This Consulting Services Agreement involves
Title: SERVICES AGREEMENT
Governing Law: Colorado Date: 7/26/2016
SERVICES AGREEMENT (this “ Agreement ”), dated as of July 22, 2016, by and between Liberty Media Corporation, a Delaware corporation (the “ Provider ”), and CommerceHub, Inc., a Delaware corporation (“ CH Parent ”).
WHEREAS, on the date hereof CH Parent is a subsidiary of Liberty Interactive Corporation, a Delaware corporation (“ LIC ”), and will hold, at the time of the Spin-Off (as defined below), among other things, LIC’s ownership interest in Commerce Technologies, LLC (f/k/a Commerce Technologies, Inc. (d/b/a CommerceHub), a New York corporation,) as a result of the consummation of the transactions described in the plan of restructuring set forth in Schedule 1.1 to the Reorganization Agreement, dated as of July 15, 2016 (the “ Reorganization Agreement ”), to which LIC and CH Parent are each parties;
WHEREAS, in accordance with the Reorganization Agreement, all of the issued and outstanding shares of common stock of CH Parent held by LIC will be distributed as a pro rata dividend to the holders of LIC’s Liberty Ventures common stock, with the effect that CH Parent will be spun-off (the “ Spin-Off ”) from LIC, and LIC will cease to have an equity interest in CH Parent; and
WHEREAS, Provider currently provides services to LIC pursuant to an existing services agreement, and LIC has requested that Provider provide certain similar services directly to CH Parent following the Spin-Off, and that CH Parent compensate the Provider for the performance of such services, in each case, on the terms and condition set forth herein.
NOW THEREFORE, in consideration of the foregoing recitals, the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be bound legally, agree as follows:
ENGAGEMENT AND SERVICES
Section 1.1 Engagement . CH Parent engages the Provider to provide to CH Parent, commencing on the date of the Spin-Off (the “ Spin-Off Effective Date ”), the services set forth in Section 1.2 (collectively, the “ Services ”), and the Provider accepts such engagement, subject to and upon the terms and conditions of this Agreement. The parties acknowledge that certain of the Services will be performed by officers, employees or consultants of the Provider, who may also serve, from time to time, as officers, employees or consultants of other companies, including, without limitation, CH Parent, LIC, Liberty TripAdvisor Holdings, Inc. (“ LTAH ”) and Liberty Broadband Corporation (“ LBC ”).
Section 1.2 Services .
(a) The Services will include the following, if and to the extent requested by CH Parent during the Term of this Agreement:
(i) services performed by the Provider’s finance, accounting, treasury, cash management, legal, disclosure compliance, human resources, employee benefits, investor relations, and tax departments; and
(ii) such other services as the Provider may obtain from its officers, employees and consultants in the management of its own operations that CH Parent may from time to time request or require.
(b) The Services are intended to be those services and functions that are appropriate for the operation and management of CH Parent as a publicly-traded company, and are not intended to be duplicative of services and functions for the operating subsidiaries of CH Parent that are to be performed by officers, employees and consultants of those companies.
Section 1.3 Services Not to Interfere with the Provider’s Business . CH Parent acknowledges and agrees that in providing Services hereunder the Provider will not be required to take any action that would disrupt, in any material respect, the orderly operation of the Provider’s business activities.
Section 1.4 Books and Records . The Provider will maintain books and records, in reasonable detail in accordance with the Provider’s standard business practices, with respect to its provision of Services to CH Parent pursuant to this Agreement, including records supporting the determination of the Services Fee and other costs and expenses to CH Parent pursuant to Article II (collectively, “ Supporting Records ”). The Provider will give CH Parent and its duly authorized representatives, agents, and attorneys reasonable access to all such Supporting Records during the Provider’s regular business hours upon CH Parent’s request after reasonable advance notice.
Section 2.1 Services Fee .
