Exhibit 10.2

IAC-Diller Letter Agreement

IAC/InterActiveCorp

555 West 18th Street

New York, NY  10011

December 1, 2010

Reference is made to (i) the Amended and Restated Stockholders Agreement, dated
as of August 9, 2005 (the “Stockholders Agreement”), by and between Liberty
Media Corporation (“Liberty”) and Mr. Barry Diller (“Diller”), (ii) the letter
agreement, dated as of the date hereof (the “Liberty Diller Agreement”), by and
among Liberty, Liberty USA Holdings, LLC (together with Liberty, the “Liberty
Parties”) and Diller, (iii) the Stock Exchange Agreement, dated as of the date
hereof (the “Exchange Agreement”), by and among IAC/InterActiveCorp (the
“Company”), Celebrate Interactive, Inc. and the Liberty Parties, (iv) the
Amended and Restated Governance Agreement, dated as of August 9, 2005 (as
amended, the “Governance Agreement”), among the Company, Liberty, and Diller,
and (v) the Termination Letter, dated as of the date hereof (the “Termination
Letter”), by and among the Liberty Parties, the Company and Diller.  Capitalized
terms used and not defined herein have the meanings provided such terms in the
Liberty Diller Agreement. 

WHEREAS, Liberty is not willing to enter into the Exchange Agreement unless
Diller waives certain pre-existing rights under the Stockholders Agreement which
would otherwise be triggered by the IAC Exchange (which rights include, among
others, a right of first refusal with respect to certain transfers by Liberty of
Common Stock and Class B Common Stock and a right to exchange with Liberty on a
one-for-one basis shares of Common Stock for shares of Class B Common Stock held
by Liberty in connection with certain transfers by Liberty);

WHEREAS, Diller is not willing to waive such pre-existing rights unless the
Company enters into this letter agreement;

WHEREAS, in order to induce Diller to waive such pre-existing rights and thereby
permit the IAC Exchange to be consummated as contemplated by the Exchange
Agreement in a “simultaneous” sign-and-close transaction, IAC is willing to
enter into this letter agreement to, among other things, preserve for a limited
period of time and for a limited number of shares Diller’s existing right to
exchange shares of Common Stock on a one-for-one basis for shares of Class B
Common Stock to be transferred by Liberty to the Company in the IAC Exchange;
and

WHEREAS, the Board of Directors of the Company (the “Board”) and a Special
Committee of the Board (the “Special Committee”) which was established in
connection with the Company’s consideration of the IAC Exchange and which is
comprised wholly of non-employee directors (as such term is defined for purposes
of Rule 16b-3 under the Exchange Act) have approved the transactions
contemplated hereby for purposes of exempting dispositions or deemed
dispositions by Diller to the Company of shares of Common Stock and acquisitions
or deemed acquisitions by Diller from the Company of shares of Class B Common
Stock, in each case pursuant to the Diller Exchange Right (as defined herein)
from Section 16(b) of the Exchange Act.

                                                                                                                                                                                                                                            

 

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In connection with the Liberty Diller Agreement and the Exchange Agreement, and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, IAC and Diller hereby agree as follows:

1.  Liberty Diller Agreement. Diller hereby represents and warrants to the
Company that the representations made by Diller in the Liberty Diller Agreement
are true and correct in all respects and that the Liberty Diller Agreement is
binding in all respects (other than as a result of the failure of the Liberty
Diller Agreement to be binding and enforceable against the Liberty Parties).

2.  Diller Waiver of Certain Rights.  Diller hereby waives, subject to the
execution of the Liberty Diller Agreement and consummation of the Liberty/Diller
Exchange, any rights he may have under the Stockholders Agreement with respect
to the transfer by the Stockholder of shares of Common Stock and Class B Common
Stock to IAC pursuant to the IAC Exchange (other than, for the avoidance of
doubt, Diller’s rights with respect to exchanging the Common Exchange Shares for
the Liberty/Diller Class B Exchange Shares in the Liberty/Diller Exchange).

