Exhibit 2.1
FORM OF
SEPARATION
AND DISTRIBUTION AGREEMENT
by
and among
IAC/INTERACTIVECORP,
HSN,
INC.,
INTERVAL
LEISURE GROUP, INC.,
TICKETMASTER
and
TREE.COM, INC.
DATED
AS OF [ ], 2008
TABLE OF
CONTENTS
ARTICLE I
|
INTERPRETATION
|
2
|
1.01.
|
Definitions
|
2
|
1.02.
|
Schedules
|
19
|
1.03.
|
Effective Time; Suspension
|
20
|
|
|
|
ARTICLE II
|
THE SEPARATION
|
20
|
2.01.
|
Separation
|
20
|
2.02.
|
Implementation
|
21
|
2.03.
|
Transfer of Spun Assets; Assumption of Spun
Liabilities
|
21
|
2.04.
|
TM Assets
|
21
|
2.05.
|
Interval Assets
|
22
|
2.06.
|
HSN Assets
|
23
|
2.07.
|
Tree Assets
|
24
|
2.08.
|
Deferred Spun Assets
|
25
|
2.09.
|
Excluded Assets
|
25
|
2.10.
|
Liabilities
|
25
|
2.11.
|
Third Party Consents and Government
Approvals
|
27
|
2.12.
|
Preservation of Agreements
|
27
|
2.13.
|
Ancillary Agreements
|
27
|
2.14.
|
Resignations
|
28
|
2.15.
|
Cooperation
|
28
|
2.16.
|
Intercompany Accounts Among Groups
|
28
|
2.17.
|
Disclaimer of Representations and
Warranties
|
28
|
|
|
|
ARTICLE III
|
DEFERRED SEPARATION TRANSACTIONS
|
29
|
3.01.
|
Deferred Transfer Assets
|
29
|
3.02.
|
Unreleased Liabilities
|
30
|
3.03.
|
No Additional Consideration
|
30
|
|
|
|
ARTICLE IV
|
COVENANTS
|
31
|
4.01.
|
General
Covenants
|
31
|
4.02.
|
Covenants of the Spincos
|
31
|
4.03.
|
Spinco Common Stock Escrow Accounts
|
32
|
4.04.
|
Cash Balance True-Ups
|
33
|
4.05.
|
Non-Solicitation
|
34
|
|
|
|
ARTICLE V
|
THE DISTRIBUTION
|
35
|
5.01.
|
Conditions to the Distribution
|
35
|
5.02.
|
Distribution of Spinco Common Stock
|
36
|
5.03.
|
Fractional Shares
|
37
|
5.04.
|
Actions in Connection with the
Distributions
|
37
|
5.05.
|
Treatment of Integrated Warrant
|
38
|
i
ARTICLE VI
|
MUTUAL RELEASES; INDEMNIFICATION
|
39
|
6.01.
|
Release of Pre-Distribution Claims
|
39
|
6.02.
|
Indemnification by Spincos
|
43
|
6.03.
|
Indemnification by IAC
|
44
|
6.04.
|
Procedures for Indemnification of Third
Party Claims
|
44
|
6.05.
|
Procedures for Indemnification of Direct
Claims
|
46
|
6.06.
|
Adjustments to Liabilities
|
46
|
6.07.
|
Payments
|
47
|
6.08.
|
Contribution
|
47
|
6.09.
|
Remedies Cumulative
|
47
|
6.10.
|
Survival of Indemnities
|
47
|
6.11.
|
Shared Liabilities
|
47
|
|
|
|
ARTICLE VII
|
INSURANCE
|
48
|
7.01.
|
Insurance Matters
|
48
|
|
|
|
ARTICLE VIII
|
EXCHANGE OF INFORMATION; CONFIDENTIALITY
|
49
|
8.01.
|
Agreement for Exchange of Information;
Archives
|
49
|
8.02.
|
Ownership of Information
|
50
|
8.03.
|
Compensation for Providing Information
|
51
|
8.04.
|
Record Retention
|
51
|
8.05.
|
Other Agreements Providing for Exchange of
Information
|
51
|
8.06.
|
Production of Witnesses; Records;
Cooperation
|
51
|
8.07.
|
Confidentiality
|
52
|
8.08.
|
Protective Arrangements
|
53
|
8.09.
|
Disclosure of Third Party Information
|
53
|
|
|
|
ARTICLE IX
|
DISPUTE RESOLUTION
|
54
|
9.01.
|
Interpretation; Agreement to Resolve
Disputes
|
54
|
9.02.
|
Dispute Resolution; Mediation
|
54
|
9.03.
|
Arbitration
|
55
|
9.04.
|
Costs
|
56
|
9.05.
|
Continuity of Service and Performance
|
56
|
|
|
|
ARTICLE X
|
FURTHER ASSURANCES
|
56
|
10.01.
|
Further Assurances
|
56
|
|
|
|
ARTICLE XI
|
CERTAIN OTHER MATTERS
|
57
|
11.01.
|
Auditors and Audits; Annual and Quarterly
Financial Statements and Accounting
|
57
|
|
|
|
ARTICLE XII
|
SOLE DISCRETION OF IAC; TERMINATION
|
59
|
12.01.
|
Sole Discretion of IAC
|
59
|
12.02.
|
Termination
|
59
|
|
|
|
ARTICLE XIII
|
MISCELLANEOUS
|
60
|
13.01.
|
Limitation of Liability
|
60
|
ii
13.02.
|
Counterparts
|
60
|
13.03.
|
Entire Agreement
|
60
|
13.04.
|
Construction
|
60
|
13.05.
|
Signatures
|
61
|
13.06.
|
Assignability
|
61
|
13.07.
|
Third Party Beneficiaries
|
61
|
13.08.
|
Payment Terms
|
62
|
13.09.
|
Governing Law
|
62
|
13.10.
|
Notices
|
62
|
13.11.
|
Severability
|
63
|
13.12.
|
Publicity
|
64
|
13.13.
|
Survival of Covenants
|
64
|
13.14.
|
Waivers of Default; Conflicts
|
64
|
13.15.
|
Amendments
|
64
|
iii
SEPARATION AND DISTRIBUTION AGREEMENT
This SEPARATION AND DISTRIBUTION AGREEMENT,
dated as of [ ], 2008, is entered into by
and among IAC/InterActiveCorp, a Delaware corporation (IAC), HSN, Inc.,
a Delaware corporation and wholly owned subsidiary of IAC (HSN Spinco),
Interval Leisure Group, Inc., a Delaware corporation and wholly owned
subsidiary of IAC (Interval Spinco), Ticketmaster, a Delaware
corporation and wholly owned subsidiary of IAC (TM Spinco), and Tree.com, Inc.,
a Delaware corporation and wholly owned subsidiary of IAC (Tree Spinco;
together with TM Spinco, Interval Spinco and HSN Spinco, the Spincos;
the Spincos and IAC, collectively, the Separate-cos or Parties).
RECITALS:
WHEREAS, IAC, acting through its direct and
indirect Subsidiaries, currently conducts a number of businesses, including (i) the
Ticketing Business (as defined herein), (ii) the Vacations Business (as
defined herein), (iii) the Retailing Business (as defined herein), (iv) the
Lending and Real Estate Business (as defined herein) (together with the
Ticketing Business, the Vacations Business and the Retailing Business, the Spun
Businesses) and (v) the Remaining Business (as defined herein);
WHEREAS, the Board of Directors of IAC (the IAC
Board) has determined that it is appropriate, desirable and in the best
interests of IAC and its stockholders to separate IAC into five publicly-traded
companies (the Separation): (i) TM Spinco, which following the
Separation will own and conduct, directly or indirectly, the Ticketing
Business, (ii) Interval Spinco, which following the Separation will own
and conduct, directly or indirectly, the Vacations Business, (iii) HSN
Spinco, which following the Separation will own and conduct, directly or
indirectly, the Retailing Business, (iv) Tree Spinco, which following the
Separation will own and conduct, directly or indirectly, the Lending and Real
Estate Business, and (v) IAC, which following the Separation will own and
conduct, directly or indirectly, the Remaining Business;
WHEREAS, following the merger on , 2008 of a wholly owned subsidiary of IAC with and into IAC, the outstanding shares of capital stock of IAC consist solely of common stock, par value $0.001 per share, of IAC ( IAC Common Stock) and Class B common stock, par value $0.001 per share, of IAC (IAC Class B Common Stock);
WHEREAS, in order to effect the Separation,
the IAC Board has determined that it is appropriate, desirable and in the best
interests of IAC and its stockholders: (i) for IAC and its Subsidiaries to
enter into a series of transactions as set forth in the Transactions Memorandum
dated of even date herewith (the Transactions Memo) as a result of
which one or more members of each Group (as defined herein) will, collectively,
own all of such Groups Corresponding Assets (as defined herein) and assume (or
retain) all of such Groups Corresponding Liabilities (as defined herein); and,
thereafter (ii) for IAC to distribute to the holders of IAC Common Stock
and the holders of IAC Class B Common Stock (in each case without
consideration being paid by such stockholders), on a pro rata basis, all of the
issued and
1
outstanding shares of Spinco Common Stock (as
defined herein) of each Spinco;
WHEREAS, each of the Separate-cos has
determined that it is necessary and desirable, on or prior to the Effective
Time (as defined herein), to allocate and transfer to the applicable Group
those Assets, and to allocate and assign to the applicable Group responsibility
for those Liabilities, in respect of the activities of the Corresponding
Businesses (as defined herein) of such Group;
WHEREAS, it is the intention of the Parties
that each of the Distributions (as defined herein) qualify as a transaction
that is generally tax free for United States federal income tax purposes under
Sections 355 and/or 368(a)(1)(D) of the Internal Revenue Code of 1986, as
amended (the Code);
WHEREAS, in connection with the
Distributions, each of HSN Spinco and/or its Subsidiaries, Interval Spinco
and/or its Subsidiaries and TM Spinco and/or its Subsidiaries will, subject to
the terms and provisions of this Agreement, enter into separate credit
facilities and/or issue new debt securities, all or a portion of the cash
proceeds of borrowings under which shall be distributed to IAC;
WHEREAS, (a) IAC has entered into an
agreement with certain holders of its 7% Senior Notes due 2013 (the IAC
Notes) providing for, among other things, (i) IAC to exchange (the Exchange)
new 9.5% Senior Notes due 2016 of Interval Acquisition Corp. (as defined
herein) that it will receive from Interval Acquisition Corp. as set forth in
the Transactions Memorandum (the Interval Senior Notes) and (ii) the
simultaneous closing of the Exchange and the cash tender offer being made by
IAC for any and all of the outstanding IAC Notes (the IAC Notes Tender
Offer) and (b) it is intended that the issuance of the Interval
Senior Notes to IAC and the Exchange, together with the IAC Notes Tender Offer,
are in connection with the Interval Distribution and are intended to give rise
to a succession event (with Interval as the sole successor to IAC) for credit
derivatives purposes; and
WHEREAS, the Parties wish to set forth in
this Agreement the terms on which, and the conditions subject to which, they
intend to implement the measures described above.
NOW THEREFORE, in consideration of the mutual
agreements, covenants and other provisions set forth in this Agreement, the
Parties hereby agree as follows:
ARTICLE I
INTERPRETATION
1.01. Definitions. The capitalized words and expressions and
variations thereof used in this Agreement or in its schedules, unless a clearly
inconsistent meaning is required under the context, shall have the meanings set
forth below:
2008
Internal Control Audit and Management Assessments has the meaning set
forth in Section 11.01(b).
AAA
has the meaning set forth in Section 9.03.
2
Accounts Receivable means in respect
of any Person, (a) all trade accounts and notes receivable and other
rights to payment from customers and all security for such accounts or rights
to payment, including all trade accounts receivable representing amounts
receivable in respect of goods shipped or products sold or otherwise disposed
of or services rendered to customers, (b) all other accounts and notes
receivable and all security for such accounts or notes, and (c) any claim,
remedy or other right relating to any of the foregoing.
Action means any demand, action,
suit, countersuit, arbitration, inquiry, proceeding or investigation by any
Person or any Governmental Authority or before any Governmental Authority or
any arbitration or mediation tribunal.
Affiliate of any Person means any
other Person that, directly or indirectly, controls, is controlled by, or is
under common control with such first Person as of the date on which or at any
time during the period for when such determination is being made. For purposes of this definition, Control
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
the ownership of voting securities or other interests, by contract or
otherwise, and the terms Controlling and Controlled have
meanings correlative to the foregoing.
Agent has the meaning set forth in Section 5.02(b).
Agreement means this Separation and
Distribution Agreement, including all of the Schedules hereto.
Ancillary Agreements has the meaning
set forth in Section 2.13.
Applicable Law means any applicable
law, statute, rule or regulation of any Governmental Authority or any
outstanding order, judgment, injunction, ruling or decree by any Governmental
Authority.
Appurtenances means, in respect of
any Land, all privileges, rights, easements, servitudes, hereditaments and
appurtenances and similar interests belonging to or for the benefit of such
Land, including all easements and servitudes appurtenant to and for the benefit
of any Land (a Dominant Parcel) for, and as the primary means of,
access between, the Dominant Parcel and a public way, or for any other use upon
which lawful use of the Dominant Parcel for the purposes for which it is
presently being used is dependent, and all rights existing in and to any
streets, alleys, passages and other rights-of-way included therein or adjacent
thereto.
Asset-Related Claims means, in
respect of any Asset, all claims of the owner against Third Parties relating to
such Asset, whether choate or inchoate, known or unknown, absolute or
contingent, disclosed or non-disclosed.
Assets means assets, properties and
rights (including goodwill), wherever located (including in the possession of
owners or Third Parties or elsewhere), whether real, personal or mixed,
tangible or intangible, movable or immovable, in each case whether or not
recorded or reflected or required to be recorded or reflected on the books and
records or financial statements of a Person, including the following:
3
(a) Real
Property;
(b) Tangible
Personal Property;
(c) Inventories;
(d) Accounts
Receivable;
(e) Contractual
Assets;
(f) Governmental
Authorizations;
(g) Business
Records;
(h) Intangible
Property Rights;
(i) Insurance
Benefits;
(j) Asset-Related
Claims; and
(k) Deposit
Rights.
Authorized Auditor has the meaning
set forth in Section 11.01(c)(i).
Authorizing Spinco has the meaning
set forth in Section 11.01(c)(i).
Business Concern means any
corporation, company, limited liability company, partnership, joint venture,
trust, unincorporated association or any other form of association.
Business Day means any day excluding
(a) Saturday, Sunday and any other day which, in New York City is a legal
holiday or (b) a day on which banks are authorized by Applicable Law to
close in New York City.
Business Records means, in respect
of any Person, all data and Records relating to such Person, including client
and customer lists and Records, referral sources, research and development
reports and Records, cost information, sales and pricing data, customer
prospect lists, customer and vendor data, production reports and Records,
service and warranty Records, equipment logs, operating guides and manuals,
financial and accounting Records, personnel Records (subject to Applicable
Law), creative materials, advertising materials, promotional materials,
studies, reports, correspondence and other similar documents and records.
Claim Notice has the meaning set
forth in Section 6.04(b).
Claimant Party has the meaning set
forth in Section 9.02(a).
Code has the meaning set forth in
the recitals hereto.
Confidential Information has the
meaning set forth in Section 8.07(a).
4
Consent means any approval, consent,
ratification, waiver or other authorization.
Contract means any contract,
agreement, lease, purchase and/or commitment, license, consensual obligation,
promise or undertaking (whether written or oral and whether express or implied)
that is legally binding on any Person or any part of its property under
Applicable Law, including all claims or rights against any Person, choses in
action and similar rights, whether accrued or contingent with respect to any
such contract, agreement, lease, purchase and/or commitment, license,
consensual obligation, promise or undertaking, but excluding this Agreement and
any Ancillary Agreement save as otherwise expressly provided in this Agreement
or in any Ancillary Agreement.
Contractual Asset means, in respect
of any Person, any Contract of, or relating to, such Person, any outstanding
offer or solicitation made by, or to, such Person to enter into any Contract,
and any promise or undertaking made by any other Person to such Person, whether
or not legally binding.
Corresponding Annual Report has the
meaning set forth in Section 11.01(d).
Corresponding Assets (a) with
respect to HSN Spinco, any HSN Entity or the HSN Group, means the HSN Assets, (b) with
respect to Interval Spinco, any Interval Entity or the Interval Group, means
the Interval Assets, (c) with respect to TM Spinco, any TM Entity or the
TM Group, means the TM Assets, (d) with respect to Tree Spinco, any Tree
Entity or the Tree Group, means the Tree Assets and (e) with respect to
IAC or the IAC Group, means the Retained Assets.
Corresponding Business (a) with respect to HSN Spinco, any HSN
Entity or the HSN Group, means the Retailing Business, (b) with respect to
Interval Spinco, any Interval Entity or the Interval Group, means the Vacations
Business, (c) with respect to TM Spinco, any TM Entity or the TM Group,
means the Ticketing Business, (d) with respect to Tree Spinco, any Tree
Entity or the Tree Group, means the Lending and Real Estate Business and (e) with
respect to IAC or the IAC Group, means the Remaining Business.
Corresponding Distribution Ratio (i) with
respect to HSN Spinco, means the HSN Distribution Ratio, (ii) with respect
to Interval Spinco, means the Interval Distribution Ratio, (iii) with
respect to TM Spinco, means the TM Distribution Ratio and (iv) with
respect to Tree Spinco, means the Tree Distribution Ratio.
Corresponding Escrow Shares has the
meaning set forth in Section 4.03.
Corresponding Group (a) with
respect to the Retailing Business, HSN Spinco or any HSN Entity, means the HSN
Group, (b) with respect to the Vacations Business, Interval Spinco or any
Interval Entity, means the Interval Group, (c) with respect to the
Ticketing Business, TM Spinco or any TM Entity, means the TM Group, (d) with
respect to the Lending and Real Estate Business, Tree Spinco or any Tree
Entity, means the Tree Group and (e) with respect to the Remaining
Business, IAC or any Remaining IAC Entity, means the IAC Group.
5
Corresponding Group Balance Sheet (a) with
respect to the Retailing Business, HSN Spinco, any HSN Entity or the HSN Group,
means the HSN Group Balance Sheet, (b) with respect to the Vacations
Business, Interval Spinco, any Interval Entity or the Interval Group, means the
Interval Group Balance Sheet, (c) with respect to the Ticketing Business,
TM Spinco, any TM Entity or the TM Group, the TM Group Balance Sheet, and (d) with
respect to the Lending and Real Estate Business, Tree Spinco, any Tree Entity
or the Tree Group, means the Tree Group Balance Sheet.
Corresponding Liabilities (a) with
respect to HSN Spinco, any HSN Entity or the HSN Group, means the HSN
Liabilities, (b) with respect to Interval Spinco, any Interval Entity or
the Interval Group, means the Interval Liabilities, (c) with respect to TM
Spinco, any TM Entity or the TM Group, means the TM Liabilities, (d) with
respect to Tree Spinco, any Tree Entity or the Tree Group, means the Tree
Liabilities and (e) with respect to IAC or the IAC Group, means the
Retained Liabilities.
Corresponding Opening Balance Sheet (a) with
respect to the Retailing Business, HSN Spinco, any HSN Entity or the HSN Group,
means the HSN Opening Balance Sheet, (b) with respect to the Vacations
Business, Interval Spinco, any Interval Entity or the Interval Group, means the
Interval Opening Balance Sheet, (c) with respect to the Ticketing
Business, TM Spinco, any TM Entity or the TM Group, means the TM Opening
Balance Sheet and (d) with respect to the Lending and Real Estate
Business, Tree Spinco, any Tree Entity or the Tree Group, means the Tree
Opening Balance Sheet.
Corresponding Other Separate-cos
Indemnified Parties has the meaning set forth in Section 6.02.
Corresponding Separate-co (a) with
respect to the Retailing Business, any HSN Entity or the HSN Group, means HSN
Spinco, (b) with respect to the Vacations Business, any Interval Entity or
the Interval Group, means Interval Spinco, (c) with respect to the
Ticketing Business, any TM Entity or the TM Group, means TM Spinco, (d) with
respect to the Lending and Real Estate Business, any Tree Entity or the Tree
Group, means Tree Spinco and (e) with respect to the Remaining Business,
any Remaining IAC Entity or the IAC Group, means IAC.
Corresponding Spinco (a) with
respect to the Retailing Business, any HSN Entity or the HSN Group, means HSN
Spinco, (b) with respect to the Vacations Business, any Interval Entity or
the Interval Group, means Interval Spinco, (c) with respect to the
Ticketing Business, any TM Entity or the TM Group, means TM Spinco and (d) with
respect to the Lending and Real Estate Business, any Tree Entity or the Tree
Group, means Tree Spinco.
Deferred Beneficiary has the meaning
set forth in Section 3.01(b).
Deferred Corresponding Asset has the
meaning set forth in Section 3.01(a).
Deferred Excluded Asset has the
meaning set forth in Section 3.01(a).
