the Reverse Split,
each holder of Common Stock immediately prior to the Reverse Split received one
share of Common Stock for every two shares of Common Stock held previously. As a
result of the Reclassification, each holder of Common Stock immediately prior to
the Reclassification received one share of $0.001 par value common stock of IAC
and 1/100 of a share of Series 1 Mandatory Exchangeable Preferred Stock of IAC.
Immediately following the Reclassification, the Mandatory Exchangeable Preferred
Stock automatically exchanged into one share of $0.001 par value common stock of
Expedia, Inc., a Delaware Corporation ("Expedia"). The net result of the
Transactions was that holders of Common Stock received one share of IAC $0.001
par value common stock and one share of Expedia $0.001 par value common stock
for every two shares of Common Stock held immediately prior to the Transactions.
The Company, the Trustee and IAC now desire to supplement the Indenture to
comply with the requirements of Section 4.10 of the Indenture.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
1. THE FOLLOWING SHALL BE ADDED AS ADDITIONAL DEFINITIONS IN SECTION 1.01 OF
ARTICLE I OF THE INDENTURE IN APPROPRIATE ALPHABETICAL SEQUENCE:
"Expedia" means Expedia, Inc., a corporation organized and existing under
the laws of the State of Delaware.
"Expedia Stock" means the common stock of Expedia, $0.001 par value, as it
exists on the date of the Second Supplemental Indenture and any shares of any
class or classes of capital stock of Expedia resulting from any reclassification
or reclassifications thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of Expedia and which are not subject to
redemption by Expedia; provided, however, that if at any time there shall be
more than one such resulting class, the shares of each such class then so
issuable on conversion of Securities shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Second Supplemental Indenture" means the Second Supplemental Indenture,
dated August 9, 2005, by and among the Company, IAC and the Trustee.
2. THE DEFINITION OF THE TERMS "APPLICABLE STOCK," "BOARD OF DIRECTORS,"
"COMMON STOCK," "OFFICER," "OFFICER'S CERTIFICATE," "TRADING DAY," AND
"VOLUME WEIGHTED AVERAGE PRICE" SHALL BE AMENDED AND RESTATED IN FULL, AS
FOLLOWS:
"Applicable Stock" means (i) the Common Stock and/or the Expedia Stock, as
the case may be, (ii) in the event of a merger, consolidation or other similar
transaction involving IAC or Expedia in which IAC or Expedia, as the case may
be, is not the surviving corporation, the common stock, common equity interests,
ordinary shares or American Depositary Shares or other certificates representing
common equity interests of such surviving corporation or its direct or indirect
parent corporation.
"Board of Directors" means either the board of directors of the Company or
of IAC, as the case may be, or any committee thereof authorized to act for
such board with respect to this Indenture, provided, that with respect to any
determination to be made by a Board of Directors hereunder with respect to the
value of Expedia Stock (or any distribution thereon or consideration therefor),
the applicable Board of Directors shall be that of IAC.
"Common Stock" means the common stock of IAC, $0.001 par value, as it
exists on the date of the Second Supplemental Indenture and any shares of any
class or classes of capital stock of IAC resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of IAC and which are not subject to redemption by IAC;
provided, however, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable on conversion of
Securities should be substantially in the proportion which the total number of
shares of such class resulting from all
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such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Officer" means, as to any Person, the following officers of such Person:
the Chairman or any Co-Chairman of the Board, any Vice Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, the Secretary or any Assistant Controller or
Assistant Secretary.
"Officer's Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Sections 4.11 and 6.03, "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company (or
of IAC, as the case may be) and by one other Officer.
"Trading Day" means a day during which trading in securities generally
occurs on The Nasdaq National Market (or, if the Common Stock or Expedia Stock
is not quoted on The Nasdaq National Market, on the principal other market on
which the Common Stock or the Expedia Stock, as applicable, is then traded),
other than a day on which a material suspension of or limitation on trading is
imposed that affects either The Nasdaq National Market (or, if applicable, such
other market) in its entirety or only the shares of Common Stock or Expedia
Stock, as applicable, (by reason of movements in price exceeding limits
permitted by the relevant market on which the shares are traded or otherwise) or
on which The Nasdaq National Market (or, if applicable, such other market)
cannot clear the transfer of IAC's shares or of Expedia's shares due to an event
beyond the such company's control.
"Volume Weighted Average Price" means, with respect to one share of Common
Stock or Expedia Stock, as applicable, on any Trading Day, the volume weighted
average prices as displayed under the heading "Bloomberg VWAP" on the applicable
Bloomberg Pages in respect of the period from 9:30 a.m. to 4:00 p.m. (New York
City time) on that Trading Day (or if such volume weighted average price is not
available, the market value of one share of Common Stock or Expedia Stock, as
applicable, on such Trading Day as the Company determines in good faith using a
volume weighted method).
3. THE FOLLOWING SHALL BE ADDED AS AN ADDITIONAL REFERENCE IN SECTION 1.02 OF
ARTICLE I OF THE INDENTURE IN APPROPRIATE ALPHABETICAL SEQUENCE:
--------------------------------------------------------------------------------
Term Defined in Section
--------------------------------------------------------------------------------
"Expedia Cash Amount" 4.02
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"Expedia Conversion Price" 4.06
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"Expedia Partial Cash Amount" 4.02
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"IAC Cash Amount" 4.02
--------------------------------------------------------------------------------
"IAC Partial Cash Amount" 4.02
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4. THE PHRASE "THE CONVERSION PRICE" CONTAINED IN SECTION 3.02(B)(12) OF THE
INDENTURE SHALL BE AMENDED AND REPLACED BY THE FOLLOWING:
the Conversion Price and Expedia Conversion Price
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5. THE PHRASE "INTO COMMON STOCK" CONTAINED IN SECTION 3.02(B)(14) OF THE
INDENTURE SHALL BE AMENDED AND REPLACED BY THE FOLLOWING:
into Common Stock and Expedia Stock
6. THE PHRASE "INTO SHARES OF COMMON STOCK" CONTAINED IN SECTION 3.03 OF THE
INDENTURE SHALL BE AMENDED AND REPLACED BY THE FOLLOWING:
into shares of Common Stock and Expedia Stock
7. ARTICLE IV OF THE INDENTURE SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY
AS SET FORTH IN ANNEX A HERETO.