3.  Diller Exchange Right.  Upon the terms and subject to the conditions set
forth in this letter agreement, Diller’s right to exchange shares of Common
Stock for shares of Class B Common Stock to be transferred by Liberty to the
Company in the IAC Exchange shall be partially preserved in the manner set forth
herein.  In furtherance of this objective, the Company hereby irrevocably agrees
that Diller shall have the right to exchange with the Company, at his option and
from time to time (as set forth in paragraph 4 below), beginning with the date
hereof and in whole or in part, up to 1.5 million shares of Common Stock (the
“Share Cap”) that he may acquire for shares of Class B Common Stock on a
one-for-one basis (the “Diller Exchange Right”).  The Diller Exchange Right
shall expire on the nine-month anniversary of the date of this letter agreement
(such date, the “Expiration Date” and such number of shares of Class B Common
Stock actually exchanged pursuant to this letter agreement, the “Restricted
Class B Shares”); provided, however, that such Expiration Date shall be extended
to enable any exercises of the Diller Exchange Right (as shown by the delivery
to the Company of Diller Exchange Notices, as defined below, on or prior to such
Expiration Date) effected by the Expiration Date which have not yet been
consummated as of such Expiration Date to be so consummated; provided, however,
for the avoidance of doubt that once Diller has exchanged (and such exchanges
have been consummated in full) an aggregate of 1.5 million shares of Common
Stock pursuant to the Diller Exchange Right, the Diller Exchange Right shall
expire.

4.  Method of Exercise.  Diller shall have the right to exercise the Diller
Exchange Right from time to time (but no more frequently than once every 30
days) by giving the Company written notice of his intention to exercise such
right (the “Diller Exchange Notice”), which notice shall include a statement by
Diller of the number of shares of Common Stock he wishes to exchange with the
Company (the “Exchanged Common Stock Shares”) for shares of Class B Common Stock
on a one-for-one basis, and within three (3) business days of receipt of such
notice (or such other date as specified in the Diller Exchange Notice), the
Parties shall consummate the transactions contemplated by the Diller Exchange
Right.  At each closing of an exercise of the Diller Exchange Right, in whole or
in part and from time to time, (i) Diller shall deliver to the Company one or
more stock certificates representing the Exchanged Common Stock Shares under the
applicable Diller Exchange Notice, free and clear of all liens, accompanied by
duly executed and effective instruments of transfer or confirmation from IAC’s
transfer agent of a book-entry transfer to IAC of such Exchanged Common Stock
Shares and (ii) the Company shall deliver or cause to be delivered to Diller one
or more stock certificates representing the number of shares of Class B Common
Stock to be exchanged with Diller for the number of shares of Common Stock to be
exchanged by Diller as set forth in the Diller Exchange Notice on a one-for-one
basis.

 