Deferred Spun Asset has the meaning
set forth in Section 3.01(a).
Deferred Transactions has the
meaning set forth in Section 10.01(a)(ii).
6
Deferred Transfer Asset has the
meaning set forth in Section 3.01(a).
Deposit Rights means rights relating
to deposits and prepaid expenses, claims for refunds and rights of set-off in
respect thereof.
DGCL means the General Corporation
Law of the State of Delaware.
Disclosing Party has the meaning set
forth in Section 8.08.
Dispute has the meaning set forth in
Section 9.02(a).
Dispute Notice has the meaning set
forth in Section 9.02(a).
Dispute Parties has the meaning set
forth in Section 9.02(a).
Distribution Date means the HSN
Distribution Date, the Interval Distribution Date, the TM Distribution Date or
the Tree Distribution Date, as applicable.
Distribution Record Date means the
HSN Distribution Record Date, the Interval Distribution Record Date, the TM
Distribution Record Date or the Tree Distribution Record Date, as applicable
Distributions means the HSN
Distribution, the Interval Distribution, the TM Distribution and the Tree
Distribution, and each of them a Distribution.
Effective Time means (a) 9:00 a.m.,
New York City time, on the earliest to occur of one or more of the HSN
Distribution Date, the Interval Distribution Date, the TM Distribution Date and
the Tree Distribution Date if IAC determines to effect the applicable
Distribution(s) prior to the opening of trading on NASDAQ or (b) otherwise,
11:59 p.m., New York City time, on such earliest date to occur.
EHS Liabilities means any Liability
arising from or under any Environmental Law or Occupational Health and Safety
Law.
Employee Matters Agreement means the
Employee Matters Agreement among the Parties to be dated as of even date herewith.
Encumbrance means, with respect to
any asset, mortgages, liens, hypothecations, pledges, charges, security
interests or encumbrances of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under Applicable Law.
Environmental Law means any
Applicable Law from any Governmental Authority (a) relating to the
protection of the environment (including air, water, soil and natural
resources) or (b) the use, storage, handling, release or disposal of
Hazardous Substances.
Escrow Agent has the meaning set
forth in Section 4.03(a).
Escrow Agreement has the meaning set
forth in Section 4.03(a).
7
Exchange Act means the United States
Securities Exchange Act of 1934, as amended.
Excluded Assets has the meaning set
forth in Section 2.09(a).
GAAP has the meaning set forth in Section 2.04(d).
Governmental Authority means any
court, arbitration panel, governmental or regulatory authority, agency, stock
exchange, commission or body.
Governmental Authorization means any
Consent, license, certificate, franchise, registration or permit issued,
granted, given or otherwise made available by, or under the authority of, any
Governmental Authority or pursuant to any Applicable Law.
Ground Lease means any long-term
lease (including any emphyteotic lease) of Land in which most of the rights and
benefits comprising ownership of the Land and the Improvements thereon or to be
constructed thereon, if any, and the Appurtenances thereto for the benefit
thereof, are transferred to the tenant for the term thereof.
Ground Lease Property means, in
respect of any Person, any Land, Improvement or Appurtenance of such Person
that is subject to a Ground Lease.
Group means the IAC Group, the HSN
Group, the Interval Group, the TM Group or the Tree Group, as the context
requires.
Guaranteed Entities has the meaning
set forth in Section 4.02(c).
Guaranteed Group has the meaning set
forth in Section 4.02(c).
Guaranteed Spinco has the meaning
set forth in Section 4.02(c).
Guaranteeing Group has the meaning
set forth in Section 4.02(c).
Guaranteeing Separate-co has the
meaning set forth in Section 4.02(c).
Hazardous Substance means any
substance to the extent presently listed, defined, designated or classified as
hazardous, toxic or radioactive under any applicable Environmental Law,
including petroleum and any derivative or by-products thereof.
HSN Assets has the meaning set forth
in Section 2.06.
HSN Claims has the meaning set forth
in Section 6.01(c).
HSN Common Stock means the common
stock, par value $0.01 per share, of HSN Spinco.
HSN Distribution means the
distribution on the HSN Distribution Date, to holders of record of shares of
IAC Common Stock and IAC Class B Common Stock as of the HSN Distribution
Record Date, of the HSN Common Stock owned by IAC on the basis of a
8
fraction of a share of HSN
Common Stock equal to the HSN Distribution Ratio for every one share of IAC
Common Stock or IAC Class B Common Stock.
HSN Distribution Date means the date
on which IAC distributes all of the issued and outstanding shares of HSN Common
Stock to the holders of IAC Common Stock and IAC Class B Common Stock.
HSN Distribution Ratio means 1/5,
subject to adjustment pursuant to Section 5.02(a).
HSN Distribution Record Date means
such date as may be determined by the IAC Board as the record date for the HSN
Distribution.
HSN Effective Time Cash Balance has
the meaning set forth in Section 4.04(c).
HSN Entities means those Business
Concerns forming part of the IAC Group which are identified on Schedule 2.06(b) and
which on and after the Effective Time form part of the HSN Group.
HSN Group means HSN Spinco, the HSN
Entities and each other Person (other than any member of any other Group) that
is a direct or indirect Subsidiary of HSN Spinco immediately after the
Effective Time, and each Person that becomes a Subsidiary of HSN Spinco after
the Effective Time.
HSN Group Balance Sheet has the
meaning set forth in Section 2.06(c).
HSN Liabilities has the meaning set
forth in Section 2.10.
HSN Opening Balance Sheet has the
meaning set forth in Section 2.06(e).
HSN Releasors has the meaning set
forth in Section 6.01(c).
HSN Spinco has the meaning set forth
in the preamble hereto.
HSN Target Cash Balance has the
meaning set forth in Section 4.04(c).
IAC has the meaning set forth in the
preamble hereto.
IAC Auditor has the meaning set
forth in Section 11.01(a).
IAC Board has the meaning set forth
in the recitals hereto.
IAC Claims has the meaning set forth
in Section 6.01(e).
IAC Class B Common Stock has
the meaning set forth in the recitals hereto.
IAC Common Stock has the meaning set
forth in the recitals hereto.
9
IAC Group means IAC, its
Subsidiaries (subject to Section 1.04(b), other than any member of any
Spinco Group) and their respective domestic and international businesses, assets
and liabilities.
IAC Notes has the meaning set forth
in the recitals hereto.
IAC Record Date Share Number with
respect to any Distribution means the aggregate number of shares of IAC Common
Stock and IAC Class B Common Stock outstanding on the applicable
Distribution Record Date.
IAC Releasors has the meaning set
forth in Section 6.01(e).
Improvements means, in respect of
any Land, all buildings, structures, plants, fixtures and improvements located
on such Land, including those under construction.
Indemnified Party has the meaning
set forth in Section 6.04(a).
Indemnifying Party has the meaning
set forth in Section 6.04(b).
Information means any information,
whether or not patentable or copyrightable, in written, oral, electronic or
other tangible or intangible forms, stored in any medium, including studies,
reports, test procedures, research, records, books, contracts, instruments,
surveys, discoveries, ideas, concepts, know-how, techniques, manufacturing
techniques, manufacturing variables, designs, specifications, drawings,
blueprints, diagrams, models, prototypes, samples, products, product plans,
flow charts, data, computer data, disks, diskettes, tapes, computer programs or
other software, marketing plans, customer information, customer services,
supplier information, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared
by attorneys or under their direction (including attorney work product), and
other technical, financial, employee or business information or data.
Insurance Benefits means, in respect
of any Asset or Liability, all insurance benefits, including rights to
Insurance Proceeds, arising from or relating to such Asset or Liability.
Insurance Proceeds means those
monies (in each case net of any costs or expenses incurred in the collection
thereof and net of any applicable premium adjustments (including reserves and
retrospectively rated premium adjustments)):
(a) received
by an insured from an insurance carrier; or
(b) paid
by an insurance carrier on behalf of the insured.
Intangible Property Rights means, in
respect of any Person, all intangible rights and property of such Person,
including IT Assets, going concern value and goodwill.
10
Intercompany Accounts means all
balances related to indebtedness, including any intercompany indebtedness,
loan, guaranty, receivable, payable or other account between a member of any
Group, on the one hand, and a member of any other Group, on the other hand.
Interval Acquisition Corp. means Interval
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of IAC
that, at the time of the Interval Distribution, will be a wholly owned
subsidiary of Interval Spinco. Interval Assets has the meaning set
forth in Section 2.05.
Interval Claims has the meaning set
forth in Section 6.01(b).
Interval Common Stock means the
common stock, par value $0.01 per share, of Interval Spinco.
Interval Distribution means the
distribution on the Interval Distribution Date, to holders of record of shares
of IAC Common Stock and IAC Class B Common Stock as of the Interval
Distribution Record Date, of the Interval Common Stock owned by IAC on the
basis of a fraction of a share of Interval Common Stock equal to the Interval
Distribution Ratio for every one share of IAC Common Stock or IAC Class B
Common Stock.
Interval Distribution Date means the
date on which IAC distributes all of the issued and outstanding shares of
Interval Common Stock to the holders of IAC Common Stock and IAC Class B
Common Stock.
Interval Distribution Ratio means
1/5, subject to adjustment pursuant to Section 5.02(a).
Interval Distribution Record Date
means such date as may be determined by the IAC Board as the record date for
the Interval Distribution.
Interval Effective Time Cash Balance
has the meaning set forth in Section 4.04(b).
Interval Entities means those
Business Concerns forming part of the IAC Group which are identified on Schedule
2.05(b) and which on and after the Effective Time form part of the
Interval Group.
Interval Group means Interval
Spinco, the Interval Entities and each other Person (other than any member of
any other Group) that is a direct or indirect Subsidiary of Interval Spinco
immediately after the Effective Time, and each Person that becomes a Subsidiary
of Interval Spinco after the Effective Time.
Interval Group Balance Sheet has the
meaning set forth in Section 2.05(c).
Interval Liabilities has the meaning
set forth in Section 2.10.
Interval Opening Balance Sheet has
the meaning set forth in Section 2.05(e).
11
Interval
Releasors has the meaning set forth in Section 6.01(b).
Interval
Spinco has the meaning set forth in the preamble hereto.
Interval
Target Cash Balance has the meaning set forth in Section 4.04(b).
Inventories
means, in respect of any Person, all inventories of such Person wherever
located, including all finished goods, (whether or not held at any location or
facility of such Person or in transit to or from such Person), work in process,
raw materials, spare parts and all other materials and supplies to be used or
consumed by the Person in production of finished goods.
IT
Assets means computers, computer software, firmware, middleware, servers,
workstations, routers, hubs, switches, data communications lines, all other
information technology equipments and all associated documentation.
Land
means, in respect of any Person, all parcels and tracts of land in which the
Person has an ownership interest.
Lending and Real Estate Business means
(a) the businesses and operations of Tree Spinco and its subsidiaries
described in the Information Statement included as an exhibit to Tree Spincos
Registration Statement, (b) any other business conducted primarily through
the use of the Tree Assets prior to the Effective Time and (c) the
businesses and operations of Business Concerns acquired or established by or
for Tree Spinco or any of its Subsidiaries after the date of this Agreement.
Liberty Spinco Agreement means that certain
Spinco Agreement, dated as of May 13, 2008, among IAC, Barry Diller,
Liberty Media Corporation and certain subsidiaries of Liberty Media Corporation
that hold IAC Common Stock and/or IAC Class B Common Stock.
Liberty Spinco Assumption Agreement means an
agreement substantially in the form of Exhibit 5 to the Liberty Spinco
Agreement.
Liberty Registration Rights Agreement means
an agreement substantially in the form of Exhibit 4 to the Liberty Spinco
Agreement.
Liability
means, with respect to any Person, any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments,
costs and expenses, sums of money, accounts, reckonings, bonds, specialties,
indemnities and similar obligations, exoneration covenants, contracts,
controversies, agreements, promises, doings, omissions, variances, guarantees,
make whole agreements and similar obligations, and other liabilities and
requirements, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued,
known or unknown, joint or several, whenever arising, and including those
arising under any Applicable Law, Action, threatened or contemplated Action
(including the costs and expenses of demands, assessments, judgments,
settlements and compromises relating thereto and attorneys fees and any and
all costs and expenses, whatsoever reasonably incurred in investigating,
preparing or defending against any such Actions or threatened or contemplated
Actions) or Order of any
12
Governmental Authority or
any award of any arbitrator or mediator of any kind, and those arising under
any contract, commitment or undertaking, in each case, whether or not recorded
or reflected or otherwise disclosed or required to be recorded or reflected or
otherwise disclosed, on the books and records or financial statements of any
Person, including any Specified Financial Liability, EHS Liability or Liability
for Taxes.
NASDAQ
means the Nasdaq Stock Market.
New
IAC Integrated Warrant has the meaning set forth in
Section 5.05(a)(i).
Non-IAC
Indemnified Parties has the meaning set forth in Section 6.03.
Non-IAC
Parties has the meaning set forth in Section 6.01(e).
Non-Interval
Parties has the meaning set forth in Section 6.01(b).
Non-HSN
Parties has the meaning set forth in Section 6.01(c).
Non-Tree
Parties has the meaning set forth in Section 6.01(d).
Non-TM
Parties has the meaning set forth in Section 6.01(a).
Notice
Period has the meaning set forth in Section 6.04(b).
Occupational
Health and Safety Law means any Applicable Law designed to provide safe
and healthful working conditions and to reduce occupational safety and health
hazards, and any program, whether governmental or private (such as those
promulgated or sponsored by industry associations and insurance companies),
designed to provide safe and healthful working conditions.
Old
IAC Integrated Warrant means the outstanding warrant to purchase shares of
IAC Common Stock identified on Schedule 1.01(a).
Order
means any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Authority or arbitrator.
Ordinary
Course of Business means any action taken by a Person that is in the
ordinary course of the normal, day-to-day operations of such Person and is
consistent with the past practices of such Person.
Parties
has the meaning set forth in the preamble hereto.
Person
means any individual, Business Concern or Governmental Authority.
Post-Record
Date IAC Shares has the meaning set forth in Section 5.02(a)
Potential
Contributor has the meaning set forth in Section 6.06(a).
13
Prime
Rate means the rate which JPMorgan Chase & Co. (or any successor
thereto or other major money center commercial bank agreed to by the Parties
hereto) announces from time to time as its prime lending rate, as in effect
from time to time.
Prospectus
with respect to a Registration Statement means the prospectus forming a part of
such Registration Statement, as the same may be amended or supplemented from
time to time. A Prospectus may, but need
not, be a joint prospectus of all of the Spincos.
Providing
Party has the meaning set forth in Section 8.08.
Real
Property means any Land and Improvements and all Appurtenances thereto and
any Ground Lease Property.
Record
means information that is inscribed on a tangible medium or that is stored in
an electronic or other medium and is retrievable in perceivable form.
Registration
Statement means, for each Spinco, the Registration Statement on
Form S-1 first filed by such Spinco with the SEC on
August [ ], 2008 (together with all
amendments and supplements thereto) in connection with the registration under
the Securities Act of such Spincos Spinco Common Stock.
Regulation
S-K means Regulation S-K of the General Rules and Regulations
promulgated by the SEC pursuant to the Securities Act.
Relevant
Time means (a) as between any two Spincos, on the date of the later
Distribution Date to occur with respect to such Spincos if such Distribution
Dates are not the same date or, otherwise, on such Distribution Date and
(b) as between IAC and any Spinco, on the Distribution Date with respect
to such Spinco, in either such case (i) 9:00 a.m., New York City
time, if IAC determines to effect the applicable Distribution(s) prior to
the opening of trading on NASDAQ or (b) otherwise, 11:59 p.m., New
York City time, on such earliest date to occur.
Remaining
Business means all IAC Businesses other than the Spun Businesses.
Remaining
IAC Entity means any Business Concern that is a member of the IAC Group on
and after the Effective Time.
Representatives
means, with respect to any Person, any of such Persons directors, officers,
employees, agents, consultants, advisors, accountants or attorneys.
Requesting
Party has the meaning set forth in Section 8.01(a).
Response
has the meaning set forth in Section 9.02(a).
Responding
Parties has the meaning set forth in Section 9.02(a).
Responsible
Group has the meaning set forth in Section 3.02(b).
14
Responsible
Separate-co has the meaning set forth in Section 3.02.
Retailing
Business means (a) the businesses and operations of HSN Spinco and
its Subsidiaries as described in the Prospectus forming a part of HSN Spincos
Registration Statement, (b) any other business conducted primarily through
the use of the HSN Assets prior to the Effective Time and (c) the
businesses and operations of Business Concerns acquired or established by or
for HSN Spinco or any of its Subsidiaries after the date of this Agreement.
Retained
Liabilities has the meaning set forth in Section 2.10.
Retaining
Person has the meaning set forth in Section 3.01(b).
SEC
means the Securities and Exchange Commission.
Securities
Act means the United States Securities Act of 1933, as amended.
Senior
Party Representatives has the meaning set forth in Section 9.02(a).
Separate-cos
has the meaning set forth in the preamble hereto.
Separation
has the meaning set forth in the recitals hereto.
Separation
Transactions means the transactions to effect the Separation as described
in the Transactions Memo and, in the singular, means any one of them.
Shared Liability of a Spinco means
any Liability from, relating to, arising out of, or derivative of any matter,
claim or litigation, whether actual or potential, associated with any
securities law litigation relating to any public disclosure (or absence of
public disclosure) with respect to such Spincos Spun Business or the Spun
Entities in such Spincos Corresponding Group made by IAC prior to the
Effective Time, including the fees and expenses of outside counsel retained by
IAC in connection with the defense and/or settlement of any such matter. For purposes of this definition, the phrase
securities law litigation shall include claims alleging any untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact in alleged violation of the Securities Act, the
Exchange Act or any similar state law and any claims premised on, related to or
derivative of such alleged statements, omissions or violations, whether payable
to any current, past or future holders of IAC securities or any Spinco
securities, to any of the co-defendants in such action or to any Governmental
Authority. Notwithstanding anything in
Section 6.06 to the contrary, the amount of any Shared Liability shall be
net of any insurance proceeds actually recovered by or on behalf of any member
of any Group.
Specified
Financial Liabilities means, in respect of any Person, all liabilities,
obligations, contingencies, instruments and other Liabilities of a financial
nature with Third Parties of, or relating to, such Person, including any of the
following:
(a) foreign exchange contracts;
(b) letters of credit;
15
(c) guarantees of Third Party loans;
(d) surety bonds (excluding surety for
workers compensation self-insurance);
(e) interest support agreements on Third
Party loans;
(f) performance bonds or guarantees
issued by Third Parties;
(g) swaps or other derivatives contracts;
(h) recourse arrangements on the sale of
receivables or notes; and
(i) indemnities for damages for any
breach of, or any inaccuracy in, any representation or warranty or any breach
of, or failure to perform or comply with, any covenant, undertaking or
obligation.
Spinco
has the meaning set forth in the preamble hereto.
Spinco
Auditor has the meaning set forth in Section 11.01(a).
Spinco
Common Stock means the HSN Common Stock, the Interval Common Stock, the TM
Common Stock and/or the Tree Common Stock, as applicable.
Spinco
Common Stock Escrow Account has the meaning set forth in
Section 4.03.
Spinco
Group means any of the HSN Group, the Interval Group, the TM Group and the
Tree Group.
Spun
Businesses has the meaning set forth in the recitals hereto.
Spun
Assets means the HSN Assets, the Interval Assets, the TM Assets and the
Tree Assets.
Spun
Entities means the HSN Entities, the Interval Entities, the TM Entities
and the Tree Entities.
Spun
Liabilities means the HSN Liabilities, the Interval Liabilities, the TM
Liabilities and the Tree Liabilities.
Subsidiary
of any Person means any corporation, partnership, limited liability entity,
joint venture or other organization, whether incorporated or unincorporated, of
which a majority of the total voting power of capital stock or other interests
entitled (without the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof, is at the time owned or controlled,
directly or indirectly, by such Person.
Tangible
Personal Property means, in respect of any Person, all machinery,
equipment, tools, furniture, office equipment, supplies, materials, vehicles
and other items of
16
tangible personal or
movable property (other than Inventories and IT Assets) of every kind and
wherever located that are owned or leased by the Person, together with any
express or implied warranty by the manufacturers, sellers or lessors of any
item or component part thereof and all maintenance Records and other documents
relating thereto.
Tax
means Income Taxes and Other Taxes as defined in the Tax Sharing Agreement.
Tax
Sharing Agreement means the Tax Sharing Agreement among the Parties to be
dated as of even date herewith.
Third
Party means a Person (a) that is not a Party to this Agreement, other
than a member of any Group and (b) that is not an Affiliate thereof.
Third
Party Claim has the meaning set forth in Section 6.04(b).
Third
Party Consent has the meaning set forth in Section 2.11.
Ticketing
Business means (a) the businesses and operations of TM Spinco and its
subsidiaries as described in the Prospectus forming a part of TM Spincos
Registration Statement, (b) any other business conducted primarily through
the use of the TM Assets prior to the Effective Time and (c) the
businesses and operations of Business Concerns acquired or established by or
for TM Spinco or any of its Subsidiaries after the date of this Agreement.