8. SECTION 6.02 OF THE INDENTURE SHALL BE AMENDED BY ADDING A NEW PARAGRAPH:
AT THE END THEREOF AS FOLLOWS:
Neither IAC nor the Company shall have any responsibility to cause or
require Expedia to file with the SEC or with the Trustee any reports or other
information and documents, whether or not required pursuant to the Exchange Act
or other applicable law, and neither IAC nor the Company makes any
representation or warranty with respect to Expedia's compliance with the
Exchange Act or other applicable law.
9. THE PHRASE "INTO COMMON STOCK" CONTAINED IN SECTION 8.04 OF THE INDENTURE
SHALL BE AMENDED AND REPLACED BY THE FOLLOWING:
into Common Stock and/or Expedia Stock
10. PARAGRAPH 6 OF EXHIBIT A TO THE INDENTURE AND OF EACH SECURITY SHALL BE
AMENDED AND RESTATED IN ITS ENTIRETY AS SET FORTH IN ANNEX B HERETO.
11. THE FORM OF CONVERSION NOTICE SET FORTH IN EXHIBIT A TO THE INDENTURE AND
IN EACH SECURITY SHALL BE AMENDED AND RESTATED IN ITS ENTIRETY AS SET FORTH
IN ANNEX C HERETO.
EFFECT OF SECOND SUPPLEMENTAL INDENTURE
The Company, IAC and the Trustee hereby agree that by virtue of their
execution and delivery of this Second Supplemental Indenture, the Securities
shall be deemed to be amended in accordance with the provisions of paragraphs 1
through 11 above.
This Second Supplemental Indenture shall become effective, and the
provisions provided for in this Second Supplemental Indenture shall become
operative, immediately upon execution of this Second Supplemental Indenture by
the parties hereto.
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RATIFICATION OF INDENTURE; SECOND SUPPLEMENTAL INDENTURE; PART OF INDENTURE.
Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Second Supplemental Indenture shall
form a part of the Indenture for all purposes, and every Holder of a Security
heretofore or hereafter authenticated and delivered shall be bound hereby.
MISCELLANEOUS
1. GOVERNING LAW. This Second Supplemental Indenture shall be governed in
accordance with the internal laws of the State of New York.
2. TRUSTEE MAKES NO REPRESENTATIONS. The Trustee makes no representation as to
the validity or sufficiency of this Second Supplemental Indenture. The
recitals and statements herein are deemed to be those of the Company and
IAC and not of the Trustee.
3. COUNTERPARTS. This Second Supplemental Indenture may be simultaneously
executed by facsimile or electronic mail and in any number of counterparts,
each of which when so executed and delivered shall be an original; but such
counterparts shall together constitute but one and the same instrument.
4. EFFECT OF HEADINGS. All descriptive headings of this Second Supplemental
Indenture are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
[Remainder of Page Intentionally Blank]
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IN WITNESS HEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed as of the day and year first above written.
ASK JEEVES, INC.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Financial Officer
IAC/INTERACTIVECORP
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx, Esq.
Title: Executive Vice President,
General Counsel and Secretary
THE BANK OF NEW YORK,
As Trustee
By: /s/ Xxxxx Xxxxxxxxx-Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxxx-Xxxxxx
Title: Vice President
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ANNEX A
ARTICLE IV
CONVERSION
SECTION 4.01 CONVERSION PRIVILEGE.
(a) Subject to the further provisions of this Article IV and paragraph 6 of
the Securities, a Holder of a Security may convert the principal amount of such
Security (or any portion thereof equal to $1,000 or any integral multiple of
$1,000 in excess thereof) into Common Stock and/or Expedia Stock at any time
prior to the close of business on the Final Maturity Date, at the applicable
Conversion Price and applicable Expedia Conversion Price then in effect, in each
case as and to the extent set forth below.
(b) If a Security is submitted or presented for purchase pursuant to a
Change of Control Purchase Notice in accordance with Article III, such
conversion right shall terminate at the close of business on the Business Day
immediately preceding the Change in Control Purchase Date for such Security or
such earlier date as the Holder presents such Security for purchase (unless the
Holder withdraws its election pursuant to Section 4.01(e)).
(c) If IAC elects Share Settlement, (i) the number of shares of Common
Stock issuable upon conversion of a Security shall be determined by dividing the
aggregate principal amount of the Security or portion thereof surrendered for
conversion by the Conversion Price in effect on the Conversion Date and (ii) the
number of shares of Expedia Stock issuable upon conversion of a Security shall
be determined by dividing the aggregate principal amount of the Security or
portion thereof surrendered for conversion by the Expedia Conversion Price in
effect on the Conversion Date. The initial Conversion Price and initial Expedia
Conversion Price are set forth in paragraph 6 of the Securities and are subject
to adjustment as provided in this Article IV.
(d) Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.
