SEPARATION AGREEMENT

Exhibit 2.1

 

EXECUTION COPY

 

SEPARATION AGREEMENT

 

by and between

 

IAC/INTERACTIVECORP

 

and

 

EXPEDIA, INC.

 

Dated as of August 9, 2005

TABLE OF CONTENTS

 

 

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SEPARATION AGREEMENT

 

This SEPARATION AGREEMENT, dated as of August 9, 2005, is entered into by and between IAC/InterActiveCorp, a Delaware corporation (“ IAC ”), and Expedia, Inc., a Delaware corporation and wholly owned Subsidiary of IAC (“ Expedia ”).

 

RECITALS:

 

WHEREAS, the Board of Directors of IAC (“ IAC Board ”) has determined it is appropriate and desirable to separate IAC and Expedia into two publicly-traded companies by separating IAC’s principal travel and travel-related businesses, and related assets and liabilities, and contributing them to Expedia and effecting a reclassification of the capital stock of IAC pursuant to the Charter Amendments (as defined below);

 

WHEREAS, the IAC Board has adopted a resolution approving an amendment to IAC’s restated certificate of incorporation (the “ Reverse Stock Split Charter Amendment ”) and recommended that the holders of common stock, par value $0.01 per share, of IAC (“ Old IAC Common Stock ”), holders of Class B common stock, par value $0.01 per share, of IAC (“ Old IAC Class B Common Stock ”), and holders of Series A Cumulative Convertible preferred stock, par value $0.01 per share, of IAC (“ Old IAC Series A Preferred Stock ,” and together with Old IAC Common Stock and Old IAC Class B Common Stock, the “ Old IAC Capital Stock ”) approve and adopt the Reverse Stock Split Charter Amendment in conformity with Section 242 of the General Corporation Law of the State of Delaware (the “ DGCL ”), pursuant to which IAC will effectuate a one-for-two reverse stock split with respect to Old IAC Common Stock and Old IAC Class B Common Stock (the “ Reverse Stock Split ”);

 

WHEREAS, the IAC Board has adopted a resolution approving amendments to IAC’s restated certificate of incorporation (the “ Spin-Off Charter Amendments ,” and together with the Reverse Stock Split Charter Amendment, the “ Charter Amendments ”) and recommended that the holders of Old IAC Capital Stock approve and adopt the Spin-Off Charter Amendments in conformity with Section 242 of the DGCL, whereby, among other matters, the Old IAC Common Stock and the Old IAC Class B Common Stock will be reclassified (the “ Reclassification ”) as follows:

 

Each then issued and outstanding share of Old IAC Common Stock will be reclassified into (a) one share of common stock, par value $0.001 per share, of IAC (“ New IAC Common Stock ”) and (b) 1/100th of a share of Series 1 Mandatory Exchangeable preferred stock, par value $0.01 per share, of IAC (the “ New IAC Series 1 Preferred Stock ”), which 1/100th of a share of New IAC Series 1 Preferred Stock shall, pursuant to its terms, automatically and immediately exchange into one share of common stock, par value $0.001 per share, of Expedia (“ Expedia Common Stock ”);

 

Each then issued and outstanding share of Old IAC Class B Common Stock will be reclassified into (a) one share of Class B common stock, par value $0.001 per share, of IAC and (b) 1/100th of a share of Series 2 Mandatory Exchangeable preferred stock, par value $0.01 per share, of IAC (the “ New IAC Series 2 Preferred Stock ”), which 1/100th of a share of New IAC Series 2 Preferred Stock shall, pursuant to its terms, automatically and immediately exchange

 

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into one share of Class B common stock, par value $0.001 per share, of Expedia (“ Expedia Class B Common Stock ”);

 

WHEREAS, at IAC’s Annual Meeting of Stockholders held on July 19, 2005, the holders of Old IAC Capital Stock approved the Charter Amendments by the requisite votes required under the DGCL (and otherwise);

 