TM
Assets has the meaning set forth in Section 2.04.
TM
Claims has the meaning set forth in Section 6.01(a).
TM
Common Stock means the common stock, par value $0.01 per share, of TM
Spinco.
TM
Distribution means the distribution on the TM Distribution Date, to
holders of record of shares of IAC Common Stock and IAC Class B Common
Stock as of the TM Distribution Record Date, of the TM Common Stock owned by
IAC on the basis of a fraction of a share of TM Common Stock equal to the TM
Distribution Ratio for every one share of IAC Common Stock or IAC Class B
Common Stock.
TM
Distribution Date means the date on which IAC distributes all of the
issued and outstanding shares of TM Common Stock to the holders of IAC Common
Stock and IAC Class B Common Stock.
TM
Distribution Ratio means 1/5, subject to adjustment pursuant to
Section 5.02(a).
TM
Distribution Record Date means such date as may be determined by the IAC
Board as the record date for the TM Distribution.
TM
Effective Time Cash Balance has the meaning set forth in
Section 4.04(a).
17
TM
Entities means those Business Concerns forming part of the IAC Group which
are identified on Schedule 2.04(b) and which on and after the
Effective Time form part of the TM Group.
TM
Group means TM Spinco, the TM Entities and each other Person (other than
any member of any other Group) that is a direct or indirect Subsidiary of TM
Spinco immediately after the Effective Time, and each Person that becomes a
Subsidiary of TM Spinco after the Effective Time.
TM
Group Balance Sheet has the meaning set forth in Section 2.04(c).
TM
Liabilities has the meaning set forth in Section 2.10.
TM
Opening Balance Sheet has the meaning set forth in Section 2.04(e).
TM
Releasors has the meaning set forth in Section 6.01(a).
TM
Spinco has the meaning set forth in the preamble hereto.
TM
Target Cash Balance has the meaning set forth in Section 4.04(a).
Transfer
Impediment has the meaning set forth in Section 3.01(a).
Transactions
Memo has the meaning set forth in the recitals hereto.
Transition
Services Agreement means the Transition Services Agreement among the
Parties to be dated as of even date herewith.
Tree Assets has the meaning set forth in
Section 2.07.
Tree
Claims has the meaning set forth in Section 6.01(d).
Tree
Common Stock means the common stock, par value $0.01 per share, of Tree
Spinco.
Tree
Distribution means the distribution on the Tree Distribution Date, to
holders of record of shares of IAC Common Stock and IAC Class B Common
Stock as of the Tree Distribution Record Date, of the Tree Common Stock owned
by IAC on the basis of a fraction of a share of Tree Common Stock equal to the
Tree Distribution Ratio for every one share of IAC Common Stock or IAC
Class B Common Stock.
Tree
Distribution Date means the date on which IAC distributes all of the
issued and outstanding shares of Tree Common Stock to the holders of IAC Common
Stock and IAC Class B Common Stock.
Tree
Distribution Ratio means 1/30, subject to adjustment pursuant to
Section 5.02(a).
18
Tree
Distribution Record Date means such date as may be determined by the IAC
Board as the record date for the Tree Distribution.
Tree
Effective Time Cash Balance has the meaning set forth in
Section 4.04(d).
Tree
Entities means those Business Concerns forming part of the IAC Group which
are identified on Schedule 2.07(b) and which on and after the
Effective Time form part of the Tree Group.
Tree
Group means Tree Spinco, the Tree Entities and each other Person (other
than any member of any other Group) that is a direct or indirect Subsidiary of
Tree Spinco immediately after the Effective Time, and each Person that becomes
a Subsidiary of Tree Spinco after the Effective Time.
Tree
Group Balance Sheet has the meaning set forth in Section 2.07(c).
Tree
Liabilities has the meaning set forth in Section 2.10.
Tree
Opening Balance Sheet has the meaning set forth in Section 2.07(e).
Tree
Releasors has the meaning set forth in Section 6.01(d).
Tree
Spinco has the meaning set forth in the preamble hereto.
Tree
Target Cash Balance has the meaning set forth in Section 4.04(d).
Unreleased
Group has the meaning set forth in Section 3.02.
Unreleased
Liabilities has the meaning set forth in Section 3.02.
Unreleased
Person has the meaning set forth in Section 3.02.
Unreleased
Separate-co has the meaning set forth in Section 3.02.
Vacations
Business means (a) the businesses and operations of Interval Spinco
and its subsidiaries as described in the Prospectus forming a part of Interval
Spincos Registration Statement, (b) any other business conducted
primarily through the use of the Interval Assets prior to the Effective Time
and (c) the businesses and operations of Business Concerns acquired or
established by or for Interval Spinco or any of its Subsidiaries after the date
of this Agreement.
Warrant
Share Number has the meaning set forth in Section 5.05(a)(i).
1.02. Schedules. The following schedules are attached to this
Agreement and form a part hereof:
Schedule 1.01(a)
|
|
Old IAC
Integrated Warrant
|
Schedule 2.04(a)
|
|
TM Assets
|
Schedule 2.04(b)
|
|
TM Entities
|
19
Schedule 2.04(c)
|
|
TM Group Balance
Sheet
|
Schedule 2.05(a)
|
|
Interval Assets
|
Schedule 2.05(b)
|
|
Interval
Entities
|
Schedule 2.05(c)
|
|
Interval Group
Balance Sheet
|
Schedule 2.06(a)
|
|
HSN Assets
|
Schedule 2.06(b)
|
|
HSN Entities
|
Schedule 2.06(c)
|
|
HSN Group
Balance Sheet
|
Schedule 2.07(a)
|
|
Tree Assets
|
Schedule 2.07(b)
|
|
Tree Entities
|
Schedule 2.07(c)
|
|
Tree Group
Balance Sheet
|
Schedule 2.09(a)
|
|
Excluded Assets
|
Schedule 2.10(a)
|
|
TM Liabilities
|
Schedule 2.10(b)
|
|
Interval
Liabilities
|
Schedule 2.10(c)
|
|
HSN Liabilities
|
Schedule 2.10(d)
|
|
Tree Liabilities
|
Schedule 2.10(e)
|
|
Retained
Liabilities
|
Schedule 2.14(a)
|
|
IAC Resignation
Exceptions
|
1.03. Effective Time; Suspension. (a) This Agreement shall be effective as
of the Effective Time.
(b) Notwithstanding
Section 1.03(a) above, as between any two of the Parties, the
provisions of, and the obligations under, this Agreement shall be suspended as
between such Parties until the applicable Relevant Time (and, as the context
requires, references to the Effective Time shall be deemed to refer to the
Relevant Time), other than Sections 2.01, 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.09 and 2.10, each of which shall be effective as of the Effective Time. For the avoidance of doubt, in the event that
one or more of the Distributions shall not be effected on the first
Distribution Date to occur, then for purposes of determining the rights and
obligations between IAC and any Spinco the Spinco Common Stock of which shall
have been distributed on such date, until the Distribution Date, if any, for
each Spinco not so distributed, such undistributed Spinco and the members of
its Corresponding Group shall continue to be treated as members of the IAC
Group and shall not, upon its Distribution Date, bear any Liability for any
Retained Liabilities.
ARTICLE
II
THE SEPARATION
2.01. Separation. To the extent not already complete, IAC and
the Spincos agree to implement the Separation and to cause the Corresponding
Businesses of each Spinco to be transferred to such Spinco and its Subsidiaries
and the Remaining Business to be held by IAC and its Subsidiaries (other than
the Spincos and their Subsidiaries) as of the Effective Time, on the terms and
subject to the conditions set forth in this Agreement. The Parties acknowledge that the Separation
is intended to result in each Spinco, directly or indirectly, operating its
Corresponding Business, owning its Corresponding Assets and assuming its
Corresponding Liabilities as set forth in this Article II.
20
2.02. Implementation. The Separation shall be completed in
accordance with the agreed general principles, objectives and other provisions
set forth in this Article II and shall be implemented in the following
manner:
(a) through
the completion of the steps described in the Transactions Memo;
(b) through
the transfer from time to time following the Effective Time of the Deferred
Transfer Assets as described in Article III;
(c) through
the completion from time to time following the Effective Time of the Deferred
Transactions, as described in Section 10.01(a); and
(d) through
the performance by the Parties of all other provisions of this Agreement.
2.03. Transfer
of Spun Assets; Assumption of Spun Liabilities. On the terms and subject to the conditions
set forth in this Agreement, and in furtherance of the Separation, with effect
as of the Effective Time:
(a) To
the extent not already complete, IAC agrees to cause the Corresponding Assets
of each Spinco to be contributed, assigned, transferred, conveyed and
delivered, directly or indirectly, to such Spinco, and each Spinco agrees to
accept all of its Corresponding Assets and all of the rights, title and
interest in and to all its Corresponding Assets owned, directly or indirectly,
by IAC which, except with respect to Deferred Corresponding Assets and
Unreleased Liabilities, will result in such Spinco owning, directly or
indirectly, its Corresponding Business.
(b) Each
Spinco agrees to accept, assume and faithfully perform, discharge and fulfill
all of its Corresponding Liabilities in accordance with their respective terms.
2.04. TM
Assets. For the purposes of this
Agreement, TM Assets shall mean, without duplication, those Assets
whether now existing or hereinafter acquired, used or contemplated to be used
or held for use exclusively or primarily in the ownership, operation or conduct
of the Ticketing Business or relating exclusively or primarily to the Ticketing
Business or to a TM Entity including the following:
(a) all
Assets expressly identified in this Agreement or in any Ancillary Agreement or
in any Schedule hereto or thereto, including those, if any, listed on Schedule
2.04(a), as Assets to be transferred to, or retained by, TM Spinco or any
other member of the TM Group;
(b) the
outstanding capital stock, units or other equity interests of the TM Entities,
as listed on Schedule 2.04(b), and the Assets owned by such TM Entities;
(c) all
Assets properly reflected on Schedule 2.04(c) (the TM Group
Balance Sheet), excluding Assets disposed of by IAC or any other
Subsidiary or entity controlled by IAC subsequent to the date of the TM Group
Balance Sheet;
21
(d) all
Assets that have been written off, expensed or fully depreciated by IAC or any
Subsidiary or entity controlled by IAC that, had they not been written off,
expensed or fully depreciated, would have been reflected on the TM Group
Balance Sheet in accordance with accounting principles generally accepted in
the United States (GAAP);
(e) all
Assets acquired by IAC or any Subsidiary or entity controlled by IAC after the
date of the TM Group Balance Sheet and that would be reflected on the balance
sheet of TM Spinco as of the Effective Time (the TM Opening Balance Sheet),
if such balance sheet were prepared in accordance with GAAP; and
(f) all
Assets transferred to TM Spinco or any member of the TM Group pursuant to
Section 10.01(a); provided, however, that any such transfer
shall take effect under Section 10.01(a) and not under this
Section 2.04.
Notwithstanding
the foregoing, there shall be excluded from the definition of TM Assets under
this Section 2.04 Business Records to the extent they are included in or
primarily relate to any Excluded Asset or Retained Liability or the Remaining
Business or their transfer is prohibited by Applicable Law or by agreements
between any other Separate-co or any member of another Separate-cos
Corresponding Group and Third Parties or otherwise would subject any other
Separate-co or any member of any other Corresponding Group to liability for
such transfer. Access to such excluded
Business Records shall be governed by Article VIII.
2.05. Interval
Assets. For the purposes of this
Agreement, Interval Assets shall mean, without duplication, those
Assets whether now existing or hereinafter acquired, used or contemplated to be
used or held for use exclusively or primarily in the ownership, operation or
conduct of the Vacations Business or relating exclusively or primarily to the
Vacation Business or to an Interval Entity including the following:
(a) all
Assets expressly identified in this Agreement or in any Ancillary Agreement or
in any Schedule hereto or thereto, including those, if any, listed on Schedule
2.05(a), as Assets to be transferred to, or retained by, Interval Spinco or
any other member of the Interval Group;
(b) the
outstanding capital stock, units or other equity interests of the Interval
Entities, as listed on Schedule 2.05(b), and the Assets owned by such
Interval Entities;
(c) all
Assets properly reflected on Schedule 2.05(c) (the Interval
Group Balance Sheet), excluding Assets disposed of by IAC or any other
Subsidiary or entity controlled by IAC subsequent to the date of the Interval
Group Balance Sheet;
(d) all
Assets that have been written off, expensed or fully depreciated by IAC or any
Subsidiary or entity controlled by IAC that, had they not been written off,
expensed or fully depreciated, would have been reflected on the Interval Group
Balance Sheet in accordance with GAAP;
(e) all
Assets acquired by IAC or any Subsidiary or entity controlled by IAC after the
date of the Interval Group Balance Sheet and that would be reflected on the
balance
22
sheet
of Interval Spinco as of the Effective Time (the Interval Opening Balance
Sheet), if such balance sheet were prepared in accordance with GAAP; and
(f) all
Assets transferred to Interval Spinco or any member of the Interval Group
pursuant to Section 10.01(a); provided, however, that any
such transfer shall take effect under Section 10.01(a) and not under
this Section 2.05.
Notwithstanding
the foregoing, there shall be excluded from the definition of Interval Assets
under this Section 2.05 Business Records to the extent they are included
in or primarily relate to any Excluded Asset or Retained Liability or the
Remaining Business or their transfer is prohibited by Applicable Law or by
agreements between any other Separate-co or any member of another Separate-cos
Corresponding Group and Third Parties or otherwise would subject any other
Separate-co or any member of any other Corresponding Group to liability for
such transfer. Access to such excluded
Business Records shall be governed by Article VIII.
2.06. HSN
Assets. For the purposes of this
Agreement, HSN Assets shall mean, without duplication, those Assets
whether now existing or hereinafter acquired, used or contemplated to be used
or held for use exclusively or primarily in the ownership, operation or conduct
of the Retailing Business or relating exclusively or primarily to the Retailing
Business or to an HSN Entity including the following:
(a) all
Assets expressly identified in this Agreement or in any Ancillary Agreement or
in any Schedule hereto or thereto, including those, if any, listed on Schedule
2.06(a), as Assets to be transferred to, or retained by, HSN Spinco or any
other member of the HSN Group;
(b) the
outstanding capital stock, units or other equity interests of the HSN Entities,
as listed on Schedule 2.06(b), and the Assets owned by such HSN
Entities;
(c) all
Assets properly reflected on Schedule 2.06(c) (the HSN Group
Balance Sheet), excluding Assets disposed of by IAC or any other
Subsidiary or entity controlled by IAC subsequent to the date of the HSN Group
Balance Sheet;
(d) all
Assets that have been written off, expensed or fully depreciated by IAC or any
Subsidiary or entity controlled by IAC that, had they not been written off,
expensed or fully depreciated, would have been reflected on the HSN Group
Balance Sheet in accordance with GAAP;
(e) all
Assets acquired by IAC or any Subsidiary or entity controlled by IAC after the
date of the HSN Group Balance Sheet and that would be reflected on the balance
sheet of HSN as of the Effective Time (the HSN Opening Balance Sheet),
if such balance sheet were prepared in accordance with GAAP; and
(f) all
Assets transferred to HSN Spinco or any member of the HSN Group pursuant to
Section 10.01(a); provided, however, that any such transfer
shall take effect under Section 10.01(a) and not under this
Section 2.06.
23
Notwithstanding
the foregoing, there shall be excluded from the definition of HSN Assets under
this Section 2.06 Business Records to the extent they are included in or
primarily relate to any Excluded Asset or Retained Liability or the Remaining
Business or their transfer is prohibited by Applicable Law or by agreements
between any other Separate-co or any member of another Separate-cos
Corresponding Group and Third Parties or otherwise would subject any other
Separate-co or any member of any other Corresponding Group to liability for
such transfer. Access to such excluded
Business Records shall be governed by Article VIII.
2.07. Tree
Assets. For the purposes of this
Agreement, Tree Assets shall mean, without duplication, those Assets
whether now existing or hereinafter acquired, used or contemplated to be used
or held for use exclusively or primarily in the ownership, operation or conduct
of the Lending and Real Estate Business or relating exclusively or primarily to
the Lending and Real Estate Business or to a Tree Entity including the
following:
(a) all
Assets expressly identified in this Agreement or in any Ancillary Agreement or
in any Schedule hereto or thereto, including those, if any, listed on Schedule
2.07(a), as Assets to be transferred to, or retained by, Tree Spinco or any
other member of the Tree Group;
(b) the
outstanding capital stock, units or other equity interests of the Tree
Entities, as listed on Schedule 2.07(b), and the Assets owned by such
Tree Entities;
(c) all
Assets properly reflected on Schedule 2.07(c) (the Tree Group
Balance Sheet), excluding Assets disposed of by IAC or any other
Subsidiary or entity controlled by IAC subsequent to the date of the Tree Group
Balance Sheet;
(d) all
Assets that have been written off, expensed or fully depreciated by IAC or any
Subsidiary or entity controlled by IAC that, had they not been written off,
expensed or fully depreciated, would have been reflected on the Tree Group
Balance Sheet in accordance with GAAP;
(e) all
Assets acquired by IAC or any Subsidiary or entity controlled by IAC after the
date of the Tree Group Balance Sheet and that would be reflected on the balance
sheet of Tree Spinco as of the Effective Time (the Tree Opening Balance
Sheet), if such balance sheet were prepared in accordance with GAAP; and
(f) all
Assets transferred to Tree Spinco or any member of the Tree Group pursuant to
Section 10.01(a); provided, however, that any such transfer
shall take effect under Section 10.01(a) and not under this
Section 2.07.
Notwithstanding
the foregoing, there shall be excluded from the definition of Assets under this
Section 2.07 Business Records to the extent they are included in or
primarily relate to any Excluded Asset or Retained Liability or the Remaining
Business or their transfer is prohibited by Applicable Law or by agreements
between any other Separate-co or any member of another Separate-cos
Corresponding Group and Third Parties or otherwise would subject any other
Separate-co or any member of any other Corresponding Group to liability for
such transfer. Access to such excluded
Business Records shall be governed by Article VIII.
24
2.08. Deferred
Spun Assets. Notwithstanding
anything to the contrary contained in Section 2.04, 2.05, 2.06 or 2.07 or
elsewhere in this Agreement, the Spun Assets shall not include any Deferred
Spun Assets. The transfer to a Spinco or
its Corresponding Group of any such Deferred Spun Asset shall only be completed
at the time, in the manner and subject to the conditions set forth in
Article III.
2.09. Excluded
Assets. (a) Notwithstanding
anything to the contrary contained in Section 2.04, 2.05, 2.06 or 2.07 or
elsewhere in this Agreement, the following Assets of IAC (or of any other
relevant member of the IAC Group) that would otherwise be included among the
Corresponding Assets of a Spinco shall not be transferred to such Spinco (or
any other member of its Corresponding Group), shall not form part of its Corresponding
Assets and shall remain the exclusive property of IAC (or the relevant member
of the IAC Group) on and after the Effective Time (the Excluded Assets):
(i) any Asset expressly identified on Schedule 2.09(a);
and
(ii) any Asset transferred to IAC or to any other relevant
member of the IAC Group pursuant to Section 10.01(a); provided, however,
that any such transfers shall take effect under Section 10.01(a) and
not under this Section 2.09.
(b) Notwithstanding
anything to the contrary in this Agreement, Excluded Assets shall not include
Deferred Excluded Assets. The transfer
to IAC (or to the relevant member of the IAC Group) or to another Spinco (or to
the relevant member of its Corresponding Group) of any such Asset shall be
completed at the time, in the manner and subject to the conditions set forth in
Article III.
