Exhibit 10.1
SEPARATION AND
DISTRIBUTION AGREEMENT
by and among
IAC/INTERACTIVECORP,
HSN, INC.,
INTERVAL LEISURE
GROUP, INC.,
TICKETMASTER
and
TREE.COM, INC.
DATED AS OF AUGUST
20, 2008
TABLE OF CONTENTS
ARTICLE I
|
INTERPRETATION
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2
|
1.01.
|
Definitions
|
2
|
1.02.
|
Schedules
|
19
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1.03.
|
Effective Time; Suspension
|
20
|
|
|
|
ARTICLE II
|
THE SEPARATION
|
20
|
2.01.
|
Separation
|
20
|
2.02.
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Implementation
|
21
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2.03.
|
Transfer of Spun Assets;
Assumption of Spun Liabilities
|
21
|
2.04.
|
TM Assets
|
21
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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
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25
|
2.10.
|
Liabilities
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25
|
2.11.
|
Third Party Consents and
Government Approvals
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27
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2.12.
|
Preservation of Agreements
|
27
|
2.13.
|
Ancillary Agreements
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27
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2.14.
|
Resignations
|
28
|
2.15.
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Cooperation
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28
|
2.16.
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Intercompany Accounts Among
Groups
|
28
|
2.17.
|
Disclaimer of Representations
and Warranties
|
28
|
|
|
|
ARTICLE III
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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
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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
|
35
|
|
|
|
ARTICLE V
|
THE DISTRIBUTION
|
35
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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
|
43
|
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
|
63
|
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 AUGUST 20, 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 August 8,
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, 4.01 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.
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 1, 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, 4:01 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)
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Old IAC Integrated Warrant
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Schedule 2.04(a)
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TM Assets
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Schedule 2.04(b)
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TM Entities
|
19
Schedule 2.04(c)
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TM Group Balance Sheet
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Schedule 2.05(a)
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Interval Assets
|
Schedule 2.05(b)
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Interval Entities
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Schedule 2.05(c)
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Interval Group Balance Sheet
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Schedule 2.06(a)
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HSN Assets
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Schedule 2.06(b)
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HSN Entities
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Schedule 2.06(c)
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HSN Group Balance Sheet
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Schedule 2.07(a)
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Tree Assets
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Schedule 2.07(b)
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Tree Entities
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Schedule 2.07(c)
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Tree Group Balance Sheet
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Schedule 2.09(a)
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Excluded Assets
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Schedule 2.10(a)
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TM Liabilities
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Schedule 2.10(b)
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Interval Liabilities
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Schedule 2.10(c)
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HSN Liabilities
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Schedule 2.10(d)
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Tree Liabilities
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Schedule 2.10(e)
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Retained Liabilities
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Schedule 2.14(a)
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IAC Resignation Exceptions
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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.
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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.
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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).
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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 and marketable securities reflected in the bank statements (or
their equivalents) including instruments deposited and interest accrued but not
yet collected of the domestic operations of TM Spinco and its subsidiaries as
of the close of business on the TM Distribution Date (the TM Effective Time
Cash Balance) is greater than $0 after reducing the TM Effective Time Cash
Balance for the aggregate amount of any Revolving Facility Borrowings
outstanding under the TM Credit Agreement dated July 25, 2008 (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. For the avoidance of doubt, (i) non-client
cash and cash equivalents and marketable securities reflected in the bank
statements (or their equivalents) of TM Spincos domestic client bank
statements (or their equivalents) will be included in the calculation of the TM
Target Cash Balance and (ii) client cash designated for payment to clients
representing the face amount of tickets sold will not be included in the
calculation of the TM Target Cash Balance.