WHEREAS, in connection with the Reclassification, holders of Old IAC Series A Preferred Stock will receive one of the following, at the holder’s option, in respect of each share of Old IAC Series A Preferred Stock: (a) $50.00 in cash plus accrued and unpaid dividends, (b) the securities that the holder would have received had the share of Old IAC Series A Preferred Stock been converted based upon the applicable conversion ratio into shares of Old IAC Common Stock immediately prior to the Reverse Stock Split and the Reclassification or (c) one share of Series A Convertible preferred stock, par value $0.001 per share, of Expedia (“ Expedia Series A Preferred Stock ”) and one share of Series B Convertible preferred stock, par value $0.01 per share, of IAC (“ New IAC Series B Preferred Stock ”);

 

WHEREAS, pursuant to their terms, the warrants to purchase shares of Old IAC Common Stock set forth on Schedule 1.01(a) (the “ Old IAC Severable Warrants ”) will be converted into (a) warrants to purchase shares of New IAC Common Stock (“ New IAC Unitary Warrants ”) and (b) warrants to purchase shares of Expedia Common Stock (“ Expedia Warrants ”);

 

WHEREAS, pursuant to their terms, the warrants to purchase shares of Old IAC Common Stock set forth on Schedule 1.01(b) (the “ Old IAC Integrated Warrants ,” and together with the Old IAC Severable Warrants, the “ Old IAC Warrants ”) will be converted into warrants to purchase shares of New IAC Common Stock and shares of Expedia Common Stock (“ New IAC Integrated Warrants ”);

 

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; and

 

WHEREAS, IAC and Expedia intend that the Separation (as defined below) and the Reclassification will qualify for United States federal income tax purposes as transactions that are generally tax free under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “ Code ”) and hereby adopt the Agreement as a “ plan of reorganization .”

 

NOW THEREFORE, in consideration of the mutual agreements, covenants and other provisions set forth in this Agreement, the Parties hereby agree as follows:

 

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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:

 

“ 2005 Internal Control Audit and Management Assessments ” has the meaning set forth in Section 12.01(b).

 

“ AAA ” has the meaning set forth in Section 10.03.

 

“ 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.

 

“ Adjusted Exercise Price ” has the meaning set forth in Section 4.03(a)(ii).

 

“ 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 4.04.

 

“ Agreement ” means this Separation Agreement, including all of the Schedules and Exhibits hereto.

 

“ Ancillary Agreements ” has the meaning set forth in Section 2.09.

 

“ 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.

 

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“ 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:

 

(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.

 

“ Assumed Liabilities ” has the meaning set forth in Section 2.06.

 

“ 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.

 

“ Charter Amendments ” shall have the meaning set forth in the recitals hereto.

 

“ Claim Notice ” has the meaning set forth in Section 7.04(b).

 

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“ Code ” has the meaning set forth in the recitals hereto.

 

“ Confidential Information ” has the meaning set forth in Section 9.07(a).

 

“ 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.

 

“ Corporate Contract ” has the meaning set forth in Section 5.03.

 

“ Corporate Contracts ” has the meaning set forth in Section 5.03.

 

“ Deferred Beneficiary ” has the meaning set forth in Section 3.01(b).

 

“ Deferred Excluded Asset ” has the meaning set forth in Section 3.01(a).

 

“ Deferred Separated Asset ” has the meaning set forth in Section 3.01(a).

 

“ Deferred Transactions ” has the meaning set forth in Section 11.01(a)(ii).

 

“ 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 ” has the meaning set forth in the recitals hereto.

 

“ Disclosing Party ” has the meaning set forth in Section 9.08.

 

“ Dispute ” has the meaning set forth in Section 10.02(a).

 

“ Dispute Notice ” has the meaning set forth in Section 10.02(a).

 

“ Effective Date ” means August 9, 2005.

 

“ Effective Date Cash Balance ” has the meaning set forth in Section 5.05.

 

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“ Effective Time ” means 9:15 a.m., New York City time, on the Effective Date.

 

“ 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 attached hereto as Exhibit A .

 

“ 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 5.04(a).

 

“ Escrow Agreement ” has the meaning set forth in Section 5.04(a).

 

“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.

 

“ Excluded Assets ” has the meaning set forth in Section 2.05(a).

 

“ Expedia ” has the meaning set forth in the preamble hereto.