2.10. Liabilities. For the purposes of this Agreement,
Liabilities shall be identified as TM Liabilities, Interval
Liabilities, HSN Liabilities,
Tree Liabilities or Retained Liabilities under the
following principles:
(a) any
Liability which is expressly identified on Schedule 2.10(a) shall
be a TM Liability;
(b) any
Liability which is expressly identified on Schedule 2.10(b) shall
be an Interval Liability;
(c) any
Liability which is expressly identified on Schedule 2.10(c) shall
be an HSN Liability;
(d) any
Liability which is expressly identified on Schedule 2.10(d) shall
be a Tree Liability;
(e) any
Liability which is expressly identified on Schedule 2.10(e) shall
be a Retained Liability;
(f) (i) 50%
of any Shared Liability of Ticketmaster Spinco shall be a Ticketmaster
Liability and 50% shall be a Retained Liability, (ii) 50% of any Shared
Liability of Interval Spinco shall be an Interval Liability and 50% shall be a
Retained Liability, (iii) 50% of
25
any
Shared Liability of HSN Spinco shall be an HSN Liability and 50% shall be a
Retained Liability and (iv) 50% of any Shared Liability of Tree Spinco
shall be a Tree Liability and 50% shall be a Retained Liability;
(g) any
Liability of a Spun Entity, whether arising or accruing prior to, on or after
the Effective Time and whether the facts on which it is based occurred on,
prior to or after the Effective Time and whether or not reflected on the
Corresponding Group Balance Sheet or on the Corresponding Opening Balance
Sheet, shall be a Corresponding Liability of such Spun Entitys Corresponding
Group, unless it is expressly identified in this Agreement (including on any Schedule)
or in any Ancillary Agreement as a Liability to be assumed or retained by IAC
(or any other member of the IAC Group) or by a Spinco that is not included in
such Spun Entitys Corresponding Group (or any other relevant member of such
other Spincos Corresponding Group), in which case it shall be a Retained
Liability or a Spun Liability of such other Spincos Corresponding Group, as
applicable;
(h) any
Liability relating to, arising out of, or resulting from the conduct of, a Spun
Business (as conducted at any time prior to, on or after the Effective Time) or
relating to a Spun Asset or a Deferred Spun Asset and whether arising or
accruing prior to, on or after the Effective Time and whether the facts on
which it is based occurred on, prior to or after the Effective Time and whether
or not reflected on the Corresponding Group Balance Sheet or the Corresponding
Opening Balance Sheet, shall be a Corresponding Liability of such Spun
Business Corresponding Group, unless it is expressly identified in this
Agreement (including on any Schedule) or in any Ancillary Agreement as a
Liability to be assumed or retained by IAC (or any other member of the IAC
Group) or by a Spinco that is not included in such Spun Entitys Corresponding
Group (or any other relevant member of such other Spincos Corresponding
Group), in which case it shall be a Retained Liability or Spun Liability of
such other Spincos Corresponding Group, as applicable;
(i) any
Liability which is reflected or otherwise disclosed as a liability or
obligation of any Spinco Group on its Corresponding Group Balance Sheet shall
be a Corresponding Liability of such Spinco Group;
(j) any
Liability which would be reflected or otherwise disclosed on the Corresponding
Group Balance Sheet of any Spinco Group, if such balance sheet were prepared
under GAAP, shall be a Corresponding Liability of such Spinco Group;
(k) any
Liability pursuant to contracts entered into by IAC and/or any member of the
IAC Group (i) in connection with the acquisition, by IAC and/or any member
of the IAC Group, of any Spun Entity and/or Spun Business or
(ii) otherwise relating primarily to a Spun Entity and/or the conduct of a
Spun Business, shall be a Corresponding Liability of such Spun Entitys or Spun
Businesss Corresponding Group, unless it is expressly identified in this
Agreement (including on any Schedule) or in any Ancillary Agreement as a
Liability to be assumed or retained by IAC (or any other member of the IAC
Group) or by a Spinco that is not included in such Spun Entitys Corresponding
Group (or any other relevant member of such other Spincos Corresponding
Group), in which case it shall be a Retained Liability or Spun Liability of
such other Spincos Corresponding Group, as applicable;
26
(l) any Liability of a Remaining IAC
Entity, whether arising or accruing prior to, on or after the Effective Time
and whether the facts on which it is based occurred on, prior to or after the
Effective Time, shall be Retained Liability, unless it is determined to be a
Spun Liability pursuant to clause (a), (b), (c), (d), (f), (g), (h), (i), (j) or
(k) above, in which case it shall be a Spun Liability as set forth
thereunder;
(m) any Liability relating to, arising out
of, or resulting from the conduct of, a Remaining IAC Business (as conducted at
any time prior to, on or after the Effective Time) or relating to an Excluded
Asset and whether arising or accruing prior to, on or after the Effective Time
and whether the facts on which it is based occurred on, prior to or after the
Effective Time, shall be a Retained Liability, unless it is determined to be a
Spun Liability pursuant to clause (a), (b), (c), (d), (f), (g), (h), (i), (j) or
(k) above, in which case it shall be a Spun Liability as set forth
thereunder; and
(n) any Liability of any Spinco or any
other member of any Spinco Group under this Agreement or any Ancillary
Agreement shall be a Corresponding Liability of such Spinco Group and any
Liability of IAC or any other member of the IAC Group under this Agreement or
any Ancillary Agreement shall be a Retained Liability.
2.11. Third Party Consents and Government
Approvals. To the extent that the
Separation or any transaction contemplated thereby requires a Consent from any
Third Party (a Third Party Consent) or any Governmental Authorization,
the Parties will use commercially reasonable efforts to obtain all such Third
Party Consents and Governmental Authorizations prior to the Effective
Time. If the Parties fail to obtain any
such Third Party Consent or Governmental Authorization prior to the Effective
Time, the matter shall be dealt with in the manner set forth in Article III.
2.12. Preservation of Agreements. The Parties each agree that all written
agreements, arrangements, commitments and understandings between any member or
members of its Corresponding Group, on the one hand, and any member or members
of any other Group, on the other hand, shall remain in effect in accordance
with their terms from and after the Effective Time, unless otherwise terminated
by the relevant Parties.
2.13. Ancillary Agreements. On or prior to the Effective Time, the
Parties shall execute and deliver or, as applicable, cause the appropriate
members of their respective Groups to execute and deliver, each of the following
agreements (collectively, the Ancillary Agreements):
(a) the Employee Matters Agreement;
(b) the Tax Sharing Agreement;
(c) the Transition Services Agreement;
and
(d) the Transactions Memorandum, and such
other agreements and instruments as may relate to or be identified in any of
the foregoing agreements.
27
2.14. Resignations. (a) IAC agrees to cause each Person who
is a director or an officer of any Spun Entity and who will not be or become an
employee of such Spun Entitys Spinco Group (or any member thereof) at the
Effective Time to resign from such position with effect as of the Effective
Time; provided, however, that this Section 2.14(a) shall
not apply to the persons in the capacities set forth on Schedule 2.14(a).
(b) Each Spinco agrees to cause each
Person (i) who is a director or an officer of a Remaining IAC Entity or
any Spun Entity that is not a member of such Spincos Corresponding Group and (ii) who
will become an employee of such Spincos Corresponding Group (or any member
thereof) at the Effective Time to resign from such position with effect as of
the Effective Time.
(c) Each Separate-co agrees to obtain all
such letters of resignation or other evidence of such resignations as may be
necessary or desirable in performing their respective obligations under this Section 2.14.
2.15. Cooperation. The Parties shall cooperate in all aspects of
the Separation and shall sign all such documents and perform all such other
acts as may be necessary or desirable to give full effect to the Separation;
and each Separate-co shall cause each other member of its Corresponding Group
to do likewise.
2.16. Intercompany Accounts Among Groups. Except as otherwise expressly provided in any
Ancillary Agreement, from and after the Effective Time, each Separate-co agrees
to cause any Intercompany Account payable by any member of its Corresponding
Group to any member of any other Group to be satisfied in full.
2.17. Disclaimer of Representations and Warranties. (a) Each of the Parties (on behalf of
itself and each other member of its respective Corresponding Group) understands
and agrees that, except as expressly set forth herein or in any Ancillary
Agreement, no Party to this Agreement, any Ancillary Agreement or any other
agreement or document contemplated by this Agreement, any Ancillary Agreement
or otherwise, makes any representation or warranty, express or implied,
regarding any of the Spun Assets, Spun Entities, Spun Businesses, Excluded Assets,
Spun Liabilities or Retained Liabilities including any warranty of
merchantability or fitness for a particular purpose, or any representation or
warranty regarding any Consents or Governmental Authorizations required in
connection therewith or their transfer, regarding the value or freedom from
Encumbrances of, or any other matter concerning, any Spun Asset or Excluded
Asset, or regarding the absence of any defense or right of setoff or freedom
from counterclaim with respect to any claim or other Spun Asset or Excluded
Asset, including any Account Receivable of any Party, or as to the legal
sufficiency of any assignment, document or instrument delivered hereunder to
convey title to any Spun Asset or Excluded Asset upon the execution, delivery
and filing hereof or thereof.
(b) Except as may expressly be set forth
herein or in any Ancillary Agreement, all Spun Assets and Excluded Assets are
being transferred on an as is, where is basis, at the risk of the respective
transferees without any warranty whatsoever on the part of the transferor,
formal or implicit, legal, statutory or conventional (and, in the case of any
Real Property, by means of a quitclaim or similar form deed or conveyance).
28
ARTICLE III
DEFERRED SEPARATION TRANSACTIONS
3.01. Deferred Transfer Assets. (a) If the transfer to, or retention
by, any member of a Spinco Group of any Asset that would otherwise constitute
its Corresponding Asset (a Deferred Spun Asset; with respect to such
Spinco, a Deferred Corresponding Asset) or the transfer to, or
retention by, any member of the IAC Group of any Asset that would otherwise
constitute an Excluded Asset (a Deferred Excluded Asset, and together
with a Deferred Spun Asset, a Deferred Transfer Asset) cannot be
accomplished without giving rise to a violation of Applicable Law, or without
obtaining a Third Party Consent or a Governmental Authorization (collectively,
a Transfer Impediment) and any such Third Party Consent or
Governmental Authorization has not been obtained prior to the Effective Time,
then such Asset shall be dealt with in the manner described in this Section 3.01.
(b) Pending removal of such Transfer
Impediment, the Person holding the Deferred Transfer Asset (the Retaining Person)
shall hold such Deferred Transfer Asset for the use and benefit, insofar as
reasonably possible, of the Party to whom the transfer of such Asset could not
be made at the Effective Time (the Deferred Beneficiary). The Retaining Person shall use commercially
reasonable efforts to preserve such Asset and its right, title and interest
therein and take all such other action as may reasonably be requested by the
Deferred Beneficiary (in each case, at such Deferred Beneficiarys expense) in
order to place such Deferred Beneficiary, insofar as reasonably possible, in
the same position as it would be in if such Asset had been transferred to it or
retained by it with effect as of the Effective Time and so that, subject to the
standard of care set forth above, all the benefits and burdens relating to such
Deferred Transfer Asset, including possession, use, risk of loss, potential for
gain, enforcement of rights against third parties and dominion, control and
command over such Asset, are to inure from and after the Effective Time to such
Deferred Beneficiary and the members of its Group. The provisions set forth in this Article III
contain all the obligations of the Retaining Person vis-à-vis the Deferred
Beneficiary with respect to the Deferred Transfer Asset and the Retaining
Person shall not be bound vis-à-vis the Deferred Beneficiary by any other
obligations under Applicable Law.
(c) The Parties shall continue on and
after the Effective Time to use commercially reasonable efforts to remove all
Transfer Impediments; provided, however, that no Party shall be
required to make any unreasonable payment or assume any material obligations
therefor. As and when any Transfer
Impediment is removed, the relevant Deferred Transfer Asset shall forthwith be
transferred to its Deferred Beneficiary at no additional cost and in a manner
and on terms consistent with the relevant provisions of this Agreement and the
Ancillary Agreements, including Section 2.17(b) hereof, and any such
transfer shall take effect as of the date of its actual transfer.
(d) Notwithstanding the foregoing or any
provision of Applicable Law, a Retaining Person shall not be obligated, in
connection with the foregoing, to expend any money in respect of a Deferred
Transfer Asset unless the necessary funds are advanced by the Deferred
Beneficiary of such Deferred Transfer Asset, other than reasonable attorneys
fees and recording or similar fees, all of which shall be promptly reimbursed
by the Deferred Beneficiary of such Deferred Transfer Asset.
29
3.02. Unreleased Liabilities. If at any time on or after the Effective
Time, any member of any Group shall remain obligated to any Third Party in
respect of any Corresponding Liability not its own i.e., a Corresponding
Liability of another Separate-co (such other Separate-co with respect such
Unreleased Liability and such Unreleased Person, the Responsible
Separate-co) the following provisions shall apply. The Liabilities referred to in this Section 3.02
are hereinafter referred to as the Unreleased Liabilities, the Person
remaining obligated for such Liability in a manner contrary to what is intended
under this Agreement is hereinafter referred to as the Unreleased Person,
such Unreleased Persons Corresponding Separate-co, the Unreleased
Separate-co and such Unreleased Persons Corresponding Group, the Unreleased
Group.
(a) Each Unreleased Person shall remain
obligated to Third Parties for such Unreleased Liability as provided in the
relevant Contract, Applicable Law or other source of such Unreleased Liability
and shall pay and perform such Unreleased Liability as and when required, in
accordance with its terms.
(b) Each Responsible Separate-co shall
indemnify, defend and hold harmless each Other Separate-Co Indemnified Party
that is an Unreleased Person from and against any Liabilities arising in
respect of each Unreleased Liability of such Unreleased Person that is a
Corresponding Liability of such Responsible Separate-co. Each Responsible Separate-co shall take, and
shall cause the members of its Corresponding Group (the Responsible Group)
to take, such other actions as may be reasonably requested by the applicable
Unreleased Separate-co in accordance with the provisions of this Agreement in
order to place the applicable Unreleased Group, insofar as reasonably possible,
in the same position as it would be in if such Unreleased Liability had been
fully contributed, assigned, transferred, conveyed, and delivered to, and
accepted and assumed or retained, as applicable, by such Responsible
Separate-co (or any relevant member of the Responsible Group) with effect as of
the Effective Time and so that all the benefits and burdens relating to such
Unreleased Liability, including possession, use, risk of loss, potential for
gain, and dominion, control and command over such Unreleased Liability, are to
inure from and after the Effective Time to the member or members of the
Responsible Group.
(c) Each Responsible Separate-co shall
continue on and after the Effective Time to use commercially reasonable efforts
to cause the applicable Unreleased Persons to be released from their respective
Unreleased Liabilities.
(d) If, as and when it becomes possible
to delegate, novate or extinguish any Unreleased Liability in favor of an
Unreleased Person, the relevant Parties shall promptly sign all such documents
and perform all such other acts, and shall cause each member of their
respective Groups, as applicable, to sign all such documents and perform all
such other acts, as may be necessary or desirable to give effect to such
delegation, novation, extinction or other release without payment of any
further consideration by the Unreleased Person.
3.03. No Additional Consideration. For the avoidance of doubt, the transfer or
assumption of any Assets or Liabilities under this Article III shall be
effected without any additional consideration by any Party hereunder.
30
ARTICLE IV
COVENANTS
4.01. General Covenants. Each Party covenants with and in favor of the
other Parties that it shall, subject, in the case of IAC, to Article XII:
(a) do and perform all such acts and
things, and execute and deliver all such agreements, assurances, notices and
other documents and instruments as may reasonably be required of it to
facilitate the carrying out of the intent and purpose of this Agreement;
(b) cooperate with and assist the other
Parties, both before and after the Effective Time, in dealing with transitional
matters relating to or arising from the Separation, the Distributions, this
Agreement or the Ancillary Agreements; and
(c) cooperate in preparing and filing all
documentation (i) to effect all necessary applications, notices,
petitions, filings and other documents; and (ii) to obtain as promptly as
reasonably practicable all Consents and Governmental Authorizations necessary
or advisable to be obtained from any Third Party and/or any Governmental
Authority in order to consummate the transactions contemplated by this Agreement
(including all approvals required under applicable antitrust laws).
4.02. Covenants of the Spincos. In addition to the covenants of the Spincos
provided for elsewhere in this Agreement, each Spinco covenants and agrees
with, and in favor of, the other Parties that it shall:
(a) use commercially reasonable efforts
and do all things reasonably required of it to cause the Separation and the
Distributions to be completed, including cooperating with IAC to obtain: the approval for the listing of such Spincos
Spinco Common Stock on NASDAQ or such other securities exchange or inter-dealer
quotation system as is reasonably acceptable to IAC;
(b) use its commercially reasonable
efforts to take all such action as may be necessary or desirable under applicable
state securities and blue sky laws of the United States (and any comparable
laws under any foreign jurisdictions) in connection with the Separation and the
Distributions;
(c) use its commercially reasonable
efforts to cause any member of another Group to be released, as soon as
reasonably practicable, from any guarantees given by any member of such other
Group (the Guaranteeing Group; its Corresponding Separate-co, the Guaranteeing
Separate-co) for the benefit of such Spinco (the Guaranteed Spinco;
its Corresponding Group, the Guaranteed Group; its Corresponding
Entities, the Guaranteed Entities) or any Guaranteed Entities and (to
the extent necessary to secure such releases) to cause itself or one or more
members of the Guaranteed Group to be substituted in all respects for any
member of the Guaranteeing Group in respect of such guarantees, provided,
that in the event that, notwithstanding the commercially reasonable efforts of
the Guaranteed Spinco, the Guaranteed Spinco is unable to obtain such guarantee
releases, the Guaranteed Spinco hereby agrees to indemnify and hold the
Guaranteeing Separate-co and the other members of the
31
Guaranteeing Group harmless
from and against all Liabilities incurred by them in connection with, arising
out of or resulting from such guarantees; and
(d) perform and, as applicable, cause
each member of its Corresponding Group to perform each of its and their
respective obligations under each Ancillary Agreement.
4.03. Spinco Common Stock Escrow Accounts. (a) Immediately following the Effective
Time, each Spinco shall deposit a number of shares of its Spinco Common Stock
as is equal to the product of (x) its Corresponding Distribution Ratio and
(y) the number of shares of IAC Common Stock deliverable upon the exercise
of the Old IAC Integrated Warrant if such warrant were to be exercised
immediately prior to the Effective Time (such Spincos Corresponding Escrow
Shares) into an escrow account (a Spinco Common Stock Escrow Account)
to be established by each Spinco with The Bank of New York Mellon (the Escrow
Agent) to be held by the Escrow Agent pursuant to the terms of an escrow
agreement in customary form to be agreed upon by each of the Spincos and the Escrow
Agent prior to the Effective Time (an Escrow Agreement). The Spinco Common Stock Escrow Accounts will
serve as a source of shares of Spinco Common Stock deliverable upon the
exercise of the New IAC Integrated Warrant.
Under the terms of the Escrow Agreements, any shares of Spinco Common
Stock designated for delivery upon exercise of the New IAC Integrated Warrant
shall be returned to the applicable Spinco upon the expiration without exercise
of the New IAC Integrated Warrant in accordance with its terms. IAC and each Spinco acknowledge that IACs
obligation to issue shares of IAC Common Stock to the holder of the Old IAC
Integrated Warrant relates to the businesses that were conducted by the IAC
Group and the Spinco Groups prior to the Effective Time. Accordingly, from and after the Effective
Time, upon an exercise of the New IAC Integrated Warrant, as between IAC and
the Spincos, each Spinco will exclusively bear the obligation to deliver shares
of its Spinco Common Stock. The issuance
and delivery by each Spinco of its Corresponding Escrow Shares to the
applicable Spinco Common Stock Escrow Account is intended to further such
Spincos satisfaction of such obligations following the Separation and the
Distributions; provided, however, that if for any reason such
Spinco Common Stock Escrow Account does not satisfy such obligations, the
transfer of shares by such Spinco to the Spinco Common Stock Escrow Account
under this Section 4.03 is not in substitution of the obligations of such
Spinco under the immediately preceding sentence to deliver shares of its Spinco
Common Stock. For the avoidance of
doubt, any obligations with respect to the delivery of any Spinco Common Stock
on account of the New IAC Integrated Warrant shall be a Corresponding Liability
of such Spinco. If, at any time or from
time to time following the Effective Time,
(X) IAC reasonably determines in good
faith (which determination, absent manifest error, shall be final and binding)
in its sole discretion that, for any Spinco, its Corresponding Escrow Shares
are insufficient to satisfy the obligations with respect to the New IAC
Integrated Warrant, IAC shall provide to such Spinco written notice indicating
the number of additional shares of such Spinco Common Stock necessary to satisfy
the obligations pursuant to the New IAC Integrated Warrant and such Spinco
shall promptly deposit into the applicable Spinco Common Stock Escrow Account
the number of shares of such Spinco Common Stock indicated in the written
notice from IAC; or
32
(Y) any Spinco undertakes any action, or
any event shall occur, that either (i) results in an adjustment to the
number of shares of its Spinco Common Stock with respect to which the New IAC
Integrated Warrant is exercisable or (ii) causes that portion of the New
IAC Integrated Warrant that would otherwise have been exercisable for shares of
such Spinco Common Stock to become exercisable into another form of
consideration (including, without limitation, in conjunction with a merger of
such Spinco or a reclassification of such Spinco Common Stock), then, in each
case, such Spinco shall promptly deposit into the applicable Spinco Common
Stock Escrow Account the number of additional shares of such Spinco Common Stock
and/or the other consideration with respect to which the New IAC Integrated
Warrant is exercisable.
(b)
Notwithstanding the foregoing, in lieu of issuing any fractional shares of its
Spinco Common Stock upon the exercise of the New IAC Integrated Warrant, the
applicable Spinco shall promptly deposit into the applicable Spinco Common
Stock Escrow Account cash in lieu of such fractional share in an amount
computed in accordance with the terms of the New IAC Integrated Warrant.