CH Parent agrees to pay, and the Provider agrees to accept, an annual fee (the “ Services Fee ”) initially equal to $300,000, payable in monthly installments in arrears as set forth in Section 2.3. The initial Services Fee was determined by the Provider, in consultation with LIC, on or prior to the Spin-Off Effective Date. Provider and CH Parent will review and evaluate the Services Fee for reasonableness quarterly during the Term and will negotiate in good faith to reach agreement on any appropriate adjustments to the Services Fee. Based on such review and evaluation, Provider and CH Parent will agree on the appropriate effective date (which may be retroactive) of any such adjustment to the Services Fee.
Section 2.2 Cost Reimbursement . In addition to (and without duplication of) the Services Fee payable pursuant to Section 2.1, CH Parent also will reimburse the Provider for all reasonable and documented direct out-of-pocket costs, with no markup (“ Out-of-Pocket Costs ”), incurred by the Provider in performing the Services (e.g., postage and courier charges, software license fees attributable to desktop or laptop computers utilized by Employees, travel and meal expenses that are incurred by the Provider or the Employees in the conduct of the Services); provided , that such Out-of-Pocket Costs shall include any third-party fees relating to projects undertaken by the Provider’s tax department on behalf of or with respect to CH Parent, and provided , further , that any such cost or expense in excess of $25,000, in the aggregate, that is not consistent with the historical practice of the Provider shall require advance written approval of CH Parent.
Section 2.3 Payment Procedures .
(a) CH Parent will pay the Provider, by wire or intrabank transfer of funds or in such other manner specified by the Provider to CH Parent, in arrears on or before the last day of each calendar month beginning with July 31, 2016, the Services Fee then in effect, in monthly installments, provided , that the monthly installment of the Services Fee with respect to the calendar month ended July 31, 2016 shall be prorated based on the date of this Agreement.
(b) Any reimbursement to be made by CH Parent to the Provider pursuant to Section 2.2 will be paid by CH Parent to the Provider within 15 days after receipt by CH Parent of an invoice therefor, by wire or intrabank transfer of funds or in such other manner specified by the Provider to CH Parent. The Provider will invoice CH Parent monthly for reimbursable expenses incurred by the Provider on behalf of CH Parent during the preceding calendar month as contemplated in Section 2.2; provided, however , that the Provider may separately invoice CH Parent at any time for any single reimbursable expense incurred by the Provider on behalf of CH Parent in an amount equal to or greater than $25,000. Any invoice or statement pursuant to this Section 2.3(b) will be accompanied by supporting documentation in reasonable detail consistent with Provider’s own expense reimbursement policy with respect to the costs and expenses incurred by the Provider for which the Provider is seeking reimbursement hereunder.
(c) Any undisputed payments not made when due under this Section 2.3 will bear interest at the rate of 1.0% per month on the outstanding amount from and including the due date to but excluding the date paid.
Section 2.4 Survival . The terms and conditions of this Article II will survive the expiration or earlier termination of this Agreement.
Section 3.1 Term Generally . The term of this Agreement will commence on the Spin-Off Effective Date and will continue until the third anniversary of the Spin-Off Effective Date (the “ Term ”). This Agreement is subject to termination prior to the end of the Term in accordance with Section 3.3.
Section 3.2 Discontinuance or Suspension of Select Services . At any time during the Term, on not less than 30 days’ prior notice by CH Parent to the Provider, CH Parent may elect to discontinue or temporarily suspend obtaining any of the Services from the Provider. In such event, the Provider’s obligation to provide Services that have been discontinued or suspended pursuant to this Section 3.2, and CH Parent’s obligation to compensate the Provider for such Services, will cease as of the end of such 30-day period (or such later date as may be specified in the notice), and this Agreement will remain in effect for the remainder of the Term with respect to those Services that have not been so discontinued or suspended (until reactivated). CH Parent may determine to reactivate a previously suspended Service during the remainder of the Term on not less than 30 days’ prior notice by CH Parent to the Provider. The Provider and CH Parent will promptly evaluate the Services Fee for reasonableness following the discontinuance or suspension of any Services, or reactivation of a previously suspended Service, and will negotiate in good faith to reach agreement on any appropriate adjustment to the Services Fee. Each party will remain liable to the other for any required payment or performance accrued prior to the effective date of discontinuance or suspension of any Service.