 

“ Expedia Annual Report ” has the meaning set forth in Section 12.01(d).

 

“ Expedia’s Auditors ” has the meaning set forth in Section 12.01(a).

 

“ Expedia Claims ” has the meaning set forth in Section 7.01(a).

 

“ Expedia Class B Common Stock ” has the meaning set forth in the recitals hereto.

 

“ Expedia Common Stock ” has the meaning set forth in the recitals hereto.

 

“ Expedia Common Stock Escrow Account ” has the meaning set forth in Section 5.04(a).

 

“ Expedia Conversion Obligations ” has the meaning set forth in Section 5.04(c).

 

“ Expedia Escrow Shares ” has the meaning set forth in Section 5.04(a).

 

“ Expedia Group ” means the Separated Entities, the domestic and international businesses, Subsidiaries and investments owned, operated and/or managed thereby and the assets and liabilities contained therein.

 

“ Expedia Group Balance Sheet ” means the combined balance sheet of “Expedia Group” as of June 30, 2005, substantially in the form attached as Schedule 1.01(c) .

 

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“ Expedia Indemnified Parties ” has the meaning set forth in Section 7.03.

 

“ Expedia Opening Balance Sheet ” has the meaning set forth in Section 2.03(e).

 

“ Expedia Parties ” has the meaning set forth in Section 7.01(b).

 

“ Expedia Releasors ” has the meaning set forth in Section 7.01(a).

 

“ Expedia Series A Preferred Stock ” has the meaning set forth in the recitals hereto.

 

“ Expedia Warrant Factor ” means 0.88933, which equals (x) $22.50, the closing per-share price of Expedia Common Stock in the “when issued market” on August 8, 2005, as listed on the NASDAQ as of 4:00 P.M. Eastern Daylight time, divided by (y) $25.30, the closing per-share price of Old IAC Common Stock trading “regular way” on August 8, 2005, as listed on the NASDAQ as of 4:00 P.M. Eastern Daylight time.

 

“ Expedia Warrants ” has the meaning set forth in the recitals hereto.

 

“ GAAP ” has the meaning set forth in Section 2.03(d).

 

“ Governmental Authority ” means any local, state, national or supranational court, arbitration panel, governmental or regulatory authority, agency, stock exchange, commission or body in any jurisdiction in or outside of the United States.

 

“ 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 IAC Group or Expedia Group, as the context requires.

 

“ 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.

 

“ IAC ” has the meaning set forth in the preamble hereto.

 

“ IAC’s Auditors ” has the meaning set forth in Section 12.01(a).

 

“ IAC Board ” has the meaning set forth in the recitals hereto.

 

“ IAC Businesses ” means the Separated Businesses and the Remaining IAC Businesses.

 

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“ IAC Claims ” has the meaning set forth in Section 7.01(b).

 

“ IAC Group ” means IAC, its Subsidiaries (other than any member of Expedia Group) and their respective domestic and international businesses, assets and liabilities.

 

“ IAC Indemnified Parties ” has the meaning set forth in Section 7.02.

 

“ IAC Parties ” has the meaning set forth in Section 7.01(a).

 

“ IAC Releasors ” has the meaning set forth in Section 7.01(b).

 

“ IAC Warrant Factor ” means 1.11067, which equals (x) $28.10, the closing per-share price of New IAC Common Stock in the “when issued market” on August 8, 2005, as listed on the NASDAQ as of 4:00 P.M. Eastern Daylight time, divided by (y) $25.30, the closing per-share price of Old IAC Common Stock trading “regular way” on August 8, 2005, as listed on the NASDAQ as of 4:00 P.M. Eastern Daylight time.

 

“ 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 7.04(a).

 

“ Indemnifying Party ” has the meaning set forth in Section 7.04(b).

 

“ Indenture ” has the meaning set forth in Section 5.04(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.

 

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“ 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.

 

“ Intercompany Accounts ” means all balances related to indebtedness, including any intercompany indebtedness, loan, guaranty, receivable, payable or other account between a member of IAC Group, on the one hand, and a member of Expedia Group, on the other hand.

 

“ 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.

 

“ Jeeves ” has the meaning set forth in Section 5.04(b).