4.04. Cash Balance True-Ups. (a) In the event that, after review and
reconciliation, the amount of cash and cash equivalents reflected in the bank
statements of TM Spinco and its subsidiaries as of the Effective Time plus the
balance as of the Effective Time of any note or notes of any member of the IAC
Group held by any member of the TM Group less the balance as of the Effective
Time of any note or notes of any member of the TM Group held by any member of
the IAC Group (the TM Effective Time Cash Balance) is greater than
$[] (the TM Target Cash Balance), TM Spinco shall make one or
more payments to IAC as promptly as practicable after the Effective Time, but
in no event more than [ninety (90)] days after the Effective Time, totaling an
amount equal to the excess of the TM Effective Time Cash Balance over the TM
Target Cash Balance. In the event that,
after review and reconciliation, the TM Effective Time Cash Balance is less
than the TM Target Cash Balance, IAC shall make one or more payments to TM
Spinco as promptly as practicable after the Effective Time, but in no event
more than [ninety (90)] days after the Effective Time, totaling an amount equal
to the excess of the TM Target Cash Balance over the TM Effective Time Cash
Balance. Notwithstanding Section 13.08,
payments pursuant to this Section 4.04(a) shall not bear any
interest.
(b) In the event that, after review and
reconciliation, the amount of cash and cash equivalents reflected in the bank
statements of Interval Spinco and its subsidiaries as of the Effective Time
plus the balance as of the Effective Time of any note or notes of any member of
the IAC Group held by any member of the Interval Group less the balance as of
the Effective Time of any note or notes of any member of the Interval Group
held by any member of the IAC Group (the Interval Effective Time Cash
Balance) is greater than $[] (the Interval Target Cash Balance),
Interval Spinco shall make one or more payments to IAC as promptly as
practicable after the Effective Time, but in no event more than [ninety (90)]
days after the Effective Time, totaling an amount equal to the excess of the
Interval Effective Time Cash Balance over the Interval Target Cash
Balance. In the event that, after review
and reconciliation, the Interval Effective Time Cash Balance is less than the
Interval Target Cash Balance, IAC shall make one or more payments to Interval
Spinco as promptly as practicable after the Effective
33
Time, but in no event more
than [ninety (90)] days after the Effective Time, totaling an amount equal to
the excess of the Interval Target Cash Balance over the Interval Effective Time
Cash Balance. Notwithstanding Section 13.08,
payments pursuant to this Section 4.04(b) shall not bear any
interest.
(c) In the event that, after review and
reconciliation, the amount of cash and cash equivalents reflected in the bank
statements of HSN Spinco and its subsidiaries as of the Effective Time plus the
balance as of the Effective Time of any note or notes of any member of the IAC
Group held by any member of the HSN Group less the balance as of the Effective
Time of any note or notes of any member of the HSN Group held by any member of
the IAC Group (the HSN Effective Time Cash Balance) is greater than
$[] (the HSN Target Cash Balance), HSN Spinco shall make one or
more payments to IAC as promptly as practicable after the Effective Time, but
in no event more than [ninety (90)] days after the Effective Time, totaling an
amount equal to the excess of the HSN Effective Time Cash Balance over the HSN
Target Cash Balance. In the event that,
after review and reconciliation, the HSN Effective Time Cash Balance is less
than the HSN Target Cash Balance, IAC shall make one or more payments to HSN
Spinco as promptly as practicable after the Effective Time, but in no event
more than [ninety (90)] days after the Effective Time, totaling an amount equal
to the excess of the HSN Target Cash Balance over the HSN Effective Time Cash
Balance. Notwithstanding Section 13.08,
payments pursuant to this Section 4.04(c) shall not bear any
interest.
(d) In the event that, after review and
reconciliation, the amount of cash and cash equivalents in the bank statements
of Tree Spinco and its subsidiaries as of the Effective Time plus the balance
as of the Effective Time of any note or notes of any member of the IAC Group
held by any member of the Tree Group less the balance as of the Effective Time
of any note or notes of any member of the Tree Group held by any member of the
IAC Group (the Tree Effective Time Cash Balance) is greater than
$[] (the Tree Target Cash Balance), Tree Spinco shall make one
or more payments to IAC as promptly as practicable after the Effective Time,
but in no event more than [ninety (90)] days after the Effective Time, totaling
an amount equal to the excess of the Tree Effective Time Cash Balance over the
Tree Target Cash Balance. In the event
that, after review and reconciliation, the Tree Effective Time Cash Balance is
less than the Tree Target Cash Balance, IAC shall make one or more payments to
Tree Spinco as promptly as practicable after the Effective Time, but in no
event more than [ninety (90)] days after the Effective Time, totaling an amount
equal to the excess of the Tree Target Cash Balance over the Tree Effective
Time Cash Balance. Notwithstanding Section 13.08,
payments pursuant to this Section 4.04(d) shall not bear any
interest.
4.05. Non-Solicitation.
(a) IAC and each of the Spincos shall
not, and each of them shall cause the other members of its respective
Corresponding Group not to, from the applicable Distribution Date of a Spinco
(the Subject Spinco) through and including the eighteen-month
anniversary of such Distribution Date, without the prior written consent of the
Subject Spinco, either directly or indirectly, on their own behalf or in the
service or on behalf of others, solicit for employment or solicit, aid, induce
or encourage any person who is an employee of the Subject Spincos respective
Corresponding Group as of such Distribution Date to leave his or her employment.
34
(b) No Spinco shall, and each of them
shall cause the other members of its respective Corresponding Group not to,
from the applicable Distribution Date of such Spinco through and including the
eighteen-month anniversary of such Distribution Date, without the prior written
consent of IAC, either directly or indirectly, on their own behalf or in the
service or on behalf of others, solicit for employment or solicit, aid, induce
or encourage any person who is an employee of IACs Corresponding Group as of
such Distribution Date to leave his or her employment.
(c) Nothing in this Section 4.06 shall
be deemed to prohibit any general solicitation for employment through
advertisements and search firms not specifically directed at employees of
another Party, provided that the applicable Party has not encouraged or advised such firm to
approach any such employee.
ARTICLE V
THE DISTRIBUTIONS
5.01. Conditions to the Distributions. (a) In addition to, and without in any
way limiting, IACs rights under Section 12.1, completion of each
Distribution is conditioned on:
(i) the IAC Board not having determined
that such Distribution is not in the best interests of IAC and its
stockholders;
(ii) the Registration Statements with
respect to such Spincos common shares shall have been declared effective by
the SEC or become effective under the Exchange Act, no stop order suspending
the effectiveness of such Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened by the
SEC;
(iii) the applicable Spinco Common Stock
shall have been accepted for listing on NASDAQ, subject to compliance with
applicable listing requirements;
(iv) no Order or other legal restraint or
prohibition preventing the consummation of any of the Distributions, or any of
the transactions contemplated by this Agreement or any Ancillary Agreement,
including the transactions to effect the Separation, shall be threatened,
pending or in effect;
(v) any material Consents and
Governmental Authorizations necessary to complete the Separation and the
Distributions shall have been obtained and be in full force and effect;
(vi) the stockholders of IAC shall have
approved, in accordance with the DGCL, a merger agreement providing for the
merger of a wholly-owned subsidiary of IAC with and into IAC pursuant to which
all of the outstanding shares of preferred stock of IAC shall be converted into
the right to receive cash;
(vii) the IAC Board shall have received a
written solvency opinion, in form and substance acceptable to the IAC Board,
from Duff & Phelps regarding the
35
Separation,
the Distributions and other transactions contemplated hereby, which opinion
shall not have been withdrawn or modified;
(viii) IAC shall have received an opinion of
Wachtell, Lipton, Rosen & Katz, in form and substance satisfactory to
the IAC Board, regarding the qualification of the Distributions, as
transactions that are generally tax free for U.S. federal income tax purposes
under Sections 355 and/or 368(a)(1)(D) of the Code (to the extent such
qualification is not addressed by an Internal Revenue Service private letter
ruling (the IRS Ruling) received by IAC), which opinion (and, in the event
IAC shall have received the IRS Ruling, the IRS Ruling) shall not have been
withdrawn or modified;
(ix) IAC shall have received opinions from
its external tax advisors, in form and substance satisfactory to the IAC Board,
regarding the U.S. federal income tax consequences to IAC of certain related
matters and transactions (to the extent such matters are not addressed by the
IRS Ruling) and certain state tax consequences to IAC of the spin-offs, which
opinions shall not have been withdrawn or modified; and
(x) IAC shall have received an opinion
of Delaware counsel to IAC, in form and substance satisfactory to the IAC
Board, to the effect that the Separation and the Distributions do not require
approval of the stockholders of IAC under Section 271 of the DGCL.
(b) The foregoing conditions are for the sole benefit of IAC and shall not
give rise to or create any duty on the part of IAC or the IAC Board to waive or
not to waive such conditions or in any way limit IACs right to terminate this
Agreement in whole or in part as set forth in Article XII or alter the
consequences of any such termination from those specified in such Article XII. Any determination made by IAC prior to the
Separation and the Distributions concerning the satisfaction or waiver of the
conditions set forth in this Section 5.01 shall be final and conclusive.
5.02. Distribution of Spinco Common Stock. (a) Prior to the Effective Time and in
accordance with the Transactions Memo, each Spinco shall issue to IAC such
additional shares of its Spinco Common Stock (or shall take or cause to be
taken such other appropriate actions to ensure that IAC has the requisite
number of shares of Spinco Common Stock) to cause the number of shares of such
Spinco Common Stock issued and outstanding immediately prior to the Effective
Time to equal the product of (x) the sum of (i) the applicable IAC
Record Date Share Number and (ii) the number of shares of IAC Common Stock
issued or issuable pursuant to the exercise of outstanding IAC Stock Options or
pursuant to the vesting of IAC Restricted Stock Units (as such terms are
defined in the Employee Matters Agreement), in either case following the
applicable Distribution Record Date and prior to the third Business Day
immediately prior to the applicable Distribution Date (giving effect to any
cashless exercise of IAC Stock Options or withholding of shares of IAC Common
Stock to satisfy tax withholding obligations) (Post-Record Date IAC Shares)
(y) the Corresponding Distribution Ratio.
The Corresponding Distribution Ratio with respect to any Spinco shall be
appropriately adjusted in the event of any stock split, reverse stock split or
similar event in respect of the IAC Common Stock and/or IAC Class B Common
Stock following the date of this Agreement and prior to the Effective Time.
36
(b) On the terms and subject to the
conditions in this Agreement, with respect to each Distribution, IAC will cause
the applicable distribution or transfer agent (the Agent) at the
Effective Time to distribute all of the outstanding shares of the applicable
Spinco Common Stock then owned by IAC to holders of IAC Common Stock and IAC Class B
Common Stock as of the applicable Distribution Record Date and, in accordance
with the Employee Matters Agreement, to holders of Post-Record Date IAC Shares,
and to credit the number of such shares of Spinco Common Stock to book-entry
accounts for each such holder or designated transferee or transferees of such
holder of IAC Common Stock or IAC Class B Common Stock. On the terms and subject to the conditions in
this Agreement, each holder of IAC Common Stock or IAC Class B Common
Stock on the applicable Distribution Record Date (or such holders designated
transferee or transferees) will be entitled to receive in the applicable
Distribution a fraction of a share of the applicable Spincos Spinco Common
Stock equal to the applicable Distribution Ratio for each share of IAC Common
Stock or IAC Class B Common Stock so held by such stockholder as of the
applicable Distribution Record Date. No
action by any such stockholder shall be necessary for such stockholder (or such
stockholders designated transferee or transferees) to receive the applicable
number of shares of Spinco Common Stock (and, if applicable, cash in lieu of
any fractional shares) that such stockholder is entitled to receive in the
applicable Distribution.
5.03. Fractional Shares. With respect to each Distribution, IAC
stockholders holding a number of shares of IAC Common Stock or IAC Class B
Common Stock on the applicable Distribution Record Date which would entitle
such stockholders to receive other than a whole number of shares of the
applicable Spinco Common Stock in such Distribution, will receive cash in lieu
of such fractional shares. Fractional
shares of Spinco Common Stock will not be distributed in any Distribution nor
credited to book-entry accounts. The
Agent shall, as soon as practicable after the applicable Distribution
Date: (a) determine the number of
whole shares and fractional shares of the applicable Spinco Common Stock to
each holder of record as of close of business on the applicable Distribution
Record Date, (b) aggregate all such fractional shares into whole shares
and sell the whole shares obtained thereby in open market transactions as soon
as practicable after the applicable Distribution Date, in each case, at then
prevailing trading prices on behalf of holders who would otherwise be entitled
to fractional share interests, and (c) distribute to each such holder, or
for the benefit of each such beneficial owner, such holder or owners ratable
share of the net proceeds of such sale, based upon the average gross selling
price per share of applicable Spinco Common Stock, after making appropriate
deductions for any amount required to be withheld for United States federal
income tax purposes. Each Spinco shall
bear the cost of brokerage fees incurred in connection with the sales of
fractional shares of its Spinco Common Stock, which sales shall occur as soon
after the applicable Distribution Date as practicable and as determined by the
Agent. None of the Parties nor the Agent
will guarantee any minimum sale price for fractional shares of Spinco Common Stock. None of the Parties will pay any interest on
the proceeds from the sale of fractional shares. The Agent acting on behalf of the applicable
Spinco will have the sole discretion to select the broker-dealers through which
to sell the aggregated fractional shares and to determine when, how and at what
price to sell such shares. Neither the
Agent nor the broker-dealers through which the aggregated fractional shares are
sold will be Affiliates of IAC or the applicable Spinco.
5.04. Actions in Connection with the
Distributions. (a) Each Spinco
shall file such amendments and supplements to its respective Registration
Statement as IAC may
37
reasonably request, and such
amendments as may be necessary in order to cause the same to become and remain
effective as required by Applicable Law, including filing such amendments and
supplements to its respective Registration Statement as may be required by the
SEC or federal, state or foreign securities laws. IAC shall mail to the holders of IAC Common Stock
and IAC Class B Common Stock, at such time on or prior to the applicable
Distribution Date as IAC shall determine, the Prospectus forming a part of the
applicable Registration Statement, as well as any other information concerning
any of the Spincos, their business, operations and management, the Separation
and such other matters as IAC shall reasonably determine are necessary and as
may be required by Applicable Law.
(b) Each of the Spincos shall also
cooperate with IAC in preparing, filing with the SEC and causing to become
effective registration statements or amendments thereof which are required to
reflect the establishment of, or amendments to, any employee benefit and other
plans necessary or appropriate in connection with the Separation or other
transactions contemplated by this Agreement and the Ancillary Agreements. Promptly after receiving a request from IAC,
to the extent requested, each of HSN Spinco, Interval Spinco, TM Spinco and
Tree Spinco, as applicable, shall prepare and, in accordance with Applicable
Law, file with the SEC any such documentation that IAC determines is necessary
or desirable to effectuate the Distributions, and IAC, HSN Spinco, Interval
Spinco, TM Spinco and Tree Spinco shall each use commercially reasonable
efforts to obtain all necessary approvals from the SEC with respect thereto as
soon as practicable.
(c) Nothing in this Section 5.04
shall be deemed, by itself, to shift Liability for any portion of any
Registration Statement or Prospectus to IAC.
(d) In addition to the covenants of the
Spincos provided for elsewhere in this Agreement, each Spinco covenants and
agrees with, and in favor of, IAC that it shall (i) cooperate with IAC in
connection with IACs performance of its obligations under the Liberty Spinco
Agreement with respect to such Spinco to be performed by IAC prior to the
Effective Time, (ii) enter into a Liberty Spinco Assumption Agreement and
a Liberty Registration Rights Agreement as contemplated by the Liberty Spinco
Agreement and (iii) indemnify and hold IAC and the other members of the
IAC Group harmless from and against all Liabilities incurred by them in
connection with, arising out of or resulting from such Spincos performance or
failure to perform its obligations under such agreements following the
Effective Time.
5.05. Treatment of Integrated Warrant. Immediately following the Effective Time:
(a) the Old IAC Integrated Warrant shall
by its terms, effective as of the Effective Time be adjusted (as so adjusted,
the New IAC Integrated Warrant), represent the right to receive upon
due exercise (w) a number of shares of IAC Common Stock equal to the
number of shares of IAC Common Stock subject to the Old IAC Integrated Warrant
immediately prior the Effective Time (the Warrant Share Number); (x) a
number of shares of common stock of Expedia, Inc. (or substitutions
therefor) as set forth in that certain Separation Agreement, dated as of August 9,
2005, between IAC and Expedia, Inc.; (y) a number of shares of Spinco
Common Stock (or substitutions therefor) of each Spinco, if any, the
Distribution Date of which shall have occurred prior to such Effective Time;
and (z) such number of shares of
38
Spinco Common Stock of each
Spinco whose Distribution is effected at such Effective Time as a given holder
of IAC Common Stock would be entitled at the Effective Time had such holder
held, on the applicable Distribution Record Date, a number of shares of IAC
Common Stock equal to the Warrant Share Number; and
(b) the exercise price of the New IAC
Integrated Warrant will not change.
ARTICLE VI
MUTUAL RELEASES; INDEMNIFICATION
6.01. Release of Pre-Distribution Claims. (a) Except as provided in Section 6.01(f),
effective as of the Effective Time, TM Spinco does hereby, on behalf of itself
and each other member of the TM Group, their respective Affiliates (other than
any member of any other Group), successors and assigns, and all Persons who at
any time prior to the Effective Time have been stockholders (other than any
member of any other Group), directors, officers, agents or employees of any
member of the TM Group (in each case, in their respective capacities as such)
(the TM Releasors), unequivocally, unconditionally and irrevocably
release and discharge each of the other Separate-cos, the other members of the
other Groups, their respective Affiliates (other than any member of the TM
Group), successors and assigns, and all Persons who at any time prior to the
Effective Time have been stockholders, directors, officers, agents or employees
of any member of any other Group (in each case, in their respective capacities
as such), and their respective heirs, executors, trustees, administrators,
successors and assigns (the Non-TM Parties), from any and all Actions,
causes of action, choses in action, cases, claims, suits, debts, dues, damages,
judgments and liabilities, of any nature whatsoever, in law, at equity or
otherwise, whether direct, derivative or otherwise, which have been asserted
against a Non-TM Party or which, whether currently known or unknown, suspected
or unsuspected, fixed or contingent, and whether or not concealed or hidden,
the TM Releasors ever could have asserted or ever could assert, in any
capacity, whether as partner, employer, agent or otherwise, either for itself
or as an assignee, heir, executor, trustee, administrator, successor or
otherwise for or on behalf of any other Person, against the Non-TM Parties,
relating to any claims or transactions or occurrences whatsoever, up to but
excluding the Effective Time, including in connection with the transactions and
all activities to implement the Separation and the Distributions (TM Claims);
and the TM Releasors hereby unequivocally, unconditionally and irrevocably
agree not to initiate proceedings with respect to, or institute, assert or
threaten to assert, any TM Claim.
(b) Except as provided in Section 6.01(f),
effective as of the Effective Time, Interval Spinco does hereby, on behalf of
itself and each other member of the Interval Group, their respective Affiliates
(other than any member of any other Group), successors and assigns, and all
Persons who at any time prior to the Effective Time have been stockholders
(other than any member of any other Group), directors, officers, agents or employees
of any member of the Interval Group (in each case, in their respective
capacities as such) (the Interval Releasors), unequivocally,
unconditionally and irrevocably release and discharge each of the other
Separate-cos, the other members of the other Groups, their respective
Affiliates (other than any member of the Interval Group), successors and
assigns, and all Persons who at any time prior to the Effective Time have been
stockholders, directors, officers, agents or employees of any member of any other
Group (in each case, in their respective capacities as such), and their
respective
39
heirs, executors, trustees,
administrators, successors and assigns (the Non-Interval Parties),
from any and all Actions, causes of action, choses in action, cases, claims,
suits, debts, dues, damages, judgments and liabilities, of any nature
whatsoever, in law, at equity or otherwise, whether direct, derivative or
otherwise, which have been asserted against a Non-Interval Party or which,
whether currently known or unknown, suspected or unsuspected, fixed or
contingent, and whether or not concealed or hidden, the Interval Releasors ever
could have asserted or ever could assert, in any capacity, whether as partner,
employer, agent or otherwise, either for itself or as an assignee, heir,
executor, trustee, administrator, successor or otherwise for or on behalf of
any other Person, against the Non-Interval Parties, relating to any claims or
transactions or occurrences whatsoever, up to but excluding the Effective Time,
including in connection with the transactions and all activities to implement
the Separation and the Distributions (Interval Claims); and the
Interval Releasors hereby unequivocally, unconditionally and irrevocably agree
not to initiate proceedings with respect to, or institute, assert or threaten
to assert, any Interval Claim.