Section 3.3 Termination . This Agreement will be terminated prior to the expiration of the Term in the following events:
(a) at any time upon at least 30 days’ prior written notice by CH Parent to the Provider;
(b) at any time upon at least six months’ prior written notice by the Provider to CH Parent;
(c) immediately upon written notice (or at any later time specified in such notice) by the Provider to CH Parent if a Change in Control or Bankruptcy Event occurs with respect to CH Parent; or
(d) immediately upon written notice (or at any later time specified in such notice) by CH Parent to the Provider if a Change in Control or Bankruptcy Event occurs with respect to the Provider.
For purposes of this Section 3.3, a “ Change in Control ” will be deemed to have occurred with respect to a party if a merger, consolidation, binding share exchange, acquisition, or similar transaction (each, a “ Transaction ”), or series of related Transactions, involving such party occurs
as a result of which the voting power of all voting securities of such party outstanding immediately prior thereto represent (either by remaining outstanding or being converted into voting securities of the surviving entity) less than 75% of the voting power of such party or the surviving entity of the Transaction outstanding immediately after such Transaction (or if such party or the surviving entity after giving effect to such Transaction is a subsidiary of the issuer of securities in such Transaction, then the voting power of all voting securities of such party outstanding immediately prior to such Transaction represent (by being converted into voting securities of such issuer) less than 75% of the voting power of the issuer outstanding immediately after such Transaction).
For purposes of this Section 3.3, a “ Bankruptcy Event ” will be deemed to have occurred with respect to a party upon such party’s insolvency, general assignment for the benefit of creditors, such party’s voluntary commencement of any case, proceeding, or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution, or consolidation of such party’s debts under any law relating to bankruptcy, insolvency, or reorganization, or relief of debtors, or seeking appointment of a receiver, trustee, custodian, or other similar official for such party or for all or any substantial part of such party’s assets (each, a “ Bankruptcy Proceeding ”), or the involuntary filing against CH Parent or the Provider, as applicable, of any Bankruptcy Proceeding that is not stayed within 60 days after such filing.
Each party will remain liable to the other for any required payment accrued prior to the termination of this Agreement.
PERSONNEL AND EMPLOYEES
Section 4.1 Personnel to Provide Services .
(a) The Provider will make available to CH Parent, on a non-exclusive basis, the appropriate personnel (the “ Personnel ”) to perform the Services. The personnel made available to perform selected Services are expected to be substantially the same personnel who provide similar services in connection with the management and administration of the business and operations of the Provider.
(b) CH Parent acknowledges that:
(i) certain of the Personnel also will be performing services for the Provider, LIC, LTAH, LBC and/or other companies, from time to time, including certain Subsidiaries and Affiliates of each of the foregoing, in each case, while also potentially performing services directly for CH Parent and certain of its Subsidiaries and Affiliates under a direct employment, consultancy or other service relationship between such Person and CH Parent and irrespective of this Agreement; and
(ii) the Provider may elect, in its discretion, to utilize independent contractors rather than employees of the Provider to perform Services from time to time, and such independent contractors will be deemed included within the definition of “Personnel” for all purposes of this Agreement.
Section 4.2 Provider as Payor . The parties acknowledge and agree that the Provider, and not CH Parent, will be solely responsible for the payment of salaries, wages, benefits (including health insurance, retirement, and other similar benefits, if any) and other compensation applicable to all Personnel; provided, however , that (a) CH Parent is responsible for the payment of the Services Fee in accordance with Section 2.1, and (b) CH Parent is responsible for the payment of all compensation based on, comprised of or related to the equity securities of CH Parent (“ Excluded Compensation ”). The parties acknowledge that Personnel may provide services directly to CH Parent in consideration for the receipt of Excluded Compensation pursuant to such Personnel’s separate employment, consultancy or other service relationship with CH Parent. All Personnel will be subject to the personnel policies of the Provider and will be eligible to participate in the Provider’s employee benefit plans to the same extent as similarly situated employees of the Provider performing services in connection with the Provider’s business. The Provider will be responsible for the payment of all federal, state, and local withholding taxes on the compensation of all Personnel (other than Excluded Compensation) and other such employment related taxes as are required by law, and CH Parent will be responsible for the payment of all federal, state, and local withholding taxes on Excluded Compensation paid to any Personnel by CH Parent and other such employment related taxes as are required by law. Each of CH Parent and Provider will cooperate with the other to facilitate the other’s compliance with applicable federal, state, and local laws, rules, regulations, and ordinances applicable to the employment or engagement of all Personnel by either party.