 

“ Jeeves Notes ” has the meaning set forth in Section 5.04(a).

 

“ Jeeves Supplemental Indenture ” has the meaning set forth in Section 5.04(b).

 

“ Land ” means, in respect of any Person, all parcels and tracts of land in which the Person has an ownership interest.

 

“ 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 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 National Association of Securities Dealers Inc. Automated Quotation System.

 

“ New IAC Common Stock ” has the meaning set forth in the recitals hereto.

 

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“ New IAC Integrated Warrants ” has the meaning set forth in the recitals hereto.

 

“ New IAC Series 1 Preferred Stock ” has the meaning set forth in the recitals hereto.

 

“ New IAC Series 2 Preferred Stock ” has the meaning set forth in the recitals hereto.

 

“ New IAC Series B Preferred Stock ” has the meaning set forth in the recitals hereto.

 

“ New IAC Unitary Warrants ” has the meaning set forth in the recitals hereto.

 

“ Notice Period ” has the meaning set forth in Section 7.04(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 Capital Stock ” has the meaning set forth in the recitals hereto.

 

“ Old IAC Class B Common Stock ” has the meaning set forth in the recitals hereto.

 

“ Old IAC Common Stock ” has the meaning set forth in the recitals hereto.

 

“ Old IAC Series A Preferred Stock ” has the meaning set forth in the recitals hereto.

 

“ Old IAC Integrated Warrants ” has the meaning set forth in the recitals hereto.

 

“ Old IAC Severable Warrants ” has the meaning set forth in the recitals hereto.

 

“ Old IAC Warrants ” has the meaning set forth in the recitals hereto.

 

“ 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 ” together and each “ Party ” individually, means the parties to this Agreement and, in the singular, means either of them.

 

“ Person ” means any individual, Business Concern or Governmental Authority.

 

“ Potential Contributor ” has the meaning set forth in Section 7.06(a).

 

“ 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.

 

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“ Providing Party ” has the meaning set forth in Section 9.08.

 

“ Real Property ” means any Land and Improvements and all Appurtenances thereto and any Ground Lease Property.

 

“ Reclassification ” has the meaning set forth in the recitals hereto.

 

“ 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.

 

“ Registered Securities ” means the shares of New IAC Common Stock, the shares of New Expedia Common Stock, the shares of New IAC Series B Preferred Stock, the shares of Expedia Series A Preferred Stock, certain of the New IAC Unitary Warrants and certain of the Expedia Warrants.

 

“ Registration Statement ” means the registration statement on Form S-4 first filed by IAC and Expedia with the SEC on April 25, 2005 (together with all amendments thereto) in connection with the registration under the Securities Act of the Registered Securities.

 

“ Regulation S-K ” means Regulation S-K of the General Rules and Regulations promulgated by the SEC pursuant to the Securities Act.

 

“ Remaining IAC Businesses ” means all IAC Businesses other than the Separated Businesses.

 

“ Remaining IAC Entity ” means any Business Concern that is a member of IAC Group on and after the Effective Time.

 

“ Representatives ” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants or attorneys.

 

“ Requesting Party ” has the meaning set forth in Section 9.01(a).

 

“ Response ” has the meaning set forth in Section 10.02(a).

 

“ Retained Liabilities ” has the meaning set forth in Section 2.06.

 

“ Retaining Person ” has the meaning set forth in Section 3.01(b).

 

“ Reverse Stock Split ” has the meaning set forth in the recitals hereto.

 

“ Reverse Stock Split Charter Amendment ” has the meaning set forth in the recitals hereto.

 

“ 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 10.02(a).

 

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“ Separated Assets ” has the meaning set forth in Section 2.03.

 

“ Separated Businesses ” means those domestic and international travel and travel-related businesses, Subsidiaries and investments owned, operated and/or managed by the Separated Entities.

 

“ Separated Entities ” means those Business Concerns which are identified on Schedule 2.03(b) and which on and after the Effective Time shall form part of Expedia Group.

 

“ Separation ” means the transfer of the Separated Entities and Separated Businesses, directly or indirectly, from IAC to Expedia.

 

“ Services ” has the meaning ascribed thereto in the Transition Services Agreement.