(e) A Security in respect of which a Holder has delivered a Change in
Control Purchase Notice pursuant to Section 3.02(c), exercising the option of
such Holder to require the Company to purchase such Security, may be converted
only (1) if such Change in Control Purchase Notice is withdrawn by a written
notice of withdrawal delivered to the Paying Agent prior to the close of
business on the Business Day immediately preceding the Change in Control
Purchase Date in accordance with Section 3.03 or (2) pursuant to the deemed
withdrawal of such notice under Section 3.02(c).
(f) A Holder of Securities is not entitled to any rights of a holder of
Common Stock and/or Expedia Stock until such Holder has converted its Securities
to Common Stock and/or Expedia Stock, and only to the extent such Securities are
deemed to have been converted into Common Stock and/or Expedia Stock pursuant to
this Article IV.
SECTION 4.02 CONVERSION PROCEDURE.
(a) To convert a Security, a Holder must (a) complete and manually sign the
conversion notice on the back of the Security and deliver such notice to the
Conversion Agent, (b) surrender the Security to the Conversion Agent, (c)
furnish appropriate endorsements and transfer documents if required by a
Registrar or the Conversion Agent, and (d) pay any transfer or similar tax, if
required. The date on which the Holder satisfies all of those requirements is
the "Conversion Date."
(b) As soon as practicable after the Conversion Date, and subject to
paragraph (c), the Company or IAC shall satisfy all of the obligations of the
Company and IAC upon conversion of the Securities ("Conversion Obligations") by
delivering to the Holder, at IAC's option, either shares of Common Stock and
Expedia Stock, cash, or a combination of cash and shares of Common Stock and/or
Expedia Stock, in the following manner:
(1) If IAC elects to satisfy the entire Conversion Obligation in
shares of Common Stock and Expedia Stock ("Share Settlement"), then IAC or the
Company will deliver to the Holder (i) shares of Common Stock equal to the
quotient of (A) the aggregate principal amount of Securities to be converted by
the Holder divided by (B) the Conversion Price in effect on the Conversion Date
and (ii) shares of Expedia Stock equal to the quotient of (A) the aggregate
principal amount of Securities to be converted by the Holder divided by (B) the
Expedia Conversion Price in effect on the Conversion Date;
(2) If IAC elects to satisfy the entire Conversion Obligation in cash
("Cash Settlement"), then IAC or the Company will deliver to the Holder cash in
an amount equal to the sum of (i) the product of (A) a number equal to the
aggregate principal amount of Securities to be converted by such Holder divided
by the Conversion Price in effect on the Conversion Date, and (B) the arithmetic
mean of the Volume Weighted Average Prices of Common Stock on each Trading Day
during the Cash Settlement Averaging Period (such product, the "IAC Cash
Amount") and (ii) the product of (A) a number equal to the aggregate principal
amount of Securities to be converted by such Holder divided by the Expedia
Conversion Price in effect on the Conversion Date, and (B) the arithmetic mean
of the Volume Weighted Average Prices of Expedia Stock on each Trading Day
during the Cash Settlement Averaging Period (such product, the "Expedia Cash
Amount"); or
(3) If IAC elects to satisfy in cash a portion of the Conversion
Obligation that would otherwise be settled in Common Stock (the "IAC Partial
Cash Amount") and/or to satisfy in cash a portion of the Conversion Obligation
that would otherwise be settled in Expedia Stock (the "Expedia Partial Cash
Amount"), then IAC or the Company will deliver to the Holder (i) the IAC Partial
Cash Amount (which may be zero), (ii) the Expedia Partial Cash Amount (which may
be zero), (iii) a number of shares of Common Stock equal to the quotient of (A)
the IAC Cash Amount minus the IAC Partial Cash Amount divided by (B) the
arithmetic mean of the Volume Weighted Average Prices of the Common Stock on
each Trading Day during the applicable Cash Settlement Averaging Period and (iv)
a number of shares of Expedia Stock equal to the quotient of (A) the Expedia
Cash Amount minus the Expedia Partial Cash Amount divided by (B) the arithmetic
mean of the Volume Weighted Average Prices of the Expedia Stock on each Trading
Day during the applicable Cash Settlement Averaging Period. Any satisfaction of
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the Conversion Obligation partially in cash and partially in securities pursuant
to this paragraph shall be referred to as a "Combined Settlement."
(c) Upon receipt of the conversion notice from a Holder by the Company, IAC
or the Conversion Agent:
(1) If IAC elects to satisfy the Conversion Obligation by Share
Settlement, then settlement in Common Stock and Expedia Stock will be made on or
prior to the fifth (5th) Trading Day following the receipt of such conversion
notice.
(2) If IAC elects to satisfy the Conversion Obligation by Cash
Settlement or Combined Settlement, then IAC or the Company will notify the
Holder, through the Trustee, of the dollar amount to be satisfied in cash at any
time on or before the date that is two Business Days following receipt of the
notice of conversion (the "Settlement Notice Period"). Share Settlement will
apply automatically if neither IAC nor the Company notifies the Holder that IAC
has chosen another settlement method.
(3) If IAC timely elects Cash Settlement or Combined Settlement, then
the Holder may retract the conversion notice at any time during the two (2)
Business Day period beginning on the day after the Settlement Notice Period (the
"Conversion Retraction Period") by notice to the Trustee. The Holder cannot
retract the conversion notice (and the conversion notice therefore will be
irrevocable) if IAC elects Share Settlement. If the Holder has not retracted the
conversion notice during the Conversion Retraction Period, then Cash Settlement
or Combined Settlement will occur on the first Trading Day following the Cash
Settlement Averaging Period.