(b) In
the event that, after review and reconciliation, the amount of cash and cash
equivalents and marketable securities reflected in the bank statements (or
their equivalents) including instruments deposited and interest accrued but not
yet collected of the domestic operations of Interval Spinco and its
subsidiaries as of the close of business on the Interval Distribution Date (the
Interval Effective Time Cash Balance) is greater than $50,000,000 (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
33
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 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. For the avoidance of doubt,
cash and cash equivalents and marketable securities reflected in the bank
statements (or their equivalents) of Interval Spincos ResortQuest operations
designated as Trust accounts and restricted cash and cash equivalents and
marketable securities of Interval Spincos Meridian Financial Services
subsidiary will not be included in the calculation of the Interval Target Cash
Balance.
(c) In
the event that, after review and reconciliation, the amount of cash and cash
equivalents and marketable securities reflected in the bank statements (or
their equivalents) including instruments deposited and interest accrued but not
yet collected of HSN Spinco and its subsidiaries as of the close of business on
the HSN Distribution Date (the HSN Effective Time Cash Balance) is
greater than $50,000,000 (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 and marketable securities in the bank statements (or their
equivalents) including instruments deposited and interest accrued but not yet
collected of Tree Spinco and its subsidiaries as of the close of business on
the Tree Distribution Date (the Tree Effective Time Cash Balance) is
greater than $98,250,000 less any amounts placed (or required to be placed) in
escrow in connection with a Tree lease with The Irvine Company (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.
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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.
(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 4.05 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) no
stop order suspending the effectiveness of the Registration Statements with
respect to such Spincos common shares 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;
35
(vi) the
written solvency opinion delivered to the IAC Board by Duff & Phelps
regarding the Separation, the Distributions and other transactions contemplated
hereby shall not have been withdrawn or modified;
(vii) 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; and
(viii) 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 Distributions, which opinions shall not have been
withdrawn or modified.
(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 (A) the exercise of
outstanding IAC Stock Options following the applicable Distribution Record Date
and prior to August 18, 2008 or (B) pursuant to the settlement of IAC
Restricted Stock Units (as such terms are defined in the Employee Matters
Agreement), following the applicable Distribution Record Date and prior to the
Effective Time (in each case 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.
(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
36
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 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
37
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 (x) 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); (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 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
38
(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 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
39
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 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
40
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 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:
41
(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 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
42
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.
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
43
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; provided that, notwithstanding anything in Section 6.02(c),
IAC shall also indemnify the Non-IAC Indemnified Parties from any Liability
arising as a result of any disclosure contained in the Prospectus contained in
any Registration Statement which disclosure was not in the Registration
Statement on Form 10 for any Spinco as filed with the SEC on July 22,
2008 other than (y) information relating to financial results for the
second quarter of 2008 and 2007 and (z) any information specifically
reviewed and/or approved by the Spinco; 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
44
failure has a
material prejudicial effect on the defenses or other rights available to the
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.
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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) 360-3373
62
If
to Interval Spinco:
Interval
Leisure Group, Inc.
6262
Sunset Drive
Miami,
Florida 33143
Attention:
General Counsel
Telecopier: (305) 667-2072
If
to HSN Spinco:
1
HSN Drive
St.
Petersburg, Florida 33729
Attention:
General Counsel
Telecopier: (727) 872-6866
If
to Tree Spinco:
11115
Rushmore Drive
Charlotte,
North Carolina 28277
Attention:
General Counsel
Telecopier: (949) 255-5139
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 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.
63
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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/s/ Gregg Winiarski
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Name: Gregg Winiarski
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Title: Vice President
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HSN, INC.
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By:
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/s/ Mindy Grossman
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Name: Mindy Grossman
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Title: Chief Executive
Officer
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INTERVAL LEISURE GROUP, INC.
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By:
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/s/ Craig Nash
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Name: Craig M. Nash
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Title: Chairman,
President &
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Chief
Executive Officer
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TICKETMASTER
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By:
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/s/ Sean Moriarty
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Name: Sean P. Moriarty
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Title: President and Chief
Executive
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Officer
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TREE.COM, INC.
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By:
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/s/ Douglas R. Lebda
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Name: Douglas R. Lebda
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Title: Chairman and Chief
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Executive
Officer
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