 

“ Shared Litigation Liability ” 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 the Separated Businesses or the Separated Entities 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 of material fact or 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 or Expedia securities, to any of the co-defendants in such action or to any Governmental Authority. For the avoidance of doubt, Shared Litigation Liability shall include those matters set forth on Schedule 2.06(c) . Notwithstanding anything in Section 7.06 to the contrary, the amount of any Shared Litigation Liability shall be net of any Insurance Proceeds actually recovered by or on behalf of any member of IAC Group or any member of Expedia Group.

 

“ Specified Financial Liabilities ” or “ SFLS ” mean, 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;

 

(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;

 

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(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.

 

“ Spin-Off Charter Amendments ” has the meaning set forth in the recitals hereto.

 

“ 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 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 ” has the meaning set forth in the Tax Sharing Agreement.

 

“ Tax Sharing Agreement ” means the Tax Sharing Agreement attached hereto as Exhibit B .

 

“ Third Party ” means a Person that is not a Party to this Agreement, other than a member of IAC Group or a member of Expedia Group, and that is not an Affiliate thereof.

 

“ Third Party Claim ” has the meaning set forth in Section 7.04(b).

 

“ Third Party Consent ” has the meaning set forth in Section 2.07.

 

“ Transfer Impediment ” has the meaning set forth in Section 3.01(a).

 

“ Transition Service Schedule ” has the meaning set forth in the Transition Services Agreement.

 

“ Transition Services Agreement ” means the Transition Services Agreement attached hereto as Exhibit C .

 

“ Trustee ” has the meaning set forth in Section 5.04(b).

 

“ Unreleased Liabilities ” has the meaning set forth in Section 3.02.

 

“ Unreleased Person ” has the meaning set forth in Section 3.02.

 

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1.02. Schedules . The following schedules are attached to this Agreement and form a part hereof:

 

 

1.03. Exhibits . The following exhibits are attached to this Agreement and form a part hereof:

 

 

ARTICLE II

 

THE SEPARATION

 

2.01. Separation . To the extent not already complete, IAC and Expedia agree to implement the Separation and to cause the Separated Businesses to be transferred to Expedia and its Subsidiaries and the Remaining IAC Businesses to be held by IAC and its Subsidiaries (other than Expedia or its 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 Expedia, directly or indirectly, operating the Separated Businesses, owning the Separated Assets and assuming the Assumed Liabilities as set forth in this Article II.

 

2.02. Transfer of Separated Assets; Assumption of Assumed 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 Separated Assets to be contributed, assigned, transferred, conveyed and delivered, directly or indirectly, to Expedia and Expedia agrees to accept from IAC all of the Separated Assets and all of IAC’s rights, title and interest in and to all Separated Assets, except with respect to the Deferred Separated Assets and Unreleased Liabilities, if any.

 

(b) Expedia agrees to accept, assume and faithfully perform, discharge and fulfill all of the Assumed Liabilities in accordance with their respective terms.

 

2.03. Separated Assets . For the purposes of this Agreement, “ Separated Assets ” shall mean, without duplication, those Assets whether now existing, used or contemplated to be used or held for use exclusively or primarily in the ownership, operation or conduct of the Separated Businesses or relating exclusively or primarily to the Separated Businesses or to a Separated 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 listed on Schedule 2.03(a) , as Assets to be transferred to, or retained by, Expedia or any other member of Expedia Group;

 

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(b) the outstanding capital stock, units or other equity interests of the Separated Entities (including the Assets owned by such Separated Entities), as listed on Schedule 2.03(b) ;

 

(c) all Assets properly reflected on the Expedia Group Balance Sheet ( Schedule 1.01(c) ), excluding Assets disposed of by IAC or any other Subsidiary or entity controlled by IAC subsequent to the date of the Expedia 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 Expedia 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 Expedia Group Balance Sheet and that would be reflected on the balance sheet of Expedia as of the Effective Date (the “ Expedia Opening Balance Sheet ”), if such balance sheet were prepared in accordance with GAAP; and

 

(f) all Assets transferred to Expedia or any member of the Expedia Group pursuant to Section 11.01(a); provided , however , that any such transfer shall take effect under Section 11.01(a) and not under this Section 2.03.