(d) If an Event of Default (other than an Event of Default in a cash
payment upon conversion of the Securities) has occurred and is continuing, IAC
and/or the Company may not pay cash upon conversion of any Security or portion
of a Security (other than cash for fractional shares).
(e) The person in whose name the Common Stock certificate is registered
shall be deemed to be a stockholder of record on the Conversion Date; provided,
however, that no surrender of a Security on any date when the stock transfer
books of IAC shall be closed shall be effective to constitute the person or
persons entitled to receive the shares of Common Stock upon such conversion as
the record holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the person or persons entitled
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; provided, further, that such conversion
shall be at the Conversion Price in effect on the Conversion Date as if the
stock transfer books of IAC had not been closed. The person in whose name the
Expedia Stock certificate is registered shall be deemed to be a stockholder of
record on the Conversion Date or as soon as reasonably practicable thereafter.
Upon conversion of a Security, such person shall no longer be a Holder of such
Security. No payment or adjustment will be made for dividends or distributions
on shares of Common Stock or Expedia Stock issued or delivered upon conversion
of a Security, except as explicitly set forth herein.
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(f) Anything herein to the contrary notwithstanding, in the case of Global
Securities, conversion notices may be delivered and such Securities may be
surrendered for conversion in accordance with the Applicable Procedures as in
effect from time to time.
(g) Upon surrender of a Security that is converted in part, IAC and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security equal in principal amount to the unconverted portion of
the Security surrendered.
SECTION 4.03 FRACTIONAL SHARES.
The Company and/or IAC will not deliver fractional shares of Common Stock
or Expedia Stock upon conversion of Securities. In lieu thereof, IAC or the
Company will pay an amount in cash for the fractional shares equal to the Volume
Weighted Average Price of the Common Stock or Expedia Stock, as applicable,
determined during the Cash Settlement Averaging Period multiplied by the
fractional share and rounding the product to the nearest whole cent.
SECTION 4.04 TAXES ON CONVERSION.
If a Holder converts a Security, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue or release of shares of
Common Stock and/or Expedia Stock upon such conversion. However, the Holder
shall pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name. The Conversion Agent may refuse
to deliver the certificates representing the Common Stock and/or Expedia Stock
being issued and/or delivered in a name other than the Holder's name until the
Conversion Agent receives a sum sufficient to pay any tax which will be due
because the shares are to be issued in a name other than the Holder's name.
Nothing herein shall preclude any tax withholding required by law or regulation.
SECTION 4.05 IAC TO PROVIDE STOCK.
(a) IAC shall, from time to time as may be necessary, (i) reserve, out of
its authorized but unissued Common Stock, a sufficient number of shares of
Common Stock, and (ii) enter into and maintain such arrangements as may be
necessary to provide a sufficient number of shares of Expedia Stock, to permit
the conversion of all outstanding Securities into shares of Common Stock and/or
Expedia Stock as provided herein. All shares of Common Stock and/or Expedia
Stock delivered upon conversion of the Securities shall be duly authorized,
validly issued, fully paid and nonassessable and shall be free from preemptive
rights and free of any lien or adverse claim.
IAC will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or on the Nasdaq
National Market or other over-the-counter market or such other market on which
the Common Stock is then listed or quoted; provided, however, that if rules of
such automated quotation system or exchange permit IAC to defer the listing of
such Common Stock until the first conversion of the Securities into Common Stock
in accordance with the provisions of this Indenture, IAC covenants to list such
Common Stock issuable upon conversion of the Securities in accordance with the
requirements of such automated quotation
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system or exchange at such time. Any Common Stock issued upon conversion of a
Security hereunder which at the time of conversion was a Restricted Security
will also be a Restricted Security. In no event shall IAC or the Company have
any obligation with respect to the listing of the Expedia Stock on any exchange
or in respect of the compliance by Expedia with applicable law, nor do IAC or
the Company make any representation or warranty with respect to the foregoing.
SECTION 4.06 ADJUSTMENT OF CONVERSION PRICE.
The conversion prices stated in paragraph 6 of the Securities (with respect
to Common Stock and Expedia Stock respectively, the "Conversion Price"
and the "Expedia Conversion Price") shall be adjusted from time to time by IAC
and the Company as follows:
(a) CONVERSION PRICE.
(i) In case IAC shall (w) pay a dividend on its Common Stock in shares of
Common Stock, (x) make a distribution on its Common Stock in shares of Common
Stock, (y) subdivide its outstanding Common Stock into a greater number of
shares, or (z) combine its outstanding Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the Holder of any Security thereafter surrendered for
conversion shall be entitled to receive that number of shares of Common Stock
which it would have owned had such Security been converted immediately prior to
the happening of such event. An adjustment made pursuant to this subsection
(a)(i) shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of subdivision or combination.
(ii) In case IAC shall issue rights or warrants to all or substantially all
holders of its Common Stock entitling them (for a period commencing no earlier
than the record date described below and expiring not more than 60 days after
such record date) to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Current Market Price per share of
Common Stock on the record date for the determination of stockholders entitled
to receive such rights or warrants, the Conversion Price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible securities so
offered, which shall be determined by multiplying the number of shares of Common
Stock issuable upon conversion of such convertible securities by the conversion
price per share of Common Stock pursuant to the terms of such convertible
securities) would purchase at the Current Market Price per share of Common Stock
on such record date, and of which the denominator shall be the number of shares
of Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered (or into which the convertible securities so
offered are convertible). Such adjustment shall be made successively whenever
any such rights or warrants are issued, and shall become effective immediately
after such record date. If at the end of the period during which such rights or
warrants are exercisable not all rights or warrants shall have been exercised,
the
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adjusted Conversion Price shall be immediately readjusted to what it would have
been based upon the number of additional shares of Common Stock actually issued
(or the number of shares of Common Stock issuable upon conversion of convertible
securities actually issued).