Section 4.3 Additional Employee Provisions . The Provider will have the right to terminate its employment of any Personnel at any time.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Provider . The Provider represents and warrants to CH Parent as follows:
(a) The Provider is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.
(b) The Provider has the power and authority to enter into this Agreement and to perform its obligations under this Agreement, including the Services.
(c) The Provider is not subject to any contractual or other legal obligation that materially interferes with its full, prompt, and complete performance under this Agreement.
(d) The individual executing this Agreement on behalf of the Provider has the authority to do so.
Section 5.2 Representations and Warranties of CH Parent . CH Parent represents and warrants to the Provider as follows:
(a) CH Parent is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.
(b) CH Parent has the power and authority to enter into this Agreement and to perform its obligations under this Agreement.
(c) CH Parent is not subject to any contractual or other legal obligation that materially interferes with its full, prompt, and complete performance under this Agreement.
(d) The individual executing this Agreement on behalf of CH Parent has the authority to do so.
Section 6.1 Indemnification by the Provider . The Provider will indemnify, defend, and hold harmless CH Parent and each of its Subsidiaries, Affiliates, officers, directors, employees and agents, successors and assigns (collectively, the “ CH Parent Indemnitees ”), from and against any and all Actions, judgments, Liabilities, losses, costs, damages, or expenses, including reasonable counsel fees, disbursements, and court costs (collectively, “ Losses ”), that any CH Parent Indemnitee may suffer arising from or out of, or relating to, (a) any material breach by the Provider of its obligations under this Agreement, or (b) the gross negligence, willful misconduct, fraud, or bad faith of the Provider in connection with the performance of any provision of this Agreement except to the extent such Losses (i) are fully covered by insurance maintained by CH Parent or such other CH Parent Indemnitee or (ii) are payable by CH Parent pursuant to Section 7.11.
Section 6.2 Indemnification by CH Parent . CH Parent will indemnify, defend, and hold harmless the Provider and its Subsidiaries, Affiliates, officers, directors, employees and agents, successors and assigns (collectively, the “ Provider Indemnitees ”), from and against any and all Losses that any Provider Indemnitee may suffer arising from or out of, or relating to (a) any material breach by CH Parent of its obligations under this Agreement, or (b) any acts or omissions of the Provider in providing the Services pursuant to this Agreement (except to the extent such Losses (i) arise from or relate to any material breach by the Provider of its obligations under this Agreement, (ii) are attributable to the gross negligence, willful misconduct, fraud, or bad faith of the Provider or any other Provider Indemnitee seeking indemnification under this Section 6.2, (iii) are fully covered by insurance maintained by the Provider or such other Provider Indemnitee, or (iv) are payable by the Provider pursuant to Section 7.11).
Section 6.3 Indemnification Procedures .
(a) (i) In connection with any indemnification provided for in Section 6.1 or 6.2, the party seeking indemnification (the “ Indemnitee ”) will give the party from which indemnification is sought (the “ Indemnitor ”) prompt notice whenever it comes to the attention of the Indemnitee that the Indemnitee has suffered or incurred, or may suffer or incur, any Losses for which it is entitled to indemnification under Section 6.1 or 6.2, and, if and when known, the facts constituting the basis for such claim and the projected amount of such Losses (which shall not be conclusive as to the amount of such Losses), in each case in reasonable detail. Without
limiting the generality of the foregoing, in the case of any Action commenced by a third party for which indemnification is being sought (a “ Third-Party Claim ”), such notice will be given no later than ten business days following receipt by the Indemnitee of written notice of such Third-Party Claim. Failure by any Indemnitee to so notify the Indemnitor will not affect the rights of such Indemnitee hereunder except to the extent that such failure has a material prejudicial effect on the defenses or other