 

Notwithstanding the foregoing, there shall be excluded from the definition of Assets under this Section 2.03 Business Records to the extent they are included in or primarily relate to any Excluded Asset or Retained Liability or Remaining IAC Business or their transfer is prohibited by Applicable Law or pursuant to agreements between IAC or any other member of IAC Group and Third Parties or otherwise would subject IAC or any other member of IAC Group to liability for such transfer. Access to such excluded Business Records shall be governed by Article IX.

 

2.04. Deferred Separated Assets . Notwithstanding anything to the contrary contained in Section 2.03 or elsewhere in this Agreement, Separated Assets shall not include the Deferred Separated Assets. The transfer to Expedia (or any other member of the Expedia Group) of any such Deferred Separated Asset shall only be completed at the time, in the manner and subject to the conditions set forth in Article III.

 

2.05. Excluded Assets . (a) Notwithstanding anything to the contrary contained in Section 2.03 or elsewhere in this Agreement, the following Assets of IAC or of any other relevant member of IAC Group shall not be transferred to Expedia (or any other member of Expedia Group), shall not form part of the Separated Assets and shall remain the exclusive property of IAC or the relevant member of IAC Group on and after the Effective Time (the “ Excluded Assets ”):

 

(i) any Asset referred to in Section 2.05(b); and

 

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(ii) any Asset transferred to IAC or to any other relevant member of IAC Group pursuant to Section 11.01(a); provided , however , that any such transfers shall take effect under Section 11.01(a) and not under this Section 2.05.

 

(b) Notwithstanding anything to the contrary in this Agreement, Excluded Assets shall not include the Deferred Excluded Assets. The transfer to IAC (or to the relevant member of IAC Group) of any such Asset shall be completed at the time, in the manner and subject to the conditions set forth in Article III.

 

2.06. Liabilities . For the purposes of this Agreement, Liabilities shall be identified as “ Assumed Liabilities ” or as “ Retained Liabilities ” under the following principles:

 

(a) any Liability which is expressly identified on Schedule 2.06(a) is an Assumed Liability;

 

(b) any Liability which is expressly identified on Schedule 2.06(b) is a Retained Liability;

 

(c) 50% of any Shared Litigation Liability shall be an Assumed Liability and 50% of any Shared Litigation Liability shall be a Retained Liability;

 

(d) any Liability of a Separated 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 Expedia Group Balance Sheet or on the Expedia Opening Balance Sheet, is an Assumed Liability, unless it is expressly identified in this Agreement (including on Schedule 2.06(b) or any other Schedule) or in any Ancillary Agreement as a Liability to be assumed or retained by IAC or any other member of IAC Group, in which case it is a Retained Liability;

 

(e) any Liability relating to, arising out of, or resulting from the conduct of, a Separated Business (as conducted at any time prior to, on or after the Effective Time) or relating to a Separated Asset or a Deferred Separated Asset (including any Asset of a Separated Entity) 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 Expedia Balance Sheet or the Expedia Opening Balance Sheet, is an Assumed Liability, unless it is expressly identified in this Agreement (including on Schedule 2.06(b) or any other Schedule) or in any Ancillary Agreement as a Liability to be assumed or retained by IAC or any other member of IAC Group, in which case it is a Retained Liability;

 

(f) any Liability which is reflected or otherwise disclosed as a liability or obligation of Expedia Group on the Expedia Group Balance Sheet is an Assumed Liability;

 

(g) any Liability which would be reflected or otherwise disclosed on the Expedia Group Balance Sheet, if such balance sheet were prepared under GAAP, is an Assumed Liability;

 

(h) any Liability pursuant to contracts entered into by IAC, any member of the IAC Group and/or any IAC Affiliate (i) in connection with the acquisition by IAC and/or any member

 

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of the IAC Group of any Separated Entity and/or Separated Business or (ii) otherwise relating primarily to a Separated Entity and/or the conduct of a Separated Business;

 

(i) 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, is a Retained Liability, unless it is determined to be an Assumed Liability pursuant to clause (a), (c), (d), (e), (f), (g) or (h) above, in which case it is an Assumed Liability;

 

(j) 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 (including any Asset of a Remaining IAC Entity) 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, is a Retained Liability, unless it is determined to be an Assumed Liability pursuant to clause (a), (c), (d), (e), (f), (g) or (h) above, in which case it is an Assumed Liability; and

 

(k) any Liability of Expedia or any other member of Expedia Group under this Agreement or any Ancillary Agreement is an Assumed Liability and any Liability of IAC or any other member of IAC Group under this Agreement or any Ancillary Agreement is a Retained Liability.