(iii) In case IAC shall distribute to all or substantially all holders of
its Common Stock any shares of capital stock of IAC (other than Common Stock),
evidences of indebtedness or other non-cash assets (including securities of any
person other than IAC but excluding (1) dividends or distributions paid
exclusively in cash or (2) dividends or distributions referred to in subsection
(a) of this Section 4.06), or shall distribute to all or substantially all
holders of its Common Stock rights or warrants to subscribe for or purchase any
of its securities (excluding those rights and warrants referred to in subsection
(b) of this Section 4.06 and also excluding the distribution of rights to all
holders of Common Stock pursuant to the adoption of a stockholders rights plan
or the detachment of such rights under the terms of such stockholder rights
plan), then in each such case the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying the current Conversion
Price by a fraction of which the numerator shall be the Current Market Price per
share of the Common Stock on the record date mentioned below less the fair
market value on such record date (as determined by the Board of Directors of
IAC, whose determination shall be conclusive evidence of such fair market value
and which shall be evidenced by an IAC Officers' Certificate delivered to the
Trustee) of the portion of the capital stock, evidences of indebtedness or other
non-cash assets so distributed or of such rights or warrants applicable to one
share of Common Stock (determined on the basis of the number of shares of Common
Stock outstanding on the record date), and of which the denominator shall be the
Current Market Price per share of the Common Stock on such record date. Such
adjustment shall be made successively whenever any such distribution is made and
shall become effective immediately after the record date for the determination
of shareholders entitled to receive such distribution.
In the event the then fair market value (as so determined) of the portion
of the capital stock, evidences of indebtedness or other non-cash assets so
distributed or of such rights or warrants applicable to one share of Common
Stock is equal to or greater than the Current Market Price per share of the
Common Stock on such record date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of a Security shall have the right
to receive upon conversion the amount of capital stock, evidences of
indebtedness or other non-cash assets so distributed or of such rights or
warrants such holder would have received had such holder converted each Security
on such record date. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the fair market value of any
distribution for purposes of this Section 4.06(c) by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price of the Common Stock. In the event that IAC has or implements a preferred
shares rights plan ("Rights Plan"), upon conversion of the Securities into
Common Stock, to the extent that any such Rights Plan is still in effect upon
such conversion, the holders of Securities will receive, in addition to the
Common Stock, the rights described therein (whether or not the rights have
separated from the Common Stock at the time of conversion), subject to the
limitations set forth in the Rights Plan. Any distribution of rights or warrants
pursuant to a Rights Plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not
6
constitute a distribution of rights or warrants pursuant to this Section
4.06(c). Rights or warrants distributed by IAC to all holders of Common Stock
entitling the holders thereof to subscribe for or purchase shares of IAC's
Capital Stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events ("Trigger Event"):
(i) are deemed to be transferred with such shares of Common Stock; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances of Common
Stock, shall be deemed not to have been distributed for purposes of this Section
4.06 (and no adjustment to the Conversion Price under this Section 4.06 will be
required) until the occurrence of the earliest Trigger Event, whereupon such
rights and warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Price shall be made under this
Section 4.06(c). If any such right or warrant, including any such existing
rights or warrants distributed prior to the date of this Indenture, are subject
to events, upon the occurrence of which such rights or warrants become
exercisable to purchase different securities, evidences of indebtedness or other
assets, then the date of the occurrence of any and each such event shall be
deemed to be the date of distribution and record date with respect to new rights
or warrants with such rights (and a termination or expiration of the existing
rights or warrants without exercise by any of the holders thereof). In addition,
in the event of any distribution (or deemed distribution) of rights or warrants,
or any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price under this
Section 4.06 was made, (1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.
(A) In case IAC shall, by dividend or otherwise, at any time
distribute (a "Triggering Distribution") to all or substantially all holders of
its Common Stock cash in an aggregate amount that, together with the aggregate
amount of (A) any cash and the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive evidence thereof and which
shall be evidenced by an Officers' Certificate delivered to the Trustee) of any
other consideration payable in respect of any tender offer by IAC or a
Subsidiary of IAC for Common Stock consummated within the 12 months preceding
the date of payment of the Triggering Distribution and in respect of which no
Conversion Price adjustment pursuant to this Section 4.06 has been made and (B)
all other cash distributions to all or substantially all holders of its Common
Stock made within the 12 months preceding the date of payment of the Triggering
Distribution and in respect of which no Conversion Price adjustment pursuant to
this Section 4.06 has been made, exceeds an amount equal to 10.0% of the product
of the Current Market Price per share of Common Stock on the Business Day (the
"Determination Date") immediately preceding the day on which such Triggering
Distribution is declared by IAC multiplied by the number of shares of Common
Stock outstanding on the Determination Date (excluding shares held in the
treasury of IAC), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
7
immediately prior to the Determination Date by a fraction of which the numerator
shall be the Current Market Price per share of the Common Stock on the
Determination Date less the sum of the aggregate amount of cash and the
aggregate fair market value (determined as aforesaid in this Section
4.06(iii)(A)) of any such other consideration so distributed, paid or payable
within such 12 months (including, without limitation, the Triggering
Distribution) applicable to one share of Common Stock (determined on the basis
of the number of shares of Common Stock outstanding on the Determination Date)
and the denominator shall be such Current Market Price per share of the Common
Stock on the Determination Date, such reduction to become effective immediately
prior to the opening of business on the day following the date on which the
Triggering Distribution is paid.