(c) Except as provided in Section 6.01(f),
effective as of the Effective Time, HSN Spinco does hereby, on behalf of itself
and each other member of the HSN Group, their respective Affiliates (other than
any member of any other Group), successors and assigns, and all Persons who at
any time prior to the Effective Time have been stockholders (other than any
member of any other Group), directors, officers, agents or employees of any
member of the HSN Group (in each case, in their respective capacities as such)
(the HSN Releasors), unequivocally, unconditionally and irrevocably
release and discharge each of the other Separate-cos, the other members of the
other Groups, their respective Affiliates (other than any member of the HSN
Group), successors and assigns, and all Persons who at any time prior to the
Effective Time have been stockholders, directors, officers, agents or employees
of any member of any other Group (in each case, in their respective capacities
as such), and their respective heirs, executors, trustees, administrators,
successors and assigns (the Non-HSN Parties), from any and all
Actions, causes of action, choses in action, cases, claims, suits, debts, dues,
damages, judgments and liabilities, of any nature whatsoever, in law, at equity
or otherwise, whether direct, derivative or otherwise, which have been asserted
against a Non-HSN Party or which, whether currently known or unknown, suspected
or unsuspected, fixed or contingent, and whether or not concealed or hidden,
the HSN Releasors ever could have asserted or ever could assert, in any
capacity, whether as partner, employer, agent or otherwise, either for itself
or as an assignee, heir, executor, trustee, administrator, successor or
otherwise for or on behalf of any other Person, against the Non-HSN Parties,
relating to any claims or transactions or occurrences whatsoever, up to but
excluding the Effective Time, including in connection with the transactions and
all activities to implement the Separation and the Distributions (HSN
Claims); and the HSN Releasors hereby unequivocally, unconditionally and
irrevocably agree not to initiate proceedings with respect to, or institute,
assert or threaten to assert, any HSN Claim.
(d) Except as provided in Section 6.01(f),
effective as of the Effective Time, Tree Spinco does hereby, on behalf of
itself and each other member of the Tree Group, their respective Affiliates
(other than any member of any other Group), successors and assigns, and all
Persons who at any time prior to the Effective Time have been stockholders
(other than any member of any other Group), directors, officers, agents or
employees of any member of the Tree Group (in each case, in their respective
capacities as such) (the Tree Releasors), unequivocally,
unconditionally and irrevocably release and discharge each of the other
Separate-cos, the other
40
members of the other Groups,
their respective Affiliates (other than any member of the Tree Group),
successors and assigns, and all Persons who at any time prior to the Effective
Time have been stockholders, directors, officers, agents or employees of any
member of any other Group (in each case, in their respective capacities as
such), and their respective heirs, executors, trustees, administrators,
successors and assigns (the Non-Tree Parties), from any and all
Actions, causes of action, choses in action, cases, claims, suits, debts, dues,
damages, judgments and liabilities, of any nature whatsoever, in law, at equity
or otherwise, whether direct, derivative or otherwise, which have been asserted
against a Non-LT Party or which, whether currently known or unknown, suspected
or unsuspected, fixed or contingent, and whether or not concealed or hidden,
the Tree Releasors ever could have asserted or ever could assert, in any
capacity, whether as partner, employer, agent or otherwise, either for itself
or as an assignee, heir, executor, trustee, administrator, successor or
otherwise for or on behalf of any other Person, against the Non-LT Parties,
relating to any claims or transactions or occurrences whatsoever, up to but
excluding the Effective Time, including in connection with the transactions and
all activities to implement the Separation and the Distributions (Tree
Claims); and the Tree Releasors hereby unequivocally, unconditionally and
irrevocably agree not to initiate proceedings with respect to, or institute,
assert or threaten to assert, any Tree Claim.
(e) Except as provided in Section 6.01(f),
effective as of the Effective Time, IAC does hereby, on behalf of itself and
each other member of the IAC Group, their respective Affiliates (other than any
member of any Spinco Group), successors and assigns, and all Persons who at any
time prior to the Effective Time have been stockholders, directors, officers,
agents or employees of any member of the IAC Group (in each case, in their
respective capacities as such) (the IAC Releasors), unequivocally,
unconditionally and irrevocably release and discharge each of the Spincos, the
other members of the Spinco Groups, their respective Affiliates (other than any
member of the IAC Group), successors and assigns, and all Persons who at any
time prior to the Effective Time have been stockholders (other than any member
of the IAC Group), directors, officers, agents or employees of any member of
any Spinco Group (in each case, in their respective capacities as such), and
their respective heirs, executors, trustees, administrators, successors and
assigns (the Non-IAC Parties), from any and all Actions, causes of
action, choses in action, cases, claims, suits, debts, dues, damages, judgments
and liabilities, of any nature whatsoever, in law, at equity or otherwise,
whether direct, derivative or otherwise, which have been asserted against an
Non-IAC Party or which, whether currently known or unknown, suspected or
unsuspected, fixed or contingent, and whether or not concealed or hidden, the
IAC Releasors ever could have asserted or ever could assert, in any capacity,
whether as partner, employer, agent or otherwise, either for itself or as an
assignee, heir, executor, trustee, administrator, successor or otherwise for or
on behalf of any other Person, against the Non-IAC Parties, relating to any
claims or transactions or occurrences whatsoever, up to but excluding the
Effective Time including in connection with the transactions and all activities
to implement the Separation and the Distributions (IAC Claims); and
the IAC Releasors hereby unequivocally, unconditionally and irrevocably agree
not to initiate proceedings with respect to, or institute, assert or threaten
to assert, any IAC Claim.
(f) Nothing contained in Section 6.01(a),
6.01(b), 6.01(c), 6.01(d) or 6.01(e) shall impair any right of any
Person to enforce this Agreement, any Ancillary Agreement or, any agreement,
arrangement, commitment or understanding that is contemplated by Section 2.12
or any other agreement, arrangement, commitment or understanding that is
entered into after the
41
Effective Time among any member of any Group,
on the one hand, and any member of any other Group, on the other hand, nor
shall anything contained in those sections be interpreted as terminating as of
the Effective Time any rights under any such agreements, contracts, commitments
or understandings. For purposes of
clarification, nothing contained in Section 6.01(a), 6.01(b), 6.01(c),
6.01(d) or 6.01(e) shall release any Person from:
(i) any Liability
provided in or resulting from this Agreement or any of the Ancillary
Agreements;
(ii) any Liability
provided in or resulting from any agreement among any members of any Group that
is contemplated by Section 2.13 (including for greater certainty, any
Liability resulting or flowing from any breaches of such agreements that arose
prior to the Effective Time);
(iii) any Liability
provided in or resulting from any other agreement, arrangement, commitment or
understanding that is entered into after the Effective Time between any member
of any Group, on the one hand, and any member of any other Group, on the other
hand;
(iv) (A) with
respect to each Spinco, any Corresponding Liability of such Spinco and (B) with
respect to IAC, any Retained Liability;
(v) any Liability that
the Parties may have with respect to indemnification or contribution pursuant
to Article III or Section 5.04(d) of this Agreement or this Article VI
for Third Party Claims;
(vi) any Liability for
unpaid Intercompany Accounts; or
(vii) any Liability the
release of which would result in the release of any Person other than a Person
released pursuant to this Section 6.01.
In addition, nothing contained
in Section 6.01(a), 6.01(b),
6.01(c), 6.01(d) or 6.01(e) hereof shall release any
Separate-co from honoring its existing obligations to indemnify any director,
officer or employee of any Group who was a director, officer or employee of
such Separate-co on or prior to the Effective Time, to the extent that such
director, officer or employee becomes a named defendant in any litigation
involving such Separate-co and was entitled to such indemnification pursuant to
then existing obligations.
(g) TM Spinco shall not make, and shall not permit any other
member of the TM Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against any other Separate-co or any member of any other Group
or any other Person released pursuant to Section 6.01(a), with respect to
any Liabilities released pursuant to Section 6.01(a).
(h) Interval Spinco shall not make, and shall not permit any
other member of the Interval Group to make, any claim or demand, or commence
any Action asserting any claim or demand, including any claim of contribution
or any indemnification, against any other
42
Separate-co or any member of any other Group
or any other Person released pursuant to Section 6.01(b), with respect to
any Liabilities released pursuant to Section 6.01(b).
(i) HSN Spinco shall not make, and shall not permit any other
member of the HSN Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against any other Separate-co or any member of any other Group
or any other Person released pursuant to Section 6.01(c), with respect to
any Liabilities released pursuant to Section 6.01(c).
(j) Tree Spinco shall not make, and shall not permit any
other member of the Tree Group to make, any claim or demand, or commence any
Action asserting any claim or demand, including any claim of contribution or
any indemnification, against any other Separate-co or any member of any other
Group or any other Person released pursuant to Section 6.01(d), with
respect to any Liabilities released pursuant to Section 6.01(d).
(k) IAC shall not make, and shall not permit any other member
of the IAC Group to make, any claim or demand, or commence any Action asserting
any claim or demand, including any claim of contribution or any
indemnification, against any Spinco or any other member of any Spinco Group or
any other Person released pursuant to Section 6.01(e), with respect to any
Liabilities released pursuant to Section 6.01(e).
6.02. Indemnification by Spincos. Except as provided in Sections 6.04 and 6.05
and subject to Section 13.01, each Spinco shall, and shall cause the other
members of its Corresponding Group to, fully indemnify, defend and hold
harmless each other Separate-co, each other member of each other Group and each
of their respective current and former directors, officers and employees, and
each of the heirs, executors, trustees, administrators, successors and assigns
of any of the foregoing (collectively, such Spincos Corresponding Other
Separate-cos Indemnified Parties), from and against any and all
Liabilities of its Corresponding Other Separate-cos Indemnified Parties
relating to, arising out of or resulting from any of the following items
(without duplication):
(a) with respect to such Spinco, the Corresponding Business,
any Corresponding Entity, any Corresponding Asset, any Corresponding Liability
or, subject to Article III, any Deferred Spun Asset;
(b) any breach of, or failure to perform or comply with, any
covenant, undertaking or obligation of, this Agreement or any of the Ancillary
Agreements, by such Spinco or any other member of it Corresponding Group,
subject to any limitation on liability set forth in any Ancillary Agreement for
any such breach or failure to perform or comply with any covenant, undertaking
or obligation under such Ancillary Agreement; and
(c) any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent relating to such Spincos Corresponding
Group or Corresponding Business contained in any Registration Statement or any
other filings made with the SEC in connection with the Separation and the
Distributions.
43
6.03. Indemnification by IAC. Except as provided in Sections 6.04 and 6.05
and subject to Section 13.01, IAC shall indemnify, defend and hold
harmless each Spinco, each other member of each Spinco Group and each of their
respective current and former directors, officers and employees, and each of
the heirs, executors, trustees, administrators, successors and assigns of any
of the foregoing (collectively, the Non-IAC Indemnified Parties), from
and against any and all Liabilities of the Non-IAC Indemnified Parties relating
to, arising out of or resulting from any of the following items (without
duplication):
(a) any Remaining IAC Business or any Retained Liability;
(b) any breach of, or failure to perform or comply with, any
covenant, undertaking or obligation of, this Agreement or any of the Ancillary
Agreements, by IAC or any other member of the IAC Group, subject to any
limitation on liability set forth in any Ancillary Agreement for any such breach
or failure to perform or comply with any covenant, undertaking or obligation
under such Ancillary Agreement;
(c) except to the extent set forth in Section 6.02(c),
any untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, contained in any
Registration Statement or Prospectus forming a part thereof; and
(d) any determination by a court of competent jurisdiction
(whether or not in a final, non-appealable judgment) that any of the Spincos
has any liability (whether direct or indirect) for the payment of the IAC
Notes; it being understood that in the event of any such determination, IAC
shall be entitled to elect either of the following options: (1) IAC shall
make arrangements that are reasonably satisfactory to any such Spinco to
provide assurance that IAC has the financial wherewithal to promptly satisfy
the IAC Notes or (2) IAC shall repay, redeem, satisfy and discharge, or
otherwise retire the IAC Notes; provided, that if such determination could
reasonably be expected to result in a default under any of such Spincos
indebtedness, then such Spinco shall be entitled to require IAC to exercise
option (2) above.
6.04. Procedures for Indemnification of Third Party Claims. (a) All claims for indemnification
relating to a Third Party Claim by any indemnified party (an Indemnified
Party) hereunder shall be asserted and resolved as set forth in this Section 6.04.
(b) In the event that any written claim or demand for which an
indemnifying party (an Indemnifying Party) may have liability to any
Indemnified Party hereunder, is asserted against or sought to be collected from
any Indemnified Party by a Third Party (a Third Party Claim), such
Indemnified Party shall promptly, but in no event more than ten (10) days
following such Indemnified Partys receipt of a Third Party Claim, notify the
Indemnifying Party in writing of such Third Party Claim, the amount or the
estimated amount of damages sought thereunder to the extent then ascertainable
(which estimate shall not be conclusive of the final amount of such Third Party
Claim), any other remedy sought thereunder, any relevant time constraints
relating thereto and, to the extent practicable, and any other material details
pertaining thereto (a Claim Notice); provided, however,
that the failure to timely give a Claim Notice shall affect the rights of an
Indemnified Party hereunder only to the extent that such failure has a material
prejudicial effect on the defenses or other rights available to the
44
Indemnifying Party with respect to such Third
Party Claim. The Indemnifying Party shall have thirty (30) days (or such lesser
number of days set forth in the Claim Notice as may be required by court
proceeding in the event of a litigated matter) after receipt of the Claim
Notice (the Notice Period) to notify the Indemnified Party whether it
desires to defend the Indemnified Party against such Third Party Claim; provided
that in the event a Claim Notice in respect of indemnification sought pursuant
to Section 6.02(c) so specifies, the Indemnified Party shall have the
right to require the Indemnifying Party, and in such event the Indemnifying
Party shall be required, to defend the Indemnified Party against such Third
Party Claim at the Indemnifying Partys expense.
(c) In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against a Third Party Claim, the Indemnifying Party shall
have the right to defend the Indemnified Party by appropriate proceedings and
shall have the sole power to direct and control such defense, with counsel
reasonably satisfactory to the Indemnified Party at the Indemnifying Partys
expense. Once the Indemnifying Party has
duly assumed the defense of a Third Party Claim, the Indemnified Party shall
have the right, but not the obligation, to participate in any such defense and
to employ separate counsel of its choosing.
The Indemnified Party shall participate in any such defense at its
expense, provided that such expense shall be the responsibility of the Indemnifying
Party if (i) the Indemnifying Party and the Indemnified Party are both
named parties to the proceedings and the Indemnified Party shall have
reasonably concluded that representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them (in which case the Indemnifying Party shall not be responsible for
expenses in respect of more than one counsel for the Indemnified Party in any
single jurisdiction), or (ii) the Indemnified Party assumes the defense of
a Third Party Claim after the Indemnifying Party has failed to diligently
defend a Third Party Claim it has assumed the defense of, as provided in the
first sentence of this Section 6.04(c).
The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party, settle, compromise or offer to settle or compromise any
Third Party Claim on a basis that would result in (i) the imposition of a
consent order, injunction or decree that would restrict the future activity or
conduct of the Indemnified Party or any of its Affiliates, (ii) a finding
or admission of a violation of Applicable Law or violation of the rights of any
Person by the Indemnified Party or any of its Affiliates or (iii) a
finding or admission that would have an adverse effect on other claims made or
threatened against the Indemnified Party or any of its Affiliates.
(d) If the Indemnifying Party (i) elects not to defend
the Indemnified Party against a Third Party Claim, whether by not giving the
Indemnified Party timely notice of its desire to so defend or otherwise or (ii) after
assuming the defense of a Third Party Claim or after receiving a Claim Notice
specified in the proviso to the last sentence of Section 6.04(b), fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within ten (10) days after receiving written notice from the Indemnified
Party to the effect that the Indemnifying Party has so failed, the Indemnified
Party shall have the right but not the obligation to assume its own defense; it
being understood that the Indemnified Partys right to indemnification for a
Third Party Claim shall not be adversely affected by assuming the defense of
such Third Party Claim. The Indemnified
Party shall not settle a Third Party Claim without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
45
(e) The Indemnified Party and the Indemnifying Party shall
cooperate in order to ensure the proper and adequate defense of a Third Party
Claim, including by providing access to each others relevant business records
and other documents, and employees; it being understood that the reasonable
costs and expenses of the Indemnified Party relating thereto shall be
Liabilities, subject to indemnification.
(f) The Indemnified Party and the Indemnifying Party shall
use commercially reasonable efforts to avoid production of confidential
information (consistent with Applicable Law), and to cause all communications
among employees, counsel and others representing any party to a Third Party
Claim to be made so as to preserve any applicable attorney-client or
work-product privileges.
6.05. Procedures for Indemnification of Direct Claims. Any claim for indemnification made directly
by the Indemnified Party against the Indemnifying Party that does not result
from a Third Party Claim shall be asserted by written notice from the
Indemnified Party to the Indemnifying Party specifically claiming
indemnification hereunder. Such
Indemnifying Party shall have a period of 45 days after the receipt of such
notice within which to respond thereto.
If such Indemnifying Party does not respond within such 45-day period,
such Indemnifying Party shall be deemed to have accepted responsibility to make
payment and shall have no further right to contest the validity of such
claim. If such Indemnifying Party does
respond within such 45-day period and rejects such claim in whole or in part,
such Indemnified Party shall be free to pursue resolution as provided in Article IX.
6.06. Adjustments to Liabilities. (a) If an Indemnified Party receives
any payment from an Indemnifying Party in respect of any Liabilities and the
Indemnified Party could have recovered all or a part of such Liabilities from a
Third Party (a Potential Contributor) based on the underlying claim or
demand asserted against such Indemnifying Party, such Indemnified Party shall,
to the extent permitted by Applicable Law, assign such of its rights to proceed
against the Potential Contributor as are necessary to permit such Indemnifying
Party to recover from the Potential Contributor the amount of such payment.
(b) If notwithstanding Section 6.06(a) an
Indemnified Party receives an amount from a Third Party in respect of a
Liability that is the subject of indemnification hereunder after all or a
portion of such Liability has been paid by an Indemnifying Party pursuant to
this Agreement, the Indemnified Party shall promptly remit to the Indemnifying
Party the excess (if any) of (i) the amount paid by the Indemnifying Party
in respect of such Liability, plus the amount received from the Third Party in
respect thereof, over (ii) the full amount of the Liability.
(c) An insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other Third Party shall be entitled to a wind-fall (i.e., a
benefit they would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions hereof.
46
6.07. Payments. The
Indemnifying Party shall pay all amounts payable pursuant to this Article VI
by wire transfer of immediately available funds, promptly following receipt
from an Indemnified Party of a bill, together with all accompanying reasonably
detailed backup documentation, for a Liability that is the subject of
indemnification hereunder, unless the Indemnifying Party in good faith disputes
the Liability, in which event it shall so notify the Indemnified Party. In any event, the Indemnifying Party shall pay
to the Indemnified Party, by wire transfer of immediately available funds, the
amount of any Liability for which it is liable hereunder no later than three (3) days
following any final determination of such Liability and the Indemnifying Partys
liability therefor. A final
determination shall exist when (a) the parties to the dispute have
reached an agreement in writing, (b) a court of competent jurisdiction
shall have entered a final and non-appealable order or judgment, or (c) an
arbitration or like panel shall have rendered a final non-appealable
determination with respect to disputes the parties have agreed to submit
thereto.
6.08. Contribution.
If the indemnification provided for in this Article VI shall, for
any reason, be unavailable or insufficient to hold harmless the Indemnified Party
hereunder in respect of any Liability, then each Indemnifying Party shall, in
lieu of indemnifying such Indemnified Party, contribute to the amount paid or
payable by such Indemnified Party as a result of such Liability, in such
proportion as shall be sufficient to place the Indemnified Party in the same
position as if such Indemnified Party were indemnified hereunder, the Parties
intending that their respective contributions hereunder be as close as possible
to the indemnification under Sections 6.02 and 6.03. If the contribution provided for in the
previous sentence shall, for any reason, be unavailable or insufficient to put
the Indemnified Party in the same position as if it were indemnified under Section 6.02
or 6.03, as the case may be, then the Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of such
Liability, in such proportion as shall be appropriate to reflect the relative
benefits received by and the relative fault of the Indemnifying Party on the
one hand and the Indemnified Party on the other hand with respect to the matter
giving rise to the Liability.
6.09. Remedies Cumulative.
The remedies provided in this Article VI shall be cumulative and,
subject to the provisions of Article IX, shall not preclude assertion by
any Indemnified Party of any other rights or the seeking of any and all other
remedies against any Indemnifying Party.
6.10. Survival of Indemnities. The rights and obligations of each of the
Separate-cos and their respective Indemnified Parties under this Article VI
shall survive the distribution, sale or other transfer by any Party of any
Assets or the delegation or assignment by it of any Liabilities.
6.11. Shared Liabilities.
Notwithstanding anything to the contrary contained in this Agreement:
(a) In order to facilitate the defense of any Shared
Liability, the Parties agree that (i) the relevant Parties shall cooperate
in the defense of any Shared Liability; (ii) each relevant Party shall be
responsible for the costs of its own in-house counsel and other internal
personnel in the defense of any Shared Liability; (iii) IAC shall be
entitled to control the defense and/or settlement of any Shared Liability,
although each relevant Spinco shall be entitled to
47
observe with counsel of its own selection and
at its own expense; provided, however, that after the Effective
Time IAC shall not settle all or any portion of any Shared Liability unless any
remaining Liability of any Spinco and its Affiliates and their respective
current and former officers and directors relating to the Shared Liability will
be fully released as a result of such settlement.