 

2.07. 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.

 

2.08. Preservation of Agreements . Expedia and IAC agree that all written agreements, arrangements, commitments and understandings between any member or members of Expedia Group, on the one hand, and any member or members of IAC 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 Parties.

 

2.09. Ancillary Agreements . On or prior to the Effective Date, 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

 

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(d) such other agreements and instruments as may relate to or be identified in any of the foregoing agreements.

 

2.10. Resignations . (a) IAC agrees to cause each Person who is a director or an officer of any Separated Entity and who will not be or become an employee of Expedia Group (or any member thereof) on the Effective Date to resign from such position with effect as of the Effective Date.

 

(b) Expedia agrees to cause each Person who is a director or an officer of a Remaining IAC Entity and who will become an employee of Expedia Group (or any member thereof) on the Effective Date to resign from such position with effect as of the Effective Date; provided , however , that this Section 2.10(b) shall not apply to Messrs. Barry Diller and Victor A. Kaufman.

 

(c) Each of IAC and Expedia 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 2.10.

 

2.11. 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 of IAC and Expedia shall cause each other member of its respective Group to do likewise.

 

2.12. Intercompany Accounts Between IAC Group and Expedia Group . From and after the Effective Time, Expedia agrees to cause any Intercompany Account payable by any member of Expedia Group to any member of the IAC Group to be satisfied in full when due. From and after the Effective Time, IAC agrees to cause any Intercompany Account payable by any member of IAC Group to any member of the Expedia Group to be satisfied in full when due.

 

2.13. Disclaimer of Representations and Warranties . (a) Each of the Parties (on behalf of itself and each other member of its respective 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 Separated Assets, Separated Entities, Separated Businesses, Excluded Assets, Assumed 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 Separated 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 Separated Asset or Excluded Asset, including any Account Receivable of either Party, or as to the legal sufficiency of any assignment, document or instrument delivered hereunder to convey title to any Separated 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 Separated Assets and Excluded Assets are being transferred on an “as is, where is” basis, at the

 

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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).

 

ARTICLE III

 

DEFERRED SEPARATION TRANSACTIONS

 

3.01. Deferred Transfer Assets . (a) If the transfer to, or retention by, Expedia Group of any Asset that would otherwise constitute a Separated Asset (a “ Deferred Separated Asset ”) or the transfer to, or retention by, IAC Group (or the relevant member thereof) (that would otherwise constitute an Excluded Asset or the relevant member thereof) of any Asset (a “ Deferred Excluded Asset ,” and together with a Deferred Separated 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 Beneficiary’s 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 the Group to which it belongs. 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 neither 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 2.13(b) hereof, and any such transfer shall take effect as of the date of its actual transfer.

 

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(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.

 

3.02. Unreleased Liabilities . If at any time on or after the Effective Time, any member of the IAC Group shall remain obligated to any Third Party in respect of any Assumed Liability or any member of Expedia Group shall remain obligated to any Third Party in respect of any Retained Liability, the following provisions shall apply. The Liabilities referred to in this Section 3.02 are hereinafter referred to as the “ Unreleased Liabilities ” and 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 .”

 

(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 Liability as and when required, in accordance with its terms.

 

(b) IAC shall indemnify, defend and hold harmless each Expedia Indemnified Party that is an Unreleased Person against any Liabilities arising in respect of each Unreleased Liability of such Person; and Expedia shall indemnify, defend and hold harmless each IAC Indemnified Party that is an Unreleased Person against any Liabilities arising in respect of each Unreleased Liability of such Person. IAC and Expedia shall take, and shall cause the members of their respective Groups to take, such other actions as may be reasonably requested by the other in accordance with the provisions of this Agreement in order to place IAC and Expedia, insofar as reasonably possible, in the same position as they 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 the other Party (or any relevant member of the Group to which it belongs) 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 IAC Group or Expedia Group, as the case may be.