(B) In case any tender offer made by IAC or any of its
Subsidiaries for Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall involve the payment of aggregate
consideration in an amount (determined as the sum of the aggregate amount of
cash consideration and the aggregate fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the Trustee
thereof) of any other consideration) that, together with the aggregate amount of
(A) any cash and the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive evidence thereof and which shall be
evidenced by an Officers' Certificate delivered to the Trustee) of any other
consideration payable in respect of any other tender offers by IAC or any
Subsidiary of IAC for Common Stock consummated within the 12 months preceding
the date of the Expiration Date (as defined below) and in respect of which no
Conversion Price adjustment pursuant to this Section 4.06 has been made and (B)
all cash distributions to all or substantially all holders of its Common Stock
made within the 12 months preceding the Expiration Date and in respect of which
no Conversion Price adjustment pursuant to this Section 4.06 has been made,
exceeds an amount equal to 10.0% of the product of the Current Market Price per
share of Common Stock as of the last date (the "Expiration Date") tenders could
have been made pursuant to such tender offer (as it may be amended) (the last
time at which such tenders could have been made on the Expiration Date is
hereinafter sometimes called the "Expiration Time") multiplied by the number of
shares of Common Stock outstanding (including tendered shares but excluding any
shares held in the treasury of IAC) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the Expiration Date by a fraction of which the
numerator shall be the product of the number of shares of Common Stock
outstanding (including tendered shares but excluding any shares held in the
treasury of IAC) at the Expiration Time multiplied by the Current Market Price
per share of the Common Stock on the Trading Day next succeeding the Expiration
Date and the denominator shall be the sum of (x) the aggregate consideration
(determined as aforesaid) payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares and excluding any shares held in the treasury of IAC) at
the Expiration Time and the Current Market Price per share of Common Stock on
the Trading Day next succeeding the Expiration Date, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Date. In the event that IAC is
8
obligated to purchase shares pursuant to any such tender offer, but IAC is
permanently prevented by applicable law from effecting any or all such purchases
or any or all such purchases are rescinded, the Conversion Price shall again be
adjusted to be the Conversion Price which would have been in effect based upon
the number of shares actually purchased. If the application of this Section
4.06(a)(iii)(B) to any tender offer would result in an increase in the
Conversion Price, no adjustment shall be made for such tender offer under this
Section 4.06(a)(iii)(B).
(C) For purposes of this Section 4.06, the term "tender offer"
shall mean and include both tender offers and exchange offers, all references to
"purchases" of shares in tender offers (and all similar references) shall mean
and include both the purchase of shares in tender offers and the acquisition of
shares pursuant to exchange offers, and all references to "tendered shares" (and
all similar references) shall mean and include shares tendered in both tender
offers and exchange offers.
(iv) For the purpose of any computation under this Section 4.06, the
current market price (the "Current Market Price") per share of Common Stock (or
Expedia Stock, as the case may be) on any date shall be deemed to be the average
of the Sales Prices for the 30 consecutive Trading Days commencing 45 Trading
Days before (i) the Determination Date or the Expiration Date, as the case may
be, with respect to distributions or tender offers under subsection (a)(iii) of
this Section 4.06 or (ii) the record date with respect to distributions,
issuances or other events requiring such computation under this Section 4.06.
(v) In any case in which this Section 4.06 shall require that an adjustment
be made following a record date or a Determination Date or Expiration Date, as
the case may be, established for purposes of this Section 4.06, IAC and the
Company may elect to defer (but only until five Business Days following the
filing by IAC with the Trustee of the certificate described in Section 4.09)
delivery to the Holder of any Security converted after such record date or
Determination Date or Expiration Date the shares of Common Stock and other
capital stock of IAC issuable upon such conversion over and above the shares of
Common Stock and other capital stock of IAC issuable upon such conversion only
on the basis of the Conversion Price prior to adjustment; and, in lieu of the
shares the issuance of which is so deferred, IAC and/or the Company shall issue
or cause its transfer agents to issue due bills or other appropriate evidence
prepared by IAC and/or the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date or Determination Date or Expiration
Date therefor is not thereafter made or paid for any reason, the Conversion
Price shall be readjusted to the Conversion Price which would then be in effect
if such record date had not been fixed or such effective date or Determination
Date or Expiration Date had not occurred.
(b) EXPEDIA CONVERSION PRICE.
In the event that any dividend, distribution, subdivision or combination of
securities, tender offer, issuance or other event contemplated in Section
4.06(a) with respect to IAC and/or the Common Stock shall occur with respect to
Expedia and/or the Expedia Stock, then equitable adjustments shall be made,
including to the Expedia Conversion Price, in substantially the same manner as
the adjustments set forth in Section 4.06(a).
9
SECTION 4.07 NO ADJUSTMENT.
(a) No adjustment in the Conversion Price or Expedia Conversion Price shall
be required:
(1) unless the adjustment would require an increase or decrease of at
least 1% in the Conversion Price or Expedia Conversion Price, as applicable, as
last adjusted; provided, however, that any adjustments which by reason of this
Section 4.07 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment;
(2) for issuances of Common Stock or Expedia Stock pursuant to a plan
for reinvestment of dividends or interest or for a change in the par value or a
change to no par value of the Common Stock or Expedia Stock; or
(3) if the Holders participate in the transactions that would
otherwise lead to an adjustment in the Conversion Price or Expedia Conversion
Price pursuant to Section 4.06. To the extent that the Securities become
convertible into the right to receive cash, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the cash. All
calculations under this Article IV shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
SECTION 4.08 ADJUSTMENT FOR TAX PURPOSES.