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5.  RESTRICTIONS ON TRANSFER.  OTHER THAN AS PERMITTED BY THIS SECTION 5, DILLER
MAY NOT TRANSFER (AS DEFINED BELOW) ANY RESTRICTED CLASS B SHARES PRIOR TO THE
FIVE YEAR ANNIVERSARY OF THE DATE OF THIS LETTER AGREEMENT (THE DATE HEREOF TO
THE DATE OF SUCH FIVE YEAR ANNIVERSARY, THE “RESTRICTED PERIOD”), AND THE
COMPANY WILL NOT REGISTER DURING THE RESTRICTED PERIOD ANY TRANSFER OF
RESTRICTED CLASS B SHARES THAT DOES NOT COMPLY WITH THIS LETTER AGREEMENT.  IN
THE EVENT THAT DILLER PROPOSES TO TRANSFER ANY OF THE RESTRICTED CLASS B SHARES
DURING THE RESTRICTED PERIOD, DILLER SHALL NOTIFY THE COMPANY PRIOR TO SUCH
PROPOSED TRANSFER AND CONVERT SUCH RESTRICTED CLASS B SHARES PROPOSED TO BE
TRANSFERRED INTO SHARES OF COMMON STOCK (OR ANY SUCH OTHER SECURITIES INTO WHICH
SUCH SHARES ARE THEN CONVERTIBLE) PRIOR TO SUCH TRANSFER; PROVIDED, HOWEVER,
THAT NO SUCH CONVERSION SHALL BE REQUIRED WITH RESPECT TO ANY SUCH TRANSFER OF
RESTRICTED CLASS B SHARES TO ANY PERMITTED TRANSFEREE IF SUCH PERMITTED
TRANSFEREE AGREES IN A WRITING REASONABLY SATISFACTORY TO THE COMPANY TO BE
BOUND FOR THE REMAINDER OF THE RESTRICTED PERIOD BY THIS SECTION 5 (SUCH
PERMITTED TRANSFEREE WHO SUBSEQUENTLY PROPOSES TO TRANSFER RESTRICTED CLASS B
SHARES DURING THE RESTRICTED PERIOD, A “PERMITTED TRANSFEROR”).  IN THE EVENT
THAT DURING THE RESTRICTED PERIOD DILLER OR A PERMITTED TRANSFEROR FAILS TO SO
CONVERT THE RESTRICTED CLASS B SHARES TO BE TRANSFERRED INTO SHARES OF COMMON
STOCK (OR ANY SUCH OTHER SECURITIES INTO WHICH SUCH SHARES ARE THEN CONVERTIBLE)
PRIOR TO SUCH PROPOSED TRANSFER (OTHER THAN TO A PERMITTED TRANSFEREE), DILLER
OR THE PERMITTED TRANSFEROR, AS APPLICABLE, SHALL BE DEEMED TO HAVE ELECTED TO
CONVERT SUCH RESTRICTED CLASS B SHARES THAT ARE TRANSFERRED (AND SUCH RESTRICTED
CLASS B SHARES THAT ARE TO BE TRANSFERRED SHALL BE DEEMED TO AUTOMATICALLY
CONVERT) INTO AN EQUIVALENT NUMBER OF SHARES OF COMMON STOCK IMMEDIATELY UPON
SUCH TRANSFER.  ANY PURPORTED TRANSFER OF RESTRICTED CLASS B SHARES DURING THE
RESTRICTED PERIOD NOT PERMITTED HEREUNDER SHALL BE VOID AND OF NO EFFECT.  THE
COMPANY SHALL REFERENCE ON THE CERTIFICATES FOR THE RESTRICTED CLASS B SHARES
THE RESTRICTIONS ON TRANSFER IMPOSED BY THIS SECTION 5, WITH SUCH REFERENCES AND
RESTRICTIONS TO BE REMOVED AT THE EXPIRATION OF THE RESTRICTED PERIOD.  FOR
PURPOSES OF THIS LETTER AGREEMENT:

“FAMILY MEMBER” MEANS, WITH RESPECT TO DILLER, HIS SPOUSE OR ANY OF HIS OR HIS
SPOUSE’S LINEAL DESCENDANTS.

“PERMITTED TRANSFEREE” MEANS (I) DILLER, ANY OF HIS FAMILY MEMBERS OR THE ESTATE
OF ANY OF THE AFOREMENTIONED INDIVIDUALS, (II) ANY TRUST FOR THE BENEFIT OF
SOLELY ONE OR MORE OF THE INDIVIDUALS DESCRIBED IN CLAUSE (I), OR (III) ANY
AFFILIATE (OTHER THAN A TRUST) OF DILLER OR ANY OF HIS FAMILY MEMBERS WHICH
DILLER OR SUCH FAMILY MEMBER CONTROLS (AS DEFINED IN THE LIBERTY DILLER
AGREEMENT).

“TRANSFER” MEANS, DIRECTLY OR INDIRECTLY, TO SELL, TRANSFER, ASSIGN, PLEDGE,
ENCUMBER, HYPOTHECATE OR SIMILARLY DISPOSE OF, EITHER VOLUNTARILY OR
INVOLUNTARILY, OR TO ENTER INTO ANY CONTRACT, OPTION OR OTHER ARRANGEMENT OR
UNDERSTANDING WITH RESPECT TO THE SALE, TRANSFER, ASSIGNMENT, PLEDGE,
ENCUMBRANCE, HYPOTHECATION OR SIMILAR DISPOSITION, OF ANY RESTRICTED CLASS B
SHARES. 