 

(c) The Parties shall continue on and after the Effective Time to use commercially reasonable efforts to cause each Unreleased Person to be released from each of its 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 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.

 

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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 either Party hereunder.

 

ARTICLE IV

 

TREATMENT OF OLD IAC SERIES A PREFERRED STOCK

AND OLD IAC WARRANTS IN THE SEPARATION

 

4.01. Old IAC Series A Preferred Stock . Following the Effective Time, a former holder of Old IAC Series A Preferred Stock will receive one of the following forms of consideration, at the holder’s election, in respect of each share of Old IAC Series A Preferred Stock held by such Person prior to the Effective Time: (i) $50.00 in cash per share, plus accrued and unpaid dividends to the Effective Date, payable by IAC, (ii) the securities that the holder would have received had the share of Old IAC Preferred Stock been converted based upon the applicable conversion ratio into shares of Old IAC Common Stock immediately prior to the Reverse Stock Split and the Reclassification, or (iii) one share of New IAC Series B Preferred Stock and one share of Expedia Series A Preferred Stock, each having the terms set forth in its respective certificate of designation filed with the Secretary of State of the State of Delaware on August 9, 2005. Holders of Old IAC Series A Preferred Stock that did not make an affirmative election by July 11, 2005 are deemed to have elected to receive $50.00 in cash per share, plus accrued and unpaid dividends to the Effective Date, payable by IAC. Schedule 4.01 sets forth the final elections, including default elections, by holders of Old IAC Preferred Stock, as of the Effective Time.

 

4.02. Old IAC Severable Warrants .

 

(a) At the Effective Time, the Old IAC Severable Warrants will be adjusted based upon the following principles:

 

(i) the number of shares of New IAC Common Stock subject to each New Unitary IAC Warrant will equal one half the number of shares of Old IAC Common Stock underlying the Old IAC Severable Warrant immediately prior to the Reverse Stock Split and the Reclassification;

 

(ii) the per share exercise price of the New IAC Unitary Warrant (rounded up to the nearest whole cent) will equal the per share exercise price of the Old IAC Severable Warrant prior to the Reverse Stock Split and the Reclassification multiplied by the IAC Warrant Factor.

 

(iii) the number of shares of Expedia Common Stock subject to the Expedia Warrant will equal one half the number of shares of Old IAC Common Stock underlying the Old IAC Severable Warrant immediately prior to the Reverse Stock Split and the Reclassification; and

 

(iv) the per share exercise price of the Expedia Warrant (rounded up to the nearest whole cent) will equal the per share exercise price of the Old IAC Severable

 

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Warrant prior to the Reverse Stock Split and the Reclassification multiplied by the Expedia Warrant Factor.

 

(b) IAC shall be responsible for all obligations with respect to the New IAC Unitary Warrants. Expedia shall be responsible for all obligations with respect to the Expedia Warrants. The warrant agreements, if any, that currently govern the Old IAC Severable Warrants shall continue to govern the New IAC Unitary Warrants, as adjusted in accordance with the terms hereof and IAC shall be responsible for the obligations arising thereunder. To the extent necessary to memorialize and satisfy its obligations hereunder, Expedia shall enter into warrant agreements with respect to the Expedia Warrants with the holders (or the agent(s) therefor) of such Expedia Warrants and Expedia shall be responsible for the obligations arising under any such agreements. The failure of Expedia to enter into any such agreements shall not relieve Expedia of its obligations with respect to the Expedia Warrants.

 

4.03. Old IAC Integrated Warrants .

 

(a) Immediately following the Effective Time:

 

(i) each Old IAC Integrated Warrant shall become a New IAC Integrated Warrant which will represent the right to receive (x) a number of shares of New IAC Common Stock equal to one half the number of shares of Old IAC Common Stock subject to the Old IAC Integrated Warrant immediately prior to the Reverse Stock Spl