IAC shall be entitled to make such reductions in the Conversion Price
and/or the Expedia Conversion Price, in addition to those required by Section
4.06, as it in its discretion shall determine to be advisable in order that any
stock dividends, subdivisions of shares, distributions of rights to purchase
stock or securities or distributions of securities convertible into or
exchangeable for stock hereafter made by IAC or Expedia, as the case may be, to
its stockholders shall not be taxable.
SECTION 4.09 NOTICE OF ADJUSTMENT.
Whenever the Conversion Price, Expedia Conversion Price or conversion
privilege is adjusted, IAC or the Company shall promptly mail to Securityholders
a notice of the adjustment and file with the Trustee an Officers' Certificate
briefly stating the facts requiring the adjustment and the manner of computing
it. Unless and until the Trustee shall receive an Officers' Certificate setting
forth an adjustment of the Conversion Price or Expedia Conversion Price, the
Trustee may assume without inquiry that the Conversion Price and Expedia
Conversion Price have not been adjusted and that the last Conversion Price and
Expedia Conversion Price of which it has knowledge remain in effect.
SECTION 4.10 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON
CONVERSION PRIVILEGE.
If any of the following shall occur, namely: (a) any reclassification or
change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination, or any
other change for which an adjustment is provided in Section 4.06); (b)
10
any consolidation or merger or combination to which IAC is a party other than a
merger in which IAC is the continuing corporation and which does not result in
any reclassification of, or change (other than in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Common Stock; or (c) any
sale or conveyance as an entirety or substantially as an entirety of the
property and assets of IAC, directly or indirectly, to any person as a result of
which holders of Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
Common Stock, then the Company and IAC, or such successor, purchasing or
transferee corporation, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security - solely to the extent
such Security was otherwise convertible into Common Stock - into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, combination, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Security immediately prior to such
reclassification, change, combination, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article IV. If, in
the case of any such consolidation, merger, combination, sale or conveyance, the
stock or other securities and property (including cash) receivable thereupon by
a holder of Common Stock include shares of stock or other securities and
property of a person other than the successor, purchasing or transferee
corporation, as the case may be, in such consolidation, merger, combination,
sale or conveyance, then such supplemental indenture shall also be executed by
such other person and shall contain such additional provisions to protect the
interests of the Holders of the Securities as the Board of Directors and the
Trustee shall reasonably consider necessary by reason of the foregoing. The
provisions of this Section 4.10 shall similarly apply to successive
reclassifications, changes, combinations, consolidations, mergers, sales or
conveyances.
In the event the Company and IAC shall execute a supplemental indenture
pursuant to this Section 4.10, IAC or the Company shall promptly file with the
Trustee (x) an Officers' Certificate briefly stating the reasons therefor, the
kind or amount of shares of stock or other securities or property (including
cash) receivable by Holders of the Securities upon the conversion of their
Securities after any such reclassification, change, combination, consolidation,
merger, sale or conveyance, any adjustment to be made with respect thereto and
that all conditions precedent have been complied with and (y) an Opinion of
Counsel that all conditions precedent have been complied with, and shall
promptly mail notice thereof to all Holders.
If any of the following shall occur, namely (a) any reclassification or
change of shares of Expedia Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination, or any
other change for which an adjustment is provided in Section 4.06); (b) any
consolidation or merger or combination to which Expedia is a party other than a
merger in which Expedia is the continuing corporation and which does not result
in any reclassification of, or change (other than in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Expedia Stock; or (c) any
sale or conveyance as an entirety or substantially as an entirety of the
property and assets
11
of Expedia, directly or indirectly, to any person as a result of which holders
of Expedia Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for Expedia
Stock, then, in lieu of Expedia Stock - and solely to the extent such Security
was otherwise convertible into Expedia Stock - the Holder of each Security then
outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, combination, consolidation,
merger, sale or conveyance by a holder of the number of shares of Expedia Stock
deliverable upon conversion of such Security immediately prior to such
reclassification, change, combination, consolidation, merger, sale or
conveyance.
SECTION 4.11 TRUSTEE'S DISCLAIMER.
The Trustee shall have no duty to determine when an adjustment under this
Article IV should be made, how it should be made or what such adjustment should
be, but may accept as conclusive evidence of that fact or the correctness of any
such adjustment, and shall be protected in conclusively relying upon, an
Officers' Certificate including the Officers' Certificate with respect thereto
which IAC or the Company is obligated to file with the Trustee pursuant to
Section 4.09. The Trustee makes no representation as to the validity or value of
any securities or assets issued upon conversion of Securities, and the Trustee
shall not be responsible for the failure of IAC or the Company to comply with
any provisions of this Article IV.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.10, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in conclusively relying upon,
the Officers' Certificate with respect thereto which IAC or the Company is
obligated to file with the Trustee pursuant to Section 4.10.
SECTION 4.12 VOLUNTARY REDUCTION.
The Company and IAC from time to time may reduce the Conversion Price or
Expedia Conversion Price by any amount for any period of time if the period is
at least 20 days and if the reduction is irrevocable during the period if the
Board of Directors of IAC determines that such reduction would be in the best
interest of IAC or to avoid or diminish income tax to holders of shares of
Common Stock in connection with a dividend or distribution of stock or similar
event, and IAC or the Company provides 15 days prior notice of any reduction in
the Conversion Price or Expedia Conversion Price; provided, however, that in no
event may the Conversion Price or Expedia Conversion Price be reduced to be less
than the par value of a share of Common Stock or Expedia Stock, respectively.