 

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6.  AVAILABLE SHARES.  THE COMPANY SHALL AT ALL TIMES PRIOR TO THE EXPIRATION OF
THE DILLER EXCHANGE RIGHT RESERVE AND KEEP AVAILABLE IN ITS TREASURY THE FULL
NUMBER OF SHARES OF CLASS B COMMON STOCK POTENTIALLY SUBJECT FROM TIME TO TIME
TO THE DILLER EXCHANGE RIGHT.

7.  SECTION 16 MATTERS.  THE BOARD OF DIRECTORS OF THE COMPANY, OR A COMMITTEE
THEREOF CONSISTING OF NON-EMPLOYEE DIRECTORS (AS SUCH TERM IS DEFINED FOR
PURPOSES OF RULE 16B-3 UNDER THE EXCHANGE ACT), SHALL WITH RESPECT TO EACH
EXERCISE OF THE DILLER EXCHANGE RIGHT OR AS MAY BE OTHERWISE REQUESTED BY
DILLER, ADOPT RESOLUTIONS AND OTHERWISE TAKE ALL ACTIONS NECESSARY TO CAUSE ANY
ACQUISITIONS OR DEEMED ACQUISITIONS FROM THE COMPANY OF CLASS B COMMON STOCK
TRANSFERRED TO DILLER PURSUANT TO THIS LETTER AGREEMENT AND THE DILLER EXCHANGE
RIGHT AND ANY DISPOSITIONS OR DEEMED DISPOSITIONS TO THE COMPANY OF COMMON STOCK
PURSUANT TO THIS LETTER AGREEMENT AND THE DILLER EXCHANGE RIGHT TO BE EXEMPT
UNDER RULE 16B-3 UNDER THE EXCHANGE ACT.

8.  ADJUSTMENT.  THE ONE-TO-ONE CONVERSION/EXCHANGE RATIO WITH RESPECT TO THE
DILLER EXCHANGE RIGHT SHALL IN ALL EVENTS BE EQUITABLY PRESERVED IN THE EVENT OF
ANY RECAPITALIZATION OF THE COMPANY, SUBDIVISION, RECLASSIFICATION, STOCK
DIVIDEND ON, OR A STOCK SPLIT OR COMBINATION OF, OUTSTANDING COMMON STOCK OR
CLASS B COMMON STOCK, IN THE EVENT OF ANY MERGER, CONSOLIDATION OR OTHER
REORGANIZATION OF THE COMPANY WITH ANOTHER CORPORATION, OR IN THE EVENT OF ANY
OTHER SIMILAR EVENT ON OR WITH RESPECT TO ANY SHARES OF COMMON STOCK OR CLASS B
COMMON STOCK (COLLECTIVELY, AN “ADJUSTMENT EVENT”).  WITHOUT DUPLICATION OF THE
FOREGOING, THE SHARE CAP SHALL ALSO BE EQUITABLY ADJUSTED IN THE EVENT OF ANY
SUCH ADJUSTMENT EVENT.

9.  Amendment to Governance Agreement.  Immediately following the consummation
of the IAC Exchange and the effectiveness of the Termination Letter, the
Governance Agreement shall be amended as follows:

a.  Section 5.07 of the Governance Agreement shall be restated and amended in
full to read as follows: “Section 5.07.  ‘CHAIRMAN TERMINATION DATE’ shall mean
the date that Mr. Diller no longer serves as Chairman of the Board of Directors
of IAC and Senior Executive of IAC.’”

b.  The phrase “and the CEO Termination Date (as defined in the Amended and
Restated Stockholders Agreement and not as defined in this Agreement) has not
occurred” in Section 2.03 of the Governance Agreement shall be restated and
amended in full to read as follows “and the Chairman Termination Date has not
occurred.”

c.  The term “CEO Termination Date” in Section 6.08 of the Governance Agreement
shall be replaced with the term “Chairman Termination Date.”