(b) The Parties agree to act in good faith and to use their
reasonable best efforts to preserve and maximize the insurance benefits due to
be provided under all policies of insurance and to cooperate with one another
as necessary to permit each other to access or obtain the benefits under those
policies; provided, however, that nothing hereunder shall be construed
to prevent any party or any other Person from asserting claims for insurance
benefits or accepting insurance benefits provided by the policies. The Parties agree to exchange information
upon reasonable request of the other Party regarding requests that they have
made for insurance benefits, notices of claims, occurrences and circumstances
that they have submitted to the insurance companies or other entities managing
the policies, responses they have received from those insurance companies or
entities, including any payments they have received from the insurance
companies and any agreements by the insurance companies to make payments, and
any other information that the Parties may need to determine the status of the
insurance policies and the continued availability of benefits thereunder.
(c) If any Party receives notice or otherwise learns of the
assertion by any person or entity (including a Governmental Authority) of a
Shared Liability, that Party shall give the other Parties written notice of
such Shared Liability, providing notice of such Shared Liability in reasonable
detail. The failure to give notice under
this subsection shall not relieve any Party of its Liability for any Shared
Liability except to the extent the Party is actually prejudiced by the failure
to give such notice. The Parties shall
be deemed to be on notice of any Shared Liability pending prior to the
Effective Time.
ARTICLE VII
INSURANCE
7.01. Insurance Matters.
(a) Each Spinco does hereby, for itself and each other member of
its Corresponding Group, agree that no member of the IAC Group or any IAC
Indemnified Party shall have any liability whatsoever as a result of the
insurance policies and practices of IAC and its Affiliates as in effect at any
time prior to the Effective Time, including as a result of the level or scope
of any such insurance, the creditworthiness of any insurance carrier, the terms
and conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise;
provided this Section 7.01(a) shall not negate IACs agreement under Section 7.01(b).
(b) IAC agrees to use its reasonable best efforts to cause the
interest and rights of each Spinco and the other members of its Corresponding
Group as of the Relevant Time as insureds or beneficiaries or in any other
capacity under occurrence-based insurance policies and programs (and under
claims-made policies and programs to the extent a claim has been submitted prior
to the Relevant Time) of IAC or any other member of the IAC Group in respect of
periods prior to the Relevant Time to survive the Relevant Time for the period
for which such interests and rights would have survived without regard to the
transactions contemplated hereby
48
to the extent permitted by such policies, and
IAC shall continue to administer such policies and programs on behalf of the
relevant Spincos and the other relevant members of the Spinco Groups, subject
to such Spincos reimbursement to IAC and the other relevant members of the IAC
Group for the actual out-of-pocket costs of such ongoing administration and the
internal costs (based on the proportion of the amount of time actually spent on
such matter to such employees normal working time) of any employee or agent of
IAC of any other relevant member of the IAC Group who will be required to spend
at least ten percent of his or her normal working time over any ten (10) Business
Days working with respect to any such matter on behalf of a Spinco or any
member of its Corresponding Group. Any
proceeds received by IAC or any other member of the IAC Group after the
Relevant Time under such policies and programs in respect of a Spinco or other
members of its Corresponding Group shall be for the benefit of such Spinco and
such other members.
(c) This Agreement is not intended as an attempted assignment
of any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of any member of the IAC Group in
respect of any insurance policy or any other contract or policy of insurance.
(d) Nothing in this Agreement shall be deemed to restrict any
member of any Spinco Group from acquiring at its own expense any other
insurance policy in respect of any Liabilities or covering any period.
ARTICLE VIII
EXCHANGE OF INFORMATION; CONFIDENTIALITY
8.01. Agreement for Exchange of Information; Archives. (a) Without limiting any rights or
obligations under any Ancillary Agreement between the Parties and/or any other
member of their respective Groups relating to confidentiality, each Party
agrees to provide, and to cause its Representatives, its Group members and its
respective Group members Representatives to provide, to the other Groups and
any member thereof (a Requesting Party), at any time before, on or
after the Effective Time, subject to the provisions of Section 8.04 and as
soon as reasonably practicable after written request therefor, any Information
within the possession or under the control of such Party or one of such Persons
which the Requesting Party reasonably needs (i) to comply with reporting,
disclosure, filing or other requirements imposed on the Requesting Party
(including under applicable securities laws) by a Governmental Authority having
jurisdiction over the Requesting Party, (ii) for use in any other
judicial, regulatory, administrative or other proceeding or in order to satisfy
audit, accounting, claims, regulatory, litigation or similar requirements of
the Requesting Party, in each case other than claims or allegations that one
Party to this Agreement or any of its Group members has or brings against the
other Party or any of its Group members, or (iii) subject to the foregoing
clause (ii) above, to comply with its obligations under this Agreement or
any Ancillary Agreement; provided, however, that in the event
that any Party determines that any such provision of Information could be
commercially detrimental, violate any Applicable Law or agreement, or waive any
attorney-client privilege, the Parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence. More particularly,
and without limitation to the generality of the foregoing sentence, the Parties
agree
49
that the provisions of the Tax Sharing
Agreement shall govern with respect to the sharing of Information relating to
Tax.
(b) After the Effective Time, each Spinco and the other
members of its Spinco Group shall have access during regular business hours (as
in effect from time to time), and upon reasonable advance notice, to the
documents and objects of historical significance that relate to the Spun
Businesses, the Spun Assets or the Spun Entities with respect to such Spinco
and that are located in archives retained or maintained by (i) IAC or any
other member of the IAC Group or (ii) by another Spinco or any other
member of another Spinco Group. Each
Spinco and the other members of its Spinco Group may obtain copies (but not
originals) of documents for bona fide business purposes and may obtain objects
for exhibition purposes for commercially reasonable periods of time if required
for bona fide business purposes, provided that (i) such Spinco
shall cause any such objects to be returned promptly, at such Spincos expense,
in the same condition in which they were delivered to such Spinco or to any
member of its Spinco Group and (ii) such Spinco and the other members of
its Spinco Group shall comply with any rules, procedures or other requirements,
and shall be subject to any restrictions (including prohibitions on removal of
specified objects), that are then applicable to such other Separate-co or such
other member of such other Separate-cos Group.
In any event, the foregoing shall not be deemed to restrict the access
of IAC or any other member of the IAC Group to any such documents or
objects. Nothing herein shall be deemed
to impose any Liability on IAC or any other member of the IAC Group if
documents or objects referred to in this Section 9.01 are not maintained
or preserved by IAC or any other member of the IAC Group. Alternatively, IAC, acting reasonably, may
request from any Spinco and any other member of such Spincos Group that they
provide IAC with reasonable advance notice, with a list of the requested
Information that relates to the relevant Spun Businesses, the Spun Assets or
the Spun Entities and IAC shall use, and shall cause the other members of the
IAC Group that are in possession of the Information requested to use,
commercially reasonable efforts to locate all requested Information that is
owned or possessed by IAC or any of its Group members or Representatives. IAC will make available all such Information
for inspection by the relevant Spincos or any other relevant member of any
Spinco Group during normal business hours at the place of business reasonably
designated by IAC. Subject to such
confidentiality or security obligations as IAC or the other relevant members of
its Group may reasonably deem necessary, the Spincos and the other relevant
members of the Spinco Groups may have all requested Information
duplicated. Alternatively, IAC or the
other relevant members of the IAC Group may choose to deliver to a Spinco, at
such Spincos expense, all requested Information in the form reasonably
requested by such Spinco or any other member of its Group. At IACs request, such Spinco shall cause
such Information when no longer needed to be returned to IAC at such Spincos
expense.
(c) With respect to the other Spinco Groups and the IAC Group,
each Spinco shall make available and shall cause its Corresponding Group to
make available to the other Spinco Groups and the IAC Group at least the level
of access provided by the IAC Group under Section 8.01(b) to all
Spinco Groups.
8.02. Ownership of Information. Any Information owned by a Party or any of
its Group members and that is provided to a Requesting Party pursuant to Section 8.01
shall be deemed to remain the property of the providing party. Unless specifically set forth herein or in
50
any Ancillary Agreement, nothing contained in
this Agreement shall be construed as granting or conferring rights of license
or otherwise in any such Information.
8.03. Compensation for Providing Information. The Party requesting Information agrees to
reimburse the providing Party for the reasonable costs, if any, of creating,
gathering and copying such Information, to the extent that such costs are
incurred for the benefit of the Requesting Party. Except as may be otherwise specifically
provided elsewhere in this Agreement, in the Ancillary Agreements, or in any
other agreement between the Parties, such costs shall be computed in accordance
with the providing Partys standard methodology and procedures.
8.04. Record Retention.
To facilitate the possible exchange of Information pursuant to this Article VIII
and other provisions of this Agreement after the Effective Time, the Parties
agree to use commercially reasonable efforts to retain, and to cause the
members of their respective Group to retain, all Information in their
respective possession or control at the Effective Time in accordance with the
policies of the IAC Group as in effect at the Effective Time or such other
policies as may be reasonably adopted by the appropriate Party after the
Effective Time. No Party will destroy,
or permit any member of its Group to destroy, any Information which another
Party or any member of its Group may have the right to obtain pursuant to this
Agreement prior to the fifth (5th) anniversary of the Effective Time without
first using commercially reasonable efforts to notify such other Party of the
proposed destruction and giving such other Party the opportunity to take
possession of such Information prior to such destruction.
8.05. Other Agreements Providing for Exchange of Information. The rights and obligations granted or created
under this Article VIII are subject to any specific limitations, qualifications
or additional provisions on the sharing, exchange, retention or confidential
treatment of Information set forth in any Ancillary Agreement.
8.06. Production of Witnesses; Records; Cooperation. (a) After the Effective Time, but only
with respect to a Third Party Claim, each Party hereto shall use commercially
reasonable efforts to, and shall cause the other relevant members of its Group
to use commercially reasonable efforts to, make available to a requesting Party
or any member of the Group to which such Requesting Party belongs, upon written
request, its then former and current Representatives (and the former and
current Representatives of its respective Group members) as witnesses and any
books, records or other documents within its control (or that of its respective
Group members) or which it (or its respective Group members) otherwise has the
ability to make available, to the extent that any such person (giving
consideration to business demands of such Representatives) or books, records or
other documents may reasonably be required in connection with any Action in
which the Requesting Party may from time to time be involved, regardless of
whether such Action is a matter with respect to which indemnification may be
sought hereunder. The Requesting Party shall bear all costs and expenses in
connection therewith.
(b) If a Party, being entitled to do so under this Agreement,
chooses to defend or to seek to settle or compromise any Third Party Claim, the
other relevant Party or Parties shall use commercially reasonable efforts to
make available to such Party, upon written request, its or their then former
and current Representatives and those of its or their respective Group members
51
as witnesses and any books, records or other
documents within its or their control (or that of its or their respective Group
members) or which it or they (or its or their respective Group members)
otherwise has or have the ability to make available, to the extent that any
such Person (giving consideration to business demands of such Representatives)
or books, records or other documents may reasonably be required in connection
with such defense, settlement or compromise, as the case may be, and shall
otherwise cooperate in such defense, settlement or compromise, as the case may
be.
(c) Without limiting the foregoing, the Parties shall
cooperate and consult, and shall cause their respective Group members to
cooperate and consult, to the extent reasonably necessary with respect to any
Actions (except in the case of an Action by one Party against another).
(d) The obligation of the Parties to provide witnesses
pursuant to this Section 8.06 is intended to be interpreted in a manner so
as to facilitate cooperation and shall include the obligation to provide as
witnesses inventors and other employees without regard to whether the witness
or the employer of the witness could assert a possible business conflict
(subject to the limitation set forth in the first sentence of Section 8.06(a) regarding
Third Party Claims).
(e) In connection with any matter contemplated by this Section 8.06,
the relevant Parties will enter into, and shall cause all other relevant
members of their respective Groups to enter into, a mutually acceptable joint
defense agreement so as to maintain to the extent practicable any applicable
attorney-client privilege or work-product privileges of any member of any
Group.
8.07. Confidentiality.
(a) Subject to Section 8.08, each Separate-co shall hold, and
shall cause its respective Group members and its respective Affiliates (whether
now an Affiliate or hereafter becoming an Affiliate) and its Representatives to
hold, in strict confidence, with at least the same degree of care that applies
to IACs confidential and proprietary Information pursuant to policies in
effect as of the Effective Time, all confidential and proprietary Information
concerning another Group (or any member thereof) that is either in such
Separate-cos possession (including Information in its possession prior to the
date hereof) or furnished by any other Group (or any member thereof) or by any
of such other Groups Affiliates (whether now an Affiliate or hereafter
becoming an Affiliate) or their respective Representatives at any time pursuant
to this Agreement or any Ancillary Agreement or the transactions contemplated
hereby or thereby (any such Information referred to herein as Confidential
Information), and shall not use, and shall cause its respective Group
members, Affiliates and Representatives not to use, any such Confidential
Information other than for such purposes as shall be expressly permitted
hereunder or thereunder. Notwithstanding
the foregoing, Confidential Information shall not include Information that is
or was (i) in the public domain other than by the breach of this Agreement
or by breach of any other agreement relating to confidentiality between or
among the relevant Parties and/or their respective Group members, their
respective Affiliates or Representatives, (ii) lawfully acquired by such
disclosing Party (or any member of the Group to which such Party belongs or any
of such Partys Affiliates) from a Third Party not bound by a
confidentiality obligation, or (iii) independently generated or developed
by Persons who do not have access to, or descriptions of, any such confidential
or
52
proprietary Information of the other Parties
(or any member of the Group to which such other Party belongs).
(b) Each Party shall maintain, and shall cause its respective
Group members to maintain, policies and procedures, and develop such further
policies and procedures as will from time to time become necessary or
appropriate, to ensure compliance with Section 8.07(a).
(c) Each Party agrees not to release or disclose, or permit to
be released or disclosed, any Confidential Information to any other Person,
except its Representatives who need to know such Confidential Information (who
shall be advised of their obligations hereunder with respect to such
Confidential Information), except in compliance with Section 8.08. Without limiting the foregoing, when any
Information furnished by another Party after the Effective Time pursuant to
this Agreement or any Ancillary Agreement is no longer needed for the purposes
contemplated by this Agreement or any Ancillary Agreement, such Party will
promptly, after request of the furnishing Party and at the election of the
Party receiving such request, destroy or return to the furnishing Party all
such Information in a printed or otherwise tangible form (including all copies
thereof and all notes, extracts or summaries based thereon), and destroy all
Information in an electronic or otherwise intangible form and certify to the
furnishing Party that it has destroyed such Information (and such copies
thereof and such notes, extracts or summaries based thereon). Notwithstanding
the foregoing, the Parties agree that to the extent some Information to be
destroyed or returned is retained as data or records for the purpose of
business continuity planning or is otherwise not accessible in the Ordinary
Course of Business, such data or records shall be destroyed in the Ordinary
Course of Business in accordance, if applicable, with the business continuity
plan of the applicable Party.
8.08. Protective Arrangements. In the event that any Party or any member of
its Group or any Affiliate of such Party or any of their respective
Representatives either determines that it is required to disclose any Confidential
Information (the Disclosing Party) pursuant to Applicable Law or
receives any demand under lawful process or from any Governmental Authority to
disclose or provide Confidential Information of another Party (or any member of
the Group to which such other Party belongs) (the Providing Party),
the Disclosing Party shall, to the extent permitted by Applicable Law, promptly
notify the Providing Party prior to the Disclosing Party disclosing or
providing such Confidential Information and shall use commercially reasonable
efforts to cooperate with the Providing Party so that the Providing Party may
seek any reasonable protective arrangements or other appropriate remedy and/or
waive compliance with this Section 8.08.
All expenses reasonably incurred by the Disclosing Party in seeking a
protective order or other remedy will be borne by the Providing Party. Subject to the foregoing, the Disclosing
Party may thereafter disclose or provide such Confidential Information to the
extent (but only to the extent) required by such Applicable Law (as so advised
by legal counsel) or by lawful process or by such Governmental Authority and
shall promptly provide the Providing Party with a copy of the Confidential
Information so disclosed, in the same form and format as disclosed, together
with a list of all Persons to whom such Confidential Information was disclosed.
8.09. Disclosure of Third Party Information. Each Spinco acknowledges that it and the
other members of its respective Group may have in its or their possession
confidential or proprietary Information of Third Parties that was received
under confidentiality or non-disclosure
53
agreements with such Third Party while it or
they were part of the IAC Group. Each
Spinco will hold, and will cause the other members of its Group and its and
their respective Representatives to hold, in strict confidence the confidential
and proprietary Information of Third Parties to which such Spinco or any other
member of its respective Group has access, in accordance with the terms of any
agreements entered into prior to the Effective Time between one or more members
of another Group (whether acting
through, on behalf of, or in connection with, the Spun Businesses) and such Third
Parties.
ARTICLE IX
DISPUTE RESOLUTION
9.01. Interpretation; Agreement to Resolve Disputes.
(a) In the event of any ambiguous provision in this Agreement
or in any Ancillary Agreement, or any inconsistency or conflict between or
among the provisions of this Agreement and one or more Ancillary Agreements or
between or among the provisions of the Ancillary Agreements, IACs
interpretation of such ambiguity or resolution of such inconsistency or
conflict shall be final and binding unless such interpretation or resolution is
unreasonable or clearly erroneous; it being understood and agreed that the
reasonableness of an interpretation or resolution shall be assessed
without regard to whether such interpretation or resolution happens to be in
IACs self-interest.
(b) Except as otherwise specifically provided in any Ancillary
Agreement, the procedures for discussion, negotiation and dispute resolution
set forth in this Article IX shall apply to all disputes, controversies or
claims (whether sounding in contract, tort or otherwise) that may arise out of
or relate to, or arise under or in connection with this Agreement or any
Ancillary Agreement, or the transactions contemplated hereby or thereby
(including all actions taken in furtherance of the transactions contemplated
hereby or thereby on or prior to the date hereof), or the commercial or
economic relationship of the Parties relating hereto or thereto, between or
among any member of any Group on the one hand and any other Group on the other
hand. Each Party agrees on behalf of
itself and each member of its respective Group that the procedures set forth in
this Article IX shall be the sole and exclusive procedures in connection
with any dispute, controversy or claim relating to any of the foregoing matters
and irrevocably waives any right to commence any Action in or before any
Governmental Authority, except as otherwise required by Applicable Law.
9.02. Dispute Resolution; Mediation. (a) Any Party (a Claimant Party)
may commence the dispute resolution process of this Section 9.02 by giving
the other Party or Parties with whom there is such a controversy, claim or
dispute written notice (a Dispute Notice) of any controversy, claim or
dispute of whatever nature arising out of or relating to this Agreement or the
breach, termination, enforceability or validity thereof (a Dispute)
which has not been resolved in the normal course of business. The relevant Parties shall attempt in good
faith to resolve any Dispute by negotiation among executives of such Parties (Senior
Party Representatives) who have authority to settle the Dispute and who
are at a higher level of management than the persons who have direct
responsibility for the administration of this Agreement. Within 15 days after delivery of the Dispute
Notice, the receiving Party or Parties (the Responding Parties and,
together with the Claimant Party, the Dispute Parties) shall
54
submit to the other Dispute Party or Parties
a written response (the Response).
The Dispute Notice and the Response shall include (i) a statement
setting forth the position of the Dispute Party giving such notice and a
summary of arguments supporting such position and (ii) the name and title
of such Dispute Partys Senior Party Representative and any other persons who
will accompany the Senior Party Representative at the meeting at which the
Dispute Parties will attempt to settle the Dispute. Within 30 days after the delivery of the
Dispute Notice, the Senior Party Representatives of the Dispute Parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the Dispute. The Dispute Parties shall cooperate in good
faith with respect to any reasonable requests for exchanges of information
regarding the Dispute or a Response thereto.
(b) If the Dispute has not been resolved within 60 days after
delivery of the Dispute Notice, or if the Dispute Parties fail to meet within
30 days after delivery of the Dispute Notice as hereinabove provided, the
Dispute Parties shall make a good faith attempt to settle the Dispute by
mediation pursuant to the provisions of this Section 9.02 before resorting
to arbitration contemplated by Section 9.03 or any other dispute
resolution procedure that may be agreed by the Dispute Parties.
(c) All negotiations, conferences and discussions pursuant to
this Section 9.02 shall be confidential and shall be treated as compromise
and settlement negotiations. Nothing
said or disclosed, nor any document produced, in the course of such
negotiations, conferences and discussions that is not otherwise independently
discoverable shall be offered or received as evidence or used for impeachment
or for any other purpose in any current or future arbitration.
(d) Unless the Dispute Parties agree otherwise, the mediation
shall be conducted in accordance with the CPR Institute for Dispute Resolution
Model Procedure for Mediation of Business Disputes in effect on the date of
this Agreement by a mediator selected by the Dispute Parties.