12
ANNEX B
6. CONVERSION
A Holder of a Note may convert the principal amount of such Note (or any
portion thereof equal to $1,000 or any integral multiple of $1,000 in excess
thereof) into shares of Common Stock and Expedia Stock at any time prior to the
close of business on June 1, 2008; provided, however, that if the Note is
submitted or presented for purchase pursuant to a Change in Control Notice, the
conversion right will terminate at the close of business on the Business Day
immediately preceding the Change in Control Purchase Date for such Note or such
earlier date as the Holder presents such Note for purchase (unless the Holder
withdraws its election pursuant to the Indenture).
The initial Conversion Price is $26.68 per share and the initial Expedia
Conversion Price is $26.68 per share, in each case subject to adjustment under
certain circumstances as provided in the Indenture. The number of shares of
Common Stock issuable upon conversion of a Note is determined by dividing the
principal amount of the Note or portion thereof converted by the Conversion
Price in effect on the Conversion Date. The number of shares of Expedia Stock
issuable upon conversion of a Note is determined by dividing the principal
amount of the Note or portion thereof converted by the Expedia Conversion Price
in effect on the Conversion Date.
To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Note to the Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or the Conversion
Agent, and (d) pay any transfer or similar tax, if required. A Holder may
convert a portion of a Note equal to $1,000 or any integral multiple thereof.
A Note in respect of which a Holder has delivered a Change in Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change in Control Purchase
Notice is withdrawn in accordance with the terms of the Indenture.
As soon as practicable after the Conversion Date, the Company and IAC shall
satisfy all of their Conversion Obligations by delivering to the Holder, at
IAC's option, either shares of Common Stock and Expedia Stock, cash, or a
combination of cash and shares of Common Stock and/or Expedia Stock. If IAC
elects to satisfy the entire Conversion Obligation by Share Settlement, then IAC
or the Company will deliver to the Holder (i) shares of Common Stock equal to
the quotient of (A) the aggregate principal amount of Notes to be converted by
the Holder divided by (B) the Conversion Price in effect on the Conversion Date,
and (ii) shares of Expedia Stock equal to the quotient of (A) the aggregate
principal amount of Notes to be converted by the Holder divided by (B) the
Expedia Conversion Price in effect on the Conversion Date.
If IAC elects to satisfy the entire Conversion Obligation by Cash
Settlement, then IAC or the Company will deliver to the Holder cash in an amount
equal to the sum of (i) the product of (A) a number equal to the aggregate
principal amount of Securities to be converted by such Holder divided by the
Conversion Price in effect on the Conversion
Date, and (B) the arithmetic mean of the Volume Weighted Average Prices of
Common Stock on each Trading Day during the Cash Settlement Averaging Period and
(ii) the product of (A) a number equal to the aggregate principal amount of
Securities to be converted by such Holder divided by the Expedia Conversion
Price in effect on the Conversion Date, and (B) the arithmetic mean of the
Volume Weighted Average Prices of Expedia Stock on each Trading Day during the
Cash Settlement Averaging Period;
If IAC elects to satisfy the Conversion Obligation in a Combined
Settlement, then the Company or IAC will deliver to the Holder (i) the IAC
Partial Cash Amount, (ii) the Expedia Partial Cash Amount, (iii) a number of
shares of Common Stock equal to the quotient of (A) the IAC Cash Amount minus
the IAC Partial Cash Amount divided by (B) the arithmetic mean of the Volume
Weighted Average Prices of the Common Stock on each Trading Day during the
applicable Cash Settlement Averaging Period and (iv) a number of shares of
Expedia Stock equal to the quotient of (A) the Expedia Cash Amount minus the
Expedia Partial Cash Amount divided by (B) the arithmetic mean of the Volume
Weighted Average Prices of the Expedia Stock on each Trading Day during the
applicable Cash Settlement Averaging Period.
Upon receipt of the conversion notice from a Holder by the Company, IAC or
the Conversion Agent, (1) if IAC elects to satisfy the Conversion Obligation by
Share Settlement, then settlement in Common Stock and Expedia Stock will be made
on or prior to the fifth (5th) Trading Day following receipt of such conversion
notice; or (2) if IAC elects to satisfy the Conversion Obligation by Cash
Settlement or Combined Settlement, then the Company or IAC will notify the
Holder, through the Conversion Agent, of the dollar amount to be satisfied in
cash at any time during the Settlement Notice Period. Share Settlement will
apply automatically if the Company or IAC does not notify the Holder that IAC
has chosen another settlement method.
If IAC timely elects Cash Settlement or Combined Settlement, then the
Holder may retract the conversion notice at any time during the Conversion
Retraction Period by notice to the Conversion Agent. The Holder cannot retract
the conversion notice (and the conversion notice therefore will be irrevocable)
if IAC elects Share Settlement. If the Holder has not retracted the conversion
notice during the Conversion Retraction Period, then Cash Settlement or Combined
Settlement will occur on the first Trading Day following the Cash Settlement
Averaging Period.
-2-
ANNEX C
CONVERSION NOTICE
To convert this Note into Common Stock, Expedia Stock and/or cash check the
box: [ ]
To convert only part of this Note, state the principal amount to be
converted (must be $1,000 or an integral multiple of $1,000): $--------.
If you want the stock certificates made out in another person's name, fill
in the form below:
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
Your Signature:
Date:
----------------------- ---------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
*Signature guaranteed by:
By:
-----------------------
* The signature must be guaranteed by an institution which is a member of one
of the following recognized signature guaranty programs: (i) the Securities
Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange
Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP);
or (iv) such other guaranty program acceptable to the Trustee.