10.       Governing Law and Forum.  This letter agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.  Any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this letter agreement will be brought
exclusively in the Delaware Chancery Courts, or, if the Delaware Chancery Courts
do not have subject matter jurisdiction, in the state courts of the State of
Delaware located in Wilmington, Delaware, or in any other venue required by
Delaware law, or in the federal courts located in the State of Delaware.  Each
of the parties hereby consents to personal jurisdiction in any such action, suit
or proceeding brought in any such court (and of the appropriate appellate courts
therefrom) and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.  Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of any
such court.  Without limiting the foregoing, each party agrees that service of
process on such party as provided below shall be deemed effective service of
process on such party. 

 

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11.  Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12.  Specific Performance.  The parties acknowledge and agree that irreparable
damage would occur in the event that any provision of this letter agreement were
not to be performed in accordance with its specific terms or were otherwise
breached, and that monetary damages, even if available, would not be an adequate
remedy therefor.  It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of this letter agreement and to
enforce specifically the performance of terms and provisions of this letter
agreement in any court referred to above without proof of actual damages (and
each party hereby waives any requirement for the securing or posting of any bond
in connection with such remedy), this being in addition to any other remedy to
which they are entitled at law or in equity.  The parties further agree not to
assert that a remedy of specific enforcement is unenforceable, invalid, contrary
to law or inequitable for any reason, nor to assert that a remedy of monetary
damages would provide an adequate remedy for any such breach.

13.  Notices.  Except as otherwise provided herein, any notice, request, claim,
demand, waiver or other communication under this letter agreement will be in
writing and will be deemed to have been duly given if delivered personally or
mailed, certified or registered mail with postage prepaid, or sent by overnight
courier or confirmed facsimile, as follows:

                        if to IAC, to:

IAC/InterActiveCorp
            555 West 18th Street

                        New York, New York 10011
                        Attn:  General Counsel

                        Facsimile: (212) 632-9551

                        if to Diller, to:

                        c/o IAC/InterActiveCorp
                        555 West 18th Street

                        New York, New York 10011
                        Attn:  General Counsel

                        Facsimile: (212) 632-9551

 

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14.  Assignment.  Neither this letter agreement nor any of the rights or
obligations under this letter agreement shall be assigned, in whole or in part
(except by operation of law pursuant to a merger whose purpose is not to avoid
the provisions of this letter agreement), by any party without the prior written
consent of the other parties hereto.  Subject to the foregoing, the provisions
of this letter agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns including, without
limitation, with respect to Diller, his heirs, estate and personal
representatives.

15.  Execution and Further Assurances.  This letter agreement may be executed in
separate counterparts each of which will be an original and all of which taken
together will constitute one and the same agreement.  If, subsequent to the date
hereof, further documents or actions are reasonably requested in order to carry
out the provisions and purposes of this letter agreement, the parties hereto
will execute and deliver such further documents and take such further actions
and agree to cooperate with each other with respect thereto.

16.  Amendment; Wavier.  No amendment, modification or termination of this
letter agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, termination or waiver is sought (and in the case of the
Company, only as authorized by the Special Committee or a majority of the
“independent directors” (as determined under the Marketplace Rules of The Nasdaq
Stock Market) of the Board).  No delay or failure at any time on the part of
either party in exercising any right, power or privilege under this letter
agreement or in enforcing any provision of this letter agreement, shall impair
any such right, power or privilege, or be construed as a waiver of such
provision, or be construed as a waiver of any default or as any acquiescence
therein.

 

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IF THE FOREGOING IS CONSISTENT WITH YOUR UNDERSTANDING, PLEASE SO INDICATE BY
YOUR SIGNATURE BELOW, WHICH WILL CONSTITUTE THE AGREEMENT OF THE PARTIES HERETO.

 

IAC/INTERACTIVECORP

 

 

By: /s/ Gregg Winiarski                               

     Name: Gregg Winiarski

     Title: Senior Vice President & General Counsel

 

 

Accepted and Agreed:

 

 

/s/ Barry Diller                                     

Barry Diller

 

 

 

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