(e) Within 30 days after the mediator has been selected as
provided above, all Dispute Parties and their respective attorneys shall meet
with the mediator for one mediation session of at least four hours, it being
agreed that each representative of a Dispute Party attending such mediation
session shall be a Senior Party Representative with authority to settle the
Dispute. If the Dispute cannot be
settled at such mediation session or at any mutually agreed continuation
thereof, any of the Dispute Parties may give the other and the mediator a
written notice declaring the mediation process at an end.
9.03. Arbitration. If
the Dispute has not been resolved by the dispute resolution process described
in Section 9.02, the Dispute Parties agree that any such Dispute shall be
settled by binding arbitration before the American Arbitration Association (AAA)
in Wilmington, Delaware pursuant to the Commercial Rules of the AAA. Any arbitrator(s) selected to resolve
the Dispute shall be bound exclusively by the laws of the State of Delaware
without regard to its choice of law rules.
Any decisions of award of the arbitrator(s) will be final and
binding upon the Dispute Parties and may be entered as a judgment by the Dispute
Parties hereto. Any rights to appeal or
review such award by any court or tribunal are hereby waived to the extent
permitted by law.
55
9.04. Costs. The
costs of any mediation or arbitration pursuant to this Article IX shall be
shared equally among the Dispute Parties.
9.05. Continuity of Service and Performance. Unless otherwise agreed in writing, the
Dispute Parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Article IX with
respect to all matters not subject to such dispute, controversy or claim.
ARTICLE X
FURTHER ASSURANCES
10.01. Further Assurances.
(a) Except as provided in Section 12.01, each Party covenants
with and in favor of the other Parties as follows:
(i) prior to, on and
after the Effective Time, each Party hereto shall, and shall cause the other
relevant members of its Group to, cooperate with the other Parties, and without
any further consideration, but at the expense of the requesting Party, to
execute, acknowledge and deliver, or use commercially reasonable efforts to
cause to be executed and delivered, all instruments, assurances or documents,
including instruments of conveyance, assignments and transfers, and to make all
filings with, and to obtain all consents, approvals or authorizations of, any
Governmental Authority or any other Person under any permit, license,
agreement, indenture or other instrument (including any Consents or
Governmental Authorizations), and to take all such other actions as such Party
may reasonably be requested to take by the requesting Party (or any member of
its Group) from time to time, consistent with the terms of this Agreement and
the Ancillary Agreements, in order to give effect to the provisions,
obligations and purposes of this Agreement and the Ancillary Agreements and the
transfers of the Spun Businesses and of the Spun Assets and the assignment and
assumption of the Spun Liabilities and the other transactions contemplated
hereby and thereby; and
(ii) to the extent that
IAC or any Spinco discovers at any time following the Effective Time any Asset
that was intended to be transferred to any Separate-co or any other member of
another Spinco Group pursuant to this Agreement was not so transferred at the
Effective Time, IAC and the Spincos shall, or shall cause the other relevant
members of their Corresponding Groups to promptly, assign and transfer to such
Separate-co or another member of such Separate-cos Group reasonably designated
by such Separate-co such Asset and all right, title and interest therein in a
manner and on the terms consistent with the relevant provisions of this
Agreement, including, without limitation, Section 2.17(b). Similarly, to the extent that IAC or any
Spinco discovers at any time following the Effective Time any Asset that was
intended to be retained by IAC or any other member of the IAC Group was not so
retained at the Effective Time, the relevant Spinco shall, or shall cause the
other relevant members of its Group to promptly to, assign and transfer to IAC
or any other member of the IAC Group reasonably designated by IAC such Asset
and all right, title and interest therein in a manner and on the terms
consistent with the relevant provisions of this Agreement, including, without
limitation, Section 2.17(b). For
the avoidance of doubt, the transfer of any Assets under
56
this paragraph (a) shall be effected without any additional
consideration by any Party hereunder (such deferred transfers being referred to
as Deferred Transactions).
(b) On or prior to the
Effective Time, each of the Separate-cos, in their respective capacities as
direct and indirect parent companies of the members of their respective Groups,
shall each approve or ratify any actions of the members of their respective
Groups as may be necessary or desirable to give effect to the transactions
contemplated by this Agreement and the Ancillary Agreements.
(c) Prior to the
Effective Time, if a Party identifies any commercial or other service that is
needed to assure a smooth and orderly transition of the businesses in
connection with the consummation of the transactions contemplated hereby, and
that is not otherwise governed by the provisions of this Agreement or any
Ancillary Agreement, the relevant Parties will cooperate in determining whether
there is a mutually acceptable arms length basis on which the such Party can
provide such service.
ARTICLE XI
CERTAIN OTHER MATTERS
11.01. Auditors and
Audits; Annual and Quarterly Financial Statements and Accounting. Each Party agrees that during the one hundred
and eighty (180) days following the Effective Time and in any event solely with
respect to the preparation and audit of each of IACs and each Spincos
financial statements for the year ended December 31, 2008, the printing,
filing and public dissemination of such financial statements, the audit of IACs
internal control over financial reporting and managements assessment thereof
and managements assessment of IACs disclosure controls and procedures, in
each case made as of December 31, 2008:
(a) Date of Spinco
Auditors Opinions. Each Spinco
shall use commercially reasonable efforts to enable such Spincos auditors (in
each case, such auditors, the Spinco Auditor) to complete their audit
such that they will date their opinion on such Spincos audited annual
financial statements on the same date that the IACs auditors (the IAC
Auditor) date their opinion on IACs audited annual financial statements
(except to the extent an earlier date is necessary to comply with SEC rules),
and to enable IAC to meet its timetable for the printing, filing and public dissemination
of IACs annual financial statements.
(b) Annual Financial
Statements. Each (i) Separate-co
shall provide to the other Separate-cos on a timely basis all Information
reasonably required to meet such Separate-cos schedule for the preparation,
printing, filing, and public dissemination of its annual financial statements
and for managements assessment of the effectiveness of its disclosure controls
and procedures in accordance with Item 307 of Regulation S-K and (ii) each
Spinco shall provide to the IAC on a timely basis all Information reasonably
required to meet IACs schedule for its
report on internal control over financial reporting in accordance with Item308
of Regulation S-K and its auditors audit of its internal control over
financial reporting and managements assessment thereof in accordance with Section 404
of the Sarbanes-Oxley Act of 2002 and the SECs and Public Company Accounting
Oversight Boards rules and auditing standards thereunder (such
assessments and audit being referred to as the 2008 Internal Control Audit
and Management Assessments).
Without limiting the generality of the foregoing, each Separate-co
57
will provide all required financial and other
Information with respect to such Separate-co and its Subsidiaries to its
respective auditors in a sufficient and reasonable time and in sufficient
detail to permit its respective auditors to take all steps and perform all
reviews necessary to provide sufficient assistance to the IAC Auditor and each
other Spinco Auditor with respect to respective Information to be included or
contained in the annual financial statements of such other Separate-co and to
permit the IAC Auditor and IACs management to all complete the 2008 Internal
Control Audit and Management Assessments.
(c) Access to
Personnel and Books and Records.
(i) Each Spinco (an Authorizing
Spinco) shall authorize its respective Spinco Auditor (the Authorized
Auditor) to make available to each of the IAC Auditor and the Spinco
Auditor of each other Spinco both the personnel who performed or are performing
the annual audits of the Authorizing Spinco and work papers related to the
annual audits of the Authorizing Spinco, in all cases within a reasonable time
prior to the Authorized Auditors opinion date, so that (A) the IAC
Auditor is able to perform the procedures it considers necessary to take
responsibility for the work of the Authorized Auditor as it relates to the IAC
Auditors report on IACs financial statements, all within sufficient time to
enable IAC to meet its timetable for the printing, filing and public
dissemination of IACs annual financial statements; and (B) each such
other Spinco Auditor is able to perform the procedures it considers necessary to
take responsibility for the work of the Authorized Auditor as it relates to the
relevant Spinco Auditors report on such Spincos financial statements, all
within sufficient time to enable such Spinco to meet its timetable for the
printing, filing and public dissemination of such Spincos annual financial
statements.
(ii) IAC shall authorize
the IAC Auditor to make available to each Spinco Auditor both the personnel who
performed or are performing the annual audits of IAC and work papers related to
the annual audits of IAC, in all cases within a reasonable time prior to the
IAC Auditors opinion date, so that each Spinco Auditor is able to perform the
procedures it considers necessary to take responsibility for the work of the
IAC Auditor as it relates to such Spinco Auditors report on the relevant
Spincos financial statements, all within sufficient time to enable such Spinco
to meet its timetable for the printing, filing and public dissemination of such
Spincos annual financial statements.
(iii) Each Spinco shall
make available to the IAC Auditor and IACs management such Spincos personnel
and such Spincos books and records in a reasonable time prior to the IAC
Auditors opinion date and IACs managements assessment date so that the IAC
Auditor and IACs management are able to perform the procedures they consider
necessary to conduct the 2008 Internal Control Audit and Management
Assessments.
(d) Spinco Annual
Reports. Each Spinco will deliver to
IAC a substantially final draft, as soon as the same is prepared, of the first
report to be filed with the SEC that includes such Spincos audited financial
statements for the year ended December 31, 2008 (such Spincos Corresponding
Annual Report); provided, however, that a Spinco may
continue to
58
revise such Corresponding Annual Report prior
to the filing thereof, which changes will be delivered to IAC as soon as
reasonably practicable; provided, further, that the respective
personnel of IAC and each Spinco will actively consult with each other
regarding any changes which a Spinco may consider making to its Corresponding
Annual Report and related disclosures prior to the anticipated filing with the
SEC, with particular focus on any changes which would have an effect upon IACs
financial statements or related disclosures.
Nothing in this Section 11.01 shall require any Party to violate
any agreement with any Third Party regarding the confidentiality of
confidential and proprietary Information relating to that Third Party or its
business; provided, however, that in the event that a Party is
required under this Section 11.01 to disclose any such Information, such
Party shall use commercially reasonable efforts to seek to obtain such Third
Party Consent to the disclosure of such Information.
ARTICLE XII
SOLE DISCRETION OF IAC; TERMINATION
12.01. Sole Discretion of
IAC. Notwithstanding any other
provision of this Agreement, until the occurrence of the applicable Relevant
Time, IAC shall have the sole and absolute discretion:
(a) to determine whether
to proceed with all or any part of the Separation, including any Separation
Transaction, or any or all of the Distributions, and to determine the timing of
and any and all conditions to the completion of the Separation and the
Distributions or any part thereof or of any other transaction contemplated by
this Agreement; and
(b) to amend or
otherwise change, delete or supplement, from time to time, any term or element
of the Separation, including any Separation Transaction, or any or all of the
Distributions or any other transaction contemplated by this Agreement.
12.02. Termination. (a) This Agreement and all Ancillary
Agreements may be terminated and the transactions contemplated hereby may be
amended, supplemented, modified or abandoned in any respect at any time prior
to the Effective Time of the first Distribution to occur, by and in the sole
and absolute discretion of IAC without the approval of any Spinco or of the
stockholders of IAC. In the event of such
termination, no Party shall have any liability of any kind to any other Party
or any other Person.
(b) After the Effective
Time of the first Distribution to occur, this Agreement may not be terminated
to the extent the rights and obligations provided for hereunder are between and
among IAC and those Spincos the Distribution of which shall have previously
occurred except by an agreement in writing signed by the relevant Parties; provided,
that IAC in its sole discretion may abandon one or more of the Distributions
the Distribution date of which shall not yet have occurred and, by notice to
the other Spincos, shall have the right to terminate (subject to the last
sentence of Section 1.04(b)) this Agreement and the Ancillary Agreements
to the extent of the rights and obligations provided between the Spinco(s) the
Distribution of which shall have been abandoned and the Spincos the
Distribution of which shall have previously occurred.
59
ARTICLE XIII
MISCELLANEOUS
13.01. Limitation of
Liability. In no event shall any
member of any Group be liable to any member of any other Group for any special,
consequential, indirect, collateral, incidental or punitive damages or lost
profits or failure to realize expected savings or other commercial or economic
loss of any kind, however caused and on any theory of liability (including
negligence) arising in any way out of this Agreement, whether or not such
Person has been advised of the possibility of any such damages; provided,
however, that the foregoing limitations shall not limit any Partys
indemnification obligations for Liabilities with respect to Third Party Claims
as set forth in Article VI. The
provisions of Article IX shall be the Parties sole recourse for any breach
hereof or any breach of the Ancillary Agreements.
13.02. Counterparts. This Agreement and each Ancillary Agreement
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties thereto and delivered to
the other party or parties.
13.03. Entire Agreement. This Agreement, the Ancillary Agreements, and
the Schedules and Exhibits hereto and thereto and the specific agreements
contemplated hereby or thereby contain the entire agreement between the Parties
with respect to the subject matter hereof and supersede all previous
agreements, oral or written, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter. No agreements or understandings
exist between the Parties other than those set forth or referred to herein or
therein.
13.04. Construction. In this Agreement and each of the Ancillary
Agreements, unless a clear contrary intention appears:
(a) the singular number
includes the plural number and vice versa;
(b) reference to any
Person includes such Persons successors and assigns but, if applicable, only
if such successors and assigns are not prohibited by this Agreement or the
relevant Ancillary Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(c) reference to any
gender includes each other gender;
(d) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended, modified, supplemented or restated, and in effect from time to time
in accordance with the terms thereof subject to compliance with the
requirements set forth herein or in the relevant Ancillary Agreement;
(e) reference to any
Applicable Law means such Applicable Law as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder, and reference to
any section or other provision of any Applicable Law means that provision of
such Applicable Law from time to time
60
in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision;
(f) herein, hereby,
hereunder, hereof, hereto and words of similar import shall be deemed
references to this Agreement or to the relevant Ancillary Agreement as a whole
and not to any particular article, section or other provision hereof or
thereof;
(g) including (and
with correlative meaning include) means including without limiting the
generality of any description preceding such term;
(h) the Table of
Contents and headings are for convenience of reference only and shall not
affect the construction or interpretation hereof or thereof;
(i) with respect to the
determination of any period of time, from means from and including and to
means to but excluding; and
(j) references to
documents, instruments or agreements shall be deemed to refer as well to all
addenda, exhibits, schedules or amendments thereto.
13.05. Signatures. Each Party acknowledges that it and the other
Party (and the other members of their respective Groups) may execute certain of
the Ancillary Agreements by facsimile, stamp or mechanical signature. Each Party expressly adopts and confirms each
such facsimile, stamp or mechanical signature made in its respective name (or
that of the applicable member of its Group) as if it were a manual signature,
agrees that it will not assert that any such signature is not adequate to bind
such Party to the same extent as if it were signed manually and agrees that at
the reasonable request of the other Party at any time it will as promptly as
reasonably practicable cause each such Ancillary Agreement to be manually
executed (any such execution to be as of the date of the initial date thereof).
13.06. Assignability. Except as set forth in any Ancillary Agreement,
this Agreement and each Ancillary Agreement shall be binding upon and inure to
the benefit of the Parties hereto and thereto, respectively, and their
respective successors and assigns; provided, however, that except
as specifically provided in any Ancillary Agreement, no Party hereto or thereto
may assign its respective rights or delegate its respective obligations under
this Agreement or any Ancillary Agreement without the express prior written
consent of the other parties hereto or thereto.
13.07. Third Party
Beneficiaries. Except for the
indemnification rights under this Agreement of any Corresponding Indemnified
Party in its capacity as such and for the release under Section 6.01 of
any Person provided therein and except as specifically provided in any
Ancillary Agreement, (a) the provisions of this Agreement and each
Ancillary Agreement are solely for the benefit of the parties hereto and
thereto and their respective successors and permitted assigns and are not
intended to confer upon any Person, except the parties hereto and thereto and
their respective successors and permitted assigns, any rights or remedies
hereunder and (b) there are no third party beneficiaries of this Agreement
or any Ancillary Agreement; and neither this Agreement nor any Ancillary
Agreement shall provide any Third Party with any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement or any Ancillary Agreement.
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13.08. Payment Terms. (a) Except as expressly provided to the
contrary in this Agreement or in any Ancillary Agreement, any amount to be paid
or reimbursed by one Party to the other under this Agreement shall be paid or
reimbursed hereunder within thirty (30) days after presentation of an invoice
or a written demand therefor and setting forth, or accompanied by, reasonable
documentation or other reasonable explanation supporting such amount.
(b) Except as expressly
provided to the contrary in this Agreement or in any Ancillary Agreement, any
amount not paid when due pursuant to this Agreement (and any amount billed or
otherwise invoiced or demanded and properly payable that is not paid within
thirty (30) days of such bill, invoice or other demand) shall bear interest at
a rate per annum equal to the Prime Rate plus 2% (or the maximum legal rate, whichever is lower), calculated
for the actual number of days elapsed, accrued from the date on which such
payment was due up to the date of the actual receipt of payment.
13.09. Governing Law. Except as set forth in Article IX, this
Agreement and each Ancillary Agreement, shall be governed by and construed and
interpreted in accordance with the internal laws of the State of Delaware,
irrespective of the choice of laws principles of the State of Delaware, as to
all matters, including matters of validity, construction, effect,
enforceability, performance and remedies.
13.10. Notices. All notices or other communications under
this Agreement and, unless expressly provided therein, each Ancillary
Agreement, shall be in writing and shall be deemed to be duly given when
delivered in person or successfully transmitted by facsimile, addressed as
follows:
If to IAC, to:
IAC/InterActiveCorp
555 West 18th Street
New York, NY 10011
Attention: General Counsel
Telecopier: (212) 632-9642
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon, Esq.
Telecopier: (212) 403-2000
If to TM Spinco:
Ticketmaster
8800 Sunset Boulevard
West Hollywood, California 90069
Attention: General Counsel
Telecopier: (310)
-
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with a copy to:
[ ]
If to Interval Spinco:
Interval Leisure Group, Inc.
6262 Sunset Drive
Miami, Florida 33143
Attention: General Counsel
Telecopier: (305)
-
with a copy to:
[ ]
If to HSN Spinco:
1 HSN Drive
St. Petersburg, Florida 33729
Attention: General Counsel
Telecopier: (727)
-
with a copy to:
[ ]
If to Tree Spinco:
11115 Rushmore Drive
Charlotte, North Carolina 28277
Attention: General Counsel
Telecopier: (704)
-
with a copy to:
[ ]
Any Party may, by notice to the other Parties as set forth herein,
change the address or fax number to which such notices are to be given.
13.11. Severability. If any provision of this Agreement or any
Ancillary Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof or thereof, or the application
of such provision to Persons or circumstances or in jurisdictions other than
those as to which it has been held invalid or unenforceable, shall remain in
full force and
63
effect and shall in no way be affected,
impaired or invalidated thereby, so long as the economic or legal substance of
the transactions contemplated hereby or thereby, as the case may be, is not
affected in any manner adverse to any party hereto or thereto. Upon such determination, the relevant Parties
shall negotiate in good faith in an effort to agree upon such a suitable and
equitable provision to effect the original intent of the Parties.
13.12. Publicity. Prior to the Effective Time, IAC shall be
responsible for issuing any press releases or otherwise making public
statements with respect to this Agreement, the Separation, the Distributions or
any of the other transactions contemplated hereby and thereby, and no Spinco
shall make such statements without the prior written consent of IAC. Prior to the Effective Time, the Separate-cos
shall each consult with the other prior to making any filings with any
Governmental Authority with respect thereto.
13.13. Survival of
Covenants. Except as expressly set
forth in this Agreement or any Ancillary Agreement, any covenants,
representations or warranties contained in this Agreement and each Ancillary
Agreement shall survive the Separation and the Distributions and shall remain
in full force and effect.
13.14. Waivers of Default;
Conflicts. (a) Waiver by any
Party of any default by the other Party of any provision of this Agreement or
any Ancillary Agreement shall not be deemed a waiver by the waiving Party of
any subsequent or other default, nor shall it prejudice the rights of the other
Party. 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.
(b) Each Party
acknowledges that each of the Parties and each member of their respective Group
are all currently represented by members of IACs legal department and IACs
outside counsel. IAC (on behalf of
itself and every member of its Group), on the one hand, and each Spinco (on
behalf of itself and every member of its Group), on the other hand, waives any
conflict with respect to such common representation that may arise before, at
or after the Effective Time.
13.15. Amendments. After the Effective Time, no provisions of
this Agreement or any Ancillary Agreement shall be deemed waived, amended,
supplemented or modified by any Party, unless such waiver, amendment,
supplement or modification is in writing and signed by the authorized
representative of the Party against whom it is sought to enforce such waiver,
amendment, supplement or modification.
[THE REMAINDER OF
THIS PAGE IS INTENTIONALLY BLANK.]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives.
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IAC/INTERACTIVECORP
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By:
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Name:
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Title:
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HSN, INC.
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By:
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Name:
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Title:
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INTERVAL LEISURE GROUP, INC.
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By:
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Name:
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Title:
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TICKETMASTER
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By:
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Name:
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Title:
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TREE.COM, INC.
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By:
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Name:
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Title:
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